Zhao v Citigroup Pty Ltd - [2021] WASC 264

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   ZHAO -v- CITIGROUP PTY LTD [2021] WASC 264
CORAM:   REGISTRAR WHITBREAD
HEARD:   15 JULY 2021
DELIVERED          :   30 JULY 2021
PUBLISHED           :   3 AUGUST 2021
FILE NO/S:   CIV 2591 of 2019
BETWEEN:   YAN ZHAO
Plaintiff
AND
CITIGROUP PTY LTD
Defendant

Catchwords:

Practice and procedure - Springing order - Application to extract springing order on basis that witness outline is not compliant with terms of order

Legislation:

Supreme Court of Western Australia Consolidated Practice Directions, Direction 4.5

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	Mr A Hershowitz
Defendant	:	Ms P Honey

Solicitors:

Plaintiff	:	VL Legal
Defendant	:	Norton Rose Fulbright Australia

Case(s) referred to in decision(s):

Firmware Technologies Inc v Asia Platinum Group Ltd [2016] WASCA 179
Mickelberg v Director of Perth Mint (1986) WAR 365
Phoenix Eagle Company Pty Ltd v Ardrey [No3] [2019] WASC 437

REGISTRAR WHITBREAD:

(This judgment was delivered orally at the hearing on 30 July 2021 and has been edited for grammar and syntax).

On 24 June 2021 Citigroup Pty Ltd (the defendant) filed an application for the extraction of a springing order made on 9 June 2021 (springing order).
The application is consequent on consent orders made on 9 June 2021. Orders 1, 3 and 7 of those orders provide:
1. The time for order 3 of the orders made on 8 February 2021 be amended, such that the plaintiff file and serve its witness outlines by 14 June 2021.
3. Each witness outline shall satisfy the following formal requirements:
(a) it should be set out in numbered paragraphs; and
(b) it must clearly identify the topics in respect of which evidence will be given and the substance of that evidence, including the substance of each important conversation.
…
7.The statement of claim be struck out and the action dismissed and judgment be entered for the defendant with costs unless the plaintiff complies with Orders 1 and 3 above by 4pm AWST on 21 June 2021.
Yan Zhao (the plaintiff) filed one witness outline on 21 June 2021, that being her own witness outline.
The defendant contends that the witness outline does not comply with order 3 in that it:
(i) does not identify, clearly or otherwise, the substance of the evidence Ms Zhao purports to give and
(ii) does not identify, clearly or otherwise, any conversations at all, despite presumably intending to rely upon some (for example, with reference to interactions with Yu in relation to her financial affairs).
Accordingly, the defendant says that there has not been compliance with orders 1 and 3 and that the plaintiff is in default of the requirements of the springing order. The defendant seeks to extract the springing order and thereby have the statement of claim struck out, the action dismissed and judgment entered for the defendant with costs.
A cross-application is made by the plaintiff in terms such that if the court finds that the witness outline does not comply with order 3 (which is denied) then an extension of time should be granted for the plaintiff to file her witness outline.
Written submissions were filed by the defendant on 7 July 2021 and by the plaintiff on 13 July 2021.
Affidavits were filed on the application:
(i)The defendant filed three affidavits of Dylan Christopher McKimmie respectively affirmed on 1 July 2021, 7 July 2021 and 15 July 2021.
(ii)The plaintiff filed one affidavit of Yi Hua Tan affirmed on 12 July 2021.
The application was heard on 15 July 2021.
I have read the witness outline, all pleadings and affidavits and submissions filed on the application. I take all of those and the oral submissions made on the hearing of the application into account in reaching my decision.
This action is, in simple terms, one where the plaintiff contends that she is entitled to damages from the defendant consequent on unauthorised transactions, in the sum of $398,436.14 during June and July 2014, from her bank account with the defendant; which transactions she contends were paid by the defendant in breach of contract; where the defendant failed to exercise reasonable care and skill in performing its part of the contract as is reasonably expected of a financial services provider.
It is relevant that the person who took the money from the relevant account (Ms Yu) has been successfully prosecuted and convicted for stealing most, if not all, of the monies which form the subject unauthorised transactions in this action. That required proof beyond a reasonable doubt of an intentional illegal act in respect of the relevant monies. Whilst that does not of itself establish that the defendant breached its contractual obligations, or acted without due care and skill towards the plaintiff, it provides a factual basis relevant to the character of the financial transactions, that is that such transactions were unauthorised by the plaintiff. A conviction could not have resulted if there was a possibility that the plaintiff had authorised Ms Yu to take monies from the plaintiff's account. Consequent on the application of the decision in Mickelberg v Director of Perth Mint (1986) WAR 365, the criminal conviction against Ms Yu will, effectively, provide prima facie evidence admissible at trial in respect of the same conduct issues, when pursued at the civil standard on the balance of probabilities where the plaintiff is seeking civil redress by way of damages against the defendant; see Phoenix Eagle Company Pty Ltd v Ardrey [No3] [2019] WASC 437 [139].
It is unsurprising that the plaintiff has, to date, been unable to locate or contact Ms Yu in order to obtain a witness outline, Ms Yu having been released from prison.
The exchange of witness outlines is a relatively new procedure introduced in the Supreme Court by amendments to the Supreme Court of Western Australia Consolidated Practice Direction (CPD), Direction 4.5, effective from 1 February 2019. As explained in a notice to practitioners dated 29 January 2019, where the standard case management directions for civil actions in the Supreme Court once provided that witness statements were to be exchanged prior to trial and stand as the witness' evidence‑in‑chief, written statements as evidence‑in‑chief are now to be the exception rather than the rule. This is because, as the notice to practitioners has frankly stated:
While the use of witness statements … is intended to promote the efficient and just determination of civil disputes, in practice their use has not always met those objectives.
CPD Direction 4.5 has been amended to now provide that, ordinarily, evidence‑in‑chief at trial will be given orally, without the use of witness statements, but that there will be orders made for the exchange of witness outlines. The procedures are set out as follows:
7. A witness outline must be directed only to matters in issue.
8. A witness outline must clearly identify all the topics in respect of which evidence will be given and the substance of that evidence, including the substance of each important conversation.
9. Where a witness refers to a document in a witness outline, they must identify the document by its description and its discovery number or, if an order has been made for a trial bundle to be filed, by a description of the document and by the page number in the trial bundle. If an order has been made for an electronic trial bundle to be filed, the document must be referred to by the document number assigned to it and the page number within that document.
10.Where a witness outline is ordered, the case manager will ordinarily order that no party may use any part of the contents of that document for the purpose of cross-examination of the witness without leave of the trial judge.
As explained in the Supreme Court's notice to practitioners:
Witness outlines must identify the topics in respect of which evidence will be given and the substance of that evidence, including the substance of each important conversation. The purpose of the outline is to provide notice of a witness' evidence in chief to the court and other parties. They are not, and do not become, evidence.
Orders for the exchange of witness statements and for witness statement to stand as evidence in chief are to be the exception, and will only be made where a party satisfies the court that this course will better achieve the objects of efficiency, just determination of litigation and proportionality than if evidence were to be given orally in the usual way.
Ordinarily, the use of a witness statement will not be appropriate where contentious evidence is to be given of facts dependent on the recollection of the witness or where the credit of the witness is likely to be challenged on the topic.
Whether or not witness outlines comply with those requirements and are sufficient may well become fertile ground for interlocutory applications.
In this matter, whether or not the witness outline is sufficient for purpose will have significant consequences, as, if I were to find for the applicant then the statement of claim would be struck out, the action dismissed and judgment entered for the defendant with costs.
With regard to the severity of that consequence I take into account the decision of the Court of Appeal in Firmware Technologies Inc v Asia Platinum Group Ltd [2016] WASCA 179 [42] ‑ [43]:
42The entry of judgment prior to trial without regard to the merits of a case is, generally speaking, the antithesis of justice. It follows that, at least generally speaking, a springing order which would have that consequence can only be justified where necessary to enable the court to fairly determine the substantive matter in dispute and as a last resort.
43There is another more pragmatic reason why springing orders should only be made as a last resort when necessary. As this case demonstrates, and as long experience shows, springing orders can and often do result in a lengthy and expensive diversion from the preparation of the substantive issues in the case for resolution by trial or mediation. We have no doubt that the Master made a springing order in this case for the purpose of enabling the case to be resolved in a timely fashion. However, the order has had precisely the opposite effect.
Whilst that decision does not preclude me from making the orders sought by the defendant it does mean that I must give consideration to whether there are grounds for an extension of time for compliance.
At [49] in Firmware:
[W]hen there is a motion for judgment based on a springing order, consideration should always be given to the question of whether there are grounds for an extension of the time for compliance.
It is of relevance that the springing order was made by consent between the parties. There has been no determination by a judicial officer that non‑compliance with previous orders requiring the filing of witness outlines was so delinquent that a springing order is required.
It is clear from the correspondence filed on affidavit that the plaintiff was delinquent in complying with orders and extensions of time for the filing of witness outlines, which led to the springing order (no doubt as an attempt to buy time consequent on the late briefing of counsel in this matter); but there was no determination by a judicial officer as to whether those circumstances were sufficient (on the relevant principles and authorities) to constitute the basis for a springing order which of its very nature is self‑executing if not complied with.
In my view, that fact is relevant to whether, on the application of the principles set out in Firmware Technologies (as set out above) it would be just to grant the defendant's application if I am satisfied that the witness outline does not comply with the relevant requirements.
The main thrust of the plaintiff's case is that she did not authorise the subject transactions. That fact is set out in par 15 of the witness outline where the plaintiff states:
That she never gave Yu authority to use any of her bank accounts or finance facilities
The plaintiff can say no more than that about her absence of authorisation in respect of the transactions she seeks damages for. This would be her evidence on that point at trial. There would never be any conversations in those terms. I acknowledge that the fact of non-authorisation is, of itself, insufficient for the plaintiff to succeed in her claim against the defendant at trial but it is a central fact to the matters in issue between the parties at trial.
Paragraph 17 states:
That Yu was found guilty and is serving a term of imprisonment for fraudulently using her bank accounts for her own benefit.
Again, that is all the evidence the plaintiff can give as to the fact of the conviction for the theft.
Paragraphs 19 to 21 state:
19. That she had no knowledge of the fact that Yu had applied for credit cards in her name in respect of certain of the bank accounts held by her.
20. That Yu, without her knowledge, opened bank accounts in Ms Zhao's name including with Suncorp, ANZ, Westpac and Citi Bank
21. That in respect to Citi Bank, large amounts of funds were withdrawn by Yu from her accounts or transferred by Yu to other accounts without her knowledge or consent.
That is all the evidence she can give as to the fact of absence of authorisation as all of the referred acts are said to have been done without her knowledge. She may now, of course, be able to specify which accounts (to the extent she is now aware of them) she asserts were opened without her authorisation but such other accounts are not a material fact relevant to this matter. Particulars of the transactions relevant to par 21 of the witness outline are particularised in par 15 of the amended statement of claim, so the defendant cannot assert that it is unaware of which transactions are complained of.
Undoubtedly other parts of the witness outline are inadequate to constitute compliance with CPD 4.5, for example, pars 9 to 14 and 16 would clearly appear to have far more relevant details of acts and conversations which would be relevant to the action. However, they are matters going to refute the defence broadly pleaded at par 17 of the amended defence (filed on 15 November 2019); namely that the alleged loss was wholly caused, or contributed to, by the actions of the plaintiff. Presumably, what is contended by the defendant in that plea is that the plaintiff failed to take reasonable steps to secure her accounts.
Paragraphs 9 ‑ 14 and 16 state that the plaintiff will give evidence of:
9. Arrangements she put in place to receive correspondence and bank statements.
10. Access she had to on line (sic) banking and her ability to use such facilities.
11. Steps taken by her to safeguard passwords and use of internet banking and bank cards.
12. Her relationship and friendship with Feng Yu (Yu) over 30 years.
13. He (sic) interactions with Yu in relation to her financial affairs.
14. Her reliance on other persons when living in Perth.
…
16. That she subsequently ascertained that Yu had fraudulently used her Suncorp and Citi Bank accounts for her own benefit which Yu was never authorised to do.
Those paragraphs could have a lot more detail if the intention is that the plaintiff is setting out the evidence which will refute the defence raised against her. Arguably though, the plaintiff should only deal with those matters in a responsive outline once the defendant has put on its evidence. Hence, the witness outline cannot arguably be deficient in that regard.
Given the central facts set out in pars 15, 17 and 19 ‑ 21, of the witness outline, where the plaintiff's evidence, as to absence of authorisation, could not be expected to be any more than that which is set out therein, and then applying the principles arising out of the Court of Appeal's decision in Firmware Technologies; I find that it would be unjust to extract the springing order and dismiss the plaintiff's action with costs payable to the defendant. It cannot be said that the witness outline so fundamentally fails to comply with orders 1 and 3 of 9 June 2021 that such a consequence would be justified.
However, the plaintiff must file a proper witness outline in respect of the rest of her evidence in the matter where one would expect there to be detailed evidence in respect of which the defendant is entitled to be put on notice prior to trial.
Accordingly, the defendant's application is dismissed and the plaintiff's cross application for an extension of time in which to file her witness statement is granted.
I will hear the parties as to the timeframe for the filing of the plaintiff's witness outline and as to the costs of the application.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CD
Associate to Registrar Whitbread
3 AUGUST 2021