Zhu v Yingle Culture Exchange (Australia) Pty Limited; Zhu v Dai [2011] NSWSC 1339 (3 November 2011)

Last Updated: 28 November 2011

This decision has been amended. Please see the end of the decision for a list of the amendments.

Supreme Court New South Wales

Case Title:	Zhu v Yingle Culture Exchange (Australia) Pty Limited; Zhu v Dai
Medium Neutral Citation:	[2011] NSWSC 1339
Hearing Date(s):	3 November 2011
Decision Date:	03 November 2011
Jurisdiction:
Before:	Rothman J
Decision:	In matter number 20211 of 2008 ( 2008/00289276) : 1. The defendants shall by 4pm on 25 November 2011 file and serve a full affidavit of discovery and production of documents that: a. lists all documents that are, or have been, in the last 5 years, in the possession of the defendants; and b. to the extent to which such documents are no longer in their possession, lists, to the best of their knowledge, where those documents are. 2. The second and third defendants pay the plaintiff's costs of and incidental to the motions, including the costs of investigating and securing the compliance with the orders of his Honour Justice Rothman, made on 21 April 2010 and 24 May 2011 on a full indemnity basis. Costs are to be payable forthwith. 3. If the defendants fail to comply with Order 1 herein, then the following orders shall issue at 4pm 28 November 2011: i. The further defence to the amended statement of claim of the second and third defendants filed on 30 May 2008 is struck out in accordance with section 61(3)(c) of the Civil Procedure Act 2005 and further and in the alternative, rule 12.7 of the Uniform Civil Procedure Rules 2005. ii. Judgment against each of the second and third defendants, in accordance with section 61(3)(c) of the Civil Procedure Act 2005 and further and in the alternative, rules 16.2(1)(c) and 16.3 of the Uniform Civil Procedure Rules 2005 and further and in the alternative pursuant to the inherent jurisdiction of the Court. iii. Leave is granted in accordance with rule 29.7 and 33.9(3) to disclose documents obtained in these proceedings to the Director of Public Prosecutions. iv. The second and third defendants pay the costs of and incidental to the proceedings, as agreed or assessed. In the proceedings 185762 of 2011: 1. The defence to the amended statement of claim of the first and second defendants filed on 30 September 2011 is struck out in accordance with rule 14.28 of the Uniform Civil Procedure Rules 2005 2. The first and second defendants pay the plaintiffs' costs of and incidental to this motion as agreed or assessed. 3. By 4 pm, 25 November 2011, the defendants shall file and serve a defence in proper form to the amended statement of claim. 4. In default of order 3 above, then at 4pm, 28 November 2011, the following orders shall take effect: i. Judgment for the plaintiffs in accordance with the Uniform Civil Procedure Rules 2005, rule 16.2(1)(c); ii. The second defendants pay the plaintiffs' costs of and incidental to the proceedings as agreed or assessed.
Catchwords:	PROCEDURE - civil - strike out; application to , self-executing orders made and defence struck out
Legislation Cited:	Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005
Cases Cited:
Texts Cited:
Category:	Procedural and other rulings
Parties:	In proceedings 289276 of 2008: Yi Lin Zhu (first applicant) Lei Jiang (second applicant) Yingle Culture Exchange (Australia) Pty Ltd (first respondent) Carter Bai (second respondent) In proceedings 185762 of 2011: Yi Lin Zhu (first applicant) Lei Jiang (second applicant) Qin Fen Dai (first respondent) Carter Bai (second respondent)
Representation
- Counsel:	Counsel A.Di Francesco (for the plaintiff) Self represented first defendant
- Solicitors:	Solicitors Thomsons Lawyers for the plaintiff
File number(s):	2011/00185762, 2008/20211 (2008/00289276)
Publication Restriction:

EX TEMPORE JUDGMENT

1. HIS HONOUR: The court has before it two motions, each on notice, dealing with two sets of proceedings; the first (which I will hereafter refer to as "the 2008 proceedings") are proceedings numbered 20211 of 2008, and the second (hereafter referred to as "the 2011 proceedings") are proceedings numbered 185762 of 2011.

2. The motions seek, in relation to the 2008 proceedings, the striking out of the defence either pursuant to s 61 of the Civil Procedure Act 2005 (hereafter "the Act") or the striking out of the defence under Uniform Civil Procedure Rules 2005 (hereafter "UCPR") r 12.7, or alternatively, r 13.48.

3. Section 61 of the Act is a provision which entitles the court to make directions in relation to persons who have failed to comply with a direction given seemingly under subsection (1) of s 61 of the Act. Section 61 allows the Court to give directions as it thinks fit for the speedy determination of the real issues between the parties.

4. There are nice questions as to whether, in order to invoke the provisions of subsection (3) of section 61, the court needs to be explicit that the orders are being made under section 61 of the Act.

5. Directions can also be made in or to the same effect of section 61 under UCPR rule 2.1 which may or may not have the same effect and may or may not enliven the jurisdiction of the court under section 61 subsection (3).

6. Nevertheless, even without the provisions of section 61, the Court would have an inherent jurisdiction to strike out proceedings in circumstances where a party has acted in a manner that disentitles it to the indulgence of the court and/or the benefit of proceedings before the court.

7. The plaintiffs, being the applicants on the motions, submits and adduces evidence to support the proposition that apart from the deliberate (as it is described) and contumelious (as it is described) failure to comply with directions relating to the production of an appropriate discovery list and documents in the possession of the defendants, there has also been a failure to prosecute the proceedings, and the defendants have acted in a manner which amounts to an abuse of process. In particular, the evidence adduced in relation to these motions makes clear that the defendants have not provided information relating to bank statements to which they are party. That is, bank statements of accounts held by them, and they have not produced the bank statements themselves. Other means have been utilised to obtain some statements from the banks which evidence the failure of the defendants to provide either a list of those documents that they have had and do not now have, or the documents that they in fact have.

8. The matter has been before the court on a number of occasions. On each occasion, complaint has been made about the defendants seeking to withhold documents and withhold a list of documents or an explanation of the last time they were held or where they have gone. Directions have been made for that purpose. Plainly, those directions, albeit without citing the terms of section 61, were issued for the purpose of facilitating the speedy determination of the real issues between the parties to the proceedings, namely, they fit the description otherwise contained in subs (1) of s 61 of the Act.

9. On 24 May 2011 I issued reasons for judgment in relation to some of the issues associated with the discovery and at paragraph 17 I said this:

"It seems that the defendants have taken a narrower view of the expression "in relation to" than is appropriate. At the same time, judging from the correspondence, it seems that the plaintiffs have taken a broader view of the expression. However, as a consequence, there has been inadequate discovery in relation to documents sought under Category 6 and Category 8. The discovery thus far provided does not include invoices or documents upon which basis a cheque would be drawn or any document authorising and/or explaining a transfer and it should."

10. I also draw the inference from the letter from the defendants' then solicitors, Colin Biggers & Paisley, that the defendants, apart from the explanation in the judgment, had explained to them, by their solicitors, that which was necessary in order to comply with the order for discovery.

11. There is much to be said for the submission made by the plaintiffs that the defendants have deliberately failed to comply with the orders that have been made by the court, and there is sufficient material from which one could draw the inference that there has been a contumelious and quite inappropriate (in the sense of dishonest) failure to provide information to allow the proceedings to be completed.

12. These are serious allegations that are made and they have been made quite properly by Mr Di Francesco, and bearing in mind the duties that he has to the Court have been made in a way that the Court compliments. Given their seriousness, it may be that there is an innocent explanation. Frankly, I have severe reservations as to whether there is, but it is possible.

13. The plaintiffs do not have to satisfy the Court on a criminal standard. The plaintiffs do not have to satisfy the court that the deliberate non-compliance with the orders of the Court have been proved beyond a reasonable doubt and that there is no other reasonable explanation for the conduct. They only have to prove it on the balance of probabilities, albeit bearing in mind the seriousness of the allegation that is made. I will come back to these issues.

14. In relation to the 2011 proceedings, the plaintiffs seek to strike out the defence which has not been properly pleaded and does not answer the particular allegations made in the the statement of claim that relates to the 2011 proceedings. To some extent at least that may be the result of the inability of the defendants to be represented by legal practitioners. Nevertheless, the defence does not properly plead in the sense of form that which is needed to be pleaded and does not answer the particular allegations. As a consequence it does not make out a defence and ought to be struck out. The question then arises as to what occurs thereafter.

15. The plaintiffs seek default judgment on the basis of the failure to defend the proceedings and remind the Court, quite properly, that the defendant would then have the capacity to move the court to set aside the default summons if they could show a good defence and otherwise satisfy the Court as to the tests necessary.

16. Against these matters the defendants raise essentially three issues. Firstly, they allege, or Ms Dai alleges, that she feels oppressed by the fact that she does not have appropriate legal representation available to her and that the plaintiffs do have that capacity and can spend as much money as they like on the proceedings. Secondly, Ms Dai submits to the Court that she does not feel well enough to deal with the issues because of the stress and upset that she feels because of the illness of her mother. Ms Dai tells the court that she has approached the Legal Aid Commission for legal assistance and has taken steps to pay outstanding leagl fees in order to obtain legal advice, preferably from the solicitors that had been acting for her for some time, namely, Colin Biggers & Paisley. She tells the court that she has put into the hands of an agent, the sale of her property.

17. The evidence before the Court from various proceedings and attached to the affidavit of Mr Hegarty of 27 October 2011 discloses that friends of Ms Dai have put something in the order of $100,000 into the account of her daughter, of which at least $50,000 has been transferred from that account into the personal account of Ms Dai.

18. Now there may be explanations for that, thus far I have not heard them, but I am not satisfied that all steps or all reasonable steps have been taken to obtain legal advice in a timely manner.

19. I come back then to the issue of the orders that ought to be made and the consideration of the various matters that go to those orders.

20. Ultimately, the court is mandated by the provisions of ss 56, 57 and 58 of the Civil Procedure Act to facilitate the just, quick and cheap resolution of the real issues between the parties.

21. The terms of the Civil Procedure Act and the recognition of the courts in modern litigation is that case management forms as important a task in the delivery of justice as does providing to parties the continuing ability to comply with that which is necessary to run their case.

22. Natural justice requires that a party be given an adequate opportunity to prepare and to present the case before the court, but the court is not under a duty to ensure that a party given an opportunity takes best advantage of that opportunity.

23. Ms Dai and Mr Bai have been given a number of opportunities. They have been provided indulgence upon indulgence by the court.

24. The expression "justice delayed is justice denied" is an expression that can be aptly applied to the plaintiffs in this case. They sue for moneys relating to the conduct of a business in which it is alleged the defendants, in essence, took money under false pretences. There has been no answer to the allegations made. Moneys that were paid for these courses did not find their way, on the material that is before the court, into the hands of the liquidator of the company to which it was supposed to have been paid.

25. While I am sympathetic to the stress that may be caused by the illness of a parent and sympathetic to the need, particularly in cases where someone has English only as a second language and only partially, to ensure that proper legal advice is given, I cannot continue to have non-compliance frustrate the right of another party to have their case heard and determined.

26. Ms Dai says that she would need an adjournment until the second half of 2012 in order to regularise these proceedings. Frankly, that is an outrageous delay and would not be countenanced by the court. However, I am prepared to give some time in which to regularise the proceedings, but a matter of weeks, not months, and I will do so on the understanding that if the proceedings are not regularised, orders are made.

27. In other words, what I intend to do is make self-executing orders of the kind sought in the notice of motion operating from a date in the future, which date will be prior to the end of this year.

Orders

28. In matter number 20211 of 2008 ( 2008/00289276) :

1. The defendants shall by 4pm on 25 November 2011 file and serve a full affidavit of discovery and production of documents that:

a. lists all documents that are, or have been, in the last 5 years, in the possession of the defendants; and

b. to the extent to which such documents are no longer in their possession, lists, to the best of their knowledge, where those documents are.

2. The second and third defendants pay the plaintiff's costs of and incidental to the motions, including the costs of investigating and securing the compliance with the orders of his Honour Justice Rothman, made on 21 April 2010 and 24 May 2011 on a full indemnity basis. Costs are to be payable forthwith.

3. If the defendants fail to comply with Order 1 herein, then the following orders shall issue at 4pm 28 November 2011:

i. The further defence to the amended statement of claim of the second and third defendants filed on 30 May 2008 is struck out in accordance with section 61(3)(c) of the Civil Procedure Act 2005 and further and in the alternative, rule 12.7 of the Uniform Civil Procedure Rules 2005.

ii. Judgment against each of the second and third defendants, in accordance with section 61(3)(c) of the Civil Procedure Act 2005 and further and in the alternative, rules 16.2(1)(c) and 16.3 of the Uniform Civil Procedure Rules 2005 and further and in the alternative pursuant to the inherent jurisdiction of the Court.

iii. Leave is granted in accordance with rule 29.7 and 33.9(3) to disclose documents obtained in these proceedings to the Director of Public Prosecutions.

iv. The second and third defendants pay the costs of and incidental to the proceedings, as agreed or assessed.

29. In the proceedings 185762 of 2011:

1. The defence to the amended statement of claim of the first and second defendants filed on 30 September 2011 is struck out in accordance with rule 14.28 of the Uniform Civil Procedure Rules 2005

2. The first and second defendants pay the plaintiffs' costs of and incidental to this motion as agreed or assessed.

3. By 4 pm, 25 November 2011, the defendants shall file and serve a defence in proper form to the amended statement of claim.

4. In default of order 3 above, then at 4pm, 28 November 2011, the following orders shall take effect:

i. Judgment for the plaintiffs in accordance with the Uniform Civil Procedure Rules 2005, rule 16.2(1)(c);

ii. The second defendants pay the plaintiffs' costs of and incidental to the proceedings as agreed or assessed.

Amendments

08 Nov 2011 Thomsons Lawyers wrongly attributed as acting for the defendant when they were actually acting for the plaintiff. Paragraphs: Name of solicitors acting

08 Nov 2011 Name of counsel was misspelt Paragraphs: Name of Counsel

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