GWM Goldmining Pty Ltd v Frerk

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

[This headnote is not to be read as part of the judgment] GWM Goldmining Pty Ltd (GWM) and Mr Xin Tian sought declarations in the District Court that several agreements entered into between GWM and Mr Terrance Frerk are rescinded and void ab initio. By amended notice of motion filed on 21 November 2017, Mr Frerk sought orders under r 42.21(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that GWM and Mr Tian provide security for his costs of the proceedings up to trial. Mr Frerk submitted that there was reason to believe that GWM would be unable to pay Mr Frerk's costs of the proceedings if ordered to do so, and that Mr Tian was ordinarily resident outside Australia. At the hearing of the notice of motion, GWM sought to rely on an affidavit expressed to have been affirmed by Ms Mei Qu on 21 November 2017 before Ms Salina Saqid (the Affidavit). Ms Qu could not read or speak English. However, the jurat of the Affidavit contained a statement that Ms Saqid (who was Ms Qu's solicitor) was fluent in English and Mandarin, and that prior to Ms Qu affirming the affidavit Ms Qu had read it to her in Mandarin and that Ms Qu appeared to understand. The primary judge rejected the Affidavit on the ground that it appeared to have been affirmed by a person who said that she did not understand or read English. His Honour found that it was unsatisfactory that a solicitor acting for a party also acted as the translator and that it was also unsatisfactory that someone who translated an affidavit did not provide any evidence as to their qualifications. His Honour ordered GWM to provide security for Mr Frerk's costs. GWM sought leave to appeal from that order. However, his Honour dismissed Mr Frerk's application that security for costs be provided by Mr Tian. His Honour was satisfied that Mr Tian ordinarily resided in Australia. Mr Frerk sought leave to appeal from that order. The issues on appeal were whether the primary judge: (i) erred in rejecting the Affidavit, and should have admitted the Affidavit under s 27A of the Oaths Act 1900 (NSW) or UCPR r 35.7; (ii) erred in failing to take into account that Mr Frerk contributed to the impecuniosity of GWM, that Mr Tian is an individual acting in the same or similar interest as GWM, and that the costs of the claim by GWM would have little or no effect on the costs incurred by Mr Frerk; (iii) erred in finding that Mr Tian was ordinarily a resident of Australia.

Held, dismissing the summons with costs:

1. The appeal, if leave were granted, has no prospects of success. There is therefore no basis for the grant of leave to appeal: [1]; [34]; [41]. In relation to (i)
2. The Affidavit was properly rejected by the primary judge. Section 27A of the Oaths Act 1900 (NSW) and r 35.7 refer to an affidavit being "read to the deponent". Reading an affidavit signify reading the words of the affidavit in the language in which it is expressed. The provisions are concerned with persons who speak English but, for whatever reason, are incapable of reading written English. They are not concerned with the making of affidavits by persons who have no knowledge of English: [1]; [25]-[28]; [41]. In relation to (ii)
3. Even if the Affidavit had been admitted, it would not have been a basis for resisting an order for security on the basis that the impecuniosity of GWM was caused by the conduct of Mr Frerk. Further, there was no evidence that the proceedings would be stifled by the order for security: [1]; [30]-[31]; [41].
4. The claims made by GWM and Mr Tian are quite independent. While they are based on the same alleged representations, the acts of reliance alleged on behalf of Mr Tian are different from the acts of reliance alleged on behalf GWM: [1]; [33]; [41].

Held, dismissing the cross summons with costs: 5. The appeal by Mr Frerk, if leave were granted, would have no prospects of success: [1]; [39]; [41]. In relation to (iii) 6. Mr Frerk gave no evidence of the source or extent of his "knowledge and enquiries" as to whether Mr Tian was ordinarily a resident outside Australia. Further, even if it were established that Mr Tian was not a permanent resident of Australia, it does not follow that he is ordinarily resident outside Australia: [2]; [38]; [41].

Judgment

1. PAYNE JA: I have read the judgment of Emmett AJA in draft. I agree, for the reasons given by his Honour, that leave to appeal should be refused as even if leave were to be granted the appeal would inevitably be dismissed.
2. I also agree that leave to cross-appeal should be refused for the reasons his Honour gives.
3. EMMETT AJA:

Introduction By summons filed on 1 March 2018, GWM Goldmining Pty Ltd (GWM) seeks leave to appeal from orders made by a judge of the District Court (the primary judge) on 1 December 2017. By cross summons filed on 4 May 2018, Mr Terrance Frerk (Mr Frerk) seeks leave to appeal from other orders made by the primary judge on the same day. A direction has been given that the applications for leave and the appeals, if leave be granted, be heard concurrently.

1. The plaintiffs in the proceedings in the District Court are GWM and Mr Xin Tian (Mr Tian). By their statement of claim filed in the District Court on 18 May 2016 (the Statement of Claim), GWM and Mr Tian seek declarations that several agreements entered into between GWM, on the one hand, and Mr Frerk, on the other, are rescinded and void ab initio. The agreements relate to the sale of gold mines and are described as "Sale of Mine Agreement", "Royalty Agreement", "Magpie Management Agreement" and "Frerk Management Agreement" (together, the Agreements).
2. The basis of the claims is that the Agreements were entered into by GWM in reliance upon representations made by Mr Frerk that are alleged to have been misleading and deceptive in contravention of s 18 of the Australian Consumer Law. [1] In addition, GWM seeks damages from Mr Frerk in the sum of $497,200.55 and Mr Tian seeks damages from Mr Frerk in the sum of $300,000. They seek that relief under s 243 and under s 236 of the Australian Consumer Law.
3. Under s 236, if a person (the claimant) suffers loss or damage because of the conduct of another person and the conduct contravened a provision of, relevantly, Chapter 2 of the Australian Consumer Law, the claimant may recover the amount of the loss or damage by action against that other person. Under s 237, a court may, on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because of the conduct of another person that was engaged in a contravention of a provision of, relevantly, Chapter 2 of the Australian Consumer Law, make such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct.
4. Under s 243, the orders that a court may make against a person (the respondent) pursuant to s 237 include an order declaring to be void the whole or any part of a contract made between the respondent and the injured person who suffered, or is likely to suffer, the loss or damage referred to in that section, or of a collateral arrangement relating to such a contract. If the court thinks fit, the Court may make an order declaring the whole or any part of such a contract to have been void ab initio or void at all times on and after such date as is specified in the order, which may be a date that is before the date on which the order is made.

The Agreements

1. In May 2014, Mr Tian, GWM and GWM Resources NL ACN 139 304 911 (GWM Resources) entered into an agreement described as the Binding Term Agreement. Under the Binding Term Agreement, Mr Tian was to pay into a trust account for the benefit of GWM the sum of $300,000, which was to be used by GWM for the purpose of acquiring a gold mine and associated exploration and mine licences. In June 2014, $300,000 was paid into the trust account as contemplated by the Binding Term Agreement.
2. In about July or August 2014, GWM and Mr Frerk entered into the Sale of Mine Agreement, which was concerned with the sale of exploration and mining licences and associated equipment. At the same time, GWM and Mr Frerk entered into the Royalty Agreement, which provided for the payment of royalties from the mine. The Statement of Claim alleges that, under the Sale of Mine Agreement, GWM was to pay $800,000 to Mr Frerk, being as to $300,000 by way of deposit and $500,000 within 18 months if the mine became operational. The Statement of Claim alleges that, pursuant to the Sale of Mine Agreement, the sum of $300,000 was paid by way of deposit to Mr Frerk, but that, because the mine was not operational within 18 months' time, the balance of $500,000 has not been paid.
3. In February 2015, GWM entered into the Magpie Management Agreement with Mr Frerk. By the Statement of Claim, GWM alleges that that Agreement was terminated or varied by agreement and that, thereafter, GWM and Mr Frerk entered into the Frerk Management Agreement. By that Agreement, Mr Frerk was to provide services consisting of setting up and managing the mines that were the subject of the Agreements, as well as ensuring the operation of the mines in accordance with the decisions of GWM.
4. The Statement of Claim alleges that Mr Frerk made four separate misleading and deceptive representations in contravention of Chapter 2 of the Australian Consumer Law. The representations are described as:

• the Rich Mine Representation;
• the Certainty of Gold Representation;
• the Extraction Representation; and
• the Quantity Depth Representation. The Statement of Claim alleges that GWM relied on each of those representations in entering into each of the Agreements.

1. GWM claims damages of $497,200.55 being the deposit of $300,000 and a further $197,200.55 for mining exploration costs, rehabilitation mining bonds paid, fees paid to Mr Frerk under the Frerk Management Agreement, legal fees and insurance. It appears to be alleged that the whole of those funds have been lost, although there is no allegation that the assets acquired under the Sale of Mine Agreement were worthless.
2. The Statement of Claim also alleges that, in reliance upon the Rich Mine Representation, the Certainty of Gold Representation and the Extraction Representation, Mr Tian entered into the Binding Term Agreement and paid the sum of $300,000 into the trust account as indicated above. Mr Tian alleges that, as a result of that reliance, he has suffered loss and damage in the sum of $300,000. It seems to be implicit in that allegation that Mr Tian will not be able to recover the sum from GWM.
3. In addition, Mr Frerk has filed a cross claim against GWM in which he claims damages for breach of the Magpie Management Agreement, which is described in the cross claim as "the Contractor Agreement". Mr Frerk also seeks to recover the balance of $500,000 allegedly payable under the Sale of Mine Agreement and damages for the loss of opportunity of receiving royalties under the Royalty Agreement. In its defence to the cross claim, GWM alleges that the Magpie Management Agreement was replaced by the Frerk Management Agreement. GWM alleges that the Frerk Management Agreement is liable to be declared void ab initio for the reasons pleaded in the Statement of Claim.

The decision of the primary judge

1. The orders that are the subject of these two summonses were made on an amended notice of motion filed by Mr Frerk on 21 November 2017 (the Motion). By the Motion, Mr Frerk sought, relevantly for present purposes, orders that GWM and Mr Tian, as plaintiffs in the District Court, provide security for his costs of the proceedings up to trial in an amount of $94,855.40. Mr Frerk sought an order that GWM and Mr Tian provide security on the grounds that:

• there is reason to believe that GWM, being a corporation, will be unable to pay Mr Frerk's costs of the proceedings if ordered to do so; and
• Mr Tian is ordinarily resident outside Australia. Other orders were sought in the Motion with which it is not necessary to deal.

1. The application for the provision of security by GWM was made under r 42.21(1)(d) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). UCPR r 42.21(1)(d) relevantly provides that the Court may order a plaintiff to give security if there is reason to believe that the plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so. The application for the provision of security by Mr Tian was made under UCPR r 42.21(1)(a), which provides that security for costs may be ordered if "a plaintiff is ordinarily resident outside Australia".
2. For reasons published on 1 December 2017, the primary judge relevantly: 1. dismissed Mr Frerk's application that security for costs be provided by Mr Tian; 2. ordered Mr Frerk pay Mr Tian's costs of the Motion; 3. ordered GWM to provide security for Mr Frerk's costs in the sum of $94,855.40 by 22 December 2017; 4. ordered that the proceedings by GWM against Mr Frerk be stayed until such security is provided; and 5. ordered GWM to pay Mr Frerk's costs of the application for security for costs.
3. GWM applies for leave to appeal from the third, fourth and fifth orders. Mr Frerk applies for leave to appeal from the first and second orders. It is convenient to deal with the applications separately.

Security by GWM

1. At the hearing of the Motion before the primary judge, GWM sought to rely on an affidavit expressed to have been affirmed by Ms Mei Qu on 21 November 2017 (the Affidavit). Ms Qu is married to Mr Tian and is a director of GWM. Paragraph 3 of the Affidavit states as follows: "I cannot read English. I do not speak English. I consider that I recognise some words spoken in English however I do not understand sentences. I am fluent in the Mandarin language." The Affidavit was expressed to have been affirmed before Ms Salina Sadiq, a solicitor. The jurat of the Affidavit contained the following statement: "I, Salina Sadiq, solicitor am fluent in both English and Mandarin. Prior to Ms Qu affirming this affidavit I read it to her in the Mandarin language [sic] annexure "A" of the affidavit of Mark Geoffrey Streeter sworn 12 October 2017, paragraphs 19 to 29 of the affidavit of Terrance Robert Frerk affirmed 12 October 2017 and this affidavit and she appeared to understand."
2. The primary judge rejected the Affidavit on the ground that it appeared to have been affirmed by a person who said that she did not understand or read English. However, his Honour said, paragraph 3 of the Affidavit would not have been an impediment to the admission of the Affidavit if there had been a jurat that stated that it had been translated by an accredited interpreter. His Honour said that it was unsatisfactory that a solicitor acting for a party also acted as the translator and that it was also unsatisfactory that someone who translated an affidavit did not provide any evidence as to that person's qualifications, merely saying that the person was fluent in a particular language. His Honour went on to say that it was not enough for a person who is not an accredited interpreter to say that the person is fluent in a particular language and that "the whole reason that we have accredited interpreters" is that there is an independent authority who has certified that a particular interpreter or translator reaches a certain level of competency.
3. After ruling on the admissibility of the Affidavit and hearing oral argument, the primary judge gave reasons for the orders that he proposed. His Honour found that there was reason to believe that GWM will be unable to pay the costs of Mr Frerk if ordered to do so. His Honour then dealt with several of the factors that, under UCPR r 42.21(1A), the Court may have regard in such an application as follows: 1. the prospects of success or merits of the proceedings: his Honour considered that the evidence in relation to that matter was entirely neutral on both sides; 2. the genuineness of the proceedings: his Honour also concluded that the evidence about that matter was entirely neutral; 3. the impecuniosity of the plaintiff: his Honour found that to be established; 4. whether the plaintiff's impecuniosity was attributable to the defendant's conduct: his Honour observed that there had been no evidence as to why, apart from the gold mining licences, GWM had no other assets; 5. whether an order for security for costs would stifle the proceedings: his Honour observed that there was no evidence that the order would have that effect; 6. the costs of the proceedings: his Honour accepted the unchallenged evidence of Mr Mark Streeter, the solicitor for Mr Frerk, as to the quantum of costs; 7. the timing of the application security for costs: his Honour observed that no submission had been made that Mr Frerk had unduly delayed the application; 8. whether the security sought was proportionate to the importance and complexity of the subject matter in dispute: his Honour accepted that the estimates given by Mr Streeter, the solicitor for Mr Frerk, appeared to be well-founded.
4. The grounds upon which GWM seeks to rely, if leave to appeal is granted, is that the primary judge erred in:

• rejecting the Affidavit;
• failing to take into account that Mr Frerk contributed to the impecuniosity of GWM;
• failing to take into account that Mr Tian is an individual and is acting in the same or similar interest as GWM; and
• failing to take into account that the costs of the claim by GWM would have little or no effect on the costs incurred by Mr Frerk in defending the proceedings by Mr Tian.

1. The reason of the primary judge for rejecting the Affidavit was that there was no evidence that Ms Sadiq was fluent in Mandarin, as she claimed to be. There is a certain circularity in the reasoning of the primary judge. The only evidence before his Honour that Ms Qu did not read or speak English was paragraph 3 of the Affidavit, which his Honour rejected. Nevertheless, the Affidavit was properly rejected by his Honour. Putting that question aside, there is a more fundamental difficulty with the Affidavit.
2. If a proposed deponent of an affidavit does not have an adequate command of English, an interpreter should read to the deponent, in a language that is understood by the deponent, a translation of the affidavit and the oath or affirmation, or to give to the deponent a written translation of the affidavit and oath or affirmation. The translator would then certify that he or she has done so. The interpreter would first swear that he or she had truly interpreted the contents of the affidavit to the deponent and that the interpreter had truly interpreted to the deponent the oath or affirmation about to be administered. The interpreter would then certify that the interpreter understands both the English language and the language understood by the deponent and that the interpreter had truly interpreted to the deponent the contents of the affidavit and the oath or affirmation that was administered. The jurat would then provide that the affidavit has been sworn or affirmed by the deponent with the assistance of interpretation by the named interpreter, whose identity and qualification would be stated. There was no evidence that the Affidavit was sworn or affirmed in such circumstances.
3. GWM complains that the primary judge ought to have admitted the Affidavit under s 27A of the Oaths Act 1900 (NSW) (the Oaths Act) or under UCPR r 35.7. Section 27A relevantly provides that, if it appears to the person before whom an affidavit is made (the authorised person) that the person making the affidavit is unable to read written English, the authorised person must certify, in or below the jurat, that:

• the affidavit was read to the deponent in the presence of the authorised person;
• it appeared to the authorised person that the deponent understood the affidavit; and
• the deponent subscribed the affidavit, by signature or mark, in the presence of the authorised person. UCPR r 35.7 relevantly provides that an affidavit made by "an illiterate person" may not be used unless:
• the affidavit bears a certificate referred to in s 27A of the Oaths Act; or
• the Court is otherwise satisfied that the affidavit was read to the deponent in the presence of the person before whom it was made and that it appeared to that person that the deponent understood the affidavit. GWM submits that the certification by Ms Saqid wholly or substantially satisfied those requirements.

1. It is significant that both provisions refer to an affidavit being "read to the deponent". Reading an affidavit must signify reading the words of the affidavit in the language in which it is expressed, namely, English, in the ordinary course. There is no suggestion in s 27A of reading English words in an affidavit by way of translating or interpreting the words into a different language.
2. Section 27A of the Oaths Act and r 35.7 are concerned with the making of affidavits by persons who are blind, illiterate or otherwise unable to read written English. That is to say, they are concerned with persons who speak English but, for whatever reason, are incapable of reading written English. The provisions are not concerned with the making of affidavits by persons who have no knowledge of English. In any event, failure to comply with s 27A or r 35.7 does not appear to have been the basis upon which the primary judge rejected the Affidavit.
3. The significance of the Affidavit is said to be that, in it, Ms Qu also said the following: "15 The only assets of [GWM] are what I understand to be the licences and equipment being the subject of this litigation. … 18 It was the plan of [GWM] to operate the mine at Wedderburn. Had the representations of [Mr Frerk] be true [GWM] would have been able to operate the mine. If the representations had not been made there would have been no money paid to Mr Frerk and [GWM] would have funds available to it. I do not believe anyone would advance funds to [GWM] or invest in [GWM] given that the representations of Mr Frerk have not proved to be true." GWM contends that, had that evidence been admitted, there would have been a basis for contending that the impecuniosity of GWM and its inability to meet an order for costs in favour of Mr Frerk, if one were made, is the result of the conduct of Mr Frerk about which complaint is made in the proceedings.
4. However, there was no evidence before the primary judge to indicate the financial position of GWM prior to making the Agreements. Further, there was no evidence before the primary judge as to the present financial position of GWM, despite efforts having been made on behalf Mr Frerk to obtain information as to the financial position of GWM. In any event, the Affidavit, if it had not been rejected, appears to disclose no more than that GWM had no assets other than the assets that it agreed to purchase from Mr Frerk under one or other of the Agreements.
5. There is no evidence as to the source of the $497,200.55 allegedly paid out by GWM, although an inference may be open that all of the funds were provided by Mr Tian and that GWM never had funds to meet any order for costs that might be made against it. Even if the Affidavit had been admitted, it would not have been a basis for resisting an order for security on the basis that the impecuniosity of GWM was caused by the conduct of Mr Frerk that is the subject of complaint in the proceedings. Further, there was no evidence that the proceedings would be stifled by the order for security.
6. In addition, GWM asserts that the claims made by it are the same as those made by Mr Tian and that, if the proceedings fail, both plaintiffs would be liable for costs. GWM also points to the fact that, as cross-defendant, it relies in its defence on the matters alleged in the Statement of Claim. GWM contends that the primary judge should have considered those matters and, in the proper exercise of his Honour's discretion, should have declined to order security.

Security by Mr Tian

1. By his cross summons, Mr Frerk seeks leave to appeal from the order made by the primary judge dismissing the Motion as against Mr Tian. In his reasons, the primary judge observed that the only power to award security for costs against a natural person is conferred by UCPR r 42.21(1)(a). His Honour found that Mr Tian is not a permanent resident of Australia. However, his Honour also found that Mr Tian resides in Australia.
2. In support of his application for leave to appeal, Mr Frerk contended that the question of whether Mr Tian ordinarily resided out of Australia had been put in issue by a letter written by Mr Streeter to the solicitors for GWM and Mr Tian. In the letter, Mr Streeter said that he had been instructed by Mr Frerk that Mr Tian resides in China, is not ordinarily resident in Australia and may only be a temporary resident on a bridging visa. He requested that he be provided with documents evidencing that Mr Tian is ordinarily resident in Australia and is a permanent resident. It appears that an inadequate response was furnished. However, that is not sufficient to discharge the onus that lay on Mr Frerk to establish that Mr Tian was ordinarily resident outside Australia.
3. Mr Frerk also relied on an affidavit affirmed by him on 12 October 2017, in which he relevantly said as follows: "5. [Mr Tian] is an individual. I have through my legal representatives requested for documentation to evidence that the Plaintiff can satisfy any adverse costs. … Mr Tian is to the best of my knowledge and enquiries is not a permanent resident of Australia. [sic] … 36 I am concerned that the Plaintiffs are unable to provide security for costs on the following basis: (a) [GWM] is insolvent for reasons articulated … above … (b) [Mr Tian] is not an Australian citizen, a permanent resident or ordinarily resident in Australia."
4. It appears that those parts of Mr Frerk's affidavit were read without objection. Whether or not they would have been rejected had objection been taken, they are not evidence of facts from which a conclusion could be drawn that Mr Tian is ordinarily resident outside Australia. Mr Frerk gave no evidence of the source or extent of his "knowledge and enquiries". In any event, he refers to Mr Tian is not being "a permanent resident of Australia". UCPR r 42.21(1)(a) refers to a plaintiff who is "ordinarily resident outside Australia". Even if it were established that Mr Tian was not a permanent resident of Australia, it does not follow that he is ordinarily resident outside Australia.
5. The primary judge made no error in declining to order security against Mr Tian. The appeal by Mr Frerk, if leave were granted, would have no prospects of success.

Conclusion

1. Neither the proposed appeal by GWM nor the proposed cross appeal by Mr Frerk has any prospects of success. Both the summons and the cross summons must be dismissed with costs.
2. SIMPSON AJA: I agree with Emmett AJA.

Endnotes

1. Sch 2, Competition and Consumer Act 2010 (Cth).
2. House v The King (1936) 55 CLR 499. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 July 2018