Jiang v Han (No 3)

Catchwords: CIVIL PROCEDURE – application strike out cross-claim and corresponding provisions of defence – where cross claim stayed because further security ordered not provided – where defendant has not served evidence as ordered nor complied with notice to produce – impending hearing – where defendants propose guillotine orders be made granting extension of time to serve evidence and provide security– cross-claim dismissed and defence struck out

Legislation Cited: Civil Procedure Act 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited: Evans v Cleveland Investments Global Pty Ltd [2013] NSWCA 439
Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230
Idoport Pty Ltd v National Australia Bank Ltd & Ors [2002] NSWCA 271
Jiang v Han (No 2) [2025] NSWSC 48
Jiang v Han [2022] NSWSC 1398
Jiang v Han and Fortune New City (Yarraville) Development Ltd (unreported 24 September 2021)
Ward v Westpac Banking Corporation Limited [2024] NSWSC 669

Category: Principal judgment

Parties: Zhao Qing Jiang (Plaintiff/Cross-Defendant)
Kairan Han (First Defendant/First Cross-Claimant)
Fortune New City (Yarraville) Development Pty Ltd (Second Defendant//Second Cross-Claimant)

Representation: Counsel:
N J Kidd (Plaintiff/Cross-Defendant)
C W Robinson (First and Second Defendants/ First and Second Cross-Claimants)
Solicitors:
Sunfield Chambers Solicitors & Associates (Plaintiff/Cross-Defendant)
Hiways Lawyers (First and Second Defendants/ First and Second Cross-Claimants)

File Number(s): 2021/273456

Publication restriction: Nil

JUDGMENT

1. These parties began litigating their dispute about a failed joint venture property development in Yarraville, Victoria in 2021, it having been the subject of agreements between them in 2015 and 2016. In June 2024 the matter was listed for hearing in June 2025, but the defendants have never complied with the Court’s orders for the service of their evidence, despite having been granted repeated extensions of time. The 10 day hearing is listed to commence on 30 June.

2. The matter has been the subject of earlier judgments, beginning with Jiang v Han and Fortune New City (Yarraville) Development Ltd (unreported 24 September 2021) when Johnson J made freezing orders against Mr Han. In Jiang v Han [2022] NSWSC 1398 and Jiang v Han (No 2) [2025] NSWSC 48 orders for security were also made, the latest of which the defendants have also not complied with, with the result that their amended cross claim is stayed. They have not applied to have the stay lifted nor to be granted the leave to serve their evidence which they now require.

3. Mr Jiang now pursues an order striking out the cross claim and corresponding provisions of the defence to his amended statement of claim. His April 2025 motion is supported by the affidavits of his solicitor Mr Zhang.

4. As Mr Jiang contends, the defendants not having served their evidence, despite the extension to serve it in December 2024, they now require the Court’s leave to do so, but it has not been sought nor granted: r 31.4(6) of the Uniform Civil Procedure Rules 2005 (NSW). This position is to be contrasted with that of Mr Jiang, who served his evidence in December 2023.

5. Further, they have also not complied with the notice to produce, which the Court had refused to set aside in Jiang v Han (No 2)**.

6. For a time the defendants were not active, but recently an affidavit has been sworn by Mr Han in which he claims to be living in Melbourne. It is not in evidence but on other evidence he is in China and still does not have the visa, which he has been pursuing, to permit him to travel to Australia.

7. The defendants appeared to resist the orders Mr Jiang pursued, relying on the May affidavit of their solicitor Mr Wu.

8. Mr Wu indicated that he had been instructed that the defendants intended to comply with the Court’s February 2025 security order, but there had been delays “due to foreign currency exchange and transfer restrictions in China”. What they were or how they were proposed to be overcome was not revealed, but he said payment of the security was expected by no later than 31 May 2025.

9. Mr Wu explained the delay in the service of the defence evidence by Mr Han’s ongoing inability to enter Australia, “due to visa restrictions” and the complexity of work being undertaken by external consultants and internal staff in Australia, in relation to post sale accounting work and responses to Australian Tax Office queries, as well as an ongoing audit into the corporate defendant.

10. Mr Wu expected shortly to file further affidavits, which will also deal with matters still being investigated, including in China. He also expected outstanding documents and materials to be produced shortly.

11. Section 61 of the Civil Procedure Act 2005 (NSW) not only empowers the Court to make directions about the preparation of a matter for hearing, but to dismiss the proceedings, whether generally, in relation to a particular cause of action or in relation to the whole or part of a particular claim, when a party fails to comply. It may also disallow evidence or strike out a defence: s 61(3).

12. There is thus no issue about the Court’s broad power to dismiss the amended cross claim and strike out the corresponding provisions of their defence, given the defendants’ ongoing failures to comply with its orders and the impending hearing: r 42.21 discussed in Idoport Pty Ltd v National Australia Bank Ltd & Ors [2002] NSWCA 271 at [51].

Should the amended cross claim be dismissed?

13. On all that now arises to be considered, I am satisfied that Mr Jiang has established a just basis for the dismissal of the amended cross claim, unchallenged as the orders which he sought were by a competing defence motion seeking the lifting of the stay.

14. In the February judgment I not only observed that ordinarily, the defendants’ repeated breaches of the Court’s orders would involve a contempt, but that there had been no explanation for those breaches and that it would appear that the defendants required the Court’s leave to serve their evidence: at [30]. The stay of the amended cross claim followed their failure to provide the further security ordered in that judgment.

15. Despite this, the defendants have still not sought leave to serve their evidence, or applied to have the stay lifted, that requiring the pursuit of a motion supported by an affidavit. That was not pursued even in response to Mr Jiang’s April motion.

16. There is thus no issue that presently, the amended cross claim is stayed until further order; that the defendants have not provided the outstanding security or applied to have the stay lifted; and that they have also failed, repeatedly, to comply with the Court’s other orders, including as to the service of their evidence and the notice to produce; and have also not applied for an extension of time to serve their evidence.

17. That is despite the complexity of what they pursue by their amended cross claim having necessitated the February order for the provision of further security.

18. In those circumstances, that the defendants have not actively pursued their defence or cross claim by the service of their evidence, nor sought the leave they now require to serve that evidence is pertinent. As is their failure to apply to have the stay of their cross claim lifted. The evidence on which they relied to resist Mr Jiang’s motion did not address this, nor adequately explain their failures to comply with the Court’s orders.

19. That undoubtedly supports the case which Mr Jiang advanced. There also being no basis on which the defendants contended that the stay could presently be lifted, or that they could now be given leave to rely on evidence which they have not even yet served, despite the approaching hearing.

20. They urging instead that the Court should follow the approach adopted by in Leeming JA in Evans v Cleveland Investments Global Pty Ltd [2013] NSWCA 439 where a guillotine order was made. It providing a final opportunity for security which had been ordered 5 months previously, to be provided before the hearing of an appeal. That approach being supported in this case, it was urged, by the $5 million assets the subject of the ongoing freezing order, as well as the 2022 order for security, which had been complied with.

21. The order proposed was that unless the security was provided by 31 May, the cross claim be dismissed. The case pressed being that there was no inability to provide the further security, only ongoing difficulty in transferring funds to Australia. But there was no evidence which supported this, other than instructions given to a solicitor

22. It was also proposed that it be ordered that unless all the defence evidence was served by 16 May, the cross claim also be dismissed.

23. This regime was opposed because without leave to rely on any evidence then served also being sought and obtained, the defendants could still not rely on such evidence at the June hearing. Such leave would be opposed.

24. Mr Jiang’s case being that the proposed orders still left him in the position of not knowing whether he had to meet the complex foreshadowed evidence the defendants wished to rely on, until only a limited time before the impending hearing.

25. The parties’ contest has to be determined in circumstances where since June 2024 the matter has been listed for 10 days commencing in June, because of the complexity of the claims pursued by the amended cross claim, claims which the defendants have not been actively pursuing. The freezing order and the security which has been provided are also relevant, but in my view cannot result in the orders the defendants proposed, they having been ordered for the reasons explained in the earlier judgments.

26. The long listed hearing is now fast approaching in entirely unsatisfactory circumstances, given the defendants’ conduct. That well explains Mr Jiang’s motion.

27. Mr Jiang’s undoubted right to have his case heard ought not to be jeopardised by the defendants’ failures, even still to serve their evidence and respond to the notice to produce. Given what Mr Wu explained was still being investigated in Australia and China, that all of the defence evidence could be served by 16 May cannot be accepted as being realistically possible. Still, it was the defence position that they also did not wish to jeopardise the hearing.

28. But even service of their evidence by 16 May will necessarily give rise to that possibility, if Mr Jiang is to have the fair opportunity he is entitled to have, to meet their evidentiary case. One which enables him to meet the evidence the defendants wish to lead about what their ongoing investigations are pursuing with the assistance of accountants, in relation to claimed complex relevant matters in both Australia and China. They also appearing to have been the subject of Tax Office investigations which are also still ongoing.

29. This explains why, even if the evidence is served by 16 May, the defendants may not be given the leave they require, but have not yet sought, to rely upon it.

30. That Mr Han will be able to give evidence at the hearing, certainly does not appear assured. He being a resident of China not Melbourne and who, it was accepted at the hearing, has ongoing visa issues as well as apparent difficulty in giving necessary instructions from China, despite the affidavit he swore which indicated that he lives in Melbourne. This could not be explained at the hearing.

31. Relevant factors to consider on the exercise of the Court’s power include the period that has elapsed since the Court’s orders were made, particularly since the matter was listed for hearing in June 2025; the fact that the defendants were on notice of Mr Jiang’s dismissal application and yet still made no applications of their own to have the stay of the amended cross claim lifted or to be given leave to serve their evidence; their failure, at least to this point, to fund the further security ordered; the prejudice they would suffer if their cross claim is dismissed; and the position of the Court.

32. They must also be considered in the context that the Uniform Civil Procedure Rules and the Court’s orders are intended to ensure compliance with the overriding purpose specified in s 56 of the Civil P**rocedure Act: the just, quick and cheap resolution of the real issues in the proceedings. As well as ensuring that litigation is not conducted by ambush or surprise.

33. The proceedings’ procedural history establishes that the defendants have had a fair opportunity, including since the matter was listed for hearing, to pursue their case by putting on their evidence and complying with the Court’s orders, which they have not availed themselves of. That is not within the Court’s control but supports Mr Jiang’s case.

34. The evidence the defendants rely on does not establish any real basis for considering that they will serve all their evidence by 16 May, if the order they proposed is made. Nor that they will make or be granted leave to rely upon it at the hearing.

35. That they will comply with the order for further security by 31 May has also not been established, let alone that problems with remitting available funds from China exist, or have been overcome. Instructions to a solicitor that this is the situation are incapable of themselves of establishing that a basis for such instructions exist.

36. It is in those circumstances that it must be accepted that the course the defendants have pursued and seek further to pursue, involves an abuse of process which cannot justly be permitted. Denying Mr Jiang as they inevitably would a fair opportunity to meet the case they wish to pursue at the June hearing, if they are complied with.

37. That the defendants will be prejudiced if the orders sought are made, must be accepted. That this is unfair, as they claim, does not necessarily follow. That having to be considered in light of the requirements of s 56 of the Civil P**rocedure Act and the parties’ respective conduct, given the Court’s orders.

38. That requires consideration not of only the overriding purpose of the legislative scheme, the just, quick and cheap resolution of the real issues, but also the objects specified in s 57(1), namely:

(a) the just determination of the proceedings,

(b) the efficient disposal of the business of the court,

(c) the efficient use of available judicial and administrative resources,

(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

39. It is evident that the defendants have to this point not complied with their duty to assist the Court to further the overriding purpose and, to that effect, to participate in the Court’s processes and to comply with its directions and orders: s 56(3). While Mr Jiang has complied with that duty.

40. What the dictates of justice now require must also be taken into account, having regard to the matters specified in s 58(2)(b) to the extent relevant. They being:

(i) the degree of difficulty or complexity to which the issues in the proceedings give rise,

(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv) the degree to which the respective parties have fulfilled their duties under section 56 (3),

(v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii) such other matters as the court considers relevant in the circumstances of the case.

41. Section 59 must also be born in mind, it requiring that the Court’s practice and procedure be implemented with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial.

42. What is here raised by the pleadings is complex, but that the defendants have had sufficient time to prepare their case for trial is apparent. Orders have repeatedly been made to ensure the orderly and fair hearing of the parties’ competing claims about their failed property development.

43. It is the defendants who have failed to comply with them, despite what they pursue by their amended cross claim and the extensions of time to serve their evidence which they have repeatedly been given. They remain in breach and have not sought the leave which they now require, to rely on the evidence they have yet to serve, despite the approaching 10-day hearing.

44. That they would obtain the leave they require, if sought, is difficult to see in all the circumstances. Were it to be given, that injustice could result for Mr Jiang appears likely, given the complexity of the evidence which Mr Wu explained. Such leave would appear to require an adjournment of the hearing, in order that Mr Jiang be given a fair opportunity to meet their complex evidentiary case. This helps explain why the leave has not been sought.

45. The defence submission that if security is provided by 31 May, Mr Jiang will have adequate time to prepare his case, thus cannot be accepted. That depending not only on what has been pleaded.

46. That the dictates of justice permit the outcome for which the defendants contend, is thus also not apparent.

47. The Court accepted that Mr Jiang is entitled to be heard on the case he pursues, having complied with the Court’s orders, when it set the matter down for hearing. The defendants have not availed themselves of the fair opportunity they have also been given to meet his case and advance theirs, by serving their evidence.

48. What the defendants have established by their repeated failure to serve that evidence and the evidence which they led on the motion, is a just basis for the conclusion that they are not entitled to further time, even until 16 May to serve their evidence before dismissal of the amended cross claim is ordered. That is established by the impending hearing, Mr Jiang’s undoubted right to a fair opportunity to meet their explained complex evidentiary case and the real likelihood that the further opportunity to serve evidence will be futile, given that the defendants are unlikely to be given leave to rely on it, if ever sought.

49. The amended cross claim has been stayed since 27 February. Despite the approaching hearing and Mr Jiang’s April motion, the defendants have still not sought any orders to have the stay lifted. The basis on which they expect to provide the further security by 31 May has not been established. Even if it is, it is also not assured that the stay would then be lifted.

50. I am satisfied that given how the defendants have sat on their hands, that Mr Jiang is entitled to have his case heard at the long listed hearing, given the opportunity they have had to meet Mr Jiang’s evidentiary case and provide the further security ordered in February and having not applied for any extensions. Nor have they established a basis on which they could be fairly granted. In the result, given all that arises to be considered, I am satisfied that justice requires that the amended cross claim now be dismissed.

51. That will result in the June hearing being considerably shortened, as well as avoiding the waste of further Court time and the parties’ resources and comply with the overriding purpose, consistent with the other statutory considerations I have explained.

Should corresponding parts of the defence be dismissed?

52. The defence and amended cross claim mirror each other in relevant respects. There is an issue about the Court’s power to dismiss some parts of the amended defence, where the facts and alleged breach pleaded are the same, but in the defence they are claimed to give rise to a setoff, which is not pursued in the cross claim. Both sides rely on observations made by Kunc J in Ward v Westpac Banking Corporation Limited [2024] NSWSC 669 to advance their position.

53. The remedy of striking out a defence has long been considered to be an extreme measure to be taken as a last resort, the direct consequence often being that the defendant is in the same position as if it had never filed a defence: Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [52]-[53]. It is one which must now be exercised in accordance with the requirements of the Civil P**rocedure Act earlier discussed.

54. The strike out power is not to be used to punish a litigant but must be exercised by giving “the fundamental weight to the (sometimes competing) considerations in ss 56 and 57 required by s 58(2)(a) and bringing to bear such of the matters set out in s 58(2)(b)” as are thought to be appropriate: Hans Pet Constructions Pty Limited at [46].

55. In Ward Kunc J struck out a defence in circumstances where an order for security had also not been complied with by the plaintiffs. Their amended statement of claim was struck out and a question arose as to the extent that they should be able to rely on allegations there made, which were also pleaded in their defence to a cross claim: Ward at [6].

56. His Honour concluded that the defence to the cross claim should also be struck out as an abuse of process. The abuse being to allow the defence to be maintained, thereby circumventing the order for security and the dismissal of the amended statement of claim for failure to provide that security: at [7]. Leave to appeal was refused, a clear injustice going beyond something merely arguable not having been established: Ward v Westpac Banking Corporation Limited at [33].

57. Mr Jiang’s case was that the circumstances which here arose for consideration were analogous. That was disputed, the defence case being that there had been no indication that he had considered the amended defence to contain any defect, it having been on foot for eight months with no particulars having been sought since the last amendment was made. In the circumstances it would be unfairly prejudicial to strike it out.

58. Here the disputed facts and breaches of the parties’ agreements advanced in the amended cross claim which has been struck out are also pleaded in the same terms in the amended defence. This is in order to establish the claimed defence of set off, which is not advanced in the cross claim.

59. I do not accept that the Court lacks power to strike out what is so pleaded, the defence having been amended as it was to reflect claims advanced in the amended cross claim. It is relevant that it was the complexity of what was so pursued by amendment which resulted in the order for the provision of further security, which has not been provided.

60. I consider that all of the reasons I have explained for the conclusion that the cross claim should be dismissed, thus also support the conclusion that the disputed aspects of the amended defence should also be struck out, as Kunc J concluded in Ward, in order to avoid the abuse of process which the course the defendants have pursued would otherwise result in.

Revised hearing estimate

61. The parties thus need to confer about the reduced time that the June hearing will require as the result of the orders I now make. They should approach Chen J’s associate within 7 days with a revised estimate and if that cannot be agreed, with the competing estimates and a short explanation of their basis.

Costs

62. The usual order under the Civil Procedure Act is that costs follow the event: r 42. In this case that is an order that the defendants bear Mr Jiang’s costs of his motion.

63. Unless the parties approach within 14 days with short written submissions about the costs order which they seek, that will be the Court’s order.

Orders

64. For these reasons I order that:

65. The amended cross claim be dismissed.

66. Paragraphs [22]-[40] of the amended defence be struck out.

67. The parties confer about the reduced time that the June hearing will require as the result of the orders I now make and approach Chen J’s associate within 7 days with a revised estimate and if that cannot be agreed, with their competing estimates and a short explanation of their basis.

68. The matter is adjourned for hearing at 10 am on 30 June 2025.

**********