Jiang v Han (No 5)

Catchwords: CIVIL PROCEDURE – application to set aside judgment under r 36.16 Uniform Civil Procedure Rules 2005 (NSW) – where defendant had withdrawn from hearing and ex parte orders were made in favour of the plaintiff – where no satisfactory explanation provided – application refused
CIVIL PROCEDURE – motions heard concurrently – application to have funds previously paid into court transferred to the plaintiff – where the plaintiff obtained judgment for damages and costs on an indemnity basis – application granted

Legislation Cited: Civil Procedure Act 2005 (NSW)
Electronic Transactions Act 2000 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited: Bailey v Marinoff (1971) 125 CLR 529; [1971] HCA 49
Dai v Zhu [2013] NSWCA 412
Jiang v Han (No 3) [2025] NSWSC 452
Jiang v Han (No 4) [2025] NSWSC 695
Pham v Gall [2020] NSWCA 116
State Rail Authority of NSW v Codelfa Construction Pty Ltd (1982) 150 CLR 29; [1982] HCA 51
University of Wollongong v Metwally (No 2) (1985) 158 CLR 447; [1985] HCA 28
Vacuum Oil Pty Ltd v Stockdale (1942) 42 SR (NSW) 239
Workers Compensation Nominal Insurer v Detailed Flooring Pty Ltd [2010] NSWSC 1056

Category: Consequential orders

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

Representation: Counsel:
N Kidd SC and R Harvey (Plaintiff)
R Marshall SC, G Antipas and M Long (Defendants)
Solicitors:
Sunfield Chambers Solicitors & Associates (Plaintiff)
Hiways Lawyers (First and Second Defendants)

File Number(s): 2021/273456

JUDGMENT

1. On 30 June 2025 I refused a motion pursued by the defendants by which they sought orders adjourning the 10 day hearing long fixed to commence that day; giving them leave to rely on a cross claim and parts of the defence which had earlier been struck out in Jiang v Han (No 3) [2025] NSWSC 452; and giving them leave to rely on evidence which was then still incomplete and which they had failed to serve in accordance with the Court’s repeated earlier orders: Jiang v Han (No 4) [2025] NSWSC 695.

2. Having refused the defence motion I then heard Mr Jiang’s claims in respect of what he was owed under a 2016 agreement about land in Yarraville which had been acquired for some $165 million, after first adjourning to permit defence counsel an opportunity to confirm his instructions not to remain to resist the case Mr Jiang pursued.

3. The result was that the defendants chose not to resist the orders which Mr Jiang pursued, their counsel having confirmed that he had no instructions to remain to press their defence of Mr Jiang’s claims, which concerned the proper construction of the 2016 agreement. The result was that the defendants were not represented at the final hearing and having heard Mr Jiang’s unopposed case, I made the orders which he sought for reasons given on 3 July in Jiang v Han (No 4).

4. Neither it nor Jiang v Han (No 3) have been appealed. But Mr Jiang later filed a motion seeking orders releasing the funds which had earlier been paid into Court by the defendants. It was supported by an affidavit affirmed by his solicitor Ms Zhang on 14 July 2025. It was listed for hearing on 25 July 2025 to suit the convenience of defence counsel.

5. The defendants then filed a motion on 18 July seeking orders setting aside Jiang v Han (No 4) under r 36.16(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW); setting aside the orders made on 12 May in Jiang v Han (No 3*),* which dismissed the amended cross claim and various paragraphs of the defence; and in the alternative, reinstating the cross claim and paragraphs of the defence, as well as a costs thrown away order in favour of Mr Jiang.

6. The defendants wished to have their motion heard together with Mr Jiang’s motion, but it was not supported by any affidavit, as the Rules contemplate. They still sought an adjournment of the 25 July hearing, in order to finalise the evidence on which they wished to rely, which they contended they were unable to complete beforehand.

7. There was no objection to the motions being heard together, but the adjournment was opposed by Mr Jiang.

8. Having heard the parties I concluded that it had to be accepted that the explanation for the defendants’ failure to serve the evidence on which they wished to rely was still inadequate and there was real apparent difficulty with the motion they wished to pursue, as was Mr Jiang’s case. Still, given the respective prejudice which the parties would likely suffer, if the hearing of the motions was not adjourned for the week sought, the adjournment should be granted if justice was to be done between them.

9. The defendants then served affidavits sworn by Mr Han, the accountant Mr Zhang and their solicitors, Mr Wu and Ms Tan, annexed to which was said to be all of the material on which they wished to rely on to advance their cross claim and defence at a final hearing, if the relief they sought was granted.

10. For his part Mr Jiang led evidence on which he relied to submit that their case could not be accepted.

Issues

11. There was finally no issue between the parties about the orders Mr Jiang sought in relation to the release of the funds which had been paid into court, if the defence motion failed.

12. Nor was there any issue about the principles which apply to an application to set aside a judgment under r 36.16.

13. In issue was whether the Court could make the orders sought and if it could, whether it would be just to exercise its discretion to make them in the circumstances which arose for consideration.

14. They including that the result of the Court’s earlier orders and the defendants’ forensic decision not to defend Mr Jiang’s claims at the long fixed June hearing was potentially to preclude them from pursuing their claim that he had caused them over $35 million damages, because of his claimed misleading and deceptive conduct at the time the agreements in relation to the Yarraville development were entered in 2015 and 2016. That being because those claims were likely now statute barred.

Can the orders the defendants sought be made?

15. Rule 36.16(3A) permits an order setting aside a judgment if a motion is filed within 14 days after a judgment or order is entered. The defence motion was not filed within that time.

16. Rule 36.16(2)(b) empowers the Court to set aside a judgment or order after it has been entered if “it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order”.

17. There is no question that the orders made at the June hearing in favour of Mr Jiang, which were entered immediately afterwards in the usual way, were made in the absence of the defendants. That was the result of their forensic decision not to remain to defend the case he pressed about the proper construction of their agreement, because their adjournment motion had been dismissed.

18. By the time of that hearing the defendants had served the affidavit which Mr Han swore in April 2025. But they did not rely on it to advance the motion dealt with at the June hearing and as the result of their decision not to remain to defend Mr Jiang’s claims, it did not go into evidence and thus could not be considered at the hearing of his claims. Still, in considering Mr Jiang’s claims, I had regard to what had been advanced in the defence.

19. It was in those circumstances that the parties joined issue over whether the Court’s discretion to make the orders the defendants sought on their further motion, to set aside Jiang v Han (No 4) and the orders made in Mr Jiang’s favour at the 3 June hearing which proceeded ex parte as the result of their forensic decisions, could now justly be made.

The applicable principles

20. The applicable principles are well settled. They include:

21. That perfected orders regularly entered by the Court which bring litigation to an end are generally beyond recall: Bailey v Marinoff (1971) 125 CLR 529 at 532 and 530; [1971] HCA 49;

22. When there is power to vacate orders regularly made, it must be exercised with great caution, after weighing what might otherwise be irremediable injustice against the public interest in maintaining the finality of litigation: State Rail Authority of NSW v Codelfa Construction Pty Lt**d (1982) 150 CLR 29 at 38; [1982] HCA 51 and University of Wollongong v Metwally (No 2) (1985) 158 CLR 447; [1985] HCA 28 at [5];

23. When exercising powers of the kind given by r 36.16 in respect of orders made in the absence of a party, consideration has to be given to whether setting them aside would serve any useful purpose, as well as to how the defendant came to be bound by the judgment: Vacuum Oil Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243 applied in Pham v Gall [2020] NSWCA 116;

24. An explanation must thus be given for the parties’ absence, which establishes that justice requires that the Court’s discretion be exercised: Pham at [56];

25. As explained in Workers Compensation Nominal Insurer v Detailed Flooring Pty Lt**d [2010] NSWSC 1056, what has to be establishing being both:

(i) That an arguable case on the merits might reasonably bring about a different result; and (ii) That there be a satisfactory explanation for the non-appearance, that is one that involves some element of injustice or unconscionability that can be laid at the feet of the party who obtained the challenged order.

1. The interests of justice require that regard be paid to the competing interests of the respective parties, that requiring consideration to be given to the prejudice which the other party would suffer if the judgment was set aside. In exercising its power the Court having to give effect to the "overriding purpose" stated in s 56(1) of the Civil Procedure Act 2005 (NSW), the just, quick and cheap resolution of the real issues in the proceedings: Dai v Zhu [2013] NSWCA 412 at [66] and [83]-[93]; and

2. The onus lying on the applicant to show a just basis for the orders sought.

3. It follows that the mere fact that the defendants left the Court and took no part in the June hearing of Mr Jiang’s claims, of itself, is not sufficient to warrant the exercise of the Court’s discretion to make the orders they sought.

4. What is required is that they give a satisfactory explanation of the course which they actually pursued, as well as that they advance their claims bona fide and that they have an arguable case.

The parties’ cases

23. The defence case was that the evidence established that they had a good arguable basis for their claimed loss of in excess of $25 million as the result of Mr Jiang’s misleading and deceptive representations, as well as in relation to the disputed construction of the 2016 agreement.

24. It was Mr Jiang who in 2015 had provided an information memorandum which predicted profits in the order of $600 million. The property was to be purchased for $165 million plus GST. New City had been incorporated to pursue the project, with Mr Jiang and Mr Han as 40/60% shareholders.

25. After Mr Han paid $11,235,000 in part payment of the purchase price, Mr Jiang had revealed that he could not make his agreed contribution. The result was that the balance of the purchase price could not be paid and additional costs of over $10 million were incurred, with Mr Han having to bear the balance of the purchase price.

26. The 2016 agreement had dealt with the consequences of Mr Jiang not making his agreed contributions to the purchase price. Mr Jiang had later signed a document certifying that he was indebted to Mr Han for over $9 million, which was to be repaid by 15 May 2016. Later Mr Han and Mr Jiang surrendered their shares in New City, causing 100 ordinary shares to be issued to Million Power Mark Limited, a company incorporated in Hong Kong which Mr Han controlled and which became New City’s sole shareholder.

27. The $12 million payment agreed to be made to Mr Jiang under the 2016 agreement had been reasonable in the context of his forecast profit of $600 million, but that was not achieved.

28. While Mr Jiang had disclosed contamination of the land, the extent, time and cost of the required remediation work had exceeded his representations, as did the resulting construction costs. This had also resulted in a decrease in the realistic average sale price estimate from $700,000 per unit to $550,000.

29. Delays had resulted in additional costs of some $10 million per year, with the result that the construction of the proposed 1,500 apartments was finally not pursued and the land was sold in 2021.

30. A loss of $35 million was claimed to have resulted from Mr Jiang’s misleading and deceptive conduct.

31. The defendants also denied that on the proper construction of the 2016 agreement, Mr Jiang was owed the $5,356,297 which the Court had found he was owed in Jiang v Han (No 4). They claiming that Mr Jiang had been loaned some $13,142,703 which he had failed to repay, there being no issue that the funds had been received, but the character of the payment being disputed.

32. It was also submitted that if the orders sought were not made, res judicata and issue estoppel would bar the pursuit of these claims and the issues dealt with in Jiang v Han (No 4). Anshun estoppel would also likely bar related claims, including those articulated in the cross claim and struck out paragraphs of the amended defence.

33. There was also a real risk that they would be time barred if they could not be pursued in these proceedings.

34. It was accepted that the defendants were on notice of the 30 June hearing, when they appeared to press their adjournment application and when it failed, that they had instructed counsel to withdraw.

35. The explanation was said to lie in the difficulty in obtaining funds in Australia and transferring them out of China, in order to provide security for costs. Funds to pay their solicitors only having been provided on 23 June 2025, the 25 June motion then having been filed and counsel being urgently instructed to appear to make the adjournment application.

36. Those circumstances resulting in counsel not reading Mr Han’s April affidavit or advancing available arguments about the consequences of the refusal of the adjournment at the 3 June hearing. The defendant’s solicitor, Mr Wu, having been surprised by the adjournment application having been refused, when funds to meet the required security had been provided and he not being aware of r 36.16, or its equivalent in Victoria where he practices. The result being that the defendants did not appear at the hearing to resist Mr Jiang’s case.

37. That was argued to have been the result of a series of unfortunate events which had left the defendants unrepresented at the hearing and not able to advance the defences which they had to Mr Jiang’s claims.

38. In the result, justice required the Court to exercise its discretion in their favour. That being supported by their prompt application to have the resulting judgment set aside and the prejudice which it was accepted Mr Jiang would suffer, being met by a costs thrown away order.

39. They also claimed that consideration had to be given to Mr Jiang’s earlier delays in the pursuit of his case, including in relation to the filing of his amended pleadings and evidence, in respect of which he had twice been granted extensions.

40. Mr Jiang’s case was that the evidence on which the defendants relied was largely irrelevant, given that it was the judgment on his claims in Jiang v Han (No 4) which they sought to have set aside, despite having made a considered decision not to defend his claims at the long listed hearing. The cross claim and paragraphs of the defence which they sought to have reinstated, having been dismissed in Jiang v Han (No 3*)**.*

41. Bank account statements and trust account records Mr Jiang tendered were argued to establish that the funds the defendants required to pay the security, which had been ordered, were long available, contrary to the defence evidence. The evidence the defendants led having also established that evidence which they wished to lead in respect of the cross claim had also been available to them long before the affidavits sworn only after judgment was given in his favour in July 2025.

42. Further, the evidence the defendants led did not establish that they had a reasonably arguable defence to his claim, their claimed construction of the agreement in issue having been dealt with in Jiang v Han (No 4)**. Nor was there a satisfactory explanation for their decision not to defend his claim at the hearing, given that it turned on the proper construction of the terms of the agreement.

43. In the result they had not established that it was unjust to let the perfected orders made in his favour stand, he not having been in default and not having contributed in any way to their decisions not to remain to defend his claims.

The relevant procedural history

44. There was a dispute between the parties about whose delays had resulted in the matter being heard as it was at the June 2025 hearing.

45. That was the result not only of pleading amendment, but failures to comply with Court orders as to the provision of security, particulars and the service of evidence. Pertinently:

46. The proceedings were commenced in September 2021 and the defence and cross claim were filed in December 2021;

47. In October 2022 the defendants were ordered to provide security and answer Mr Jiang’s request for particulars: Jiang v Han [2022] NSWSC 1398;

48. Security was not provided until February 2023, with the cross claim being stayed until then;

49. The defendants did not provide all the particulars sought until March 2023;

50. The defence to the cross claim was filed in June 2023;

51. In June 2024 the matter was listed for hearing for 10 days in June 2025;

52. An amended statement of claim was filed in July 2024, an amended defence and cross claim in August 2024 and an amended defence to the cross claim in November 2024;

53. The defendants sought repeated extensions of time to serve their evidence, but despite the Court’s orders, the only evidence they served before the June 2025 hearing, Mr Han’s April 2025 affidavit, was not relied on either to advance the adjournment application, or to resist Mr Jiang’s claims when the adjournment was refused;

54. In February 2025 the defendants had been ordered to provide further security, which was not provided, with the result that the cross claim was again stayed;

55. In May 2025 the cross claim was dismissed and corresponding provisions of the defence struck out; and

56. The defendants still sought further time to serve their evidence at the June hearing, when the adjournment was refused and Mr Jiang’s claims were heard.

The evidence

46. In his April 2025 affidavit, which he swore during a WeChat video call in accordance with s 14G of the Electronic Transactions Act 2000 (NSW), Mr Han had explained that his 2017 Australian Permanent Resident visa had expired in 2022 and that he has since not been successful in obtaining either a resident return visa, or a tourist visa. With the result that he has been unable to return to Australia since 2020.

47. In his affidavit Mr Han also explained problems he claimed he had in making funds available to provide the further security ordered in Jiang v Han (No 2*)*. That was supported by the evidence of Ms Tan, who explained various relevant Chinese laws and their consequences.

48. Mr Jiang’s challenged this evidence relying on:

49. Bank records which established that Kaifu Investment Pty Ltd, of which Mr Han was the sole director and shareholder, had in 2025 paid to Fortune New City, the second defendant, considerably greater funds than the $185,000 further security the defendants had been ordered to pay;

50. Payments into the defendants’ solicitors trust account in 2025 had totalled $200,000; and

51. A further $55,000 had been transferred from funds held on trust for Fortune New City in respect of another matter concerning a lease of the property at Yarraville.

52. In his affidavit Mr Wu explained various steps taken to prepare the matter for hearing, the defendants always intending to comply with the order to provide further security, but being unable to do so due to their inability to source funds in Australia and Mr Han not receiving the required funds until June 2025. He explained problems experienced in obtaining relevant financial records which were neither intentional nor strategic. Mr Wu deposed that he briefed counsel to seek an adjournment on the day of the June hearing and was surprised that the application was refused, he having had success in similar applications in Victoria. He thus permitted counsel to withdraw, counsel not having been briefed in the substantive matter.

53. Ms Tan’s affidavit explained applicable Regulations and Guidelines concerning foreign exchange payments, to put in context Mr Han’s claimed inability to transfer funds to Australia.

54. Ms Zhang recounted the procedural history of the matter, the defendants paying $5,658,262 into court in response to the freezing order made by Johnson J. That amount later being moved to the Commonwealth Bank of Australia and, as at January 2025 totalling $6,109,866.74 after accruing interest. Albeit that was not sufficient to cover the judgment debt of $7,367,846.60.

55. In her affidavit Ms Thai further recounted the procedural history of the matter and various correspondences between the parties regarding the preparation of the matter for hearing. As well as correspondence about evidence and documents and the defendants’ various requests for time extensions.

The orders sought must be refused

53. I am satisfied that despite the evidence led the orders pressed by the defendants must be refused, no satisfactory explanation having been given for their failure to remain to resist Mr Jiang’s claims at the June hearing, despite them turning on the proper construction of the 2016 agreement and not the further evidence they now wish to rely on. They not having established a just basis for the exercise of the Court’s discretion to set aside the orders made at that hearing, when I concluded that Mr Jiang had established the case he advanced, for reasons later explained.

54. There can be no question that the defendants had, to that point, been given a fair opportunity to advance their case and to resist Mr Jiang’s claims.

55. While on this application the defendants relied on Mr Han’s April 2025 affidavit, no explanation was able to be given for why it was not relied on to advance the motion dismissed for the reasons given in Jiang v Han (No 4)**. Nor why the evidence relied on to advance their July motion, was not led in support of the motion dealt with on 3 June.

56. In my view the evidence accords with the affidavits put on only after judgment was given in favour of Mr Jiang in June, being able to have been put on long before, given what they deal with and what the evidence establishes about funds which the defendants arranged to have brought into the country.

57. That there was any real financial difficulty which precluded the timely service of their evidence, or the payment of the further security ordered was not established, given what the bank and trust records establish. Nor does the evidence about Mr Han no longer being able to visit Australia and the difficulties which control exercised over money paid out of China into Australia causes, establish the claimed problems.

58. Why none of the available funds were used to provide the further security which the Court had ordered was not explained.

59. Nor was there a satisfactory explanation for the decision not to remain to resist the case Mr Jiang successfully advanced at the June hearing about the proper construction of the 2016 agreement, despite that turning on the words used in the document itself.

60. The orders made on 3 June were regularly entered after Mr Jiang was heard, the defendants having made a forensic decision while represented by counsel not to remain to defend the case he pressed, their adjournment application and other orders sought having been refused.

61. It may be accepted that the results of the forensic decisions which the defendants made include the consequences which they advanced in their submissions. But that must have been apparent earlier, when they failed to provide the further security ordered and to serve their evidence.

62. Those failures were dealt with in Jiang v Han (No 3), where I explained how the amended cross claim had been stayed since February 2025 and despite the approaching hearing and Mr Jiang’s April motion, by which he sought to have the cross claim and corresponding provisions of the defence dismissed, the defendants had still not sought orders to have the stay lifted, or to have leave to serve their evidence*.*

63. I was then satisfied that given how they had sat on their hands, Mr Jiang was entitled to have his case heard at the long listed hearing and that the orders which he sought dismissing the stayed cross claim, as well as corresponding provisions of the defence had to be made.

64. Orders of the kind which the defendants now seek must be exercised with great caution, after weighing what might otherwise be irremediable injustice against the public interest in maintaining the finality of litigation. Together with the other matters earlier identified. Their consideration, I am satisfied, cannot justly result in the orders the defendants sought being made, given the circumstances in which they pursue those orders.

65. I consider that such orders would also not accord with the requirement which s 56 imposes, that regard be had to the overriding purpose there specified, the just, quick and cheap resolution of the real issues in the proceedings, when the Court’s discretions are exercised.

66. The defendants, it must be accepted, repeatedly failed to comply with the obligations which the section also imposes on them. That Mr Jiang also did not comply with all of the Court’s procedural orders must be accepted, but that does not provide a just basis for the orders which they now seek.

67. The defendants having had a fair opportunity to present their case, which they did not avail themselves of despite always being legally represented, including at the June hearing and they not having provided an adequate explanation for their failure to remain to present their case, I am not persuaded that they have met the onus which falls upon them, to establish a just basis for the orders which they seek. That not being established by the evidence which I have explained.

68. I am certainly not satisfied that the defendants have established that they have an arguable case about the merits of what was decided in Jiang v Han (No 4) as to the proper construction of the 2016 agreement, which might reasonably bring about a different result to that which was there arrived at.

69. In the result the orders sought must be refused.

Costs

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

71. Unless the parties approach to be heard with short written submissions within 14 days, that will be the Court’s order.

Orders

72. For these reasons I order that:

73. The funds which the defendants have paid into court be released to Mr Jiang.

74. The defence motion be dismissed.

75. Unless the parties approach to be heard with short written submissions within 14 days the defendants are to bear Mr Jiang’s costs of the motions.

**********