Lau v Citic Australia Commodity Trading Pty Ltd [1999] VSCA 34

Court of Appeal (Vic)|1999-03-26|Before: WINNEKE, P., TADGELL and ORMISTON, JJ.A.

For the reasons given I have come to the conclusion that this appeal should be allowed and that, in lieu of his Honour's order that the appeal from the Master should be dismissed, this Court should order that the appeal should be allowed and the appellant have leave to file the amended defence in the form which he proposed.

It is unnecessary to determine whether his Honour was correct in determining that, as a matter of law, the other defences put forward by Lau are unarguable. They too should be determined by the judge who conducts the trial.

Mr O'Bryan contended that in the event that this Court should determine that the appeal be allowed, we should only do so on the condition that Lau pay the judgment sum into Court. In support of this submission Mr O'Bryan cited to us a number of authorities, exemplified by the case of The substance of the submission was that the material put before the Court by Lau was so "shadowy" that it was reasonable to impose such a condition as the price for setting aside the judgment. For the reasons I have given I cannot accept that submission. For my own part I cannot see why such a condition should be placed upon a defendant where he has placed material before the Court sufficient to show that he has an arguable defence on the merits and where his explanation for not filing that defence within the time permitted has been wholly accepted by the Court.

The test which the learned judge appears to have applied in determining the appellant's application to have the default judgment against him set aside was, in my opinion, unduly onerous. His Honour said that the appellant must show "that he has a defence to the claim". Of course, that cannot be literally correct, and perhaps his Honour meant by it that the appellant should show that he has what is sometimes called a prima facie defence or a fairly arguable defence.

His Honour went on to say that he would conclude "that there is a defence if Mr Lau shows a triable conflict of fact or an arguable defence in law".

If that was intended to state an appropriate dichotomy I am, with respect, unable to agree that it is supported or supportable by authority. It is in any event not clear, at least to me, what is comprehended in this context by a triable conflict of fact. Ex hypothesi, the plaintiff at this stage of the proceeding has in strictness offered no evidence in proof of its claim. Such affidavits as were filed in opposition to the appellant's application were, as we were told by Mr O'Bryan, disregarded insofar as they referred to facts in contradiction of those to which the appellant's affidavits deposed. I have not been able to understand in these circumstances what criteria might be used in determining whether, upon the application to have the judgment set aside, the appellant showed a "triable conflict of fact".

The learned judge's language unfortunately suggests that he set himself the task of deciding whether the appellant's outlined defences would succeed. For example, when dealing with the third head of the appellant's proposed defence His Honour said "the evidence in support of this defence gives me cause for concern"; and he concluded, after analysis, by saying "this defence too is not made out." It was, with respect, not a question whether the defence was made out. Rather, the primary consideration (as Lord Wright put it in Evans v. Bartlam [1937] A.C. 473 at 489, in a passage quoted and adopted by our Full Court in Kostokanellis v. Allen [1974] VicRp 71; [1974] V.R. 596 at 603 was whether the appellant had merits to which the court should pay heed.

The passage which the President has read from the judge's reasons, with respect to the proposed defence of unilateral mistake, appears to take a view of the appellant's prospect of being believed and to involve a "conclusion" (to use the learned primary judge's word) that it could not ultimately be demonstrated that Mr Wang was aware of any relevant misapprehension on the part of the appellant. Such a conclusion drawn, without hearing cross-examination of either the appellant or Wang, is difficult to understand: cf. Dick v. Piller [1943] K.B. 497 at 500 per Lord Justice Scott; and Rosing v. Ben Shemesh [1960] VicRp 28; [1960] V.R. 173 at 175-176.

I am of opinion that, in this respect at least, the learned judge's exercise of his discretion miscarried. I therefore agree that the appeal should be allowed and the orders proposed by the learned President made.

Having decided that the appellant has shown that he ought to be allowed to come in and defend the action we should not, in my opinion, impose any condition of the kind for which counsel for the respondent alternatively contended.

I agree with the judgments of both the President and Tadgell, J.A. I would add only this: It appears that the defence first delivered was not struck out either by direct orders or as result of any self-executing order. It was not argued and, therefore, I do not wish to express a concluded view as to whether the judgment here in question was entered regularly either under Order 21.02 or any other power of the Court.

The formal orders of the Court will be that the appeal is allowed with costs, and we will hear you gentlemen about costs.

Secondly, that the order made by the learned judge on 10 November 1997 to the effect that the appeal from Master Wheeler is dismissed be set aside and in lieu thereof: (a) that the appeal against the order of Master Wheeler is allowed, and (b) that the defendant Joseph Lau be permitted to serve and file an amended defence in the action by Wednesday 7 April.

We will order that the costs order made by his Honour on 10 November 1997 stand and we will order that the costs of the appeal be reserved for consideration of the judge at trial.

(2) Secondly, Lau alleged that he was not bound by, and had no liability under, the GIA because he had been induced to execute it by the false and deceitful representations made by Citic's manager, one Xin Wang, who had assured him that he could safely execute the documents because they imposed no personal liability upon Lau. Lau contended that he relied upon this deceitful conduct when he executed the GIA and was thus fundamentally mistaken as to the meaning of, and the obligations imposed by, the deed. On his behalf reference was made to Taylor v. Johnson [1983] HCA 5; (1983) 151 C.L.R., 422. It was Lau's contention that Wang had deliberately misled him by urging him to execute the documents which Wang had forwarded through his company's solicitors and by telling him that they were in the same form as the draft deeds which had previously been prepared on Lau's instructions and presented to Wang.

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Judgment (14 paragraphs)

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Cases Cited (2)