Li v Hanson Property Developments Pty Ltd

The test

1. UCPR r 36.16(2)(b) provides that the Court may 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 hearing.
2. There is no dispute that the orders made by Lindsay J were made in the absence of Hanson Property and Mr Lau.
3. However, as Barrett JA observed in Northey v Bega Valley Shire Council [2012] NSWCA 28 at [13]: "But that, of itself, is insufficient to justify the setting aside of the order. There must be some added factor that makes it unjust for the order to stand."

The issues

1. Mr Chi contends that the defendants have at all relevant times been in breach of orders made by Bergin CJ in Eq on 2 July 2014 (very shortly after these proceedings were commenced), that they are thereby in contempt of court and cannot be heard to bring the application to set aside the 8 August 2016 orders (or at all).
2. In an endeavour to meet that submission, on 17 November 2016, the defendants filed a notice of motion seeking to vary the 2 July 2014 orders in the manner I discuss later in these reasons.
3. Mr Chi contends that the defendants cannot be heard on that application either; at least not until they purge their contempt.
4. In any event, Mr Chi contends that the defendants have not made out a basis to set aside the 8 August 2016 orders, although he does accept that the defendants have an arguable defence to his claim.
5. For their part, the defendants contend that the 8 August 2016 orders should be set aside by reason of Mr Chi's failure to disclose material matters to Lindsay J on 8 August 2016.

The 2 July 2014 order

1. Relevantly, the 2 July 2014 orders were in the following terms: "2. By consent until further order of the Court one-third of the net proceeds payable to [Hanson Property] from the sale of any of the units at [the Queanbeyan property] (net proceeds being the gross proceeds of sale less any amounts payable by [Hanson Property] to [Hanson Property's] secured creditor(s) and costs associated with the sale including agents fees, advertising & legal fees) up to a sum of $300,000 be deposited into an interest bearing account in the joint names of the solicitors for [Mr Chi] and the Defendant [sic] with no withdrawal to be made from that account without an order from the Court or by agreement of the parties. 3. On or before 21 July 2014 the Defendants' solicitors are to notify [Mr Chi's] solicitors of all units at the property (as defined in prayer 1 of the Amended Summons) which have been sold by exchange of contracts and the sale price of each of those units. 4. The Defendants' solicitors are to notify [Mr Chi's] solicitors when each of the sales of the units have been completed within 7 days of that completion."
2. There was a debate before me as to whether Hanson Property complied with order 2.
3. There is no dispute that the defendants did comply with order 3 but did not comply with order 4.

The proper construction of the 2 July 2014 order

1. There was no dispute before me that order 2 did not prevent Hanson Property from further encumbering any one of the units in the development.
2. There was debate as to the effect of the reference "secured creditors" in the order.
3. In my opinion that expression refers to a creditor having security over the unit in question. The effect of the order is that Hanson Property was, upon the sale of any unit, obliged to pay one third of the "net proceeds" into an interest bearing account. The reference to "secured creditors" is included in the parenthetical definition of "net proceeds". It thus must refer to a creditor whose security entitles it, in terms, to be paid funds from those net proceeds, and thus to a creditor with security directed, in terms, to the unit in question.

Did the defendants act in breach of the 2 July 2014 order?

1. Mr Chi's contention that Hanson Property acted in breach of the 2 July 2014 orders arises from the agreed fact that on the occasions when six units in the development were sold, the proceeds were paid otherwise than to a joint account of the kind contemplated by the order.

Project Coordination (Australia) Pty Ltd

1. The first of those occasions was on 25 February 2015 when, Mr Chi alleges, unit 26 was sold for $425,000 and the net proceeds of sale were paid to the builder of the project, Project Coordination (Australia) Pty Ltd ("PCA").
2. However, it is not clear that this is what happened.
3. By a letter dated 15 October 2012, the solicitor then acting for Hanson Property, wrote to PCA confirming an agreement in the following terms: "1. Parties agree that the total fixed cost of the contract is $10,823,700 which is $450,000 more than the initial agreed amount of $10,373,700.50 indicated in the letter of offer of [PCA] dated 7 May 2012. 2. To address the shortfall, the parties agreed that [Hanson Property] ("the Owner") will issue a contract for sale as security and hand over an executed transfer for unit 26 for the value of $425,000 in favour of [PCA] ("Contractor") and will accept a variation of $25,000 on the condition set out below. 3. If the above total cost of the contract is not paid by the date the Certificate of Occupancy is issued, the Contractor will issue a variation in the amount of $25,000 and will proceed to complete transfer of unit 26 without requiring any payment to the Owner."
4. The effect of that agreement was that to address the "shortfall" referred to in par 1, Hanson Property (in par 2) agreed to issue (evidently forthwith) a contract for sale of unit 26 "as security" and to give PCA an "executed transfer" in respect of that unit.
5. The effect of par 3 is that Hanson Property agreed simply to transfer unit 26 to PCA "without requiring any payment" in the circumstances there outlined.
6. Contrary to the submission advanced by Mr Katekar, who appeared with Mr Gee for Mr Chi, I do not see what is contained in this letter as being an "agreement to agree". I read the letter as containing a binding agreement between PCA and Hanson Property whereby PCA agreed to proceed as builder in consideration of being provided with unit 26 as part payment ($425,000) of the construction cost.
7. Neither the contract for sale, or the transfer in respect of unit 26 was in evidence before me. A schedule prepared by Hanson Property's solicitor suggests that the "date of exchange" in respect of unit 26 was 31 October 2012 (several weeks after the date of the letter).
8. What appears to have happened is that, on 25 February 2015, Hanson Property simply transferred unit 26 to PCA, seemingly in compliance with its obligations under par 3 of the 15 October 2012 letter.
9. In those circumstances, my conclusion, based upon the incomplete evidence before me, is that there was no sale of unit 26 to PCA in the conventional sense, and thus no "net proceeds" that were required to be dealt with in accordance with the 2 July 2014 order.

The remaining units

1. In relation to the remaining five units, it is common ground that: 1. unit 23 was sold on 10 July 2015 and from the proceeds $200,000 was paid to Mr Zhang and $68,795.15 was paid to Hanson Property; 2. unit 8 was sold on 25 August 2015 and from the proceeds $48,000 was paid to Mr Zhang and $35,600.20 was paid to Hanson Property; 3. unit 29 was sold on 26 October 2015 and from the proceeds $50,000 was paid to Mr Zhang and $13,009.13 was paid to Hanson Property; 4. unit 20 was sold on 30 October 2015 and from the proceeds $313,958.39 was paid to Mr Zhang; and 5. unit 40 was sold on 5 November 2015 and from the proceeds $50,000 was paid to Mr Zhang and $17,257.98 was paid to Hanson Property.
2. In the case of each of these units, no part of the proceeds of sale was paid into a joint account, as envisaged by order 2 made on 2 July 2014. Rather the proceeds of sale were paid either to Mr Zhang or to Hanson Property.
3. It is common ground that the defendants' solicitors did not notify Mr Chi's solicitors of the sale of any of these units and that the defendants were thereby in breach of order 4 made on 2 July 2014.
4. In that regard Mr Lau simply said: "Unfortunately, no notification [of the sale of units] was provided to the plaintiffs' solicitors after [27 April 2015], due to my failure to inform my solicitors of those transactions."

Payment of proceeds of sale to Mr Zhang

1. According to Mr Lau, Mr Zhang had invested some $1.5 million into the project.
2. On 27 April 2015, Mr Zhang lodged a caveat on the title of a number of units in the development.
3. Mr Lau said that, in order to persuade Mr Zhang to remove the caveats, he agreed to "give" Mr Zhang the certificates of title to units 20, 21 and 45. In one of his affidavits he said that this represented "part payment" of Mr Zhang's investment of $1.5 million.
4. However, Mr Lau did not give Mr Zhang a transfer in respect of those units and said, in cross-examination, that this was because "I want to be in control" and "want to make sure we sell them at the right price".
5. In cross-examination Mr Lau gave this evidence: "Q. In 2015, you reached an agreement with Mr Zhang to pay him back his $1.5 million? A. Yes. Q. And you gave him three titles. A. Yes. Q. For security for that obligation to pay it back? A. Yes."
6. There was debate before me as to whether the proper characterisation of these events was that Hanson Property, through Mr Lau, granted Mr Zhang an equitable charge over those units.
7. In Ellis v Marshall [2006] NSWSC 448 at [47] Campbell J (as his Honour then was) said: "The deposit of title documents, without more, gives rise to an inference that the deposit was intended by the parties to operate as creating an equitable charge or mortgage over the property whose title document is deposited: Bank of New South Wales v O'Connor (1889) 14 App Cas 273 at 282; Shaw v Foster (1872) 5 Eng & Ir App 321 at 339-340, per Lord Cairns; Westpac Banking Corporation v Cronin (1990) 6 BPR [13,105]; Re Wallis & Simmonds (Builders) Limited [1974] 1 All ER 561."
8. His Honour went on to say at [48]: "That inference is, as I have said, one which arises when there is a mere deposit of title deeds without more. If the Court is satisfied that there has been an actual agreement about the basis on which those title documents are deposited, the inference ceases to operate: Westpac Banking Corporation v Cronin…at 13,110."
9. In my opinion, notwithstanding Mr Lau's statement that the delivery of the certificates of title of units 20, 21 and 45 to Mr Zhang was as "part payment" of the amount said to be due to Mr Zhang, the proper characterisation of what happened was that Mr Lau and Hanson Property, intended to give Mr Zhang a charge over the title deeds. Hence, Mr Lau did not deliver to Mr Zhang an executed transfer of the units. That suggests that there was no "actual agreement" of the kind contemplated by Campbell J (see [45] above) that Mr Zhang held the title deeds otherwise than by way of security. The true position was, as Mr Katekar put to Mr Lau, the deposit on the title deeds was "for security" (see [42] above).
10. How it was that Mr Zhang was able to effect the sale of unit 20 without having a transfer from Hanson Property was not explained in the evidence.
11. Mr Lau gave inconsistent evidence as to when he reached this agreement with Mr Zhang. In one affidavit he said it occurred on 3 July 2015 and in another affidavit he said it was on 15 July 2015.
12. The difference does not appear to be material as the only sale that occurred between those two dates was of unit 23 (the title of which was not deposited with Mr Zhang).
13. Further, assuming Mr Zhang has an equitable charge of units 20, 21 and 45, this does not explain how it was that he was paid funds from the proceeds of units 8, 23, 29 and 40 (the certificates of titles of which were not deposited with Mr Zhang).
14. Order 2 made on 2 July 2014 required that one third of the net proceeds of sale of those units be paid into a joint account. The payments to Mr Zhang from the proceeds of sale of those units thus constituted a breach of the order.

Payment of proceeds of sale to Hanson Property

1. As I have set out above, Hanson Property paid itself part of the proceeds of sale of units 8, 23, 29 and 40.
2. Evidently, Hanson Property passed these funds onto another company associated with Mr Lau, Hanson Australasia Pty Ltd.
3. Several years earlier, on 13 May 2013, Hanson Australasia deposited $250,000 into Hanson Property's account with the National Australia Bank, extinguishing Hanson Property's indebtedness to the NAB. The NAB was at that time the secured lender of the project. The deposit facilitated the discharge by NAB of its mortgage over the Queanbeyan property and the refinancing of the project with another secured creditor.
4. In those circumstances, it was contended on behalf of the defendants that they were entitled to the benefit of the principle referred to by the Privy Council in Ghana Commercial Bank v Chandiram [1960] AC 732 at 745 as follows: "It is not open to doubt that where a third party pays off a mortgage he is presumed, unless the contrary appears, to intend that the mortgage shall be kept alive for his own benefit…".
5. I see a number of difficulties with the application of that principle to the facts of this case.
6. First, the evidence shows that Hanson Australasia lent Hanson Property the $250,000 in order that Hanson Property could "pay out the NAB loan" and procure the discharge of the mortgage that the NAB then had over the project to facilitate registration of a mortgage from the incoming lender. I cannot see how it could follow that the parties intended that the NAB mortgage be "kept alive" for the benefit of Hanson Australasia. The whole point of the exercise was to cause the NAB mortgage to be discharged and substituted by a mortgage in favour of the incoming lender.
7. Second, and assuming that somehow Hanson Australasia did obtain security over units in the project, the fact is that the net proceeds of the units in question were not paid to it, but rather to Hanson Property.
8. Accordingly, the disposition of the proceeds of these units to Hanson Property, rather than (as to one third) into a joint account, also constituted a breach of the 2 July 2014 orders.

Conclusion as to breach

1. The 2 July 2014 orders required that Hanson Property pay one third of the net proceeds of sale of units in the project to a joint account.
2. My conclusion is that because Mr Zhang was not a secured creditor of any of units 8, 23, 29 or 40, and because Hanson Australasia was not a secured creditor of any units at all, the application by Hanson Property of the proceeds of sale of units 8, 23, 29 and 40 as I have set out above was a breach of the 2 July 2014 orders.
3. In any event, by reason of Hanson Property's failure to comply with order 4 of 2 July 2014 (which required its solicitors to notify the plaintiffs' solicitors of the dates of sale of the units) Hanson Property was in breach of the 2 July 2014 orders and is thus, as Mr Chi has contended, in contempt.

Was breach contumelious? Mr Lau's state of mind

1. Mr Lau's position was that he misunderstood the effect of the 2 July 2014 orders and that, although he understood that order 2 required him to set aside $300,000 from the sale of the units in the project as security for Mr Chi's claims in these proceedings (especially his claim to a one third profit interest in the development), he thought that the $300,000 could be set aside at any time during the development.
2. Mr Lau said he could not recall exactly how he came to have that understanding of the order but said that he had understood since August 2012, as a result of a conversation he had with Mr Chi: "…that Hanson Property is liable to pay Mr Chi $300,000 at the conclusion of the Queanbeyan Property project (that is, after all units have been sold and all equity in the Queanbeyan property has been realised)".
3. The conversation with Mr Chi in August 2012 to which Mr Lau referred was one in which Mr Lau claims that Mr Chi demanded that Mr Lau buy him out of the project and said "I won't take less than $380,000".
4. Mr Lau claims that he replied by saying: "Okay, Hanson can pay that. But I can't pay you $380,000 now. Hanson hasn't got any money at the moment to spare. In a month or so, when I've sorted things out with the council, Hanson can give you $80,000, but the remaining $300,000 will need to be paid by Hanson at the end of the Project, when we have sold all the units". and that Mr Chi replied: "Okay fine. I'll take $80,000 now and $300,000 at the end, before you get any profit. But I'm not putting any more money into the Project. I'm out."
5. Mr Lau claims that, consistently with this agreement, he gave Mr Chi a cheque for $80,000 which Mr Chi cashed on 19 September 2012.
6. Mr Lau stated that he had not intentionally disregarded the 2 July 2014 orders and: "I apologise most sincerely to the Court and to Mr Chi for any and all payments that I have caused Hanson Property to make in breach of Order 2 [of 2 July 2014]".
7. Mr Lau's stated misunderstanding of the effect of order 2 made on 2 July 2014 appears to be reflected in his account of his August 2014 conversation with Mr Chi which account was given in an affidavit sworn by Mr Lau on 28 July 2015, long before any controversy arose as to Hanson Property's compliance with the 2 July 2014 orders.
8. For that reason I am prepared to accept his explanation for Hanson Property's failure to comply with the order.
9. Now, by the notice of motion of 17 November 2016 to which I referred at [14] above, Hanson Property and Mr Lau seek to vary the 2 July 2014 orders so as, in effect, to put in place an alternative means to secure to Mr Chi the $300,000 referred to in the 2 July 2014 orders.
10. Hanson Australasia owns a property in Macgregor in the Australian Capital Territory.
11. The Macgregor property has been recently valued at $475,000 and is currently encumbered to the NAB in a sum in the order of $60,000.
12. By the notice of motion of 17 November 2016, Hanson Property and Mr Lau seek an order that the 2 July 2014 orders be varied so as to apply only to sales completed after the date of this order.
13. By the notice of motion, Mr Lau and Hanson Property also propose that the 2 July 2014 orders be varied so that the Macgregor property be charged in favour of Mr Chi in the sum of $300,000 and that upon $300,000 being paid into a joint account of the kind contemplated by the 2 July 2014 orders, those orders be vacated.
14. Mr Lau has given instructions to a real estate agent in Queanbeyan that the Macgregor property be sold.

Can the defendants be heard on either their application to vary the 2 July 2014 order or to set aside the 8 August 2016 orders?

1. In Chamberlain Group Pty Ltd v Kids for Life Academy Pty Ltd [2015] NSWCA 241, Emmett and Leeming JJA and Sackville AJA said at [17]: "Failure to comply with orders of the court amounts to contempt of court. There is a general principle that, until any contempt is purged, a party guilty of contempt should not be heard on any application for relief beyond an application to set aside or vary an order (or undertaking to the court) in respect of which he, she or it is in contempt or an appeal designed to set aside or vary that order or undertaking: Young v Jackman (1986) 7 NSWLR 97 at 101; for a helpful discussion of the history of this principle, and relevant authorities, see Stokes (by a tutor) v McCourt [2013] NSWSC 1014 at [18]-[52]."
2. Mr Katekar submitted that the only basis upon which a party in contempt could be heard on an application to set aside or vary the order in question was if that application was made on the basis of an "irregularity" in the order in question.
3. I do not agree.
4. In support of his submission, Mr Katekar referred to observations made by Hutley JA in Permewan Wright Consolidated Pty Ltd v Attorney-General (NSW) (1978) 35 NSWLR 365 at 368.
5. However, as I read Hutley JA's comments in Permewan, his Honour was referring to one exception to the general rule that a party in contempt cannot be heard and was not meaning to state exhaustively the circumstances in which a party in contempt may be heard.
6. In Chamberlain the Court of Appeal cited with approval the discussion of authority by Lindsay J in Stokes v McCourt.
7. In that case, Lindsay J did not doubt that a party could be heard on a motion to set aside and vacate an order of which he or she was in contempt.
8. His Honour cited the observations of Romer LJ (with whom Somervell LJ agreed) in Hadkinson v Hadkinson [1952] P 285; 2 All ER 567 at 288-290: "Is this case, then, an exception from the general rule which would debar the mother, as a person in contempt, from being heard by the courts whose order she has disobeyed? One of such exceptions is that a person can apply for the purpose of purging his contempt and another is that he can appeal with a view to setting aside the order upon which his alleged contempt is founded; neither of those exceptions is relevant to the present case. A person against whom contempt is alleged will also, of course, be heard in support of a submission that, having regard to the true meaning and intendment of the order which he is said to have disobeyed, his actions did not constitute a breach of it; or that, having regard to all the circumstances, he ought not to be treated as being in contempt."
9. Lindsay J also said at [45]: "[W]here objection is taken to a contemnor being heard, a routine response by the contemnor is to move the court for relief against the order or undertaking sought by the objection to be enforced. This too engages a need in the court to focus attention on questions of case management. Is the contemnor's motion to be heard first? Can it be, should it be, must it be, heard in conjunction with other process before the court?"
10. In light of those authorities, I have no doubt that I may entertain Hanson Property's application to vary the 2 July 2014 orders, notwithstanding that it is currently in breach of them.
11. I also agree with Lindsay J's observations at [30] of Stokes v McCourt that: "Whether the general principle is best stated as 'a rule subject to exceptions' or as a 'discretionary rule' is the subject of debate in New South Wales (Kayserian Nominees (No 1) Pty Ltd v JR Garner Pty Ltd [2008] NSW 1011 at [3]-[4]), a debate which must now be viewed in the context of the case management provisions of ss 56-64 of the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW)."
12. Indeed, were it open to me to do so, I would adopt the approach favoured by the Queensland Court of Appeal in Hwang v Lawrie [2013] QCA 204, that there is no absolute rule that a court will not hear a party in contempt and that, instead, the court should treat the question of whether the party in contempt will be heard as one of discretion, exercised in accordance with where the interest of justice lie (per Holmes JA (with whom Fraser JA and Mullins J agreed) at [22] and [24]). Although this case was decided in 2013, it does not appear to have been drawn to the attention of Lindsay J in Stokes v McCourt or the Court of Appeal in Chamberlain.
13. In any event, I take the Court of Appeal in Chamberlain to hold that a party in the position of Hanson Property may be heard on an application to set aside an order of which it is in breach.
14. In circumstances where an explanation (which I accept) has been offered for the breach, an apology offered to the Court and to Mr Chi, and a proposal made which, for all practical purposes will place Mr Chi in a position similar to that which he would have obtained had the 2 July 2014 orders been complied with, I am prepared to make orders to the effect of those sought in the defendant's notice of motion of 17 November 2016.
15. That clears the way for me to hear the substance of the application before me, namely whether the orders made by Lindsay J on 8 August 2016 should be set aside.

Should the 8 August 2016 declarations and orders be set aside?

1. As I have mentioned at [6], the hearing date of 8 August 2016 was set almost six months earlier, on 22 February 2016.
2. Mr Lau was well aware of the hearing date.
3. Now, despite not appearing at the hearing, Mr Lau and Hanson Property wish to be let in to defend.
4. In their favour are the following matters.
5. First, Mr Chi accepts that Mr Lau and Hanson Property have an arguable defence. It would be a strong thing to shut out a defendant with an arguable defence.
6. Second, this application was made promptly. The notice of motion to set aside the 8 August 2016 orders was made only two days later, on 10 August 2016 (the day Mr Lau returned to Australia from China).
7. Third, Mr Lau has made an unconditional offer that, if the 8 August 2016 orders are set aside, he will pay, on an indemnity basis, and immediately, Mr Chi's costs thrown away by the making of such an order including the costs of the defendants' notice of motion of 10 August 2016.
8. However, I must also consider Mr Lau's explanation for not attending the hearing, and, assuming such explanation be accepted, his evidence as to what he would have done had he been able to attend.

Mr Lau's explanation

1. Mr Lau said in cross-examination that between February and August 2016 he was under "financial stress".
2. One consequence of that was that, evidently, he was not able to place his solicitor, Mr David, in funds, in anticipation of the 8 August 2016 hearing.
3. On 11 July 2016, Mr David filed a Notice of Intention of Ceasing to Act which notified Mr Lau that Mr David would file a Notice of Ceasing to Act 28 days later.
4. Nonetheless, on 20 July 2016 Mr Lau travelled to China to undergo what he described in his affidavit of 10 August 2016 as a "dental procedure to replace 11 teeth, which were removed some 18 months ago as a result of decay caused by diabetes and gout". Mr Lau said that he had a "friend in Tangshan City with a dental practice specialising in the type of procedure necessary to implant false teeth". Mr Lau said that the cost of such treatment in China was considerably less than in Australia.
5. At the time Mr Lau departed from Australia, his original itinerary had him returning to Australia on 3 August 2016 (five days before the scheduled hearing on 8 August 2016).
6. Mr Lau said the dental operation occurred between 21 and 23 July 2016 in Tangshan and that on 23 July 2016 he left Tangshan and travelled to Guangzhou, via Beijing.
7. Mr Lau said that on 26 July 2016, after a few days in Guangzhou, he became sick with an elevated temperature and fever and was admitted to hospital. Mr Lau said he was advised to stay in hospital until his condition improved.
8. Mr Lau has produced a "Diagnosis Certificate" from Zhongshan Dongsheng Hospital which makes no mention of elevated temperature or fever but refers rather to a "preliminary diagnosis" of "acute gastroenteritis".
9. The certificate does not record that Mr Lau was admitted to hospital but says, instead, that "the patient receives treatment in the out-patient department, and is suggested to have a rest for four days".
10. Mr Lau said that on 1 August 2016 he was discharged from hospital but that, at that time, a tropical storm, which later transformed into Typhoon Nida, struck the South China Sea and impeded air travel from China.
11. Mr Lau said that, on 3 August 2016 (the day he was originally due to return to Australia) he again succumbed to illness and suffered from coughing and vomiting and had to again attend the Zhongshan Dongsheng Hospital.
12. Mr Lau has produced a further certificate from the hospital which, again does not confirm the symptoms to which Mr Lau deposed but said, rather, that Mr Lau suffered from "acute periodontitis" and that "the patient receives follow-up treatment in the Department of Stomatology" between 3 and 9 August 2016.
13. Mr Lau said that, on 9 August 2016, he travelled by ferry from China to Hong Kong and, that day boarded a night flight to Sydney.
14. Further, although the medical certificates to which I have referred are dated 26 July 2016 and 3 August 2016, they bear consecutive reference numbers. Mr Katekar submitted that that suggested that they were not prepared contemporaneously, and were back dated. That may be so but that is consistent with Mr Lau's evidence that he arranged to obtain the certificates from China, after his return to Australia on 10 August 2016, and with the hospital producing the certificates at the same time, albeit after the event.
15. In these circumstances, and despite the fact that documents that Mr Lau has produced do not entirely corroborate his account of what occurred while he was in China, I am satisfied that his delayed return to Australia was to some extent a result of some kind of ill health.
16. The fact remains that Mr Lau went to China shortly after receiving from his solicitor a Notice of Intention of Ceasing to Act, with the then avowed intention of returning to Australia only a short number of business days before the scheduled hearing, and in circumstances where Mr Lau was without legal representation.
17. That suggests, strongly, that Mr Lau had no intention of participating in and defending the hearing on 2016.
18. That is confirmed by Mr Lau's evidence before me that, had he managed to get back to Australia in time for the 8 August 2016 hearing, he would have done no more than seek to have the proceedings adjourned.
19. When asked in re-examination what he would have done had such an application for adjournment been refused he simply said "I have to get some funding and then get you guys back" and "we just have to do our best".
20. It appears that the only resources available to Mr Lau with which he could try to "do our best" was his next door neighbour, a retired librarian who "has been helping me every now and then with some advices" and who, Mr Lau said, would have been available to speak on his behalf in court.
21. In these circumstances my conclusion is that Mr Lau simply closed his eyes to the reality of the forthcoming hearing. He did not, and perhaps could not place his solicitor in funds. His solicitor had informed him he proposed to cease to act. Mr Lau decided to travel to China for dental work and planned to return only days before the hearing and to do no more than seek to have the hearing adjourned.
22. These are factors which have caused me to hesitate to make the orders sought in the 10 August 2016 notice of motion.
23. However, as Mr Pritchard SC and Mr Macauley have submitted on behalf of Mr Lau and Hanson Property, the prejudice that will be caused to the defendants if the 8 August 2016 orders are not set aside outweighs to a considerable degree the prejudice that would be caused to Mr Chi if the orders are set aside; particularly bearing in mind the concession, which has been very properly made on behalf of Mr Chi by Mr Katekar, that Mr Lau and Hanson Property have an arguable defence; and in light of the unconditional offer that Mr Lau has made (see [98] above) concerning costs.
24. In those circumstances, notwithstanding the reservations I have about the explanation offered by Mr Lau for not turning up before Lindsay J on 8 August 2016, I have concluded that the justice of the case requires that I accede to the defendants' application.
25. In those circumstances it is not necessary for me to deal with the defendants' contentions as to the alleged non-disclosure before Lindsay J.

Conclusion

1. I propose to make orders to the effect of those set forth in pars 1, 2, 3, 5 and 7 of the defendants' notice of motion of 17 November 2016.
2. I propose to make an order in accordance with par 1 of the defendants' notice of motion of 10 August 2016.
3. I propose to make a costs order to the effect of the offer that has been made on behalf of Mr Lau and is set out at [98] above.
4. I propose to give Mr Chi the option of having such costs assessed and payable forthwith or having them specified by me as a gross sum pursuant to s 98(4) of the Civil Procedure Act. If the latter course is to be adopted, a procedure will have to be agreed whereby the defendants are given an opportunity to make submissions in relation to the figure proposed on behalf of Mr Chi as a specified gross sum, and the basis for it.
5. I invite the parties to confer and agree on the orders which must now be made to dispose of the motions before me and to progress the matter to a final hearing.

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: 20 December 2016