Plaintiff/Defendant by Counterclaim v First Defendant/Plaintiff by Counterclaim

1 This is an appeal from a determination made by the Court, constituted by a Judicial Registrar, in respect of an application for joinder and the amendment of pleadings.

2 The proceeding concerns a contract for the sale of land dated 3 April 2023 between the plaintiff, Ming Jiang, as purchaser, and the first defendant, as vendor. The property is a substantial building in Queen Street, Melbourne. The purchase price under the contract was $27.5 million, with settlement due on 2 April 2024. Ming Jiang paid a deposit of $5.5 million but, prior to settlement, served a notice of rescission dated 6 March 2024. The notice alleged a number of matters including that the vendor knowingly concealed material facts in relation to the condition of the building, the presence of hazardous material, the rental income of the building, and issues with elevators, air conditioning, and the like. Ming Jiang has made a number of claims against the vendor and, as part of his relief, seeks orders in the proceeding for the return of his deposit.

3 On 3 April 2024, the vendor served a notice of default and rescission. The vendor's position is that there was no knowing concealment of facts and that the process for the sale included the making available of an electronic data room to which Ming Jiang had access. The vendor has counterclaimed for damages, alleging that Ming Jiang has failed to pay the balance of the purchase price and complete the contract of sale.

4 Claims have also been made against the second defendant, the agent appointed to market and sell the property. The second defendant took no part in the appeal and advised the Court that it neither consented to nor opposed the appeal.

5 By summons filed on 7 May 2025, the vendor sought orders which would permit it to amend its counterclaim to include a claim pursuant to s 172 of the Property Law Act 1958 and to join Ming Jiang's mother, Rong Dai, as the second defendant by counterclaim in this proceeding. It does so after ascertaining through discovery that Ming Jiang sold a property in Madden Street, Balwyn North, to Rong Dai. The vendor says the Madden Street property was the only property owned by Ming Jiang in Victoria, that he sold it six days after he failed to settle his purchase of the Queen Street property, and that he sold it for $880,000 less than its market value. The vendor contends that the Madden Street property was alienated with the intent to defraud Ming Jiang's creditors within the meaning of s 172 of the Property Law Act 1958. As such the transfer of the Madden Street property should be declared void and set aside.

6 On 29 May 2025, Burgess JR dismissed the application for joinder and the amendment of pleadings. By notice of appeal filed 11 June 2025, the vendor seeks to appeal against that determination. The appeal is to be conducted by way of hearing de novo.[1]

7 The vendor relied on affidavits by Fabian Scaunich, made 5 March 2025, and Norman Samuel Fryde, made 5 May 2025. Ming Jiang relies on his affidavit made 24 March 2025 and the affidavits of Rong Dai made 24 March 2025, Kylie Trinh made 21 May 2025, and Simon Adrian Francis made 9 October 2025.

8 Other than in one respect, there was no dispute between the parties as to the applicable legal principles.

(a) pleadings are a means to ensure that the real issues of controversy are raised in a way that is procedurally fair to both plaintiff and defendant, allowing each to properly prepare and articulate their case, on clear notice of allegations and defences. On this basis, absent extraordinary circumstances, leave to amend will be granted;

(b) the fact that an amendment has no real prospect of success at trial will be a highly relevant factor. While the Court will not engage in an examination of the merits of the foreshadowed case, an amendment will not be allowed if it is futile because it is obviously bad in law or would be liable to be struck out due to defects as a pleading;

(c) the Court must engage with the CPA's provisions in balancing the competing interests of the parties and those of the administration of justice more generally; and

(d) other considerations include:

i. whether the amendment will cause substantial delay;

1. the extent of wasted costs to be incurred;

iii. whether the amendment will cause irreparable unfair prejudice;

1. case management concerns arising from the stage in the proceeding when the amendment is sought, including efficient use of the Court's time and whether inefficiencies may arise from vacation or adjournment of trials;

v. public confidence in the judicial system; and

1. the explanation given for seeking the amendment at the stage when it is sought.[2]

10 In respect of joinder under r 9.06(b)(ii) of the Supreme Court (General Civil Procedure) Rules 2025 (the 'Rules'), the elements are as follows:

(i) that there are two entities namely the person to be added as a party and a party to the proceedings;

(ii) between the two entities there may exist a question arising out of or relating to or connected with any claim in the proceeding;

(iii) it is just and convenient to determine that question between the proposed party and the other party as well as between the parties to the proceeding.[3]

(a) whether there would be common evidence, common questions of fact and law;

(b) the public interest and the need to avoid multiplicity of proceedings;

(c) unfairness or prejudice to any party, understood in the context of the court's powers to manage the proceeding so as to address or minimise any prejudicial consequences;

(d) delay is relevant but is not decisive and should be explained to enable a rational assessment of competing considerations;

(e) unless the claim against the proposed defendant is obviously bad in law or futile, the merits of the claim are not a decisive consideration. The court would not refuse to allow an amendment because it raised a claim that ought not to succeed, for this will be an issue at trial.[4]

12 In respect of joinder under r 9.06(b)(i) of the Rules, the test contains two alternatives, namely:

(a) persons who ought to have been joined as a party because their presence is required to enable the proceeding to continue; and

(b) persons whose presence before the Court is necessary as their presence will aid in achieving finality and avoiding a multiplicity of proceedings.[5]

13 A person is a necessary party where the Court is invited to make, or proposes to make, orders that will directly affect their rights or liabilities.[6]

14 In support of the application for amendment, the vendor submitted that there were no extraordinary circumstances standing in the way of joinder because:

(a) the vendor's proposed s 172 claim has a prima facie basis;

(b) the proposed amendment has been sought promptly after the vendor's solicitors identified underlying facts and then obtained expert evidence to ensure that there was a proper basis for the proposed claim;

(c) the proceeding has not yet been listed for trial and the amendment will not cause substantial delay, significant wasted costs or irreparable unfair prejudice; and

(d) there are no case management concerns and the amendment would not lessen public confidence in the judicial system.

15 In support of the application for joinder, the vendor submitted that if the amendment is allowed, it must follow that Rong Dai is joined pursuant to r 9.06(b)(i) of the Rules because she becomes a necessary party.

16 Further, the vendor submitted that Rong Dai ought to be joined pursuant to r 9.06(b)(ii) of the Rules because the vendor has a prima facie s 172 claim, connected to or related to its existing claim, which is just and convenient to be determined as part of this proceeding. In this regard the vendor relied on:

(a) the existence of common evidence;

(b) the risk of inconsistent findings should the claims be determined in separate proceedings;

(c) the public interest in avoiding a multiplicity of proceedings;

(d) the existing proceeding being at a relatively early stage; and

(e) the absence of unfairness or prejudice.

17 Ming Jiang submitted that the joinder and amendment application should be dismissed because:

(a) multiple layers of contingency make the s 172 claim speculative and unlikely to ever practically arise, exposing Ming Jiang as plaintiff to significant unnecessary delay and costs;

(b) the s 172 claim raises substantial new factual and legal issues that will cause delay by adding for simultaneous resolution a claim that should only be tried if it arises;

(c) the additional claim would require hard swearing evidence through interpreters about whether Ming Jiang intended to defraud the vendor by transferring the Madden Street property to Rong Dai, and complex issues about whether the disposition caused any prejudice given the Ming Jiang's lack of equity in the property;

(d) Rong Dai will require an interpreter, which alone would likely prolong the trial by multiple days;

(e) having regard to the lack of utility in the claim (as Ming Jiang has no equity in the Madden Street property), the amendment appears to be an unnecessary step designed to intimidate Ming Jiang and Rong Dai.

Court's approach to determining the application

18 The one area of dispute in respect of the principles of law related to the order in which the applications should be determined and whether the applications should be granted absent extraordinary circumstances.

19 The vendor submitted that the Court should first determine the amendment application with reference to the principle that 'absent extraordinary circumstances, leave to amend will be granted'.[7] The Court should then turn to the question of joinder. But, if leave to amend were granted, plainly, the joinder of Rong Dai becomes necessary.

20 Ming Jiang submitted that the authorities referring to extraordinary circumstances were in the context of amendment generally, whereas here the more important consideration was the question of joinder. In that sense, both applications should be considered at the same time with the proper focus being whether the joinder and consequential amendment was just and convenient.

21 I accept the submission of Ming Jiang that it is not appropriate to separately consider the applications for joinder and amendment. I am of the opinion that the applications are intertwined. The practical reality is that if the amendment application were granted, joinder would need to sensibly follow. Accordingly, as part of the Court's consideration of the amendment application, the Court is entitled to consider, not just the competing interests of the existing parties and the administration of justice more generally, but the flow on effect and any competing interests of Rong Dai.

22 The reference in the authorities to the need for extraordinary circumstances is in the context of ensuring that the real issues of controversy between existing parties are clearly articulated and determined in a procedurally fair way. Where an amendment to pleadings effectively necessitates the joinder of an additional party, who would not otherwise be a necessary party, additional considerations may influence the outcome of the application.

The power to grant leave to a party to amend a pleading is a discretionary power. The nature and importance of the proposed amendments must be considered. This consideration must be weighed against case management considerations such as cost, delay and the potential for unfair prejudice to other parties to the proceeding, the court and other litigants that might arise if the proposed amendment is allowed.[8]

Whether leave for amendment and joinder should be granted

24 I am satisfied that a factor in favour of both amendment and joinder is that the vendor has a prima facie s 172 claim that has some connection to the vendor's counterclaim. The Madden Street property was transferred to Rong Dai for an amount significantly less than the valuation provided by CBRE Residential Valuations Pty Ltd[9] at a time when the vendor was, at least, an impending future creditor of Ming Jiang.

25 I am also satisfied that a number of factors favour both amendment and joinder. In particular, there has not been any relevant delay in the bringing of those applications and the proceeding has not yet reached a stage where joinder and amendment would be inappropriate. Further, it is likely that there will be some common evidence between the existing claims and the proposed s 172 claim. It is likely that Rong Dai will be a relevant witness for both. In this regard I bear in mind the timing of the transfer of the Madden Street property and the proposed finance arrangements for the purchase of the Queen Street property. Those proposed finance arrangements included reference to a mortgage over the Madden Street property and the provision of a personal guarantee by Rong Dai. This commonality points in favour of granting the application for amendment and joinder.

26 It is difficult at this point to determine the likelihood of inconsistent findings. The possibility cannot be ruled out, but I am not persuaded that the risk is sufficiently significant to influence the outcome of the application.

27 Whether the applications are simply an intimidatory tactic is tied to the question of utility. The question of utility, in particular whether Ming Jiang ever had any equity in the Madden Street property as a result of a November 2021 loan agreement and mortgage in favour of Rong Dai, is not something that can be determined in this application. It is certainly not the case that the issue is clear cut, noting competing arguments and potential evidence on this issue. In those circumstances I do not accept Ming Jiang's submission that 'having regard to the lack of utility in the claim, the amendment appears to be an unnecessary step designed to intimidate'.

28 As to the considerations that weigh against the Court permitting amendment and joinder, of significance is the risk of adding cost, expense and court resources to a proceeding in respect of a claim that may never come to fruition.

29 The decision of Rysze International Pty Ltd v Guan[10] is instructive in that regard, where Attiwill J determined that a Supreme Court proceeding in which s 172 relief was sought should be stayed until the resolution or determination of claims brought in a VCAT proceeding. Attiwill J stated that:

In the event that Rysze's claims against Mr Guan in the VCAT proceedings are unsuccessful there will be no utility in the proceeding in this Court.

...

Significant time and legal costs will be incurred by the parties, including the defendants, in the proceeding in this Court in continuing to prepare for and appear at a trial. Those costs may be wasted if Rysze's claims against Mr Guan in the VCAT proceeding are unsuccessful.[11]

30 It is difficult to determine how much longer a court hearing would be if the s 172 claim were added. Without amendment and joinder the parties estimate the duration of any trial as being around 10 days.

31 Relying on the principles that are applicable to a s 172 claim as set out in Argyle Building Services Pty Ltd v Franek,[12] the vendor submitted that this is a simple claim. It only needs to be shown that Ming Jiang had an intention to hinder or delay creditors. There is no requirement of malice against a particular creditor and it is a misapprehension to suggest that the introduction of the s 172 claim will turn the case into a hard swearing fraud case. As such, the s 172 claim is likely to only add hours to the case. It will simply involve some additional evidence and cross examination of Ming Jiang and Rong Dai together with some valuation evidence.

32 Ming Jiang submitted that the s 172 claim was a complicated matter involving a property transaction between a mother and son, requiring the examination of the affairs of a very wealthy family. In the circumstances it could add a week to the trial. This is particularly so given Rong Dai does not speak English and would require an interpreter, not just when giving evidence, but to assist her to appear at the trial.

33 The additional length of the trial is probably somewhere between the two estimates. But, perhaps of more relevance is that the existing proceeding already has a number of layers of complexity. There are multiple parties and multiple allegations. There are contested issues of fact, such as what occurred at meetings. The proceeding will involve a consideration of substantive questions of law, such as whether the interactions of the provisions of the Sale of Land Act 1958 and the Australian Consumer Law and Fair Trading Act 2012 create a private right of action_._

34 The High Court in Aon Risk Services Australia Ltd v Australian National University noted that it is relevant to consider whether any unnecessary delay arising from amendment would create prejudice unable to be repaired by an order for costs.[13] In Namberry Craft Pty Ltd v Watson, Vickery J identified that the 'inconvenience and stress caused to individuals' may be irreparable, irrespective of any award for costs.[14] If Rong Dai were added as a party, she would be added to a proceeding in which, for the most part, she has no direct interest. This would inevitably involve stress, inconvenience and costs, leading to the sort of irreparable prejudice contemplated by these decisions.

35 Balancing the competing considerations, I conclude that both the application for amendment and the application for joinder should be refused.

36 To permit the application for amendment would be to permit a premature claim to proceed, resulting in utilisation of court time and the expenditure of costs which may turn out not to have been necessary.

37 To permit the application for amendment and consequential joinder would necessitate Rong Dai being added to an already complicated proceeding, thereby resulting in significant cost to her and irreparable prejudice.

38 To permit the s 172 claim to be determined in this proceeding is not just and convenient.

39 The appeal will be dismissed. I will hear the parties on the appropriate form of orders and as to costs.

[1] Supreme Court General (Civil Procedure) Rules 2025, r 84.05(4).

[2] Australian and Pacific Investment Corporation Pty Ltd v Jeshing Property Management Pty Ltd (No 3) [2025] VSC 358, [18] _(_Cosgrave J), citing Pentridge Village Pty Ltd (in liq) v Capital Finance Australia Ltd (No 2) [2020] VSC 284 (Connock J) [13]-[19] (citations omitted).

[3] Anjin No 13 Pty Ltd v Allianz Australia Insurance Ltd [2009] VSC 371; (2009) 26 VR 148, 153 [27] (Vickery J), quoting Tatterson v Wirtanen (as Executrix of the Estate of Wirtanen) [1998] VSC 88, [30] (Gillard J).

[4] Lee v Korean Society of Victoria [2015] VSC 262, [10] (Dixon J), citing Main Property Group Pty Ltd & Ors v Pelligra & Sons Pty Ltd & Ors [2007] VSC 43, [20]-[28] (Bell J).

[5] S Pirrie Equities Pty Ltd v Venetian Media Group Pty Ltd (2023) 73 VR 521, 543 [80] (Elliott J).

[6] Chickabo Pty Ltd v Zphere Pty Ltd (No 2) [2019] VSC 580, [44],[48] (Sifris J).

[7] Pentridge Village Pty Ltd (in liq) v Capital Finance Australia Ltd (No 2) [2020] VSC 284, [15] (Connock J), quoting ABL Nominees Pty Ltd v Mackenzie (No 2) [2014] VSC 529, [17]-[22] (Derham AsJ).

[8] S Pirrie Equities Pty Ltd v Venetian Media Group Pty Ltd (2023) 73 VR 521, 531 [36] (Elliott J) (citations omitted).

[9] Expert Report of Julian Valmorbida dated 4 February 2025, relied on by the vendor.

[10] [2021] VSC 706.

[11] Rysze International Pty Ltd v Guan [2021] VSC 706, [78], [87] (Attiwill J).

[12] [2020] VSCA 196, [63] (Kyrou, McLeish and Niall JJA).

[13] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, 182 [5].

[14] Namberry Craft Pty Ltd v Watson [2011] VSC 136, [38] (Vickery J).