Plaintiff v YAZHUO PAN

1. The defendants have filed and rely upon the following materials:

(a) defence filed 24 January 2024;

(b) affidavits of Mr Pan affirmed 2 April 2025 and 13 March 2026;

(c) amended defence filed 19 September 2025;

(d) witness outline of Mr Pan dated 2 February 2026;

(e) witness outline of Weichang Huang (Ms Huang) dated 2 February 2026;

(f) Summons filed 16 March 2026;

(g) bundle of authorities filed 17 March 2026; and

(h) submissions filed 17 March 2026.

1. The plaintiff has filed and relies on the following materials:

(a) writ (Writ) and statement of claim (SOC) filed 28 November 2024;

(b) reply filed 28 February 2025;

(c) affidavit of Rony The (Mr The) affirmed 28 March 2025;

(d) amended reply filed 1 October 2025;

(e) witness outline of Mr The filed 17 October 2025; and

(f) submissions filed 18 March 2026.

1. On 28 November 2024, the plaintiff commenced these proceedings by the Writ and the SOC.
2. On 20 December 2024, Connock J made orders that the Writ be referred to an Associate Judge for hearing and determination pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) and, if required, also pursuant to r 16.1(3) of the Supreme Court (Corporations) Rules 2023 (Vic).
3. On 5 February 2025, Gardiner AsJ made orders by consent, including that the plaintiff file and serve any reply by 28 February 2025, that the matter be referred to a mediator with such mediation to be completed by 16 May 2025, and that the directions hearing be adjourned to 6 June 2025.
4. On 24 January 2025, the defendants filed their defence.
5. On 28 February 2025, the plaintiffs filed their reply.
6. On 4 June 2025, Efthim AsJ made orders by consent that:

(2) By 4:00pm on 5 September 2025, the plaintiff file and serve its witness outlines.

(3) By 4:00pm on 3 October 2025, the defendants file and serve their witness outlines.

(13) By 4:00pm on 17 October 2025, the plaintiff is to serve on the defendants a draft index for the proposed Court Book.

(14) By 4:00pm on 24 October 2025, the defendants are to send a list of documents to be included or documents to be excluded from the proposed Court Book and the parties must consult as to and agree upon the contents of the Court Book.

(15) By 4:00pm on 31 October 2025, the plaintiff is to serve on the defendants and file for the use of the judge the index to the Court Book in electronic form, together with an electronic copy of the Court Book.

(16) By 4:00pm on 7 November 2025, the plaintiff is to serve a draft list of the real issues in dispute to be determined at trial.

(17) By 4:00pm on 14 November 2025, the parties are to confer so as to limit the issues in dispute.

(18) By 4:00pm on 21 November 2025, the plaintiff is to file an agreed draft list of the real issues in dispute to be determined at trial or, if agreement cannot be reached, a list highlighting the differences between the parties.

(21) By 4:00pm on 7 November 2025, the plaintiff is to serve a draft statement of facts.

(22) By 4:00pm on 14 November 2025, the defendants are to serve any proposed amendments to the draft statement of facts served by the plaintiff.

(23) By 4:00pm on 21 November 2025, the plaintiff is to file and serve an agreed statement of facts.

(24) The proceeding is set down for trial commencing on 31 March 2026 with an estimated duration of 4 days.

1. On 13 August 2025, Efthim AsJ made orders by consent that within 30 days of the order being made, the plaintiff pay the sum of $59,040 into the Court as security for the defendants' costs of the proceeding and that the proceeding be stayed until the security sum is paid into the Court.
2. On 18 September 2025, Efthim AsJ made orders by consent that:

(1) By 4:00pm on 19 September 2025, the defendants are to file and serve their amended defence.

(2) By 4:00pm on 3 October 2025, the plaintiff is to file and serve any reply to the amended defence.

(3) The date in order 2 of the 4 June 2025 orders (Orders) by which the plaintiff is to file and serve its witness outlines is extended to 4.00pm on 17 October 2025.

(4) The date in order 3 of the Orders by which the defendants are to file and serve their witness outlines is extended to 4.00pm on 14 November 2025.

(5) The date in order 13 of the Orders by which the plaintiff is to serve on the defendants a draft index for the proposed Court Book is extended to 4.00pm on 28 November 2025.

(6) The date in order 14 of the Orders by which the defendants must send a list of documents to be included or documents to be excluded from the proposed Court Book is extended to 4.00pm on 5 December 2025.

(7) The date in order 15 of the Orders by which the plaintiff is to serve on the defendants and file for the use of the judge the index to the Court Book in electronic form, together with an electronic copy of the Court Book is extended to 4.00pm on 12 December 2025.

(8) The date in order 16 of the Orders by which the plaintiff is to serve a draft list of the real issues in dispute to be determined at trial is extended to 4.00pm on 6 March 2026.

(9) The date in order 17 of the Orders by which the parties are to confer so as to limit the issues in dispute is extended to 4.00pm on 13 March 2026.

(10) The date in order 18 of the Orders by which the plaintiff is to file an agreed draft list of the real issues in dispute to be determined at trial is extended to 4.00pm on 20 March 2026.

(14) The date in order 21 of the Orders by which the plaintiff is to serve a draft statement of facts is extended to 4.00pm on 6 March 2026.

(15) The date in order 22 of the Orders by which the defendants are to serve any proposed amendments to the draft statement of facts served by the plaintiff is extended to 4.00pm on 13 March 2026.

(16) The date in order 23 of the Orders by which the plaintiff is to file and serve an agreed statement of facts is extended to 4.00pm on 20 March 2026.

1. On 19 September 2025, the defendants filed an amended defence (ADef).[1]
2. On 1 October 2025, the plaintiff filed an amended reply.
3. On 17 October 2025, the plaintiff filed the witness outline of Mr The.[2]
4. On 20 November 2025, Efthim AsJ made orders by consent that:

(1) The date in order 3 of the 4 June 2025 orders ('Orders') by which the defendants are to file and serve their witness outlines is extended to 4.00pm on 12 December 2025.

(2) The date in order 13 of the Orders by which the plaintiff is to serve on the defendants a draft index for the proposed Court Book is extended to 4.00pm on 20 February 2026.

(3) The date in order 14 of the Orders by which the defendants must send a list of documents to be included or documents to be excluded from the proposed Court Book is extended to 4.00pm on 27 February 2026.

(4) The date in order 15 of the Orders by which the plaintiff is to serve on the defendants and file for the use of the judge the index to the Court Book in electronic form, together with an electronic copy of the Court Book is extended to 4.00pm on 6 March 2026.

1. In December 2025, the defendants terminated the retainer of VSTAR Lawyers Melbourne and engaged Linx Law to act as solicitors for them.
2. On 10 December 2025, Linx Law filed a notice of change of solicitor on behalf of the defendants.
3. From 'approximately December 2025' until late January 2026, Mr Pan was in China.
4. On 16 January 2026, Linx Law sent an email to Fortuno Lawyers seeking consent to an extension of time for the filing of materials and for the provision of all discovery previously exchanged. The lawyers exchanged correspondence on the topic. Fortuno Lawyers provided the documents sought on 26 February 2026.
5. On 2 February 2026, the defendants filed the witness outline of Mr Pan. According to order 1 of the orders made by Efthim AsJ on 20 November 2025, this was due on 12 December 2025.
6. On 2 February 2026, the defendants filed the witness outline of Ms Huang. According to order 1 of the orders made by Efthim AsJ on 20 November 2025, this was due on 12 December 2025.
7. On 16 February 2026, Linx Law served on Fortuno Lawyers, by way of further disclosure, the correspondence between Linx Law and the Australian Government Department of Employment and Workplace Relations, together with five historical versions of the Australian Apprenticeships Incentives Program Guidelines.
8. On 2 March 2026, Efthim AsJ made orders that the proceeding listed on 30 March 2026 be adjourned to 27 April 2026 on an estimate of four days.
9. On 16 March 2026, the defendants filed the Summons.
10. On 18 March 2026, I heard the Summons.

1. Rule 36.01(1) of the Supreme Court (General Civil Procedure) Rules 2025 (Rules) provides that at any stage, the Court may order that any document be amended or that any party have leave to amend any document in the proceeding for the purpose of determining questions of controversy, correcting any defect or error, or avoiding multiplicity of proceedings.
2. The power to grant an amendment is discretionary. It is axiomatic that the discretion be exercised consistent with the overarching purpose of the Civil Procedure Act 2010 (Vic) (CPA).[3] It is to be exercised in a manner that best promotes the 'overarching purpose'; namely to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute. The power to grant leave to amend is broad and has the objective of facilitating the curing of errors and omissions so that the real questions in controversy are properly agitated. A central question is whether it is in the interests of justice for the amendment to be granted.
3. The matters relevant to the discretion to grant leave to amend include:[4]

(a) whether there will be a substantial delay caused by the amendment;

(b) the extent of any wasted costs;

(c) whether there is an irreparable element of unfair prejudice caused by the amendment;

(d) concerns of case management arising from the stage in the proceeding when the amendment is sought;

(e) whether the grant of the amendment will lessen public confidence in the judicial system; and

(f) whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought.

1. Rule 49.03 of the Rules provides that the Court may adjourn a trial on such terms as it thinks fit.
2. The power to grant an adjournment is discretionary. It is axiomatic that the discretion be exercised consistent with the overarching purpose of the CPA. It is to be exercised in a manner that best promotes the 'overarching purpose'; namely to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute. An application for adjournment is 'to be resolved according to the overall requirements of justice in the particular circumstances'.[5] A central question is whether it is in the interests of justice for the adjournment to be granted.
3. The matters relevant to the discretion to adjourn include:

(a) the reason for the adjournment, and the importance of it, to the party applying for adjournment, in particular whether a refusal would have the effect of preventing the party from presenting their case;

(b) the extent of the delay and the costs associated with the adjournment;

(c) the explanation for any delay in applying for adjournment;

(d) the prejudice that might be assumed to follow from the adjournment, and that which is shown;

(e) the parties' choices to date in the litigation and the consequences of those choices;

(f) the detriment to other litigants in the Court; and

(g) potential loss of public confidence in the legal system which can arise where a court is seen to accede to applications made without adequate explanation or justification.

(a) the Company has provided payroll services to entities in the Laguna Group, which operates Asian supermarket businesses in Victoria and is an importer and wholesaler of Indonesian food products throughout Australia;

(b) Mr Pan was directly involved in the Company's management until he was removed from his position as director on 2 February 2024;

(c) Mr Pan breached his statutory and fiduciary duties by causing funds to be transferred from the Company's account which were not used to discharge the Company's genuine liabilities or to provide any other benefit to the Company, as follows:

(i) on 18 July 2023, Mr Pan executed two electronic transfers from the Company's bank account to his father (Shian) and Ms Huang - his wife - each in the sum of $47,496.02; and

(ii) between 4 January 2022 and 2 January 2024, Mr Pan executed 24 electronic transfers each of $1,121.57 (totalling $26,917.68) from the Company's bank account into Cherish's bank account;

(d) despite demands made by the Company's solicitors, the defendants have not repaid the misappropriated funds, being $121,909.72 allegedly owed by Mr Pan and $26,197.68 allegedly owed by Cherish; and

(e) the Company seeks the following relief:

(i) as against Mr Pan: compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) or equitable compensation; and

(ii) as against Cherish: a declaration that Cherish received and holds $26,917.68 as constructive trustee for the Company or equitable compensation.

(a) deny the Company's allegations and contend that the relevant payments were properly authorised and made in accordance with arrangements as agreed between Mr Pan and Mr The; and

(b) contend that the Company is estopped from impugning those transactions.

(a) give background to the structure and operation of the Laguna Group companies;[6]

(b) describe a change of direction in the business (the 'Remodelling Plan') from April 2022 which took advantage of the Australian Government's Apprenticeship Commencements wage subsidy program (Apprenticeships Program) by hiring and training staff in commercial cookery;[7]

(c) plead an agreement in late March between the Company and Mas National (an 'Apprentice Connect Australia provider');[8]

(d) plead that from 1 April 2022, seven individuals were 'employed as apprentices under the Program [sic, presumably the Apprenticeships Program]';[9]

(e) plead that in or around March or April 2022, the Company entered into an arrangement with Miaosheng Pty Ltd (Wonder Sushi) to provide supplementary workplaces for training of apprentices 'through Mas National' (Wonder Sushi Arrangement);[10]

(f) plead an agreement between the Company and Ms Huang (Weichang Agreement) and its amendment, for the employment and training of Ms Huang, for the performance of work by Ms Huang, and for the indebtedness of the Company to Ms Huang in the amount of $51,458.29;[11]

(g) plead an agreement between the Company and Shian (Shian Agreement) and its amendment, for the employment and training of Shian, for the performance of work by Shian, and for the indebtedness of the Company to Shian in the amount of $51,458.29;[12]

(h) described participation of other individuals in the Apprenticeships Program;[13]

(i) described the receipt by the Company of Boosting Apprenticeship Commencement (BAC) subsidies in the amount of $152,796.60;[14]

(j) plead that 'In or about late May or June 2023, Mr Pan and Mr The confirmed to repay the salaries owed to Weichang and Shian using the Total Subsidies on behalf of the Plaintiff';[15] and

(k) plead an agreement made in about late 2021 between Mr Pan and Mr The for a monthly payment of $1,121.57 'as an additional monthly transportation allowance' which was to be paid to Cherish.[16]

1. The defendants (Mr Pan and Cherish) apply for orders that they be granted leave to amend their defence, for adjournment of the trial listed on 27 April 2026 (on an estimate of four days) and for ancillary orders.
2. It is convenient to consider the matters relevant to both the amendment and the adjournment together, because the issues are somewhat interrelated.

1. The first consideration is whether a satisfactory explanation has been given for seeking the amendment and adjournment at the stage when it is sought.
2. The starting point is to identify why the amendments in the PDef are necessary. On one view, the PDef expands upon, re‑expresses and/or particularises matters that are already in the ADef. But there are some new and substantial allegations in the PDef.
3. Before addressing those new and substantial allegations, it is convenient to deal with a number of discrete amendments that I consider do not substantially alter the issues in dispute and, therefore, ought to be allowed, subject to other discretionary considerations. The amendments within the PDef that fall into this category are:

(a) para [4] inserting a time period;

(b) paras [4A], [4B] and [4C] concerning the operation of the 'Laguna Group';

(c) para [5D] concerning the decision to take advantage of the Apprenticeships Program;

(d) para [5E] concerning the agreement between the Company to enter into an Australian Apprenticeship Agreement with Mas National, an Apprentice Connect Australia provider;

(e) para [5F] concerning the individuals employed as apprentices under the Apprenticeships Program. Although I would not allow the allegation in para [5F] as to a personal relationship on the basis that it is irrelevant to the issues in dispute between the parties;

(f) para [10B] concerning the receipt by the Company of BAC subsidies. The defendants plead that the plaintiff received BAC subsidies under the Apprenticeships Program totalling $152,796.60, including amounts of $27,598.90 in respect of Shian and $27,598.90 in respect of Ms Huang. They plead that the amounts paid to Ms Huang and Shian came from those moneys. In stark contrast to these allegations is the plaintiff's claim that payments to Ms Huang and Shian, of $47,496.02, respectively, 'were not used to discharge any genuine liabilities of [the Company] or provide any other benefit to [the Company]'. If both the plaintiff and defendants' allegations were true, it would raise a number of troubling questions, but none which would appear to necessitate the adjournment of the trial;

(g) para [10C] concerning an agreement between Mr Pan and Mr The to 'repay the salaries owed to Weichang and Shian using' the subsidies; and

(h) para [12(b)] concerning an agreement between Mr Pan and Mr The for payment to Mr Pan of a monthly payment of $1,121.57 'as an additional monthly payment allowance'

1. There are also a number of proposed allegations that I consider are not material facts for the purpose of the defendants' PDef. The amendments that fall into this category are:

(a) para [5A] concerning AR Family Pty Ltd and its directorship;

(b) para [5B] concerning decision making within the Laguna Group. The failure to identify the relevant decisions, and use of 'and/or' renders the pleading of little value;

(c) para [5C] concerning the 'Remodelling Plan' and strategic direction of the group; and

(d) para [10A] concerning the placement of apprentices other than Ms Huang and Shian

1. The allegations that I would characterise as substantial and new are as follows:

(a) para [5G] concerning an arrangement between the Company and Wonder Sushi pursuant to which Wonder Sushi agreed to provide supplementary workplace‑based kitchen and food preparation training to apprentices of the Company;

(b) paras [10(a)-(f)] concerning the Weichang Agreement; and

(c) paras [10(g)-(l)] concerning the Shian Agreement

1. The following is a high level summary of the Weichang Agreement and the Shian Agreement as pleaded in the PDef. The agreements were between the Company and Ms Huang and Shian, respectively. Under those agreements, the Company engaged Ms Huang and Shian as apprentices on a salary of $58,000, plus superannuation per year. They claim to have done work under the agreements. They claim that by April 2023, the Company was indebted to them under the agreements.
2. The Weichang Agreement and the Shian Agreement were both pleaded in the ADef at para [10]. The amounts paid to Shian and Ms Huang were characterised in the ADef as 'remuneration to which they were entitled for their employment'. The particulars to para [10] of the ADef set out arrangements made for work to be done by employees, including Shian and Ms Huang under the Apprenticeships Program.
3. While the PDef adds a significant detail in relation to the arrangements between the Company and Shian and Ms Huang, the critical additional allegation is that work was performed for Wonder Sushi and other companies, under the agreements, and in turn those companies trained them. In other words, while engaged as apprentices by the Company, both the work and training were done with other companies. The allegation of delegated work and training has considerable factual and legal complexity. It requires significant revision of both pleadings (as evidenced by the PDef), further evidence and preparation. Both parties have proceeded on either the explicit or implicit premise that if leave were granted, the trial could not proceed as listed.
4. It became apparent, during the hearing of the Summons, that the proposed amendments are not the only reason why adjournment of the trial is sought. The defendants also require time in order to prepare further outlines of evidence (for example from Shian) in support of the existing defence (ADef). However, there is no application for an extension of time to file witness outlines, save to the extent necessitated by the PDef. Further, in the absence of draft proposed outlines, such application would have little prospect of success.
5. The application to adjourn the trial and for leave to amend was taken by the defendants after a change of solicitors from VSTAR Lawyers Melbourne to their current solicitors, Linx Law, in December 2025.
6. The defendants' explanation for the application to adjourn and for leave to amend is that they have obtained evidence relevant to the substantive issues which 'explains, in part, the time required to properly particularise the proposed amendments to the Further Amended Defence'. The defendants claim the time taken to gather evidence and particulars is a material cause of the time taken by Linx Law to finalise the PDef.
7. A critical document that the defendants rely on is a letter dated 13 March 2026 from Wonder Sushi confirming that it provided supplementary workplace‑based kitchen and food preparation training to Ms Huang, Shian and Linna Wang, as trainees employed by the Company in connection with their Certificate III in Commercial Cookery apprenticeship program administered through Mas National, during the period April 2022 to April 2023, at Southbank. The defendants also rely on photographs of the training and of a logbook. The provenance of those photographs is not explained, including as to when they were obtained, a matter bearing on the question of whether the information was available at the time of the ADef.
8. The difficulty with the defendants' evidence is that while it might explain delay between the appointment of Linx Law and the making of the application, it does not adequately explain why the defendants were not in a position to plead the arrangements with Wonder Sushi in either their defence or the ADef. I am not satisfied that the claimed need, to 'obtain corroborating evidence as to the nature, scope, and supervision of the training carried out by Ms Huang and Shian at Wonder Sushi and at other training sites', explains the failure to plead the arrangement at an earlier point in time - even if particulars of it might have been required to be given subsequently. The matters relied upon by the defendants provide a partial explanation for the delay in particularising the PDef, but not as to why the defendants were not in a position to plead the Wonder Sushi Arrangement in the first place.

Whether there will be a substantial delay caused by the amendment

1. I do not consider that the Category A Amendments and the consequential effects on pleadings, witness outlines or the Court Book, would be such as to cause substantial delay to the trial of the proceeding.
2. I consider that the Category C Amendments are likely to cause the trial to be adjourned. While the agreements, the subjects of those amendments, are already the subject of the ADef, the nature and extent of the proposed pleading is such as to raise substantial new legal and factual questions that could not satisfactorily be addressed in the time between now and the trial.

1. I accept that there are likely to be some costs thrown away by reason of the Category A Amendments. To some extent, those costs can be addressed by way of a costs order. On the other hand, the costs thrown away by the Category C Amendments are likely to be significant, on the premise that it would necessitate adjournment of the trial.

1. The next consideration is concerns of case management arising from the stage in the proceeding when the amendment is sought.
2. Trial orders were made on 4 June 2025. An order for security for costs was made in August 2025. The defendants filed their ADef on 19 September 2025. The trial orders were revised by consent on 20 November 2025. On 2 March 2026, the trial was re‑listed on 27 April 2026 on an estimate of four days.
3. It can be seen that the defendants have already had one opportunity to revise their defence (the ADef) and have had significant time to prepare for trial (even if re‑scheduled relatively recently).
4. The amount in issue in these proceedings is relatively small in the context of a hearing estimate of three or four days. The costs thrown away by adjournment of the trial are likely to be disproportionate to the issues in dispute.

1. In exercising my discretion to grant leave to amend and to adjourn, I must determine where the interests of justice lie, having regard to the potential prejudice to the parties and to the broader concern for the administration of justice emphasised by the High Court in Aon Risk Services Australia Ltd v Australian National University.[17] Taking into account all of the matters set out above, I consider that it is in the interests of justice to allow the Category A Amendments, but to disallow the Category B Amendments and Category C Amendments. I also consider that the interests of justice dictate that the application to adjourn the trial should be refused.

1. I shall make orders granting leave to the defendants to file and serve a further amended defence with the amendments indicated above by 23 March 2026, and for the plaintiff to have leave to file any further amended reply. I shall also grant leave to the defendants to file and serve witness outline(s), or revised witness outline(s), limited to the issues arising from the amendments that I have allowed within seven days of the amended reply, and for the plaintiff to file and serve any witness outline(s) in reply within seven days after that. To the extent that the defendants seek to rely on documents that are not in the Court Book, they will need to prepare a supplementary Court Book. I shall otherwise dismiss the Summons.
2. I will leave it to the parties to confer regarding the wording of the orders, and any orders required to revise the trial orders. My preliminary view is that the defendants should pay the costs of the Summons, and the costs thrown away, by reason of the further amendment of the defence. The orders should also provide for reference to mediation one afternoon that is convenient to the parties, around one week prior to the trial. If there is a dispute concerning the form of orders, including in relation to costs, I will list the matter for hearing.

[1] In compliance with order 1 of the orders of Efthim AsJ dated 18 September 2025.

[2] In compliance with order 3 of the orders of Efthim AsJ dated 18 September 2025.

[3] Civil Procedure Act 2010 (Vic) ss 8, 9 (CPA); Eaton v ISS Catering Services Pty Ltd [2013] VSCA 361, [49], [50], [54]; AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, [154].

[4] Northern Health v Kuipers [2015] VSCA 172, [28].

[5] Rizzo v VicRoads [2019] VSC 770, [112] (Derham AsJ), citing Hamod v State of New South Wales [2011] NSWCA 375, [131], citing Conroy v Conroy [1917] NSWStRp 44; (1917) 17 SR (NSW) 680, 682; Squire v Rogers (1979) FLR 106, 113; Vasser v Taylor Black [2010] FamCAFC 36, [31].

[6] Proposed Amended Defence, [4A], [4B], [4C], [5A], [5B] (PDef).