Supermega Market Ltd v Sunnya Pty Ltd

Supermega Market Ltd v Sunnya Pty Ltd - [2024] NSWCA 270 - NSWCA 2024 case summary — Zoe

BASTEN AJA: The motion before the Court today, filed last Thursday, 14 November 2024, sought to vacate the dates for hearing of three appeals listed for Monday and Tuesday, 25 and 26 November 2024. The motion was dismissed this morning: these are the short reasons for the dismissal.
On 19 April 2024, Williams J handed down a lengthy judgment in the Equity Division, corporations list, largely upholding oppression claims brought by two companies, Sunnya Pty Ltd and Jatcorp Ltd ("Sunnya Parties"). Sunnya's business involved the export and sale of formulated milk powder products from Australia and New Zealand to the People's Republic of China. The products were manufactured by two New Zealand registered companies, Supermega Market Ltd and a related company, Megadairy Ltd. Those two companies and a third NZFDA Ltd, were known as the "NZ Parties".
Yinghan He and his wife, Yanxia Lu, established Sunnya and established its right to use the brand name "Neurio". At trial, Sunnya alleged that Mr He and Ms Lu (with others "the He Parties") had taken steps in late 2022 to transfer Sunnya's registered trademarks to another company, Guangzhou Aotea Biological Technology Pte Ltd (GABT) for no consideration, in breach of statutory and fiduciary duties as directors of Sunnya.
Williams J largely upheld the claims brought by Sunnya, but stood over a question of quantification of its entitlement to compensation. The judgment was thus interlocutory and any appeal required leave. Immediately following the judgment, both the NZ Parties and the He Parties filed notices of intention to appeal. On 13 May 2024, the NZ Parties sought orders staying further hearing of the proceedings in the Equity Division until the determination of the appeals.
On 17 May 2024, the Sunnya Parties filed a notice of intention to appeal in respect of matters where the trial judge had rejected their claims.
On 6 June 2024, counsel for the NZ Parties gave an oral undertaking that they would prosecute any appeal expeditiously, an undertaking repeated in an affidavit filed by their then solicitor, Mr Rhys Roberts, on 24 June 2024. Moving to vacate the hearing dates (for a second time) 10 days before the hearing, absent substantial justification, would constitute a breach of that undertaking. For reasons explained below, there was no sufficient justification. Further, the circumstances in which the NZ Parties had obtained the vacation of earlier dates for hearing, fixed for October 2024, had also lacked justification.
In an affidavit dated 17 November 2024, Yi (Easter) Wu, the person responsible for the conduct of the proceedings by the NZ Parties, stated that he did not understand "what specific conduct" was said by the Sunnya Parties to constitute a failure to prosecute their appeal with expedition and due diligence. The relevant conduct was self-evidently their failure to prepare the appeal books in compliance with a direction of the Court (made by consent) and the motion to vacate the hearing.
Mr Wu also stated that the NZ Parties' undertaking "was made in the context of not knowing what [sic] the He Parties or the Sunnya Parties' appeal". It was nevertheless said that the other appeals were "more substantial than the NZ Parties' appeal". Whilst that assessment may be doubted, it does not provide a reason for non-compliance with an undertaking to the Court in respect of the NZ Parties' own appeal.
Mr Wu also stated that the NZ Parties are currently without counsel "through no fault of their own". That claim should not be accepted, as explained below. The NZ Parties' justification given for seeking to vacate the hearing dates, was explained in the affidavit of their current solicitor, Chang Yang Zhou, of 14 November 2024. He said that, following his acceptance of instructions from Mr Wu to act for the NZ Parties on their appeal on 25 October 2024, and after initial reassurance from senior counsel, he had been unable to secure the services of any counsel who had acted for the NZ Parties during the trial, who had already (i) prepared the appeal documents, (ii) prepared a summary of argument in support of the application for leave to appeal and (iii) prepared written submissions for the appeal. Mr Zhou gave evidence of limited attempts to obtain alternative counsel.
That explanation provided no justification for vacating the hearing dates. Assuming that counsel had been paid for work done to date, and funds provided for the final preparations for, and appearing at, the two-day appeal, counsel would have been obliged to continue to act. If funds had not been forthcoming from the NZ Parties, the absence of counsel was their responsibility.
The suggestion that the continuing willingness of counsel to appear (and presumably the return of their briefs) was due to some inferred "white-anting" by the former solicitor (Mr Roberts) was not demonstrated and should not be accepted.
Mr Zhou, in his affidavit, said that he had been instructed on 11 November 2024 (that is, two weeks after he had accepted instructions from Mr Wu), that Roberts Gray Lawyers had lost Mr Wu's confidence for three reasons. The first related to the use of Mr Roberts' email address by another solicitor in his office in responding to Mr Wu, a matter raised on 24 December 2023, that is almost 12 months ago. The second concerned Mr Wu expressing concern with Mr Roberts and his counsel in 24 June 2024, that he, Mr Wu, had not approved the appeal documents (presumably referring to the mandatory white folder filed by the NZ Parties on 21 June 2024). The third matter concerned a further complaint by Mr Wu that he had not been involved in the preparation for the appeals, dated 19 July 2024. Counsel for the Sunnya Parties submitted, fairly, that those matters could not, separately or cumulatively, justify the withdrawal of instructions six months after the last date, and one month before the hearing of the appeal.
The emails from Mr Wu did not demonstrate that Mr Wu did not want the NZ Parties to appeal, rather the contrary. Further, whatever the timing of the complaints, he had solicitors and senior and junior counsel briefed on the appeal and was bound by the course that counsel determined. No doubt if there were issues which Mr Wu wished to be raised on the appeal, not covered by the notice of appeal or the submissions, those matters could have been raised with counsel: none were identified.
Finally, it may be noted that this was the second occasion on which the NZ Parties had sought to vacate the hearing dates for the appeal. The original dates of 29 and 30 October 2024 were fixed at a directions hearing on 29 July 2024 attended by all parties by counsel. That afternoon, Mr Roberts sent an email to the Registrar (and the parties) stating that there had been a problem instructing senior counsel and that "the NZ Parties are not available to appear in the appeals on 29 and 30 October 2024". He proposed an earlier date or 18 November and thereafter.
It is apparent from Mr Roberts' affidavit dated 2 August 2024 that the reason for seeking to vacate the October dates was that his firm had been involved in other proceedings in the Federal Court and a ten-day trial had been listed to commence on 28 October 2024. That was not a proper reason for vacation of the dates in circumstances where trial counsel were available. Mr Roberts also noted that junior counsel, Mr Aleksov was also unavailable because he was briefed to appear in the Federal Court proceedings. However, Mr Aleksov had appeared at the directions hearing before the Registrar, and had apparently not raised (or been told by senior counsel not to raise) that issue. As the Federal Court trial had been listed on 2 April 2024, both counsel and solicitor must have known that before the hearing before the Registrar. There was, in these circumstances, little justification for vacating the October hearing dates. In any event, that occurred.
The matter was relisted before the Registrar on 5 August 2024 when the matter was listed for 25 and 26 November. One result of that step was to leave Sunnya without senior counsel who had been retained for the appeal, but had not appeared at the trial. Despite the dates having been expressly chosen so that all three counsel who had appeared for the NZ Parties at trial would be available, it now appears that none of them are available.
This background provides no basis for vacating the hearing dates on 25 and 26 November 2024. I am not persuaded that the absence of counsel is a matter for which the NZ Parties do not have full responsibility. Nor, given the change in solicitors, am I satisfied that over the ensuing three weeks, alternate counsel could not have been obtained. Patently competent junior counsel who appeared for the applicant on the motion, and was clear as to her instructions, stated that she was not briefed and would not be appearing on the hearing of the appeal. Her instructing solicitor, Mr Zhou, is apparently in New Zealand.
Nevertheless, if counsel are obtained in the next week, and wish to provide any supplementary written submissions, that may be done by email to my associate.
There remains one further procedural issue. More than three months ago the NZ Parties were directed to prepare the appeal books, the cost of which was to be shared between the three appellants, by 8 November 2024. Why some steps had not been taken, with the possible exception of the orange book, prior to 28 October 2024, when the date was extended to 14 November, is unexplained. Mr Zhou appears to have understood his responsibility in that respect, but took no serious steps to remedy the omission, beyond forwarding an index to the other parties for the book containing the affidavits and documentary evidence (blue book). He was met by a concern that affidavits were to be included which had not been read and that much of the material might be unnecessary. He responded that without the assistance of counsel, he was not in a position to provide a more appropriate index.
The possibility that the hearing dates might be vacated because the appeal books had not been prepared was appreciated by the Sunnya Parties, which agreed to undertake the preparation of the appeal books and file and serve them by 4pm on Wednesday, 20 November. They agreed that the current arrangement for payment of one-third of the costs by each of the appellants should be maintained, but did not insist upon payment in advance. Accordingly, that potential problem has been averted.
The two substantive matters sought in the notice of motion filed by the NZ Parties was vacation of the hearing dates and rescheduling of the obligation to file four copies of the appeal books "from 14 November 2024 to a later date". Neither of those orders having been made (except to the extent that another party has taken over the obligation to file the books), the notice of motion was dismissed. It followed that the NZ Parties should pay the costs of the motion.
Although counsel for the He Parties had not put evidence before the Court, nor opposed the motion, he submitted that the costs of the He Parties should also be paid by the NZ Parties. That submission was accepted. Where there is a motion to vacate a hearing date, it is important that all parties be represented, and preferably by counsel. Accordingly, the NZ Parties were order to pay the costs of both the other groups of the motion.
Accordingly, the Court made the following orders: (a) Direct the Sunnya Parties to prepare the Court Books and serve each party with a copy and file four copies by 4pm, Wednesday, 20 November 2024. (b) Dismiss the Notice of Motion filed by Supermega Market Ltd and Megadairy Ltd (the New Zealand Parties) dated 14 November 2024. (c) Confirm the listing of all three summonses seeking leave to appeal and the appeals for concurrent hearings on 25 and 26 November 2024. (d) Order that costs of the motion be payable by the applicant on the motion to the Sunnya Parties and the He Parties.

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