Trademax Australia Limited v Huang (No 2)

Parties: Trademax Australia Limited (Plaintiff/Cross-Defendant/Applicant)
Xiang Huang (Defendant/Cross-Claimant/Defendant)

Representation: Counsel:
P Gaffney (Plaintiff)
J Cohen (Defendant)
Solicitors:
Broaden Legal (Plaintiff)
Du & Associates Lawyers (Defendant)

File Number(s): 2024/418405

EX TEMPORE JUDGMENT (REVISED)

1. The plaintiff seeks an order that the defendant attend to be cross examined on his affidavits of discovery.

2. The defendant, who is represented in the proceedings, does not oppose the order.

3. The general rule is that an affidavit of discovery is conclusive, and that cross-examination on an affidavit of discovery is not permitted except in exceptional circumstances. [1] The most recent judicial consideration of this question that I have been able to locate is that of Garling J in Con Ange v Fairfax Media Publications Pty Ltd. [2] In that decision, Garling J expressed a more nuanced view than had perhaps hitherto been expressed in relation to this matter when his Honour said:

“For my part, particularly in light of the provisions of s 56 of the Civil Procedure Act 2005 [(NSW)] and the extensive use of the modern tools of case management to ensure that the real issues in dispute are addressed in a cost effective manner … I see no compelling reason to accord to an affidavit verifying a list of documents by way of discovery any special status. Proper compliance with a party’s obligations of discovery under the overall supervision of the Court is an important and necessary part of modern litigation. The Court has the capacity to limit discovery, or control the process of discovery, so that it does not become unduly onerous.”

4. The plaintiff is a trader in financial products. The defendant is a former employee at the plaintiff's Canberra office. The plaintiff alleges that whilst employed by it, the defendant worked for another trader, FP Markets, in breach of his terms of employment.

5. On 22 October 2024, the defendant participated in interviews with the plaintiff's personnel in which he admitted that he had worked for FP Markets while working at the plaintiff and was working with others at the plaintiff's office to do that work for FP Markets.

6. On 22 October 2024, the plaintiff terminated the defendant's employment.

7. The following day, 23 October 2024, the plaintiff's solicitors wrote to the defendant foreshadowing that it was likely to commence proceedings against the defendant and "requiring" him not to "destroy any documents relating to" his employment with the plaintiff and his involvement with FP Markets.

8. On 13 November 2024, McGrath J made orders restraining the defendant from, in effect, acting in breach of his employment terms with the plaintiff for reasons published on 15 November 2024. [3]

9. On 29 November 2024, I made orders setting this matter down for hearing for four days commencing 5 May 2025. I also, by consent, made an order that the defendant produce by 20 December 2024 a document referred to in the "Schedule", which was in the following form:

“1. All documents created on or after 22 December 2021, comprising or recording communications sent to or received from the defendant on one part and on the other:

(a) FP; or

(b) Zhonglin (Johnny) Guan.”

10. Ultimately, on 19 February 2025, the defendant made an affidavit in which he said:

"I can confirm to the Court that I no longer possess the documents referred to in the [Schedule] on around 21 October 2024."

11. The defendant also deposed:

“I logged on my personal email address … on or around 22 October 2024, and noticed that my personal email address above mentioned had been invaded at night on 22 October 2022 with a log in by an IP address of New South Wales from a desktop computer. …

Due to safety of internet, I immediately changed password [sic] of logging in my personal email, also I deleted a lot of emails believed [sic] involve personal information and personal confidentiality. I confirm that I no longer use the email address [above]. Thus, I do not have anything in my possession referred to the Schedule [sic] that requires me to produce.”

12. A short time later, on 2 March 2025, the defendant made his affidavit of discovery, in which he gave a different account of what had happened as follows:

“I have deleted all emails related to my personal information and any emails involving my last employment with Trademax after I noticed that my personal email … has been invaded by the Plaintiff or its employee or agent without my consent on or around 21 October 2024.”

13. The plaintiff is aware, from its interrogation of its own records, of communications between the defendant and FP Markets. It is therefore perhaps notable that the defendant made no reference to such documents in either of those affidavits. Some of the documents of which the plaintiff so became aware were deployed by it in the hearing before McGrath J.

14. Further, the defendant accepts he received commissions from FP Markets. It thus seem likely that there are documents to which he has access which would contain some record of the manner in which he dealt with those commissions.

15. In these circumstances there is reason to believe that the defendant may not have given a comprehensive account of the documents in his possession, or documents which were in his possession, that are of central relevance to the issues in these proceedings.

16. Those circumstances alone may not have been sufficient to warrant an order being made that the defendant be examined, but as the defendant does not oppose that course being taken, I am persuaded that in this particular circumstance of this case, cause has been shown.

17. In a slightly different context, namely, an application to examine a party served with a subpoena as to the adequacy of the party's response, I made these observations, based on earlier authority, [4] as to the limitations that might be imposed in those circumstances:

18. the defendant may be examined by counsel for the plaintiff as if giving evidence-in-chief and thus by use of non-leading questions; [5]

19. the defendant may be re-examined by counsel appearing for him; [6]

20. the examination will be without prejudice to any claim that the defendant may wish to make in respect of the privilege against self-incrimination and in respect of any relevant claim for confidentiality; [7]

21. the examination may be directed to the defendants’ understanding of the terms of the subpoena; [8]

22. the examination will not extend to:

(a) establishing whether or not the defendant may have been in contempt of court; [9] (b) inquiries of a “search and inquiry type such as to [the defendant’s] knowledge as to the location of documents not in his present possession or control, or as to the nature of other documents in his possession not within the scope of the subpoena, or as to his systems of books or the like, so that this material could be used to search for other evidence or to enable a different subpoena to be framed”; [10]

6. the evidence on the examination will not be evidence in the proceedings; [11] and

7. the process will not be an examination as to "non-compliance with the subpoena". [12]

8. The judge hearing the cross examination of the defendant may be persuaded that some or all of those conditions should apply to the examination that is to take place.

9. In those circumstances, I make the orders proposed by the plaintiff:

10. The defendant is to attend court to give evidence at 10am on 10 April 2025.

11. Grant leave to counsel for the plaintiff to cross-examine the defendant on that day in respect of:

(a) the defendant’s affidavits relating to discovery of documents made 19 February 2025 and 2 March 2025; and (b) the identification of other repositories of the documents deleted by the defendant.

3. The issue of costs of the plaintiff’s motion filed 18 March 2025 is reserved.

4. The matter be listed for directions on Thursday 24 April 2025.

5. The examination will take place before a judge other than the trial judge.

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Endnotes

Fruehauf Finance Corp Pty Ltd v Zurich Australian Insurance Ltd (1990) 20 NSWLR 359 at 365 (Giles J).

[2010] NSWSC 1200.

Trademax Australia Limited v Xiang Huang [2024] NSWSC 1459.

GEMI 169 Pty Ltd v Suria Global (L) Pty Ltd (No 2) [2023] NSWSC 427 at [30(a)]-[30(g)].

Quach v Vu [2009] NSWSC 131 at [9] (Brereton J).

Ibid.

Ibid.

Ibid at [10].

Ibid at [8], citing Moffitt J extrajudicially in H Glass (ed), Seminars on Evidence (2nd ed, 1970, Law Book Co).

Ibid.

Quach v Vu (supra) at [10].

Ibid.