The first defendant by notice of motion filed 3 September 2020 sought a review of the decision of the Registrar made on 5 August 2020. That decision was made on a summons filed by the plaintiff on 12 December 2019 seeking orders under rr 5.2 and 5.3 of the Uniform Civil Procedure Rules 2005 (NSW) for preliminary discovery.
The summons also sought similar orders against the second defendant, National Australia Bank Limited.
The categories of documents sought in relation to the first defendant were as follows:
1. All documents relating to or recording the receipt, collection or payment of moneys by or on behalf of the first defendant from the plaintiff into National Australia Bank account number 934214248 (NAB Account), being the following sums of money:
1.1 $1,000.00 on 21 June 2019 from the bank account identified by BSB 064462, account number 10265257;
1.2 $4,000.00 on 24 June 2019 from the bank account identified by BSB 064462, account number 10265257;
1.3 $30,000.00 on 1 July 2019 from the bank account identified by the account number 486 695 462;
1.4 $35,000.00 on 2 July 2019 from the bank account identified by the account number 486 695 462;
1.5 $70,000.00 on 4 July 2019 from Bank of Melbourne by way of telegraphic transfer from Jian YU, address unit 1/38 Deakin Street, Bentleigh East VIC 3165 Australia;
1.6 $76,000 on 15 July 2019 from Bank of Melbourne by way of telegraphic transfer from Yueyue Ql, address unit 1/38 Deakin Street, Bentleigh East VIC 3165 Australia; and
1.7 $39,780.00 on 15 July 2019 from the bank account identified by BSB 062188, account number 10716096.
(collectively Plaintiff's Moneys).
2. All documents relating to or recording the disbursement, payment out, expenditure or transfer of the Plaintiffs Moneys by or on behalf of the first defendant from the NAB Account including but not limited to;
2.1 all directions, instructions, authorities or commands received from any person or persons by the first defendant to disburse, pay out, expend or transfer the plaintiffs money from the NAB Account;
2.2 all directions, instructions, authorities, advices or commands given by the first defendant or any person on behalf of the first defendant to the National Australia Bank to disburse, pay out, expend or transfer money from the NAB Account, including but not limited to any account, platform or financial institution including Dangkang International Group Pty Ltd.
3. All bank account statements, including all documents showing the receipt, collection or payment of moneys into the NAB Account and the disbursement, payment out, expenditure or transfer of moneys from the NAB Account in the period 21 June 2019 to present.
Yu v H&J Aus Trading Pty Ltd [2020] NSWSC 1843 | Case summary | Zoe
Similar categories were sought from NAB in the summons but subsequently the plaintiff limited the categories sought against NAB to the third of those categories only which sought:
3. Bank account statements for the NAB Account for the period 21 June 2019 to present.
NAB did not oppose the narrowed claim for relief sought against it.
The Registrar ordered that the categories sought to be discovered by the first defendant be provided, and ordered that category 3 sought against NAB be provided. There is no appeal by NAB from the order made against it.
The parties have now resolved the substantive issues between them leaving for consideration only the question of who should pay the costs before the Registrar and the costs of the hearing which took place before me, prior to the resolution of the matter. So that the costs issue can be properly understood, it is necessary to summarise the background of the matter which led to the preliminary discovery application.
[2]
Background
The facts are within a relatively small compass. They were summarised by the Registrar as follows, and are not in dispute.
In about June 2019 the plaintiff was introduced to a person (the Advisor) on the Chinese social media platform, "WeChat", for the purposes of obtaining advice on how to engage in foreign exchange trading with or through an organisation identified as DangKang International Group Ltd. The identity of the Advisor was unknown to the plaintiff.
The Advisor directed the plaintiff to provide funds into a designated bank account with NAB, which was opened in the name of H&J Aus Trading Pty Ltd. That is the name of the first defendant.
Between 24 June and 15 July 2019, the plaintiff deposited $255,780.00 into the NAB account, and a DangKang trading account was established in his name (the trading account). In June/July 2019 the plaintiff carried out foreign exchange trades with the assistance of the Advisor.
From 23 July 2019, the plaintiff has been unable to access the trading account, and the website URLs provided to him by the Advisor are no longer valid. The plaintiff believes he has been a victim of fraud, and relies on public alerts issued by New Zealand and United Kingdom regulatory authorities in relation to DangKang, in support of that belief.
The plaintiff requested information from the first defendant. The first defendant:
(a) denied that the Advisor was H&J's director, Jun Liang, or any employee of H&J;
(b) declined to provide him with copies of any bank statements or an account of what it did with his funds.
The plaintiff requested information from NAB, which declined to provide him any information in the absence of consent from the relevant account holder.
[3]
The hearing of the review application
At the hearing of the first defendant's notice of motion the parties argued the issues concerning preliminary discovery and whether the Registrar was in error in making the orders that she did. At the end of the argument I asked what had transpired in relation to the order made against NAB, and whether it had produced the documents. Mr Furlan of counsel for the plaintiff informed me that NAB had produced the bank statements. There was some doubt about whether the first defendant had been notified about the production of those statements. At the conclusion of the hearing I gave leave to the parties, if they wished, to make any further application or submissions arising out of the production of the NAB material.
Subsequently, the plaintiff's solicitor, Wenhao Cai, swore a further affidavit on 18 November 2020 which annexed the bank statements provided and said that it was not possible for the plaintiff to identify the recipient of any of the payments out of the NAB account from any material in those statements. The affidavit also annexed an email which had been forwarded to the solicitor for the first defendant on 3 September 2020 notifying him that NAB had complied with the Registrar's order.
On 20 November 2020 counsel for the first defendant forwarded to my Associate what was described as an additional submission concerning the affidavit of the plaintiff's solicitor of 18 November 2020. The submission said this:
3. In the light of the Cai affidavit the First Defendant makes the following 'open offer' in relation to the application.
The Open Offer
UCPR 5.2 (l)(a)
4. Is so far as the Plaintiff's original application concerns an UCPR 5.2 (a) the First Defendant is able and willing to provide the following classes of the documents:
(i) Documents showing the destination or recipient account details for the "funds" referred to in paragraph 9 of the Cai's affidavit;
(ii) A copy of the identification card of the recipient of the funds referred to in paragraph 9 of the Cai affidavit; and
(iii) WeChat Conversation Records showing the instruction or direction received by H&J Aus Trading Pty Ltd [H&J) for the remittance of "funds" referred to in paragraph 9 of the Cai affidavit.
5. It is submitted, that the categories of documents H & J is willing to provide deal with the primary concerns expressed by the Plaintiff through Mr Cai on paragraphs 12 and 13 of the Cai affidavit, save that First Defendant advises the Court by its Counsel in these submissions whether the documents reveal the identity of "the Adviser" that dealt with the Plaintiff is not a matter within the knowledge of the First Defendant.
In relation to UCPR 5.2(3)(a) the submission said that the first defendant relied on the submissions made at the hearing before me.
On 24 November 2020 counsel for the plaintiff forwarded an email to my Associate saying that the plaintiff accepted the first defendant's offer. The email noted that, in the light of what was said in paragraph 5 of the first defendant's submission (above at [17]), that the plaintiff maintained his opposition to the first defendant's notice of motion of 3 September 2020. The email then sought time after the documents were supplied for the parties to inform the Court what should then happen.
On 2 December 2020 counsel for the plaintiff forwarded an email to my Associate saying (inter alia):
I confirm that the first defendant has produced documents to the plaintiff following his acceptance of the first defendant's offer of 20 November 2020.
I am instructed that:
• as a result of that production, the plaintiff does not oppose the making of an order setting aside Order 1 of the orders of the Registrar made on 5 August 2020;
• the plaintiff maintains his opposition to the other orders sought in the Summons (save for order 4); and
• the plaintiff wishes to be heard in relation to costs.
It should be noted that the reference to the plaintiff maintaining his opposition to the other orders sought in the "Summons" was an error and should have read "other orders sought in the notice of motion".
The matter was then relisted so that the issue of costs could be determined.
The agreed settlement of the proceedings provides for an order setting aside order 1 made by the Registrar on 5 August 2020. Order 1 granted the application contained in prayers 1, 2 and 3 of the summons seeking preliminary discovery of the documents identified in [3] of this judgment.
[4]
Submissions
The first defendant submitted that the appropriate order was that each party should pay their own costs of the proceedings before the Registrar and of the notice of motion filed 3 September 2020. The first defendant referred to principles set out in Re Minister for Immigration and Ethnic Affairs: Ex parte Lai Qin (1997) 186 CLR 626, Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 at [2] and Kiama Council v Grant [2006] NSWLEC 96; 143 LGERA 441 at [80].
The first defendant submitted that it was not until Mr Cai's affidavit was filed that it was clear that the plaintiff was not able to ascertain from the NAB documents where the payments had gone and to whom. In that way, the first defendant submitted the open offer by the first defendant should not be regarded as a surrender as described in Kiama Council v Grant at [80] and One.Tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270 at [6].
The first defendant submitted that it was necessary for the review application to be brought and argued because the first defendant maintained that the plaintiff had not demonstrated that it had passed through the required gateways in the Rules.
The plaintiff submitted that the open offer made by the first defendant had surrendered to the orders sought by the plaintiff. The plaintiff submitted further that the provision of the documents at the eleventh hour on the basis of the supply of the NAB documents was an unreasonable act, when the first defendant had its own copies of those documents from the time the plaintiff's summons was filed.
[5]
Determination
I can see no basis upon which the costs order made by the Registrar should be disturbed. As against the first defendant, the plaintiff was entirely successful on his summons. The fact that there is now an agreement to set aside the Registrar's orders has occurred only as a result of subsequent developments, but those developments are related to the relief that the plaintiff was successful in claiming against NAB. It is apparent that, but for the provision of the documents produced by NAB and the subsequent affidavit of Mr Cai, the open offer is unlikely to have been made, leading to the resolution I have identified.
In relation to the costs of the first defendant's notice of motion, the principle in relation to costs where a matter is resolved is summarised by Burchett J in One.Tel at [6] as follows:
In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. In Ex Parte Lai Qin, McHugh J was careful to state (at 624) that the principles with which he was concerned were those that "govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means".
The first defendant, having resisted the provision of the documents sought by the plaintiff, including by seeking a review of the Registrar's decision that such documents be provided, made the offer it did by counsel's submission on 20 November 2020. The only explanation given for that offer was that Mr Cai's affidavit of 18 November indicated that the NAB documents did not advance the plaintiff's ability to identify where the money had gone. The suggestion by the first defendant that this was new information causing it to reconsider its position must be rejected.
The plaintiff sought preliminary discovery because he said he was not able to determine where the money went. The NAB statements produced by the NAB were only copies of documents that the first defendant would always have had. The first defendant must have known that it would not be possible at least for a stranger such as the plaintiff to identify from those records where the money had gone or the identity of any person who could be sued in relation to the transfer of the funds.
In any event, what Mr Cai disclosed in his affidavit did not change anything. The plaintiff had sought the documents from the first defendant because he said that he did not know where the money had gone, did not know who he should sue, and did not know whether to commence proceedings against Mr Liang, the first defendant, or anyone else. That was still the position after Mr Cai's affidavit. Mr Heath of counsel for the first defendant said that everybody makes an assessment (presumably, a re-assessment) about their position, and his client responded two days after receiving Mr Cai's affidavit offering the documents. It does not appear to me that the offer can be explained by Mr Cai's affidavit or any other supervening event.
The first defendant had resisted even providing its own copies of those bank statements to the plaintiff. It cannot be said that the provision of them by the NAB was a supervening event that gave rise to the open offer by the first defendant.
Although the term "surrender" as used in the authorities might be thought to be an unfortunate one, the principle is the same whatever term is used. I prefer to characterise the matter by saying that the first defendant has not provided any satisfactory explanation of what changed since the filing of the first defendant's notice of motion to explain the offer made in the submission of 20 November 2020. In those circumstances, the late offer of the documents was not a reasonable act in the sense that it provided a justification for not making a costs order against the first defendant. In those circumstances, it seems to me that the plaintiff is entitled to his costs of the notice of motion.
I note that the orders of the Registrar are only being set aside as a result of an agreement between the parties, and not because I found any error in her judgment.
Accordingly, I make the following orders:
By consent, set aside order 1 made by the Registrar on 5 August 2020.
Otherwise confirm orders 2, 3 and 4 made by the Registrar on 5 August 2020.
Dismiss the first defendant's notice of motion filed 3 September 2020.
The first defendant is to pay the plaintiff's costs of the notice of motion.
[6]
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Decision last updated: 17 December 2020