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 QCA 87
COURT OF APPEAL
Appeal No 13575 of 2020
SC No 10409 of 2018
KIN SUN CHAN Appellant
GOLDENWATER LDL PTY LTD First Respondent
ACN 166 820 711
YUE LIU Second respondent
XIANHUI MENG Third respondent
TUESDAY, 4 MAY 2021
- SOFRONOFF P: This is an appeal against an interlocutory order in a matter of practice and procedure. Although the pleadings are lengthy, the essential point in the appeal is a narrow one. The following facts are drawn from the relevant allegations in the Fourth Amended Statement of Claim.
- The second plaintiff, Ms Yue Liu, and the third plaintiff, Mr Xianhui Meng, are married. In 2011, they decided that Ms Liu and the couple’s two children would emigrate to Australia. The first defendant, Mr Kin Sun Chan, is an Australian citizen and holds a Queensland real estate agent’s licence. He advised Ms Liu about migration matters and offered to help her with the process. Ms Liu and her husband accepted Mr Chan’s offer of help, and in late 2013 Ms Liu and her children moved to this country.
- Soon after she arrived, Mr Chan told her that an apartment was for sale in the building in which she was living. He said the price was $800,000 and that she should buy it. He said that she should establish a family trust, and the trust should buy the apartment. Mr Chan said that he could help her with the transaction. Ms Liu accepted his offer and agreed to buy the apartment and also agreed to his advice that she should do so by means of a trust. Mr Chan took Ms Liu to a branch of the HSBC bank and arranged with bank staff to effect a transfer of $700,000 from her account to his. Mr Chan spoke in English to bank staff, and she did not understand what was said. When asked, she entered her PIN into a machine, and the money was transferred.
- Later, Mr Chan told Ms Liu that he had transferred this $700,000 from his account to the seller, but that that sum was not enough. He said that another $100,000 was needed. Earlier, Mr Chan had arranged to accept the transfer of money in Chinese currency held by Ms Liu in a bank in China into an account of his own in China in return for his promise to make an equivalent sum available to her in Australian dollars in an Australian bank account of his own when she arrived here. He suggested that he use that money, which he held for her, to make up the necessary $100,000, and she agreed. Mr Chan then transferred $100,000.
- Mr Chan then incorporated an Australian registered company in which he and Ms Liu were both directors and caused it to become the trustee of a unit trust of which he and Ms Liu held units and equal shares. Ms Liu did not know that he had arranged things in that way. The purchased apartment was transferred to this company, and it is one of the defendants in the proceeding.
- In fact, the purchase price of the apartment was only $600,000, and Mr Chan always knew that was so. The plaintiffs allege that Mr Chan was Ms Liu’s agent. They allege Mr Chan induced Ms Liu to pay the two sums, amounting to $800,000, by deceit and seek to recover it as damages.
- The crucial paragraphs of the statement of claim are these:
“29. In or about early September 2013, Chan told Liu words to the effect that:
- (a)another unit in the Oracle bui8lding, being unit 2107 (2107 Oracle), was for sale;
- (b)Liu should purchase 2017 Oracle so that she could tell immigration that it was her office, if there was an investigation;
- (c)Liu needed an office for her business investment visa in Australia;
- (d)Liu should purchase 2107 Oracle using a family trust in order to avoid any potential issues and that she would save a lot of tax.
- In a further conversation between Chan and Liu in or about September 2013:
- (a)Chan told Liu that the purchase price of 2107 Oracle was $800,000;
- (b)Liu told Chan that she wanted to purchase 2107 Oracle via a family trust to be established for herself, her husband and their children;
- (c)Chan said words to the effect that he would assist Liu to set up the family trust and with the purchase of 2107 Oracle by that trust;
- (d)Liu agreed to accept Chan’s offer of assistance.”
- The defendants filed an application to strike out these two paragraphs, as well as other paragraphs which are ancillary to these, and further paragraphs relating to other alleged misrepresentations. On 2 December 2020, Flanagan J dismissed the application with costs, and the defendants now appeal against his Honour’s orders. They urge, as grounds of appeal, that his Honour ought to have concluded that the relevant paragraphs disclosed no reasonable cause of action and that they had a tendency to prejudice or delay a fair trial. There are another eight grounds of appeal, but they add nothing further to the dispute.
- At first instance, the appellants submitted to Flanagan J that the plaintiffs were obliged to plead “the impugned paragraphs by adopting the following mode”, namely, by pleading the “precise words used in the relevant foreign language” and by pleading a “precise translation of each conversation” in English. They submit that the actual words used in the foreign language and the plaintiff’s translation of them into English are material facts that have to be pleaded.
- Flanagan J rejected this submission.
- The proposition that the pleading does not disclose a cause of action is untenable and can be ignored. The real question for his Honour was whether or not the form of pleading would prejudice a fair trial of the proceeding. Whether or not the pleading had that effect was a matter of judgment akin to the exercise of a discretion because it involved a consideration of a number of factors, none of which is necessarily determinative of a result. The Uniform Civil Procedure Rules 1999 (UCPR) requires a pleading to contain a statement of all the material facts and to state specifically any matter that, if not stated, may take the other party by surprise. That final aspect of the rule does not require a pleader to guarantee that the opposing party will encounter nothing unexpected at the trial. Trials are full of the unexpected. The rule requires a pleading to contain all that is reasonably and fairly necessary to ensure that the opposing party is not met at the trial by an unexpected turn in the case which that party, acting in good faith and reasonably, is unable to meet because of a natural failure to prepare to meet it having regard to the content of the pleading. That is what surprise means in the context of this rule, which has, in one form or another, existed since 1873.
- Whether a pleading does or does not comply with this requirement is a matter for the assessment and judgment of the judge who must decide the question ahead of the trial, like all pre-trial rulings. Cases cited by the appellant, like Brosnan v Katke  FCA 203, which was a decision after a trial and Maietti v Riccard  VSC 620, a defamation case, are concerned with the demands of particular kinds of cases and are of no assistance here. It is the task of that judge to consider the possible future effect of the pleading in the circumstances of the particular case and to make a critical judgment about whether there is a risk, and the extent of any such risk, that the pleading might prejudice a fair trial. That is not the function of the Court of Appeal.
- A rehearing of the case by the Court of Appeal would offend the principle which UCPR 5 entrenches into the procedure of the court.
- Rule 5 provides:
“(1) The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.
- (2)Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules.”
- For a very long time, this court and other appellate courts have applied the principle that particular caution should be exercised when asked to review decisions pertaining to matters of practice and procedure. Such decisions may not strictly involve the exercise of discretion of the kind discussed in House v the King (1936) 55 CLR 499. Nevertheless, because the management of a proceeding before trial is entrusted to the judgment of judges of the trial division, and because appeals against decisions of that kind are apt to cause delay, the Court of Appeal will only interfere to overturn a decision of that kind if there is shown to be an error of principle and the decision appealed from will work a substantial injustice to one of the parties. The enactment of UCPR 5 makes this venerable principle even more exigent.
- The appellants’ submissions should be rejected. It is true that, in some cases, it is necessary for a party to plead the exact words relied upon. But that is not every case. Moreover, the time when a party or a witness giving evidence was expected and required to recite the purported actual words of conversations because of a common forensic assumption, including an assumption held by judges, that was a feasible deed to perform, is long gone. That is one of the reasons why UCPR 152 says that unless precise words are material, a pleading may state the effect of spoken words as briefly as possible without setting out all the spoken words.
- In this case, the allegations of the kind complained of now were also made in early versions of the pleading and contrary to the appellants’ present assertions about the prejudice that they will suffer at the trial, they had no difficulty giving instructions enabling a detailed response to be pleaded to those other allegations. Indeed, although it is said that the appellants cannot respond to the allegations discussed above, paragraph 361 to 372 of the defence actually contained a detailed positive defence to those allegations and similar allegations, as Flanagan J noticed. It is true that allegations of fraud have lately been introduced, but the nature of the prejudice, if it existed, is the same.
- None of this part of the law of pleading is novel, and it is all set out in Flanagan J’s judgment. It would be enough in order to dispose of this appeal to observe that the appellants have not shown that Flanagan J’s reasoning involved any error of principle or that it was arguably wrong, but, plainly enough, the conclusion to which his Honour came was the only possible one open. Mr Chan and the other defendants could be under no misapprehension that the plaintiff’s case is that he told Ms Liu to the effect that the purchase price of the apartment was $800,000. Evidence given in the form “he told me that…” would be admissible. There is no requirement to plead anything more than that, as has already been pleaded in paragraph 30(a) of the statement of claim:
“Chan told Liu that the purchase price of 2107 Oracle was $800,000.”
- The appeal is dismissed with costs.
- MULLINS JA: I agree.
- WILSON J: I agree.
 The plaintiffs claim various other forms of relief in relation to this transaction but it is unnecessary to consider this aspect of the pleading.
 The statement of claim contains other allegations about other similar transactions that are alleged to have been induced by similar fraudulent misrepresentations. It is unnecessary to detail these.
 Applicants’ written submissions before Flanagan J, paragraph 21, AB 386.
 cf. Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at  per Gleeson CJ, Gaudron and Hayne JJ.
 Part 2, Rule 149.
 cf. Bert v Red 5 Limited  QCA 233 at - per Sofronoff P, cited by Flanagan J at  of his reasons.
- Published Case Name:
Chan v Goldenwater LDL Pty Ltd & Ors
- Shortened Case Name:
Chan v Goldenwater LDL Pty Ltd
 QCA 87
14 May 2021
- Selected for Reporting: