Yao v Fang[2025] QCA 86

SUPREME COURT OF QUEENSLAND

1. [1]
   THE COURT:  On 31 October 2022 Ms Fang and three Australian corporations of which she was the sole director, secretary and shareholder commenced a proceeding in the trial division.
2. [2]
   The plaintiffs’ case is that Ms Fang had been married to a Mr Wang from 2002 until 2019.  Both were citizens of the People’s Republic of China (PRC).  The plaintiffs contend that in August 2015 Mr Wang gifted Ms Fang the equivalent of AUD$100,000,000 from his personal funds.  At the time of the gift the funds were said to have been held on his behalf by certain third parties (who may be referred to as the custodians).  This arrangement may be referred to as the custodian arrangement.  The plaintiffs contend that the gift was formalised by a gift declaration instrument stamped by Mr Wang and dated 11 August 2015.  They contend that Ms Fang and Mr Wang agreed that the monies the subject of the gift should remain under the custodians’ control, albeit that they would now be held by the custodians on Ms Fang’s behalf.
3. [3]
   Mr Yao is the first defendant in the proceeding.  He, together with the fourth and fifth defendants (which are Australian corporations of which he is said to be the sole director and shareholder) may be referred to as the Yao defendants.  Ms Li is the second defendant in the proceeding.  She is Mr Yao’s wife.  She, together with the seventh and eighth defendants (which are Australian corporations of which she is said to be a director and majority shareholder) may be referred to as the Li defendants.  Ms Zhao is the third defendant in the proceeding.  She is Mr Yao’s mother.  She, together with the sixth defendant (which is an Australian corporation formerly associated with Mr Yao but of which Ms Zhao is said to be the sole director and shareholder) may be referred to as the Zhao defendants.
4. [4]
   The plaintiffs’ case is that in 2016 Ms Fang decided to migrate from the PRC to Australia.  To that end she retained Mr Yao to provide advice in relation to migration issues and in relation to the transfer of money from the PRC to Australia.  The plaintiffs say that Ms Fang caused the custodians to transfer the equivalent of about AUD$78 million of her monies to certain accounts at Mr Yao’s direction.  There are substantial disputes between the plaintiffs and the defendants about the amounts and circumstances of the transfers, the circumstances of Mr Yao’s involvement and also concerning the whereabouts of the funds and whether transferred monies were used to purpose properties in Australia in the names of the plaintiffs.  The plaintiffs say that they have claims against the Yao, Li and Zhao defendants as a consequence of what happened to Ms Fang’s monies.  They claim $78,673,449 (or alternative lesser sums) on a number of legal bases including claims for monies had and received, damages for deceit, equitable compensation, for an account, for monies held on trust, for damages pursuant to the Australian Consumer Law, and for damages for breach of fiduciary duty.
5. [5]
   It is uncontentious that significant funds were ultimately received into bank accounts in the name of Mr Yao and Ms Zhao in Australia and that, in September 2021, the Deputy Commissioner of Taxation (the Commissioner) garnisheed $28 million of those funds, asserting an entitlement to the monies for unpaid tax liabilities.  As between themselves and the Commissioner, the Yao and Zhao defendants have disclaimed any interest in the garnisheed funds, including by positively asserting that the funds were Ms Fang’s funds.
6. [6]
   It is an essential part of the plaintiffs’ case that the funds the subject of the proceeding, including the garnisheed funds, belonged to Ms Fang.  The plaintiffs joined the Commissioner as the ninth defendant, asserting Ms Fang’s entitlement to the garnisheed funds, an allegation which was traversed by non-admission by the Commissioner.  In the Yao and Zhao defendants’ respective defences, the plaintiffs’ allegations that Ms Fang owned the funds were dealt with inconsistently.  Allegations pleaded by the plaintiffs at [26(d)], [26(e)], [35(c)], [78] and, particularly [82A] of their statement of claim that the relevant monies were owned by Ms Fang were traversed by non-admission by the Zhao defendants in their defence, but the Yao defendants had pleaded to those and other paragraphs in the statement of claim in terms which were only consistent with the Yao defendants having admitted that Ms Fang owned the funds.
7. [7]
   The proceeding was placed on the commercial list in the trial division on 19 May 2023 after the plaintiffs obtained freezing orders against the Yao and Zhao defendants.  On 22 December 2023 the matter was listed for an 18-day trial to commence on 28 October 2024.  It was not then ready for trial.  The intention was that the parties be given early dates for trial so that they could properly work towards those dates.
8. [8]
   On 24 September 2024 – which was just over a month from the scheduled commencement of the trial – the Yao and Zhao defendants applied to vacate the trial dates and to have consequential directions made.  The principal basis for that application was their contention that investigations conducted by their solicitors had suggested the basis for amended defences which would involve both groups of defendants separately pleading a denial of the proposition that Ms Fang had owned the monies the subject of the proceeding, together with a positive case associated with that denial which would, amongst other things assert –

   1. the documents which were central to the plaintiffs’ case were either forgeries or of doubtful authenticity;
   2. Ms Fang and Mr Wang were never married (or divorced);
   3. the alleged custodian arrangement did not reflect any arrangement or understanding which in fact existed; and
   4. the funds for which Ms Fang sued and for which she sought damages did not ever belong to her.
9. [9]
   At the time the application was made the Yao and Zhao defendants by their solicitor estimated they would need 3 to 4 weeks to finalise their investigations sufficiently to be able to plead the case.  The contemplated amendment would require leave to withdraw certain admissions already made.
10. [10]
    The Yao and Zhao defendants’ application succeeded before the primary judge on 30 September 2024.  Her Honour accepted the application was brought in good faith, noted that she was not prepared to conclude (nor had it been suggested that she should) that the delay was the result of a deliberate tactical decision, and found that the defendants should be given an opportunity “to properly plead an attempt to prove that case in the interests of justice.”  Her Honour made orders which granted the application, vacated the trial dates and ordered that the proceeding “will be listed for trial commencing 14 July 2025, with a present estimate of 30 days, to be confirmed when calendar issued.”  Her Honour made timetabling directions for the foreshadowed application for leave to amend and to withdraw admissions with a view to that application being heard on 29 November 2024.  Her Honour also listed the proceeding for review on that date.
11. [11]
    The application for amendment and leave to withdraw admissions was argued on 29 November 2024 but not determined until 21 March 2025.  By orders made in a judgment published 21 March 2025, the primary judge refused the Yao and Zhao defendants the leave which they had sought in relation to the principal ground of their application, namely the question of ownership of the funds said to be Ms Fang’s.  Despite the fact that the primary judge specifically proceeded on the basis that –

“… the case sought to be run by the Yao and Zhao defendants’ – that Ms Fang was not the owner of the relevant funds – is a reasonably arguable case, sufficiently particularised and supported by evidence those defendants would seek to adduce at trial …”,

the primary judge determined that leave should not be granted to withdraw the ownership admission and stated that it was particularly important to her decision–

“… that the Yao and Zhao defendants have not adequately explained how the admissions came to be made in the first place, which leads me to conclude there is not a real issue in dispute that the interests of justice require to be addressed.”

12. [12]
    The Yao and Zhao defendants had mixed success in obtaining leave in relation to some other parts of their proposed pleading.  By orders made on 1 April 2025 the primary judge listed the matter for a 6-week trial commencing on 21 July 2025 and made other timetabling orders.
13. [13]
    By the present appeal the Yao and Zhao defendants effectively seek to reverse the outcome on the part of the application for amendment and leave to withdraw admissions on which they had failed, save for one minor part of the application which they did not press.^[1]  Their appeal is resisted by the plaintiffs, although the plaintiffs concede that if the Yao and Zhao defendants succeed in relation to their appeal concerning the ownership of funds issue, they plaintiffs would not resist their having leave to amend in relation to the other parts of their proposed amendment and on which they had failed before the primary judge.  The Li defendants and the Commissioner chose to play no role on the appeal, although they had supported the application for vacation of the October 2024 trial dates.
14. [14]
    For reasons which follow, the appeal must succeed.  The primary judge’s conclusion that there was not a real issue in dispute that the interests of justice required to be addressed was inconsistent with the basis on which her Honour had vacated the original October 2024 trial dates and was, in any event, an inferential conclusion of mixed fact and law which we conclude was in error having regard to the material which was before her Honour in relation to the application.  On that basis, we conclude that her Honour’s discretion miscarried.  We would exercise our discretion in favour of permitting the proposed amendments.  It is common ground that in the event the appeal succeeded the trial dates would have to be vacated and we would make that order.

The September 2024 decision to vacate trial dates

15. [15]
    The Yao and Zhao defendants summarised the basis on which they founded their application to vacate the October 2024 trial dates in the following terms in written submissions before the primary judge:

“The first and third to sixth defendants (Yao and Zhao defendants) respectfully seek adjournment of the trial, listed to commence in less than a month, for the reasons below.

There are a number of serious procedural problems which amply justify adjournment.  However, the central point is that the Yao and Zhao defendants, in investigations not yet complete despite earnest pursuit, have recently become aware of matters which undermine inter alia the essential premise of the plaintiffs’ case that the funds in question belonged to Ms Fang.  It would undermine public confidence in the Courts, and be contrary to the interests of justice, were the trial to proceed without the Yao and Zhao defendants having a reasonable opportunity to sufficiently complete those investigations and then plead and present lay and expert evidence accordingly; directions to that effect are sought.

There is no inherent urgency or particular prejudice identifiable.  The funds, mostly either garnisheed by the Commissioner or used to purchase properties held by Ms Fang or related entities, are all the subject of Mareva orders.”

16. [16]
    The burden the Yao and Zhao defendants faced on that application was very significant.  Their application was made in respect of a commercial list case for which the trial was imminent.  Their application specifically recognised that they would need leave to amend including by withdrawing pleaded admissions, yet they were bringing the application in the context in which they did not yet have a proposed amended pleading and estimated that they would not have one prepared until a time after the scheduled commencement of the trial dates which they sought to vacate.  They faced a plain need to explain to the Court why they should be permitted to take this course.
17. [17]
    By reference to r 5 of the Uniform Civil Procedure Rules 1999 (Qld), Aon Risk Services Australia Ltd v Australian National University^[2] and Cement Australia Pty Ltd v Australian Competition and Consumer Commission^[3] the Yao and Zhao defendants recognised their burden when they advanced these submissions:

    1. Case management considerations do not override the broad discretion focusing on doing justice between the parties nor confine the relevant considerations which include, by r 5(1), facilitating the just and expeditious resolution of the real issues in a proceeding.
    2. Case management considerations do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will.
    3. Whilst various factors are identified in the judgment as relevant to the exercise of discretion, the weight to be given to these factors, individually and in combination, and the outcome of that balancing process, may vary depending on the facts in the individual case.
    4. Other factors identified in Aon relevantly included:
       1. the nature and importance of the amendment to the party applying;
       2. weighed against that, the extent of the delay and the costs associated with it together with assumed and any proven specific prejudice;
       3. whether it can properly be concluded that a party has had sufficient opportunity to plead its case and that it is too late for a further amendment;
       4. the provision of an explanation for the delay, showing that the application is made in good faith and bringing the circumstances giving rise to the amendment to the court’s attention so that, again, those circumstances can be weighed against the effects of delay and case management considerations;
       5. as one of those circumstances, at least inferentially, whether the delay was the result of a deliberate tactical decision.
18. [18]
    The Yao and Zhao defendants had not filed any affidavits by Mr Yao, Ms Zhao or any other person authorised to swear affidavits on behalf of the corporate defendants.  Rather they relied on, amongst other things, three affidavits by their solicitor, Mr Cohen, namely:

    1. Mr Cohen’s third affidavit, affirmed 10 September 2024;
    2. Mr Cohen’s fourth affidavit, affirmed 24 September 2024;
    3. Mr Cohen’s fifth affidavit, affirmed 29 September 2024.
19. [19]
    Amongst other things, the Yao and Zhao defendants submitted that the third and fourth affidavits of Mr Cohen had explained the process by which Mr Cohen had developed suspicions concerning the plaintiffs’ case concerning Ms Fang’s ownership of the funds the subject of the proceeding and the delays and difficulties he had been experiencing in carrying out investigations concerning those allegations and obtaining instructions from his own client.  They submitted that it could not sensibly be argued that the delay in identifying a need for, or in conducting, these investigations or completing lay and expert evidence was the result of any tactical or forensic decision or of an absence of sufficient diligence by the Yao and Zhao defendants or their solicitors.  They submitted that the delay was amply explained by reference to Mr Cohen’s affidavits.  They submitted that there had not been a sufficient opportunity, in the circumstances and having regard to the significant procedural demands of the case, for the Yao and Zhao defendants to plead the case anticipated to arise from the investigations.  Mr Cohen’s fifth affidavit set out a detailed explanation justifying his expression of opinion that it would take at least three weeks but most likely about four weeks to draft and settle proposed amendments to the Yao and Zhao defendants’ defences and further affidavit material supporting an application for leave to amend.
20. [20]
    The plaintiffs opposed the application, submitting, amongst other things –

    1. the new case that the Yao and Zhao defendants wished to run was weak;
    2. there was an inadequate explanation as to why the proposed new pleading could not be available at the time the application was made, noting that Mr Cohen had deposed that he had formed the view there was a proper basis for it by 17 September 2024;
    3. the Yao and Zhao defendants should provide a proposed amended Defence immediately, in order to allow the Court to assess: (a) its viability; (b) whether leave to amend at this late stage ought be granted; and (c) either way, whether the trial could proceed, or at least commence, within its current dates;
    4. the Yao and Zhao defendants’ affidavit material evidenced extensive delay both in making their investigations, and in bringing the application which, taken with their lack of proper explanation as to why they had not yet delivered their lay or expert opinion evidence told against any exercise of discretion in their favour.
21. [21]
    In an ex tempore judgment, the primary judge explained why she concluded that the application should succeed and the trial dates be vacated.  The critical aspects of her Honour’s reasoning were as follows.
22. [22]
    First, her Honour noted that although it had been suggested that there were matters apart from the proposed amendments which justified the conclusion that the trial was not ready to proceed and should be adjourned, she was not inclined to give them much weight.
23. [23]
    Second, she found that the key to the application was the defendants’ proposal to amend their defences to include a defence that was not presently pleaded and which would require leave to withdraw certain admissions in relation to whether the funds in question that were transferred from the PRC to Australia were, in fact, funds belonging to the plaintiffs.
24. [24]
    Third, although no proposed pleading was before her, there was in some detail an explanation of the type of evidence or material facts that the defendants proposed to plead to support of an inferential case that the relevant funds did not belong to Ms Fang.  In this regard her Honour noted the way in which Mr Cohen’s suspicions had developed in relation to that question leading up to his recently forming the view that there was a sufficient basis for those defendants to plead that the funds the subject of the proceeding did not at any stage, in whole or part, belong to the plaintiffs.
25. [25]
    Fourth, her Honour noted that if that proposition was correct it would be a complete or potentially partial defence to the claim advanced by the plaintiffs.
26. [26]
    Fifth, her Honour considered the factors relevant to her discretion to adjourn the trial if it was necessary to do justice between the parties.  She considered delay; case management considerations; general and specific prejudice to the plaintiffs.  Her consideration of the various factors concluded in these passages (emphasis added):

“In terms of whether the Yao defendant has had a sufficient opportunity to plead its case, whilst, as I have said, it is unfortunate that the suspicions have taken so long to investigate to – before that the matter could be pleaded is of concern. It is not a case where I think it could be concluded without more, but it is too late for further – for an opportunity to further amend be given, in the circumstances where the solicitor has set out in significant detail the inquiries that he made and the reasons for delay.

Further, whilst in managing the matter to date I had come to somewhat of an impression that an application to adjourn the trial by the defendants was likely, there is no reason to conclude that the application for an adjournment is not made in good faith and that it is not being brought at a time that the solicitor considers is appropriate, given the evidence available that can be pleaded. Thus I am not prepared to conclude – and it was not suggested that l would conclude – that the delay was as a result of some deliberate tactical decision.

In considering each of those matters – sorry, the other thing I should specifically make reference to is the submission by the plaintiff that the proposed case has demonstrable weakness, such that that would factor into whether an adjournment of the trial to allow a further pleading should be permitted.

There does seem, on the face of the material presented in the Yao solicitor’s affidavit, to be some evidentiary basis for the suspicions that were held. It does not seem to me to be so weak a case that the defendants should not be given an opportunity to properly plead an attempt to prove that case in the interests of justice.

Accordingly, when I balance all of those factors together, it is with some significant hesitation that I consider that the interests of justice do require that the present trial dates be adjourned. I certainly would not want any such adjournment to be seen as an opportunity for the defendants not to properly progress the matter, in circumstances where just as I said back in late [2023], the matter is deserving of whatever expedition can reasonably be achieved in relation to the matter.”

27. [27]
    As already mentioned, the primary judge vacated the October 2024 trial dates; set tentative trial dates for July 2025; and made timetabling directions for the foreshadowed application for leave to amend and to withdraw admissions with a view to that application being heard on 29 November 2024.  Her Honour also ordered that the plaintiffs’ costs of the Yao and Zhao defendants’ application and thrown away by reason of the adjournment of the trial be the plaintiffs’ costs in the proceeding.

The March 2025 amendment decision

28. [28]
    As it transpired, Mr Cohen had underestimated the time it would take to finalise an amended pleading and the Yao and Zhao defendants did not file the application within the time provided by the primary judge’s timetabling directions.  That led to an application by the plaintiffs on 4 November 2024 seeking orders which amongst other things would have precluded the Yao and Zhao defendants from filing an application to amend at all.  The Yao and Zhao defendants resisted that application in reliance on a sixth affidavit from Mr Cohen which explained the very considerable work which had been carried out in preparation of the pleading since the trial dates had been vacated.  The plaintiffs’ application failed and the primary judge extended the time within which the Yao and Zhao defendants were to provide their proposed amended pleadings.
29. [29]
    The Yao and Zhao defendants again did not file any affidavits by Mr Yao, Ms Zhao or any other person authorised to swear affidavits on behalf of the corporate defendants in support of their application.  In addition to the affidavits of Mr Cohen previously relied on, they relied on a seventh affidavit from Mr Cohen, affirmed on 21 November 2024, and to which the proposed draft pleadings were exhibited.  Mr Cohen’s seventh affidavit contained an exhaustive explanation virtually on a paragraph-by-paragraph basis of the nature of the proposed amendments, the evidentiary basis for them and the extent to which they involved the need for withdrawal of existing admissions by the Yao defendants.  The proposed separate amended defences for the Yao defendants and the Zhao defendants contained the previously foreshadowed denials and associated positive case.  In particular, and amongst other things, the proposed new pleadings pleaded –

    1. a denial of the allegation that Ms Fang and Mr Wang had ever been married or, it would follow, divorced, and a positive case that the documents on which the plaintiffs apparently relied to support the contrary proposition were not genuine documents; and
    2. a denial of the allegations concerning Ms Fang’s ownership of the funds the subject of the proceeding, and a positive case that the gift declaration document was not a genuine document, Mr Wang had never given Ms Fang the funds, and the documents on which Ms Fang relied to allege that the funds were hers and were held by the custodians on her behalf pursuant to the custodian arrangement were not genuine and did not record any transaction which had in fact occurred.
30. [30]
    The Yao and Zhao defendants submitted that the circumstances in which the amendments had been sought to be made had already been accepted by the primary judge as sufficient to justify adjournment of the trial.  That submission was correct in our view.  They submitted that nothing had materially changed since then, save for further investigations of the kind which had been foreshadowed in September and for the subsequent production of the proposed amended defences.  This submission too was correct in our view, having been demonstrated by Mr Cohen’s sixth and seventh affidavits.  The Yao and Zhao defendants explained the nature of the proposed amendments and submitted that they raised a reasonably arguable defence which, if true, went to the heart of the plaintiffs’ entitlement to any relief.  That submission too was correct in our view, as the primary judge had already recognised.  They submitted, again correctly in our view, having regard to Mr Cohen’s affidavits that the positive case had an evidentiary foundation, the delay in identifying which had been amply explained.  They submitted that permitting the amendments would cause no relevant prejudice to the plaintiffs and could be accommodated by trial dates in 2025.  The submission concerning prejudice could not be accepted at the least because of the likely extent of costs thrown away by the amendments.
31. [31]
    Despite the fact that the October 2024 trial dates had already been vacated in favour of tentative July 2025 trial dates, the plaintiffs resisted the application on the principal ground argued by the Yao and Zhao defendants.  Their principal submissions were as follows.

    1. First, they contended that the defences now sought to be raised, and the key admissions sought to be withdrawn, were not matters recently discovered by the Yao and Zhao defendants.  The plaintiffs contended the principal matters relied on were known by the Yao and Zhao defendants prior to the commencement of the proceeding.
    2. Second, they emphasised that the Yao defendants had advanced pleadings and made assertions to the Commissioner which were consistent only with an admission that the moneys the subject of the proceeding were owned by Ms Fang.
    3. Third, there was no adequate explanation before the Court for the Yao and Zhao defendants conducting this litigation in this manner; in particular, for their failure to raise these matters at any time prior to the application they made in September 2024.  They contended the inadequacy of the explanation gave rise to the inference that:

“…the Yao and Zhao defendants deliberately failed to reveal their true defences to the Plaintiffs’ claims until only weeks before the matter was listed for trial, in order to obtain a forensic or strategic benefit in obtaining the adjournment of the trial.”

4. Fourth, and related to the third point, they submitted that there was good reason to conclude that Mr Yao was a person with no credibility and upon whom no reliance could be placed.
5. Fifth, they would suffer substantial prejudice if the amendments were permitted.  They were likely to incur significant additional costs in responding to the amended defences, including by filing updated lay and expert evidence, undertaking further disclosure and preparing amended replies.  An eleventh affidavit by their solicitor, Mr Deane, had outlined some evidence responding to the case identified in Mr Cohen’s seventh affidavit, but had estimated “that there will be an additional 400-500 hours of work required to respond to the proposed amendments sought to be made by the Yao and Zhao defendants to their pleadings.”
6. Sixth, Mr Yao and Ms Zhao had apparently permanently left the jurisdiction.  While the limited assets belonging to the Yao and Zhao defendants in Australia were the subject of freezing orders, it would be highly unlikely that those assets would be sufficient to satisfy a judgment against the Yao and Zhao defendants, let alone a costs order in favour of the plaintiffs.

32. [32]
    During the course of argument, the primary judge raised with the parties the question whether it might be possible to condition any grant of leave by making the grant subject to a condition that the Yao and Zhao defendants pay into Court an amount as security for costs thrown away by reason of the amendments.  Supplementary submissions were delivered by the parties in which it was common ground that there was jurisdiction to impose such a condition but dispute as to whether it was appropriate so to do.  The plaintiffs submitted an appropriate security would be a bank guarantee in the amount of $500,000 and the Yao and Zhao defendants resisted that contention, including on the basis that “… [t]here is no rational basis to conclude, as the plaintiffs urge, a deliberate failure to reveal a known defence for unidentified forensic or strategic benefit or (contradictorily) recent invention.”
33. [33]
    As already mentioned, the application for leave to amend and to withdraw admissions was argued before the primary judge on 29 November 2024 and leave was refused in a judgment published on 21 March 2025.

Consideration of appeal

34. [34]
    A number of appeal grounds were advanced in relation to the decision of the primary judge but we consider it is necessary only to found our decision based on accepting the submission of error in relation to the finding that her Honour identified as particularly important to her conclusion, namely that there was not a real issue in dispute that the interests of justice require to be addressed.  If that finding was in error, then it would follow that her Honour’s discretion miscarried.
35. [35]
    In order to provide an explanation for our conclusion it is necessary to identify and to discuss the critical aspects of her Honour’s reasoning as expressed in her reasons for judgment of 21 March 2025.
36. [36]
    First, after having recited the relevant aspects of the procedural history, the primary judge stated relevant principles informing the exercise of her discretion.  No criticism could be advanced in relation to the principles her Honour stated by reference to Aon Risk Services Australia Ltd v Australian National University^[4] and Hartnett v Hynes.^[5]
37. [37]
    Second, the primary judge had particular regard to an orthodox statement of principles concerning the need for a party to provide explanations when seeking to withdraw pleaded admissions as expressed in Rigato Farms Pty Ltd v Ridolfi^[6] and in Hanson Construction Materials Pty Ltd v Norlis Pty Ltd.^[7]  No criticism could be advanced in relation to her Honour’s reliance on these cases.  Her Honour quoted these well-known passages from the former case:

    1. per de Jersey CJ at [19]-[20]:

“Asked to exercise the discretion under r. 189(3), a court would ordinarily expect sworn verification of the circumstances justifying a grant of leave.  Those circumstances may include why no response to the notice was made as required, the response the party would belatedly seek to make, and confirmation that the response would accord with evidence available to be led at a trial.  Here none of those matters was so verified.  Issues of prejudice may also fall for consideration upon the hearing of such an application.

There is no principle that admissions made, or deemed to have been made, may always be withdrawn ‘for the asking’, subject to payment of costs.  The discretion is broad and unfettered, as exemplified by Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 N.S.W.L.R. 738 and Equuscorp Pty Ltd v Orazio [1999] QSC 354.”

2. per McPherson JA at [27]:

“Before permitting the admission to be withdrawn, the first step to be determined here was whether there was a genuine dispute about the defendant’s liability in this action.  Drawing on the analogy provided by another branch of the law, it is not enough for that purpose simply to assert that a dispute exists: see Re Brighton Club & Norfolk Hotel Co Ltd (1865) 35 Beav. 204, 205; (1865) 55 E.R. 873, 874.  Some proper basis must be laid for that assertion, which would ordinarily include an explanation of how the earlier admission came to be made and why it should now be permitted to be withdrawn.  That is not shown by saying that there has been a change of solicitors, or that it is possible to see that, before the admission was made, the issue of liability was an open question.  Here the defendant has not condescended to swear to the circumstances in which the admission came to be made, or to show that it occurred by inadvertence, mistake or some other way that might now justify its withdrawal.”

3. per Williams J at [32]:

“Certainly an admission flowing from the operation of r. 189 should not be withdrawn merely for the asking.  In my view a clear explanation on oath should be given as to how and why the admission came to be made and then detailed particulars given of the issue or issues which the party would raise at trial if the admission was withdrawn.”

38. [38]
    Third, her Honour identified three factors which she concluded favoured the grant of leave, four factors which she concluded sounded against the grant of leave and other factors which were neutral.  Having balanced those considerations her Honour concluded leave should not be given.  It is necessary only to address her Honour’s analysis of the factors for and against leave and her Honour’s conclusion.
39. [39]
    As to the first factor in favour of the grant of leave, her Honour stated:

“… I proceed on the basis that the case sought to be run by the Yao and Zhao defendants’ – that Ms Fang was not the owner of the relevant funds – is a reasonably arguable case, sufficiently particularised and supported by evidence those defendants would seek to adduce at trial.  That basis gains some support from the fact that [the Commissioner] in its pleading made a non-admission about ownership of the garnished funds.  Further, because of that non-admission, the issue of ownership of the garnished funds will be a live one at trial although [the Commissioner] will be restricted in the evidence it can adduce in relation to the issue – rule 165(2) UCPR.”

40. [40]
    It may be noted that, like the Commissioner, the Zhao defendants too had traversed the ownership allegations by non-admission.  Her Honour’s observations concerning the Commissioner could have been made in relation to the Zhao defendants as well.  That omission seems to us to be of little moment.  Her Honour went on to acknowledge that the resolution of the real issues in dispute was a weighty factor to be considered and was important in the interests of justice.  But her Honour qualified that statement by stating that whether there was a real issue in dispute may be influenced by the explanation as to how the admission came to be made in the first place.  We will come back to that observation when we discuss the conclusion her Honour reached.
41. [41]
    The second factor in favour of the grant of leave was that the trial was not “imminent” and was likely to be scheduled to commence around 21 July 2025.  Even if those dates had to be vacated, a trial might still be able to be heard in 2025.  Curiously her Honour went on to find that the possibility that July trial dates might have to be vacated was the first factor sounding against the grant of leave.  That conclusion seems to us to have been in error.  We observe:

    1. The October 2024 trial dates had already been vacated by her Honour’s order of 30 September 2024.
    2. Trial dates were not set by that order.  Rather, as we have already noted, the order stated that the trial “will be listed for trial commencing 14 July 2025, with a present estimate of 30 days, to be confirmed when calendar issued.”
    3. Logically, as at 30 September 2024, the not yet confirmed trial dates must have been set based on an assumption that they could accommodate whatever delay might be caused by the proposed new issues, once they were clarified.
    4. By the time the amendment application was argued before her Honour on 29 November 2024, Mr Deane for the plaintiffs had estimated that an additional 400-500 hours of work were required to respond to the proposed amendments sought to be made by the Yao and Zhao defendants.
    5. Consideration of the transcript of argument on 30 November 2024, revealed that at the close of argument her Honour recognised that the July 2025 trial dates should be regarded as only tentative trial dates.  Her Honour went on to ask counsel for the Yao and Zhao defendants whether any problems might be caused to those dates if the application was not resolved until January 2025.  He submitted that there might be difficulties given the 500-hour estimate, but that was something which did not then need to be decided.
    6. As it happened, the application was not able to be resolved by her Honour until 21 March 2025 and her rejection of the application enabled her to confirm July 2025 trial dates by a subsequent order on 1 April 2025.
    7. This history reveals that there is no basis on which it could be said that any need to vacate tentative trial dates in July 2025 could be said to be a factor against the grant of leave.  Trial dates had already been vacated.  Once that had occurred trial dates could only ever properly be regarded as tentative and necessary to be set once one having assessed the impact of whatever amendments were properly to be allowed.
42. [42]
    The third factor in favour of the grant of leave was that her Honour found there was some explanation for delay in relation to which her Honour observed:

“The issue only appears to have arisen because of enquiries made by the Yao and Zhao defendants’ current solicitor and those investigations have taken some time to advance to a stage permitting him to be able to plead the defences now sought to be advanced. Whilst the investigations have taken a significant period of time, at least some of the delay is to be expected in the circumstances of the proceeding involving an overseas connection.”

43. [43]
    The first factor which her Honour identified as sounding against the grant of leave was the factor that the grant might lead to vacating trial dates in July.  We have already addressed that consideration.
44. [44]
    The second factor against the grant of leave was that there had been no affidavit evidence from the Yao and Zhao defendants which had addressed how the admissions which had been made in relation to the question of Ms Fang’s ownership of the funds the subject of the proceeding had come to be made in the first place.  Her Honour correctly observed that such an explanation would ordinarily be required.  A fortiori, her Honour concluded in light of the fact that Ms Fang’s ownership had been asserted to the Commissioner; Mr Yao had known of some of the evidence now relied on; and the late nature of the application itself.  Her Honour concluded that there was no evidence about what the natural person defendants actually knew or what they had told their solicitors which led to the admissions being made.
45. [45]
    The third factor which her Honour identified as sounding against the grant of leave was that the basis for the proposed denial that the relevant funds were owned by Ms Fang seemed to rely upon matters that were known, at least to Mr Yao, at the commencement of the proceeding, the pleaded matters having occurred between 2016 and 2021.  Whether this factor was in error was the subject of argument before this Court.  It is true, as the Yao and Zhao defendants submitted, that the material facts which they plead (namely falsity of alleged marriage, falsity of divorce, falsity of alleged gift; falsity of alleged custodian arrangements) were not matters capable of being “known” by someone in Mr Yao’s position.  On the other hand, as the plaintiffs submitted to this Court, what is revealed is that Mr Yao had some of the documentary evidence before him which is now relied on against the plaintiffs.  Had he analysed that evidence with a degree of rigour he could have formed the same doubts that Mr Cohen subsequently formed.
46. [46]
    The fourth factor identified as sounding against the grant of leave was the prejudice suffered by the plaintiff in terms of delay and additional cost in responding to the proposed amended defences.  Her Honour observed that the defendants had not put forward a proposal as to how such prejudice might be practically alleviated, noting that whilst there were freezing orders in place in respect of the value of the assets within jurisdiction was far below the amount of the claim, and any assets in the PRC (where the individual defendants are now located) were likely to be beyond reach.  We take her Honour’s remark about the lack of a proposal to be a remark directed at the absence of any proposal to provide security for the costs thrown away.
47. [47]
    Ultimately, the primary judge expressed her conclusion concerning the factors for and against the grant of leave in these terms:

“In my view, in considering the competing factors, leave should not be granted to the Yao and Zhao defendants to withdraw the ownership admission. Particularly important to that outcome is that the Yao and Zhao defendants have not adequately explained how the admissions came to be made in the first place, which leads me to conclude there is not a real issue in dispute that the interests of justice require to be addressed. The Yao and Zhao defendants have had more than an adequate opportunity to plead the defences they wished to maintain and the (second) trial should not now be derailed by a late sought amendment in all of the circumstances of the proceeding.”

48. [48]
    The primary judge was undoubtedly correct to conclude a direct explanation of why the admissions came to be made by the Yao defendants in the first place would ordinarily have been expected.  Parties should ordinarily be regarded to be bound by the way in which they conduct their cases and not permitted to change course without good reason having been shown.  In a particular case, for example, it might well be necessary for a party seeking to withdraw pleaded admissions to prove an explanation from a relevant natural person so as to negate a possible inference adverse to the good faith of their proposed conduct.  Such a party has the persuasive burden on the application and the absence of such evidence might well justify rejecting the application.
49. [49]
    But that is not this case, at least where the critical second application was to be addressed in a context where the disposition of the Yao and Zhao defendants’ first application had already altered the discretionary landscape by obtaining the vacation of the October 2024 trial dates and by obtaining good faith findings in their favour.  To our minds, the absence of evidence from the natural person defendants was at least as significant for the disposition of the first application as it was for the disposition of the second application, yet its absence on the occasion of the first application was not seen as an overwhelming obstacle.  It is hard to see how in that context it was legitimate to regard it as such on the second occasion.
50. [50]
    It could not, for example, be thought that in the primary judge’s reasons on the second application her Honour had meant to convey that she accepted the submissions which the plaintiffs had then advanced to her that the Yao and Zhao defendants had deliberately failed to reveal their true defences to the plaintiffs’ claims until only weeks before the matter was listed for trial, in order to obtain a forensic or strategic benefit in obtaining the adjournment of the trial.  As previously noted, her Honour had already rejected any such conclusion in her decision to vacate the October 2024 dates.  In theory of course, her Honour would not be bound by her previous conclusion and if the evidence justified it her Honour could have formed the view that her previous conclusion was mistaken.  In this case, however, that would have been surprising because the evidence had not changed adversely to the Yao and Zhao defendants in that regard as between the two judgements of her Honour.  Moreover, if that was what her Honour had meant, it is inconceivable that her Honour would not have said it.
51. [51]
    In any event, the plaintiffs’ argument before this Court did not seek to support such an understanding of the primary judge’s reasons.  Nor was there any notice of contention seeking to support her Honour’s orders on the basis that her Honour ought to have drawn the inference adverse to the good faith of the Yao and Zhao defendants which the plaintiffs had suggested she ought to have drawn.  Nor, for that matter, was any submission advanced to this Court that it should draw that inference in the event that we came to the conclusion that the discretion had miscarried.
52. [52]
    Once bad faith tactical considerations are discounted from consideration, we conclude that the correct conclusion open on the evidence was that the issue of Ms Fang’s ownership of the funds was a real issue in dispute that the interests of justice required to be addressed.  Indeed, once bad faith tactical considerations were discounted, the most likely conclusion was that the admissions were made on the basis of mistaken assumptions made on the basis of insufficient investigation and attention to detail.  That conclusion finds support in the fourth and seventh affidavits of Mr Cohen generally, but also particularly in his seventh affidavit at [122] to [124] where he expressed this direct explanation:

“When I prepared the amended Yao defence [which responded to an allegation by the plaintiffs concerning Mr Yao dealing with ‘Ms Fang’s moneys’], I continued to use the phrase ‘Ms Fang’s moneys’ which had already been adopted in the Yao defence. I did so because of the matters deposed to in paragraph 16 of my fourth affidavit.

Subparagraphs 26(a)(iv), (v), and (vi) of the proposed defences plead, by reference to the ‘Transfer Funds’ (which is defined in introductory paragraph C) instead of ‘Ms Fang’s moneys’. To the extent that there was an admission in these subparagraphs of the Yao defence, the Yao defendants seek leave to withdraw the admission to plead, in the proposed Yao defence, that the funds the subject of this proceeding do not belong to Ms Fang based on the matters deposed to in my third and fourth affidavits.

The Yao and Zhao defendants did not sooner seek leave to withdraw these admissions, because:

1. of the matters deposed to in paragraph 16 of my fourth affidavit;

2. as I deposed to in paragraphs 14 to 95 of my fourth affidavit, while I had suspicions, it was not until shortly before 17 September 2024 that I considered there was a proper basis to assert, inter alia, that the funds for which Ms Fang sues do not and did not ever belong to her.”

53. [53]
    Our conclusion that the primary judge was mistaken in finding that there was no real issue which the interests of justice require to be addressed concerning the question of Ms Fang’s ownership of funds is sufficient to justify a conclusion that the primary judge’s discretion miscarried.
54. [54]
    We would, in the exercise of our own discretion, conclude that leave should be given in relation to the question of Ms Fang’s ownership of the funds the subject of the proceeding for these reasons:

    1. The discretionary landscape was significantly altered in favour of the Yao and Zhao defendants’ application by the first decision to vacate the October trial dates and to reject bad faith.  Save for the proposition that there was no prejudice to the plaintiffs, we would, as already mentioned, accept the submissions on behalf of the Yao and Zhao defendants to the primary judge recorded at [30] above.
    2. The question whether Ms Fang owns the funds was already in issue in the trial as between the plaintiffs on the one hand and on the other hand the Commissioner and the Zhao defendants.  Their ability to explore the issue at trial would, however, be constrained by their having traversed the relevant allegations only by non-admission.  In light of the next circumstance, that is an undesirable outcome.
    3. For reasons already advanced, the positive case that Ms Fang was not the owner of the relevant funds is a reasonably arguable case, sufficiently particularised and supported by evidence that at least the Yao and Zhao defendants would seek to adduce at trial.  It is not suggested that it is appropriate to draw a conclusion that the issue is being raised in bad faith.  The weight of this consideration is not diminished by the fact that the issue could have been raised earlier if Mr Yao or his lawyers had more carefully tested their assumptions by reference to documents which he had already possessed.
    4. There is no sense in which the Yao and Zhao defendants should be regarded as having sought to withdraw amendments merely “for the asking” or merely because they raise an arguable case.
    5. Delay up to September 2024 had in effect already been excused by virtue of the vacation of the October 2024 trial dates.  Delay between the order vacating the October 2024 trial dates and the hearing of the application for leave was explained by the need to draw the amendments.  For reasons expressed at [41] above it would be wrong to attribute to the defendants any subsequent delay and wrong to conclude that they had caused any “second” vacation of trial dates.
    6. The foregoing considerations outweigh the undoubted prejudice which the plaintiffs will suffer in terms of the delay caused by having lost the October 2024 trial dates and by the undoubted but as yet unquantified costs thrown away by reason of the amendment.  In this regard we note that the assessment of that element may be a matter of some complexity in light of the fact that as against the Commissioner and the Zhao defendants the plaintiffs always had to prove that Ms Fang owned the funds.
55. [55]
    It is common ground that generally an appellate court will not interfere in a discretionary decision on a matter of practice and procedure unless, in addition to error of fact or principle, the appellant demonstrates that leaving the error uncorrected will work a substantial injustice.^[8]  In this case, we agree with the submissions of the Yao and Zhao defendants that leaving the error uncorrected would cause them a substantial injustice because it would deny them an opportunity to advance a positive defence which, as the primary judge found, would, if true, go to the whole of the plaintiffs’ case against them.
56. [56]
    Accordingly, this case is an appropriate case to intervene.

The orders which should be made

57. [57]
    As we earlier recorded, if the Yao and Zhao defendants succeeded in relation to their appeal concerning the ownership of funds issue, the plaintiffs would not resist their having leave to amend in relation to the other parts of their proposed amendments and on which they had failed before the primary judge.  Accordingly, it is not necessary to deal with the arguments which the Yao and Zhao defendants advanced in relation to the other proposed amendments.
58. [58]
    The orders which should be made are:

    1. The appeal is allowed, with costs.
    2. Orders 1 to 4 made by Hindman J on 1 April 2025 are set aside and in lieu thereof–
       1. Leave is given to the Yao defendants to withdraw admissions contained in the amended defence of the Yao defendants filed 13 March 2024 (CFI 112) sufficient to permit the filing of the proposed further amended defence of the Yao defendants in materially the same form as appears at pages 104 to 213 and 295 to 305 of Exhibit BTC-7 of the seventh affidavit of Benjamin Timothy Cohen affirmed 21 November 2024 (Yao further amended defence).
       2. Except in relation to subparagraphs 18D(b) to (g), leave is given to the Yao defendants to file and serve the Yao further amended defence.
       3. Leave is given to the Zhao defendants to withdraw admissions contained in the amended defence of the Zhao defendants filed 13 March 2024 (CFI 113) sufficient to permit the filing of the proposed further amended defence of the Zhao defendants in materially the same form as appears at pages 214 to 294 of Exhibit BTC-7 of the seventh affidavit of Benjamin Timothy Cohen affirmed 21 November 2024 (Zhao further amended defence).
       4. Except in relation to subparagraphs 18D(b) to (g), leave is given to the Zhao defendants to file and serve the Zhao further amended defence.
       5. The Yao and Zhao defendants must pay the plaintiffs’ costs thrown away by the various amendments in respect of which leave has been given in the previous paragraphs of this order.
       6. The plaintiffs must pay the Yao and Zhao defendants’ costs of the application of the Yao and Zhao defendants filed 25 November 2024 (CFI 238).
    3. Order 17 made by Hindman J on 1 April 2025 listing the proceeding for trial commencing on 21 July 2025 is set aside.