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Liu v Chan[2021] QSC 352

SUPREME COURT OF QUEENSLAND

CITATION:

Liu v Chan & Ors [2021] QSC 352

PARTIES:

CHENG BIN LIU

(plaintiff)

v

STANLEY KIN CHAN

(first defendant)

AMY SIU MAN SHUM

(second defendant)

AE DEVELOPMENTS PTY LTD

ACN 136 649 502

(third defendant)

LC INTERNATIONAL CORPORATION PTY LTD

ACN 136 885 704

(fourth defendant)

CMO HOLDINGS PTY LTD

ACN 139 313 060

(fifth defendant)

FILE NO/S:

BS No 7428 of 2015

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

17 December 2021

DELIVERED AT:

Brisbane

HEARING DATE:

31 March 2021

JUDGE:

Davis J

ORDERS:

  1. The stay of proceedings ordered on 18 June 2020 is dissolved.
  2. The application for an extension of time is dismissed.
  3. The plaintiff pays the defendants’ costs of both applications on the indemnity basis.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DISCOVERY AND INTERROGATORIES – DISCOVERY OF DOCUMENTS – where the plaintiff failed to make proper disclosure of documents – where the plaintiff’s claim was stayed – where the plaintiff made further disclosure – where the plaintiff sought to dissolve the stay – where the plaintiff sought an extension of time to comply with the orders – where the plaintiff remained in breach of orders – whether the stay should be dissolved

Uniform Civil Procedure Rules 1999, r 430, r 668

Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, cited

Di Carlo v Dubois [2002] QCA 225, followed

Federal Treasury Enterprise (FKP) Souzplodoimport v Spirits International BV (reg’d) in the Netherlands [2019] FCA 802, followed

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, cited

Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264, cited

Rosniak v Government Insurance Office (1997) 41 NSWLR 608, followed

Tomlinson v Ramsey Food Processing (2015) 256 CLR 507, cited

COUNSEL:

M Steele with M Walker for the plaintiff (applicant)

D Keane with D Tay for the defendants (respondents)

SOLICITORS:

Rapport Lawyers for the plaintiff (applicant)

Bartley Cohen for the defendants (respondents)

  1. [1]
    The plaintiff, Cheng Bin Liu, applies to lift a stay of the proceedings that was ordered by me on 18 June 2020.  Mr Liu, who was in default of orders, also seeks an extension of time to comply with those orders in some respects.  Both applications are resisted by all defendants.

Background

  1. [2]
    Mr Liu is a businessman living in China.  He says that in 2009 he met with Stanley Kin Chan, the first defendant, and discussed with him the prospects of Mr Chan helping Mr Liu and his family emigrate to Australia.
  2. [3]
    Mr Liu says that an agreement was struck whereby sums of money would be paid to Mr Chan for the purposes of acquiring real estate in Australia for Mr Liu to facilitate the qualification of Mr Liu and his family to live here.
  3. [4]
    Mr Liu alleges that the money was paid to Mr Chan and has been misappropriated.  It is unnecessary to delve into the alleged liability of the other defendants save that it is alleged that they are involved in the breach by Mr Chan of his obligations to Mr Liu.
  4. [5]
    Mr Liu claims relief against the defendants who counterclaim.  Various amended pleadings have been filed.  It is unnecessary to analyse the pleadings.
  5. [6]
    Mr Chan gives a different version of the underlying agreement which he reached with Mr Liu.  He accepts that money was received by him, but he did not misappropriate it.  He says that it was expended as directed by Mr Liu.  For present purposes, the important issue is that Mr Liu says that there was an ongoing business relationship between Mr Liu and Mr Chan which involved Mr Chan’s business carrying out architectural design work for companies controlled by Mr Liu.  There were two significant projects; the Tianyi Xianguin Project and the Dacheng Project.  The money, or at least most of it, was paid in relation to those arrangements.
  6. [7]
    A company in which Mr Liu is involved, Chengdu Dacheng Real Estate Co Ltd (CDRE) was involved in the projects.
  7. [8]
    On Monday, 25 November 2019, the trial commenced before me.  It was heard for a number of days up to 6 December 2019 and then adjourned.  The trial resumed on 9 March 2020.  Mr Liu gave evidence and was cross-examined.  His cross-examination has not been completed.
  8. [9]
    A dispute arose as to disclosure.  It is unnecessary to descend into detail of that dispute.  In essence, the defendants complained that Mr Liu had not made proper disclosure of documents relevant to the building projects in respect of which Mr Chan has said he did work.  Central to that issue was CDRE, its involvement in the projects, its involvement with Mr Chan, and Mr Liu’s control over it.
  9. [10]
    On 11 March 2020, I made various orders, relevantly here:

“1 By 4pm on 22 April 2020, the plaintiff must serve a list of documents and deliver copies of each document, and in the event that any document is written in a Chinese language, a copy of a translation in English of the document, including of any signature, to the solicitor for the defendants in relation to any of the following documents in his possession or control:

  1. (a)
    Documents referred to in the email from Rachel Liang[1] to Edwin So on 10 March 2020 at 9:33pm;
  1. (b)
    Documents relating to Chengdu Dacheng Real Estate Co. Ltd.’s engagement by Huaxi Securities Co. Ltd., on the project referred to as Phase II Project of Plot D6 of Huaxi Securities Co. Ltd.;
  1. (c)
    The tender documents submitted by Chengdu Dacheng Real Estate Co Ltd., to Huaxi Securities Co. Ltd., for the project referred to as Phase II Project of Plot D6 of Huaxi Securities Co. Ltd.;
  1. (d)
    Correspondence relating to the design work submitted as part of the tender referred to at paragraph 1 (c) above;
  1. (e)
    Records relating to the employment or engagement of Hao Song and Ling Ling Jiang with Chengdu Dacheng Real Estate Co. Ltd.;
  1. (f)
    Records relating to the employment or engagement of Hao Song and Ling Ling Jiang with Huaxi Securities’ Phase II Project of Plot D6 Construction Department referred to in paragraph 1.1 and 1.2 of the Supplementary Agreement to the Joint Construction Agreement for Phase II Project of Plot D6 on Huaxi Securities Co. Ltd.;
  1. (g)
    An impression of the chop or seal described in 1.4.6 of the Supplementary Agreement to the Joint Construction Agreement for Phase II Project of Plot D6 on Huaxi Securities Co Ltd.;
  1. (h)
    Any document recording the involvement of Hao Song and Ling Ling Jiang in carrying out the works pursuant to the Joint Construction Agreement for Phase II Project of Plot D6 on Huaxi Securities Co. Ltd.;
  1. (i)
    Any company documents between 2009 and 2011 recording the person that held the position of General Manager of Chengdu Lan ling Investment Co. Ltd. or Lanling Investment Co. Ltd.;
  1. (j)
    Any document in relation to the plaintiff’s role or interest in relation to Chengdu Lanling Investment Co. Ltd. or Lanling Investment Co. Ltd.;
  1. (k)
    Any documents in relation to the plaintiff’s role or interest in relation to the project referred to as the Tianyi Xiangyun Project;
  1. (l)
    Any emails between Hao Song, Ling Ling Jiang, or any other person on behalf of Chengdu Dacheng Real Estate Co. Ltd., to the first defendant, Hong Mei ‘Crystal’ Zhou, Tina Ka, Alex Shen, Sun Shun and Steven Seto relating to, the design of the Phase II Project of Plot D6 of Huaxi Securities Co. Ltd.; and
  1. (m)
    Any communications between the plaintiff and Hao Song relating to the project referred to as the Tianyi Xiangyun Project or Phase II Project of Plot D6 of Huaxi Securities Co. Ltd.

2 To the extent that any documents referred to in order 1 do not exist or have passed out of the possession or control of the plaintiff, by 4pm on 29 April 2020, the plaintiff must file and serve an affidavit stating:

  1. (a)
    That the relevant document or class of document does not exist or has never existed;
  1. (b)
    The circumstances in which the relevant document or class of documents ceased to exist or passed out of the possession or control of the plaintiff. …”
  1. [11]
    The email which is referred to in order 1(a) contained a list of 82 identified documents.
  2. [12]
    By other orders made on 11 March 2020, the trial was adjourned to a date to be fixed.
  3. [13]
    Further documents were disclosed by Mr Liu, but the defendants did not accept that disclosure as compliance with the March 2020 orders.
  4. [14]
    The defendants made application for judgment on Mr Liu’s claim based on alleged non-compliance with the orders of 11 March 2020.  Mr Liu made application for further disclosure.  On 18 June 2020, I made the following orders:

“1. The plaintiff’s claim is stayed until further order.

  1. The plaintiff must comply with the orders of 11 March 2020, by 31 July 2020.
  2. The plaintiff may apply to lift the stay only after compliance with the order of 11 March 2020.
  3. The plaintiff’s application for further disclosure is adjourned to a date to be fixed.
  4. The plaintiff is to pay the defendants’ costs of the defendants’ application on the indemnity basis.
  5. The costs of the plaintiff’s application for further disclosure are reserved.”
  1. [15]
    On 18 June 2020, I delivered ex tempore reasons for the orders made, a transcript of which appears as Schedule “A” to these reasons.
  2. [16]
    As can be seen from the reasons, the central finding was to reject Mr Liu’s assertion that he had no access to documents of CDRE because that access was denied by the current controllers of the company; his brother and son.
  3. [17]
    Mr Liu has made further disclosure and attempted to otherwise comply with the orders of March 2020.
  4. [18]
    Mr Liu now applies to lift the stay and for the making of other orders to regularise the proceedings.  Those applications are opposed.
  5. [19]
    The material before me included a schedule which identified the various categories of documents and the status of disclosure in relation to them.  Much of the argument before me focussed on the documents as identified in that schedule.  The schedule appears as Schedule B to these reasons.
  6. [20]
    The key to interpretation of the schedule is explained by Mr Edwin So, Mr Liu’s solicitor, in his affidavit filed 31 July 2020.[2]  That is:

“I set out below a table which lists the documents ordered to be disclosed by Order 1 of the March Order. Items 1 to 82 are the documents referred to in Order 1(a). In column B, the letter ‘P’ followed by a number indicates that the document had already been disclosed. For example, item 1 was already disclosed as item 46 in the Plaintiff’s list of documents. ‘Yes’ means the document was located by Mr Wang and was provided to me and has now been disclosed. ‘Not available’ means the document could not be located. Column C is the remark for the document and Column D is the number for the document in the plaintiff’s Fifth Further Supplementary List of Documents served on the defendants on 31 July 2020. …”

  1. [21]
    The argument before me concentrated on the documents as identified in Schedule 2 and it is convenient to refer to that schedule in explaining the reasons for the orders now made.

The course of the application

  1. [22]
    As already observed, two applications were made by Mr Liu.  The first was in these terms:

“1. Pursuant to Rule 7 of the Uniform Civil Procedure Rules 1999, the time for the Plaintiff to comply with paragraph 1 of the orders of the Court made on 11 March 2020, insofar as that order requires English translations of documents to be served on the defendants, is extended to 25 August 2020.

  1. No order as to costs.”
  1. [23]
    The second was:

“1. The stay of the plaintiff’s claim imposed by order of the Court dated 18 June 2020 be lifted.

  1. No order as to costs.”
  1. [24]
    During the course of argument, it became apparent that Mr Liu had not fully complied with the orders of March 2020.  Mr Liu’s case was not really that the stay ought to be lifted because he had complied with the orders.  His real case was that Mr Liu had made best attempts to comply with the orders and in those circumstances the stay ought to be lifted.
  2. [25]
    Mr Liu applied to amend the first application to add paragraph 1 as:

“1. The plaintiff be relieved from further compliance with the order of 11 March 2020.”[3]

  1. [26]
    That amendment was allowed.

Mr Liu’s attempts at compliance with the orders of March 2020

  1. [27]
    Mr Liu swore an affidavit in the current application.  At the time of swearing the affidavit, Mr Liu was in Chengdu, Sichuan Province, China.  Because of COVID travel restrictions, he could not be present during the hearing of the application.  Taking oral evidence from him by video link to China would breach the domestic law of China so that was not an option.  Consequently, Mr Liu could not be cross-examined on his affidavit.
  2. [28]
    In his affidavit, Mr Liu said that:
  1. he is a shareholder of CDRE;
  2. he does not have day to day involvement in CDRE’s business;
  3. he is not familiar with the record keeping, or the computers used by CDRE;
  4. a meeting of shareholders of CDRE (including himself) approved the appointment of a Mr Wang, an employee of CDRE, to provide the documents ordered to be disclosed in March 2020.
  1. [29]
    Mr So is Mr Liu’s solicitor.  Mr Wang sent Mr So an email which attached a resolution of the shareholders of CDRE.  The resolution was in these terms:

“Since shareholder Liu Chengbin has a personal lawsuit case in Australia, he has applied to the company for having access to all the documents and instruments of evidence related to the lawsuit case between the company and Huaxi Securities Company (hereinafter referred to as ‘the documents’). All the company’s shareholders agree unanimously to appoint Wan Jun to sort out the documents, connect with Australian lawyers appointed by Liu Chengbin, provide the documents to them and ask them to keep properly the documents and use such documents only for Liu Chengbin’s personal lawsuit case in Australia.”

  1. [30]
    Mr So then communicated with Mr Wang.  That led to the production of various documents.
  2. [31]
    Mr So swore affidavits based on information and belief.  The information came from Mr Wang.  In order for Mr Liu to rely upon hearsay evidence of what was told by Mr Wang to Mr So, Mr So must believe the information to be true and he must swear to that belief.[4]  He did so.  Mr So is a solicitor and is entitled to the assumption that he understands his obligations when swearing such an affidavit.
  3. [32]
    The defendants complain about the material which has been filed against them.  It was submitted that they were at a disadvantage because they could not explore the truth of what was asserted to Mr So by Mr Wang.  They submitted that this was so because:
  1. Mr Liu cannot be cross-examined on his affidavit;
  2. Mr Wang cannot be cross-examined;
  3. there is no point in cross-examining Mr So as to the actual truth of what he has been told by Mr Wang because it is Mr Wang who has the actual knowledge of the truth or otherwise of what he has told Mr So.
  1. [33]
    Mr So could be cross-examined as to the substance of his belief of the truth of what he had been told by Mr Wang.  That course was not taken.  The defendants could also have sought an adjournment of the applications until arrangements could be made to cross-examine Mr Liu and obtain an affidavit from Mr Wang.  Even if those witnesses could not come to Australia and could not be cross-examined by video link from China, it may be possible for them to travel to another country from which the taking of evidence would not be unlawful.  All those courses were suggested during argument and all were declined by the defendants.
  2. [34]
    It follows that Mr Liu’s material must be taken at face value, except where the defendants can point to some contradictory evidence or some inconsistency or lack of logic on the face of the material.

The documents in dispute

  1. [35]
    The defendants point to general deficiencies in Mr Liu’s material.  In particular:
  1. Mr So was told by Mr Wang that he, Mr Wang, conducted various computer searches but was unable to locate documents.  There is no independent verification of that; by screenshot for instance.
  2. Mr Wang told Mr So that he, Mr Wang, had located Mr Liu’s computer and that the computer was “empty”.  There is no explanation as to the meaning of the computer being “empty” but it probably means that the memory has been cleared.  There is no evidence as to when it was cleared.
  3. There is no evidence of any examination of other computers.
  4. While there has been an attempt to disclose documents which have been found, there is no attempt to identify documents which have been in the possession of CDRE and therefore under the control of Mr Liu which have passed from his possession.
  1. [36]
    In addition, Ms Liang, a solicitor employed by Bartley Cohen, the solicitors for the defendants, has examined the disclosed documents and has made criticism of the disclosure.  General criticisms can be summarised as:
  1. the documents which have been disclosed suggest that further documents are in existence, or have existed;
  2. there has not been disclosure of any documents in categories 84, 85, 88, 91, 92, 93 and 94 of Schedule 2 to these reasons.
  1. [37]
    Further, there are specific complaints with which I will now deal. 
  2. [38]
    Mr Liu has disclosed an “audit report” which is document 18 in Schedule 2.  What has been disclosed consists of one document but the accounts referred to in that document have not been disclosed.
  3. [39]
    Taking Mr So’s affidavit at face value, it appears that Mr Wang has searched for documents and disclosed to Mr So the documents that have been found.  The inference then is that the accounts that are referred to in the audit document are not in the possession of CDRE.  That being so, there is no failure to disclose the accounts.  There is though a failure to explain whether the accounts were ever in the possession of CDRE and if so the circumstances under which they left CDRE’s control. 
  4. [40]
    Document 68 in Schedule 2 to these reasons is the design scheme.  That has been produced but the complaint is that there is no English translation of the document.  Mr So, on this topic, has sworn:

“7. I refer to paragraph 7(b) of the above affidavit complaining that an English translation of the document, namely, ‘design scheme referred to in the notice dated 24 January 2011’ is not provided.

  1. I was informed by Mr Jun Wang, which I believe to be true, that when the drawing plan was tendered to Notary Public office for translation and certification, he was informed that the office was unable to find a qualified person to translate drawing plan. The office then has done the certification only.”
  1. [41]
    Given that Mr So was not cross-examined, that statement should be accepted.  However, the fact remains that a English translation has not been provided.
  2. [42]
    Documents 70 and 80 of Schedule 2 concerns the “notice of construction suspension issue 2 January 2014”.  Only one document has been disclosed and that was retrieved from a file held in a Chinese court.  There are two complaints:
  1. the English translation is only a partial translation; and
  2. there is no evidence as to the circumstances in which CDRE’s copy of the other documents ceased to exist or passed out of the company’s possession or control.
  1. [43]
    The issue of the allegedly “partial translation” is dealt with by Mr So in these terms:

“9. I refer to paragraph 7(c)(ii) of the above affidavit complaining that the English translation is a partial translation. The translation is not a partial translation. There are empty spaces in the translation. This document was retrieved from the Chinese court file. The quality of the Chinese document retrieved is very low and the wordings in the space were illegible. I confirmed with Mr Wang, which I believe to be true that, Mr Wang was unable to locate any copy of such document in his or the company’s possession.”

  1. [44]
    Document 83 in Schedule 2 consists of engagement documents.  Some documents have been disclosed together with English translations.  One would expect that there would be associated documents such as correspondence, plans, designs and file notes, none of which have been disclosed.  However, Mr Wang told Mr So that searches have been undertaken of the records of CDRE.  The defendants assume that further documents exist or existed and complain that there is no evidence as to whether the documents existed or ceased to exist or passed out of the possession or control of CDRE.
  2. [45]
    Documents 84 and 85 are the tender documents submitted by CDRE to Huaxi Securities for the Huaxi project and correspondence relating to the design work.  This is one of the categories of documents where nothing has been disclosed.  Mr So swears on information and belief that Mr Wang was unable to locate the documents despite physical and electronic searches.  The complaint by the defendants here is that there is no evidence from a computer expert or otherwise as to whether the documents may have once been in the possession of CDRE and no longer are.
  3. [46]
    Documents 86 and 87 concern employment records of two people, Hao Song and Ms Jiang.  There have been some documents disclosed but some are not translated.  That has now been rectified.
  4. [47]
    Document 88 on Schedule 2 is the “chop” which is a seal.  Mr So gave evidence on information and belief that the chop is most probably with Huaxi Securities.
  5. [48]
    Document 89 on Schedule 2 concerns the involvement of Hao Song and Ling Ling Jiang in carrying out works on a particular project.  No documents have been disclosed beyond some documents that were disclosed in July 2020.  The complaint here is to assume that there are further documents and to observe that there is no explanation as to what happened to them.
  6. [49]
    Document 90 concerns documents identifying the person who held the position of General Manager of Chengdu Lanling Investment Co Ltd or Lanling Investment Co Ltd.  Some documents have been disclosed but Ms Liang says that she would expect more and that there is no explanation as to whether any further documents existed and the circumstances in which they passed from the control of CDRE.  This is, frankly, quite speculative.
  7. [50]
    Documents 91 and 92 concern documents in relation to Mr Liu’s role or interest in Chengdu Lanling Investment Co Ltd, Lanling Investment Co Ltd or the Tianyi Xianguin Project.  Some documents have been disclosed and there is a general suspicion by Ms Liang that there are other documents.  Again, this is rather speculative. 
  8. [51]
    Document 93 concerns emails passing between various persons.  The documents have not been disclosed and the issue here is that there is no evidence that a computer expert has inspected the computers on which the documents may have been generated.
  9. [52]
    Document 94 concerns communications between Mr Liu and Hao Song relating to the projects.  No documents have been disclosed.  Mr Liu swears in his affidavit that there is no relationship between him and Hao Song and that explains why no documents are disclosed.

Consideration and conclusions

  1. [53]
    Mr Liu remains in breach of the orders made in March 2020.  There is, for example, no attempt to identify documents which have been in the possession or under the control of CDRE but no longer are.  There is also no attempt to explain what happened to any such documents.  Some of the explanations given by Mr Wang to Mr So give no great confidence that full disclosure has otherwise been given.  However, in my view, there has been substantial compliance.  Three issues therefore arise:
  1. Should further compliance be excused?
  2. Should the stay be lifted?
  3. Should the time for compliance be extended?

Should further compliance be excused?

  1. [54]
    For reasons which follow, I intend to lift the stay.
  2. [55]
    However, the defendants achieved the orders which were made in their favour in March 2020.  It is clear that there has not been complete and total compliance with those orders.
  3. [56]
    It may be that during the proceedings the failure to comply will achieve a significance justifying the remaking of the stay.  Further, the defendants may seek other and different remedies consequent upon the failure to comply.
  4. [57]
    In my view, there is no reason justifying the discharge of the orders made in March 2020.

Should the time for compliance be extended?

  1. [58]
    There is no point in doing this as Mr Liu remains in breach. 

Should the stay be dissolved?

  1. [59]
    As at March 2020, Mr Liu had clearly not fulfilled his obligation to make disclosure.  As at June 2020, Mr Liu had not fulfilled his obligations as to disclosure.  His assertion that he had no control over CDRE was found, in June 2020, to be false and there was no appeal against the orders made consequent upon that finding.  Subsequently, Mr Liu seemingly easily engineered access to CDRE’s documents providing further proof of the finding made that he did in fact have access to those documents.
  2. [60]
    Since June 2020, Mr Liu has contacted CDRE and steps were put in place for the documents to be made available to Mr Liu through Mr Wang.  That occurred, although Mr So has sworn on information and belief that there are no further documents.  A major issue outstanding is whether Mr Liu is in a position to disclose whether documents that have not been disclosed were in existence, whether they were in the possession of CDRE and in what circumstances they passed from the possession of CDRE.  That information is said not to be within the personal knowledge of Mr Liu.  He has sworn that he has no knowledge of the documents held by CDRE.  That assertion may very well be challenged by cross-examination, and perhaps evidence at the trial and that may reignite further considerations in relation to disclosure.
  3. [61]
    However, as the evidence presently sits, Mr Wang has made inquiries and searches and has disclosed those results as best that he can to Mr So.  The only rational inference to draw is that Mr Wang did not identify whether CDRE ever held the documents or where they went.  Whether he could, with further searching, is another issue.
  4. [62]
    The summary determination of a claim, or the staying of a claim, based on a failure to comply with interlocutory orders, is a very serious step justified when the failure renders the proceedings an abuse of process.[5]  The staying of the proceedings was justified in June 2020 because Mr Liu had abrogated his obligation to make disclosure.  That is not the case now.
  5. [63]
    A failure to comply with disclosure may render the prosecution of the claim an abuse of process when the failure poses a risk to the defendants’ ability to resist the claim.[6]
  6. [64]
    That is not the case here.  Substantial disclosure has been made.  Orders can be sought for further disclosure; that the plaintiff deliver a list of relevant documents that have passed from the possession or control of the plaintiff for example.
  7. [65]
    Even though Mr Liu remains in breach of the order in March 2020, on balance, it is appropriate to lift the stay.

Costs

  1. [66]
    The defendants apply for costs of the application on an indemnity basis.
  2. [67]
    Mr Liu accepts that he must pay the costs but submits that it should not be on an indemnity basis given that he has succeeded in lifting the stay.
  3. [68]
    There have been many decisions which have attempted to categorise the type of cases which ought to attract an order of costs on an indemnity basis.[7]  It is unnecessary to analyse those cases.  The underlying principle is that there may be a departure from the usual order as to costs where there has been unreasonable conduct by a party.[8]
  4. [69]
    Costs were awarded on an indemnity basis in June 2020 when the stay order was made.  The necessity for Mr Liu to make application to lift the stay is caused by the fact that he did not make proper disclosure as required by the Rules and the order in March 2020.  The defendants are only in the position of having to respond to the current application because of those failures by Mr Liu.
  5. [70]
    Mr Liu has been successful in his application in that the stay has been dissolved.  However, he has not been granted an extension of time to comply with the orders and therefore remains in breach.  Further, it is very clear that he has still not complied with all the requirements of the orders of March 2020.
  6. [71]
    The necessity for the present applications is caused by the applicant’s unreasonable attitude and conduct towards his disclosure obligations.  In those circumstances, Mr Liu should pay the defendants’ costs of both applications on an indemnity basis.

Orders

  1. [72]
    It is ordered that:
  1. The stay of proceedings ordered on 18 June 2020 is dissolved.
  2. The application for an extension of time is dismissed.
  3. The plaintiff pays the defendants’ costs of both applications on the indemnity basis.

Liu v Chan [2021] QSC 352

SCHEDULE “A”

5 HIS HONOUR: This is an application by the defendants for judgment in the case, based on the alleged failure by the plaintiff to comply with disclosure orders made on 11 March 2020 by me, in the course of the trial of the action. There is also an application brought by the plaintiff against the defendants for disclosure, to which Iwill later return.

10The basic premise of the plaintiff’s case is quite simple. He says that by arrangement with the first defendant, he sent money to the defendants to invest in real estate.

That, it seems, did not occur, in that the money was sent, but the real estate was not purchased.

15The defendants deny this arrangement. The defence is that the money was payment for design work for development projects. A company called Chengdu Dacheng Real Estate Company Limited- which I will call CDRE because the parties do so in their submissions- is a company which the plaintiff has said is "owned" by him.  It has been involved in the projects, and the orders of 11 March 2020 concerned documents likely to be held by the company. The plaintiff produced very few documents pursuant to the order of 11 March. The explanation is the company is not controlled by the plaintiff, and he has approached the controllers of the company,

20  who were only prepared to release limited categories of documents. The parties who are said to control CDRE are the plaintiff’s brother and his son.

25The plaintiff has sworn affidavits in the proceedings; they are exhibits 74 and 75 in the trial. CDRE is mentioned in these affidavits, and the affidavits are littered with statements by the plaintiff to the effect that CDRE belongs to the plaintiff, and that the company is the plaintiff’s company. The plaintiff has not been cross-examined on the point; however, it is easy to draw an inference from the affidavits that the plaintiff has sufficient control of those companies to be able to access documents held by it. There is, though, the denial that he has that control, and the allegation that the control lies with his brother and son.

30Liu v Chan [2021] QSC 352I am not obliged to accept what is sworn in an affidavit. Here, there are bases to reject the plaintiff’s evidence that he cannot access the documents in the possession of CDRE. As I have already observed, he has sworn to "owning" the company. It is

35 obvious, from the affidavits, that he has knowledge of the operations of the company. He is referred to as “the chairman”. I reject the assertion that the plaintiff’s brother and son are effectively denying him access to the company's documents. The scenario sought to be painted by the plaintiff is, in my view, absurd. I find that the documents in the categories specified in the orders of 11 March 2020 are within the control of

40 the plaintiff.

The defendant seeks an order that the plaintiffs claim be dismissed. There were many and varied submissions made to that end by Mr Keane, counsel for the defendants and while I have taken them all into account, it seems to me that the most

45 significant submissions are these:

  1. the failure to make disclosure pursuant to the order shows that the plaintiff has abrogated his obligations of disclosure;
  1. there is no practical way for the defendants to obtain documents from a company like CDRE, who is based in China; and
  2. the plaintiff is effectively using family members to drip feed to the defendants those documents which he wishes to disclose, rather than all those documents which he ought to disclose.

Mr Steele, counsel for the plaintiff, submits that there is no unfairness to the defendants, as the documents are not likely to be forensically significant. That, to

10  my mind, is not the point. The unfairness is the denial of the due disclosure of documents, a process to which the defendant is entitled.  The defendants are entitled to expect that the plaintiff will comply with his obligations.

The dismissal of the plaintiff's claim is an extreme step, and one that is not

15  warranted despite the findings that I have made. In my view, properly balancing the interests of the various parties, the appropriate course is to stay the plaintiff's case, and order the plaintiff to comply with the orders of 11 March 2020. However, the onus should be upon the plaintiff to make application to lift the stay once he has complied with the orders of 11 March. That will compel the plaintiff to convince the

20 court that he has complied with his disclosure obligations, and therefore restore faith  in the plaintiff's ability and intention to comply with his obligations in the litigation.

The plaintiff should pay the costs of the defendants, and the defendants' application. The question is whether the costs should be assessed on the standard or indemnity

25  basis. Here, there are reasons why there should be departure from the normal order, which is assessment on the standard basis. The plaintiff has necessitated the application by failure to comply with the order of 11 March, and the maintenance of  a pretence that his son and brother were keeping the documents from him. On that basis, there should be an order that the plaintiff pay the defendants' costs of the

30  defendants' application on the indemnity basis. The plaintiff's disclosure application should be adjourned to a date to be fixed, at a time after the stay is lifted, if indeed it is lifted.

I order:

35 1. The plaintiff's claim is stayed until further order.

  1. The plaintiff must comply with the orders of 11 March 2020, by 31 July 2020.
  2. The plaintiff may apply to lift the stay only after compliance with the order of 11 March 2020.

40 4. The plaintiff's application for further disclosure is adjourned to a date to be fixed.

  1. The plaintiff is to pay the defendants' costs of the defendants' application on the indemnity basis.
  2. The costs of the plaintiff's application for further disclosure are reserved.

SCHEDULE “B”

Documents (A)

Available I Disclosed (B)

Remarks (C)

Plaintiff Disclosure

(D)

 

Facts and Reasons

 

1

The Joint Construction Agreement for Phase II I Project of Plot D6 of Huaxi Securities Co Ltd

("Huaxi") dated 7 September 2010

P46

NIA

 

2

The Supplementary Agreement (the Joint I Construction Agreement)

P47

NIA

 

3

The Notice of Termination served by Huaxi to I Chengdu Dacheng Real Estate Co Ltd

("Dacheng")

Yes

103

 

Defendant's Statement of Defence

 

4

The written agreement on the usage and settlement  I of the RMB 10,000,000 yuan deposit signed by Huaxi and Dacheng on 26 January 2016;

P49

NIA

 

Dacheng's Evidence

 

5

Document from State-Owned Assets Supervision I and Administration Commission of Luzhou

Yes

104

 

6

Document from Huaxi I

Yes

105

 

7

Joint Construction Agreement I

P46

NIA

 

8

Memorandum of Understanding; I

Yes

106

 

9

Supplementary Agreement of the Joint Construction II

P48

NIA

 

10

Notice issued on 16 September 2011

I Yes

107

 

11

Reply to the Notice issued on 16 September 2011

Yes

108

 

12

Letter Pursuant to the Supplement to the Joint Construction Agreement for the project of Area B of Huaxi Securitie ;

Yes

109

 

13

Letter on Negotiating and Holding a Special Research Meeting on the Project Cooperation Mode of"Huaxi Securities Plot D6 Phase II";

I Yes

110

 

14

Documents referred to as "Relative matters on the Cooperative Development between Huaxi Securities and Dacheng Real Estate for the project

of "Huaxi Securities Plot D6 Phase II

Yes

111

 

15

Letter on Relative Matters on the Project for "Huaxi Securities Plot D6 Phase II"

Yes

112

 

16

The Notice Letter of Termination of the

Agreement;

Yes

Same as (3)

 

17

Agreement on the Refund of the Investment Funds;

I P49

NIA

 

18

Audit Report.

I Yes

113

 

Huaxi's Evidence - First Set

 

19

Reply on the Approval of the Joint Construction for Office Building of Huaxi Securities Headquarters on Plot D6 Phase II Project by means of public bidding [LSASAC 92010) No. 85]

I Yes

Same as (5)

 

20

Report on Partner Invitation for Joint Construction of Huaxi Securities Plot D6 Phase II Project [HX

(2010) No. 23] _

I Yes

Same as (6)

 

Huaxi's Evidence - Second Set

 

21

Joint Construction Agreement

I P46

NIA

 

22

Supplementary Agreement to Joint Construction Agreement

I P47

NIA

 

23

Supplementary Agreement to Joint Construction Agreement II

I P48

NIA

 

 

Huaxi's Evidence -Third Set

 

 

 

24

Notice issued by Huaxi Securities to Dacheng Real Estate

Yes

Same as (10)

 

25

Reply Letter from Dacheng Real Estate

Yes

Same as(11)

 

26

Notice of Authorisation

Yes

 

114

 

27

Work Contract Letter

Yes

115

 

28

Review Form for the Payment of Project Funds;

Yes

116

 

29

Letter on Relative Matters on the Project for "Huaxi Securities Plot D6 Phase II" [DCH (2013)

02]

Yes

117

 

30

Reply Letter from Huaxi to Dacheng;

Yes

118

 

31

Reminder Letter on the Application for the Construction Permit

Yes

119

 

32

Work Details Form

Yes

120

 

33

Letter on Adjusting the Cooperation Mode for the Project ofHuaxi Securities Plot D6 Land Phase II

(DC (2013) No. 002]

Yes

121

 

34

Reminder letters from Huaxi instructing Dacheng fulfil its Contractual Obligations in a Timely

Manner

Yes

122

 

35

Letter from Dacheng requiring Changes in the

Substantive Contents of the Joint Construction Agreement

Yes

123

 

36

Notice of Construction Shutdown;

Yes

 

124

 

37

Second Reminder Letter on the Instruction for

Dacheng Real Estate to fulfil its Contractual Obligations in a Timely Manner

Yes

 

125

 

38

Letter on Relative Matters on the Cooperative Development of Huaxi Securities Plot D6 Phase II project [DCH (2014) No. 005] between Dacheng

and Huaxi

Yes

Same as (14)

 

 

39

Reply from Huaxi Securities instructing Dacheng to fulfil its Contractual Obligations in a Timely

Manner

Yes

 

126

 

40

Reminder Letter on the Instruction for Dacheng to fulfil its Contractual Obligations in a Timely Manner;

Yes

Same as (34)

 

 

41

Notarial certificate [(2014) CLGZNM No. 53353];

Yes

 

127

 

42

Notice of Termination of Agreement served;

Yes

Same as (3)

 

 

43

Reply to Notice of Termination of Agreement

Yes

 

128

 

44

Letter on the matters related to the termination of the contractual relationship

Yes

 

129

 

 

Huaxi's Evidence - Fourth Set

 

 

 

 

45

Account statement from China Construction Bank

Yes

 

130

 

46

Bookkeeping voucher

Yes

 

131

 

47

Payment form;

Yes

 

132

 

48

Request letter

Yes

 

133

 

49

Transfer notice;

Yes

 

134

 

50

Construction fee collection table

Yes

 

135

 

51

Financial vouchers (such as bookkeeping vouchers, invoice couplet and bank slips, and construction permit);

Yes

 

136

 

52

Bookkeeping voucher

Yes

 

137

 

53

Income slip;

Yes

 

138

 

 

 -

54

Loan certificate;

Yes

139

- .

 

 

55

Loan application letter

Yes

 

140

 

Huaxi's Evidence - Fifth Set

 

 

 

56

Excerpt of Dacheng's filing enquiries

Yes

 

141

57

The proceeding materials, application and orders

of jurisdiction objection in the first dispute between both parties

Yes

 

142

58

The agreement between both parties

P49

 

 

59

The Orders of Sichuan Provincial Higher People's Court;

Yes

 

143

60

Appraisal letter and relative materials of Huaxi's

re-selection of the cooperative construction partner;

Yes

 

144

 

Court Findings

 

 

 

61

Project materials, including the Project Schedule

Yes - Project Schedule

only

 

145

62

Winning Tender Notice

Yes

 

146

63

. Memorandum of Understanding on the First Project Payment for the Joint Construction for Phase II Project of Plot D6 ofHuaxi Securities Co

Ltd

Yes

Same as (8)

 

64

Joint Construction Supplementary  Agreement

P46

NIA

 

65

Supplementary Agreement on Joint Construction II

P48

NIA

 

66

Dacheng's Notice and Huaxi's 15 September 2011 reply

Yes

 

147

67

Notice dated 24 January 2011 stating that the Design Scheme has been approved by the High- Tech Planning Bureau

Yes

 

148

68

The Design Scheme referred to in the Notice dated 24 January 2011

Yes

 

149

69

Letter on the Request to Supplement the General Agreement for the Project of Area B of Huaxi

Securities dated 5 April 2012 from Dacheng

Yes

Same as (12)

 

70

Notice of Construction Suspension issued 2 January 2014

Yes

Same as (36)

 

71

Letter on Relative Matters on the Project for Huaxi Securities Plot D6 Phase II (005) dated 17 March 2014 from Dacheng

Yes

Same as (14)

 

72

Reminder Letter on the instruction to fulfil Contractual Obligations dated 21 March 2014 from Huaxi to Dacheng;

Yes

Same as (39)

 

73

Reminder Letter on the instruction to fulfil Contractual Obligations dated 4 September 2014

from Huaxi to Dacheng

Yes

 

150

74

Notice of Termination of Agreement dated 12 September 2014 from Huaxi to Dacheng

Yes

Same as (3)

 

75

Letter on Relative Matters on the Joint Development Agreement for the Project ofHuaxi Securities Plot D6 Phase II dated 17 September

2013 from Huaxi to Dacheng

Yes

 

151

76

Reminder Letter on the Instruction for Dacheng Real Estate to Fulfil its Contractual Obligations in a Timely Manner dated 4 November 2013 from

Huaxi to Dacheng

Yes

Same as (34)

 

77

Second Reminder Letter on the Instruction for Dacheng Real Estate to Fulfil its Contractual Obligations in a Timely Manner dated 4 March

Yes

Same as (37)

 

 

 

 

 

20 i 4 from Huaxi to Dacheng

 

 

 

78

Reply on instructing Dacheng Real Estate to Fulfil its Contractual Obligations dated 21 March 2014 from Huaxi to Dacheng

Yes

Same as (39)

 

79

Reminder Letter on the Instruction for Dacheng 

Real Estate to Fulfil its Contractual Obligations

Yes

Same as (73)

 

80

Notice of Suspension from the Administrative Law Enforcement Department

Yes

Same as (36)

 

81

Agreement on the Return of Investment Funds dated 26 January 2016

P49

NIA

 

82

Statements from the involved parties

Yes

 

152

 

Others from court order

 

 

 

83

Documents relating to Chengdu Dacheng Real Estate Co. Ltd.'s engagement by Huaxi Securities Co. Ltd., on the project referred to as Phase II Project of Plot D6 of Huaxi Securities Co. Ltd -

paragraph l(b) of March Order

P46-P48

 

 

84

The tender documents submitted by Chengdu Dacheng Real Estate Co Ltd., to Huaxi Securities Co. Ltd., for the project referred to as Phase II Project of Plot D6 of Huaxi Securities Co. Ltd -

paragraph l(c) of March Order

Not available

 

 

85

Correspondence relating to the design work submitted as part of the tender referred to above­ paragraph 1(d) of March Order

Same as 84

 

 

86

Records relating to the employment or engagement of Hao Song and Ling Ling Jiang with Chengdu Dacheng Real Estate Co. Ltd- paragraph l(e) of March Order

Yes - employmen t   contract of Ling Ling Jian g_

 

153

87

Records relating to the employment or engagement of Hao Song and Ling Ling Jiang with Huaxi Securities'  Phase.II Project of Plot D6 Construction Department referred to in paragraph

1.1 and 1.2 of the Supplementary Agreement to the Joint Construction Agreement for Phase II Project of Plot D6 on Huaxi Securities Co. Ltd -

paragraph l(f) of March Order

Yes

Same as (86)

 

88

An impression of the chop or seal described in I

1.4.6 of the Supplementary Agreement to the Joint Construction Agreement for Phase II Project of Plot D6 on Huaxi Securities Co Ltd - paragraph

l (g) of March Order

Not available

89

Any document recording the involvement of Hao Song and Ling Ling Jiang in carrying out the works pursuant to the Joint Construction Agreement for Phase II Project of Plot D6 on Huaxi Securities Co. Ltd-paragraph l(h) of

March Order

I Yes

154

90

Any company documents between 2009 and 2011 recording the person that held the position of General Manager of Chengdu Lanling Investment· Co. Ltd. or Lanling Investment Co. Ltd - paragraph l(i) of March Order

I Yes

155

91

Any docurrient in relation to the plaintiff's role or

interest in relation to Chengdu Lanling Investment Co. Ltd. or Lanling Investment Co. Ltd - paragraph

1(j) of March Order

Not

available

92

Any documents in relation to the plaintiffs role or interest in relation to the project referred to as the Tianyi Xiangyun Project - paragraph l(k) of March

Order

Not available

93

Any emails between Hao Song, Ling Ling Jiang, or any other person on behalf of Chengdu Dacheng Real Estate Co. Ltd., to the first defendant, Hong Mei "Crystal' Zhou, Tina Ka, Alex Shen,  Sun Shun and Steven Seto relating to the design of the Phase II Project of Plot D6 ofHuaxi Securities Co.

Ltd - paragraph 1(1) of March Order

Not available

94

Any communications between the plaintiff and Hao Song relating to the project referred to as the Tianyi Xiangyun Project or Phase II Project of Plot D6 ofHuaxi Securities Co. Ltd. - paragraph l(m)

of March Order

Not available

Footnotes

[1]  A solicitor employed by the firm of solicitors representing the defendants.

[2]  CFI 206.

[3] Uniform Civil Procedure Rules 1999, r 668.

[4] Uniform Civil Procedure Rules 1999, r 430(2).

[5]Federal Treasury Enterprise (FKP) Souzplodoimport v Spirits International BV (reg’d in the Netherlands) [2019] FCA 802 at [152] following Tomlinson v Ramsey Food Processing (2015) 256 CLR 507.

[6] Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264 at [95].

[7] Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.

[8] Rosniak v Government Insurance Office (1997) 41 NSWLR, followed in Di Carlo v Dubois [2002] QCA 225.

Close

Editorial Notes

  • Published Case Name:

    Liu v Chan & Ors

  • Shortened Case Name:

    Liu v Chan

  • MNC:

    [2021] QSC 352

  • Court:

    QSC

  • Judge(s):

    Davis J

  • Date:

    17 Dec 2021

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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