Shakya v Lobana Trading Co Pty Ltd & Ors

By a summons filed on 4 July 2022 Raju Shakya (Shakya) seeks a number of orders against Lobana Trading Co Pty Limited (Lobana Trading), Young Dong Song (Song), Astonblu Pty Limited (Astonblu) and Kamalini Knight (Knight). The principal order sought is set out in prayer 1 of the summons in the following terms:

The ensuing paragraphs of the summons seek various ancillary orders with which I do not need to concern myself for present purposes.

The summons is supported by an affidavit of the plaintiff’s solicitor, Jessica Marie Kavvalos, of 17 June 2022, along with exhibit JMK-1. That affidavit, as well as a number of other affidavits and associated evidentiary material, were contained in a court book which, with the consent of the parties, was admitted and marked exhibit A on the hearing. Two further documents were tendered (with the consent of counsel for Shakya) by counsel for Lobana Trading and were added to exhibit A. The first, was a letter from Shakya’s solicitors to Lobana Trading’s solicitor on 12 August 2021. The second was an email from Shakya’s solicitor to Lobana Trading’s solicitor of 28 February 2022.

The order sought in the summons was opposed by Lobana Trading who was the only active defendant on the application.

On 16 September 2021, proceedings were commenced in the District Court of New South Wales (the District Court proceedings) by Lobana Trading against Shakya. The District Court proceedings are listed for hearing commencing on 14 September 2022 with an estimate of two days. That hearing date was allocated on 24 May 2022 which, for reasons to which I will come, assumes some importance in the determination of the present application. Lobana Trading brings a number of separate causes of action against Shakya in those proceedings.

First, the statement of claim pleads [1] that in about mid-2019, Lobana Trading entered into agreements to advance Shakya sums of $20,000 and $40,000. In respect of the sum of $20,000 it is pleaded [2] that it was a term of the agreement that Lobana Trading would advance that sum to Shakya, and that Shakya would use it in what is described as his "education hub business". As to the agreement pertaining to the advance of $40,000, it is pleaded [3] that it was a term of that agreement that Shakya would use that sum to commence processing documentation necessary to obtain a licence to establish a University campus in Australia, and would obtain such a licence by April 2020. It is further pleaded that it was a term of the agreement that if Shakya could not do so, he would be required to repay the money within two months of April 2020.

Secondly, the statement of claim pleads [4] a common money count in relation to each of the sums of $20,000.00 and $40,000.00.

Thirdly, the statement of claim pleads [5] an action based on misleading and deceptive conduct on the part of Shakya in respect of the advance of $60,000.00.

Fourthly, the statement of claim pleads [6] an action based on misleading and deceptive conduct on the part of Shakya in relation to the acquisition of shares in Zhouand Institute Pty Limited (Zhouand).

On 18 January 2022 proceedings were commenced in this Court (the Supreme Court proceedings) by Astonblu and Knight against Lobana Trading and Song. The statement of claim filed in the Supreme Court proceedings pleads three causes of action.

First, the statement of claim pleads [7] a loan agreement pursuant to which Astonblu agreed to lend Lobana Trading the sum of $472,953.00.

Secondly, the statement of claim pleads [8] a cause of action in misleading and deceptive conduct based upon representations said to have been made by Song on behalf of Lobana Trading.

Thirdly, the statement of claim pleads [9] a cause of action based on threats made by Song with the intention of inducing Knight to transfer shares in Zhouand.

The commencement of the Supreme Court proceedings was first foreshadowed in a letter sent by Shakya’s solicitor to the solicitor for Lobana Trading on 12 August 2021. [10] That correspondence was sent in the context of the District Court proceedings which were already on foot. Notwithstanding the fact that commencement of the Supreme Court proceedings was foreshadowed in that correspondence, the statement of claim was not filed until 18 January 2022, more than 5 months later.

On 21 January 2022, having filed the statement of claim, Shakya’s solicitor wrote to Lobana Trading’s solicitor and foreshadowed, for the first time, the bringing of the present application: [11]

The suggestion in the final paragraph of that correspondence that the issue of transfer of the proceedings could be resolved simply by the parties agreeing to an order to that effect ignores the nature of the determination which is made in an application of this kind. Irrespective of what view the parties might take, whether or not an order for the transfer of proceedings should be made necessarily remains a matter for the Court in the exercise of its discretion. The fact that the parties may agree to an order being made is, frankly, neither here nor there.

On 8 February 2022, Lobana Trading’s solicitor responded to Shakya’s solicitor in (inter alia) the following terms: [12]

On 18 February 2022 Shakya’s solicitor responded in (inter alia) the following terms: [13]

The correspondence went on to cite a number of further matters in support of the proposition that the District Court proceedings should be transferred to this Court. [14] Those matters included that:

In correspondence of 23 February 2022, Lobana Trading’s solicitor made it clear that there would be no consent to an order transferring the District Court proceedings to this Court. [15] That position was unequivocally confirmed by the solicitor for Lobana Trading in correspondence of 24 March 2022. [16]

At 5.53 pm on 24 March 2022 Shakya’s solicitor wrote to the District Court Registry seeking an adjournment of a directions hearing, stating (inter alia): [17]

Notwithstanding what was said on that occasion, a period of almost three months elapsed before the present application was brought, which was more than five months after it had originally been foreshadowed. On the hearing of this application, counsel for Shakya, with what I might say was commendable candour, unreservedly accepted that there was no satisfactory explanation for that delay. What is also significant is that between 24 March 2022 (when the District Court Registry was informed of the intention to bring the present application) and 4 July 2022 (when the application was brought) the District Court proceedings were allocated a hearing date of 14 September, with an estimate of 2 days.

The present application has been brought pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW) (the CPA). That section is in the following terms:

Section 140 of the CPA confers a broad discretion on the Court to make the order sought. Pursuant to s 56(2) of the CPA I must, in the exercise of that discretion, seek to give effect to the overriding purpose of both the CPA and the Uniform Civil Procedure Rules 2005 (NSW) (the rules), namely, the purpose of facilitating the just, quick and cheap resolution of the issues between the parties.

Necessarily, the discretion in s 140 of the CPA is to be exercised having regard to the entirety of the relevant circumstances of the case, so that justice is served between the parties. In Sanderson Motors Pty Limited v Kirby [18] Bryson J dealt with a similar application pursuant to the provisions of section 145(1) of the District Court Act 1973 (NSW). His Honour's observations as to the nature and extent of the discretion remain apposite, even though he was dealing with a different statutory provision. His Honour observed [19] that when called upon to exercise the discretion, it is necessary for the Court to appraise itself of the entirety of the facts and circumstances of the case, and make a determination as to whether the applicant for the order has established something which, within the framework of the purposes for which the discretion exists, is a sound ground or a good reason why an order for transfer ought be made.

It is impossible to be prescriptive as to the circumstances which will justify the making of such an order. Each case will obviously be determined on its own facts and the evaluation which is required to be conducted is, to some degree, necessarily impressionistic.

Counsel for Shakya submitted that in light of the background outlined above, there was, between the two sets of proceedings, an interplay between the parties, and a material overlap of the issues between them. Counsel emphasised that the issues in each set of proceedings arose from a business relationship between Song and Shakya. He cited, as examples of the common issues which will arise, the terms of any agreement(s), and what representation(s) were or were not made.

Counsel further submitted that it was clear that Shakya and Song were the two main parties, and the two primary witnesses, in each proceedings. He submitted that in those circumstances, there would be issues of credit which would have to be determined, and that this was a further factor which supported the District Court proceedings being transferred to this Court and the two proceedings heard and determined together.

Counsel further submitted that if the District Court proceedings were not transferred to this Court there would, in all likelihood, be a significant duplication in the work which was required to be carried out by the parties. Counsel also raised the possibility of inconsistent factual findings being reached if the proceedings remained separated, and highlighted what was said to be the necessity to avoid the parties having to prepare and attend two separate hearings.

Finally, counsel submitted that if the District Court proceedings were not transferred there would be a risk of an issue estoppel arising as a consequence of determinations made by the judge in hearing and determining those proceedings.

In opposing the order sought, counsel for Lobana Trading advanced four primary propositions, namely that:

In developing those submissions, counsel submitted that on any view, the District Court proceedings involved the resolution of claims between Lobana Trading and Shakya. He submitted, by way of contrast, that the Supreme Court proceedings involved an action brought by Astonblu and Knight against Lobana and Song. Counsel highlighted, in my view with some force, that no claim was propounded by or on behalf of Shakya in the Supreme Court proceedings, such that Shakya had no direct interest in the outcome of those proceedings. Counsel submitted that what flowed from those circumstances was that, aside from Lobana Trading being a party to both proceedings, there were different causes of action involving different parties in the two proceedings, to the point where there was no real commonality between them at all. In adopting that position, counsel accepted, as I understood it, that there may be some matters of background which were common to both proceedings. However, he submitted that fundamentally, the two sets of proceedings involved different parties, different causes of action, and different issues, all of which were factors weighing heavily against the order sought being made. Counsel further submitted that by reason of all of those matters, no estoppel could arise if the District Court proceedings were determined first.

In terms of the delay in bringing the present application, and in addition to the fact that the reason for the delay is largely unexplained, counsel for Lobana Trading relied on the fact that the District Court proceedings had been allocated a hearing date, which would be lost in the event that the present application was successful. It was submitted that such a consequence would be inconsistent with the dictates of justice set out in the CPA, inconsistent with the overriding purpose of both the CPA and the rules, and prejudicial to Lobana Trading.

For the reasons that follow I am not satisfied that the order sought should be made.

First, whilst I accept that there is a degree of what might be described as common background, the fact remains that the parties to the District Court proceedings, and the parties to the Supreme Court proceedings are (except for Lobana Trading) different, as are the causes of action relied upon. In those circumstances, I am unable to accept the proposition that if the matters were to proceed separately there would be any significant duplication of work.

Secondly, I am not persuaded that any issue estoppel will arise if the District Court proceedings are determined first. Even if I am wrong in that determination, the fact that an issue estoppel may arise is not necessarily a factor which weighs in favour of the making of the order. In United Card Services Pty Ltd v Object Consulting Pty Ltd; United Petroleum Pty Ltd v PayPoint Solutions Pty Ltd, [20] White J (as his Honour then was) observed that it is an intended consequence of the judicial resolution of proceedings that the parties are bound by findings which are made.

Thirdly, Lobana Trading has the benefit of a hearing date for the District Court proceedings, and is entitled to have those proceedings heard and determined. If the District Court proceedings are resolved in favour of Lobana Trading, the likelihood is that it will be entitled to damages. It would be prejudiced if it were kept out of the benefit of those damages. If, on the other hand, the District Court proceedings are resolved in favour of Shakya, no prejudice would flow to him as a consequence. To deprive Lobana Trading of the allocated hearing date in all of those circumstances would be at odds with the just, quick and cheap resolution of the issues in the District Court proceedings, particularly in circumstances where, in the event that the present application was successful, it is unlikely that the proceedings would be heard until the latter part of 2023 at the earliest.

Fourthly, and whilst I make it clear that I do not regard this as a determinative factor, there has been a significant delay in the bringing of this application. In that regard, the following matters are noteworthy:

Why, in all of those circumstances, the present application was not brought until 4 July 2022 is not explained, satisfactorily or at all.

For the reasons I have given, I make these orders: