Sui v Jiang and Anor (No. 2)

1. [1]

   JOHNSON J: On 30 April 2021, I gave judgment in this matter returning a verdict for each of the First Defendant, Zhaoquing Jiang, and the Second Defendant, Australian Fulin Agriculture Pty Limited, on the claim by the Plaintiff, Guangyi Sui: Sui v Jiang and Anor [2021] NSWSC 435.

The Costs Issue

1. [2]

   For reasons explained at [136]-[145] of that judgment, I indicated a provisional view that the Court would make an order that the Plaintiff should pay 50% of the costs of the proceedings of the Defendants on the ordinary basis (“the foreshadowed costs order”). However, as this scenario had not been raised with the parties during submissions, I gave the parties an opportunity to make written submissions with respect to costs following the publication of the Court’s judgment.

2. [3]

   In written submissions, dated 7 May 2021, counsel for the Defendants sought a different costs order. In written submissions dated 13 May 2021, Senior Counsel for the Plaintiff joined issue with the Defendants with respect to costs. In written submissions in reply dated 18 May 2021, counsel for the Defendants responded to the submissions for the Plaintiff.

The Court’s Provisional View Concerning Costs

1. [4]

   It is appropriate to set out what was said in Sui v Jiang and Anor at [136]-[145] in explaining the Court’s approach to the foreshadowed costs order:

Submissions of the Defendants

1. [5]

   In written submissions dated 7 May 2021, it was submitted for the Defendants that the Court should order that costs follow the event. Alternatively, in the event that the Court found that the conduct of the Defendants was disentitling conduct, it was submitted that awarding only 50% of their costs was disproportionate to such conduct and that the Defendants ought be awarded 90% of their costs.

2. [6]

   In support of this submission, it was argued that the engagement of a new legal team for the Defendants ought not be characterised as disentitling conduct warranting a reduction of their costs. It was submitted, as well, that the raising of objections at the hearing on 30 September 2020 ought not create any disentitlement of the Defendants to costs.

3. [7]

   With respect to the late filing of evidence, it was submitted that the Court recognised the significance of the translation evidence and allowed the Defendants an opportunity to adduce evidence in that respect. It was noted that the Plaintiff was informed by the Court that there was no legal necessity for him to put on additional evidence concerning translation, but he chose to file further translation evidence in any event.

4. [8]

   It was submitted for the Defendants that, in circumstances where the evidence of Ms Lee formed a crucial part of the case in which the Defendants were wholly successful, the filing of such evidence (albeit late) ought not be seen as unreasonable conduct requiring the exercise of discretion to depart from the usual rule as to costs: Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616.

5. [9]

   The Defendants submitted that the requirement for a second hearing date arose from the original estimate of one day which was too conservative in light of what occurred and the length of submissions made. It was submitted that the issue of the translation of the 2017 written agreement was important to the case as was the concurrent evidence of the two translators given on the second day of the hearing.

6. [10]

   It was submitted that the late filing by the Defendants of the evidence did not unnecessarily protract the proceedings and that the second day of the hearing was used for submissions as well.

Submissions of the Plaintiff

1. [11]

   In submissions dated 13 May 2021, Senior Counsel for the Plaintiff supported the foreshadowed costs order that the Plaintiff should pay 50% of the costs of the proceedings of the Defendants calculated on the ordinary basis. The Plaintiff opposed the application for the Defendants to vary the foreshadowed costs order.

2. [12]

   The Plaintiff emphasised that he had long sought a costs order on an indemnity basis arising from what was said to be the gross default in 2020 by the Defendants in breach of the Court’s timetable, followed by what was described as the “eleventh hour opposition of the Plaintiff’s claim”. It was submitted that this occasioned the Defendants putting on translation evidence which led in turn to the need for the Plaintiff to put on an expert translator’s report, as well as the extension of the hearing part-heard into a second day in 2021 at which the translators were cross-examined.

3. [13]

   The history of the Plaintiff’s costs application arising in and after September 2020 was relied upon in support of the Court’s ultimate conclusion in the foreshadowed costs order. Rather than dealing with the two different costs questions separately, it was noted that the Plaintiff was content with the practical approach adopted in the Court’s judgment of 30 April 2021 which dealt with all costs issues in a proposed single order.

4. [14]

   Senior Counsel for the Plaintiff submitted that if his client had received an indemnity interlocutory costs order (as sought) with respect to the Plaintiff’s costs of preparing expert evidence in reply to that of Ms Lee and in relation to the Plaintiff’s costs of the second day of the hearing, and he had to pay the Defendants’ costs on the ordinary basis of the hearing up to the conclusion of the first day, then the Plaintiff would likely be in a significantly better position than he will enjoy under the foreshadowed 50% costs order. Viewed in this way, it was submitted that the Court’s proposed determination as to costs did not operate to the detriment of the Defendants.

5. [15]

   It was submitted for the Plaintiff that this was not a case where the Defendants had simply engaged a new legal team prior to hearing on 30 September 2020. Rather, the Defendants had disengaged completely from the Court’s case management process, did not appear at directions hearings, filed no evidence and acted as if they were not even going to appear at trial. All of this changed suddenly a couple of days before the hearing.

6. [16]

   In these circumstances, the Plaintiff submitted that the reduction of the award of costs to the Defendants to 50% of those costs, in compensation for no separate costs order being made in favour of the Plaintiff by reason of the Defendants’ misconduct, operated favourably to the Defendants.

7. [17]

   It was submitted for the Plaintiff that to make the order sought by the Defendants would effectively absolve them from what was described as their very serious misconduct in the proceedings.

8. [18]

   In the event that the Defendants were unsuccessful in seeking a change to the foreshadowed costs order, the Plaintiff sought an order that the Defendants pay the Plaintiff’s costs of the additional steps involved in the making of submissions concerning costs.

Submissions in Reply of the Defendants

1. [19]

   The Defendants submitted in reply that the approach indicated by the Court at the interlocutory hearing on 22 November 2020 operated in such a way that the foreshadowed costs order should not be made.

2. [20]

   It was submitted that the making of the foreshadowed costs order would also overlook the Plaintiff’s choice to continue with his action after the later evidence of the Defendants was served.

3. [21]

   It was emphasised that a costs order had already been made on an indemnity basis against the Defendants (on 22 October 2020), which was attributed to this delay.

4. [22]

   The Defendants submitted that to require the Plaintiff to pay only 50% of their costs would give the Plaintiff an advantage he does not deserve for pursuing to judgment a failed case, and would be unfairly onerous to the Defendants.

Interlocutory Hearings on 22 October 2020 and 12 November 2020

1. [23]

   Given the submissions of the parties, it is appropriate to step back and consider the course taken by the Court on 22 October 2020 and 12 November 2020, being the further interlocutory hearings required as a result of the defaults of the Defendants prior to 30 September 2020.

2. [24]

   The interlocutory application by the Defendants for leave to adduce expert translator evidence was heard and determined on 22 October 2020. An ex tempore judgment was delivered at the conclusion of the hearing: Sui v Jiang and Anor (unreported, 22 October 2020).

3. [25]

   In the course of outlining the “somewhat chequered history” of the proceedings, I noted that the Statement of Claim was filed on 27 September 2019. The Court said (at [4]-[6]):

4. [26]

   The Court summarised the submissions made on the contested application to adduce expert translator evidence (at [12]-[13]):

5. [27]

   The Court noted (at [14]) that a “central issue in the litigation” concerned the terms of the 2017 written agreement. The Court concluded (at [16]):

6. [28]

   As part of the application for leave, the Defendants relied upon an affidavit of the First Defendant affirmed 7 October 2020. The Court said in this respect (at [17]-[19]):

7. [29]

   The Court then turned to the question of costs (at [20]-[27]):

8. [30]

   A further aspect of costs was then considered by the Court (at [28]-[31]):

9. [31]

   The Court then made the following orders (at [32]):

10. [32]

    A further interlocutory hearing took place on 12 November 2020. At the conclusion of the hearing, the Court gave reasons for the orders made that day (T8-9):

11. [33]

    Amongst the orders made that day, the Court reserved costs and said (T10):

Determination of the Costs Question

1. [34]

   It is the expectation of the Court that parties will engage in, and remain engaged in, civil litigation in discharge of the obligations placed upon them under s.56(3) Civil Procedure Act 2005. The Court may take into account any failure to comply with the statutory duty contained in s.56(3) in exercising a discretion with respect to costs: s.56(5) Civil Procedure Act 2005; Richards v Cornford (No. 3) [2010] NSWCA 134 at [104].

2. [35]

   Between early June 2020 and 27 September 2020, the Defendants failed in fundamental respects to comply with their duty under s.56(3) Civil Procedure Act 2005.

3. [36]

   At the time when the Court was about to hear the Plaintiff’s claim on 30 September 2020, the Plaintiff had complied with Court orders and the Defendants had effectively disengaged from the proceedings. To all intents and purposes, it appeared that one day was adequate to accommodate the hearing of what appeared to be an uncontested claim.

4. [37]

   Very shortly prior to the hearing date, the Defendants engaged in a whirlwind of litigious activity which changed the nature of the hearing which proceeded on 30 September 2020.

5. [38]

   The Plaintiff had maintained effective compliance with his s.56 obligation, but the Defendants ceased involvement in the litigation for several months prior to the hearing. The Defendants simply failed to comply with Court orders, including a guillotine order.

6. [39]

   If the Defendants had complied with their duty under s.56(3), then evidence would have been filed and served on their behalf in a timely fashion, with appropriate case management orders being given for a hearing with a likely estimate of one to two days. The final hearing ought to have been in a position to proceed with concurrent evidence being given by the translator witnesses and with counsel being in a position to address to assist the Court at a single hearing.

7. [40]

   Instead, because of the failures of the Defendants, a complicated and fractured hearing proceeded on 30 September 2020 with extensive evidentiary objections being taken by the Defendants, and with evidence from a translator witness being proffered belatedly by the Defendants in gross breach of Court orders. The failures of the Defendants had a practical and detrimental effect upon the Court’s ability to hear the matter in an orderly fashion.

8. [41]

   Rather than a single final hearing, the Court was required to fix two interlocutory hearing days and then a resumed hearing date on 22 February 2021.

9. [42]

   As a result of the failures of the Defendants, judicial resources were necessarily directed to these proceedings which ought not have been required. All of this flowed from the last-minute actions by the Defendants to retain a new legal team and to advance a new case in opposition to the Plaintiff’s claim.

10. [43]

    I do not consider that the Defendants are assisted by the suggestion that this was always at least a two-day case. The Plaintiff and the Court proceeded to list the matter upon the basis of the Defendants ceasing active involvement in the litigation. What was expected to take one day ended up taking two full hearing days, together with two further interlocutory hearings being required on 22 October 2020 and 12 November 2020 to further progress the litigation, arising from the failures of the Defendants to take steps in compliance with orders of the Court prior to 30 September 2020.

11. [44]

    It is the case that the Court made an order on 22 October 2020 that the Defendants pay the Plaintiff’s cost of the Notice of Motion on an indemnity basis (see [29], [31] above). It is also the case that the Court reserved the remaining aspect of costs of the interlocutory application on 12 November 2020 (see [32]-[33] above).

12. [45]

    The intention of the Court on 30 April 2021, in fashioning the foreshadowed costs order, was to bring to a practical completion all costs issues arising in the proceedings. The Defendants have resisted the approach proposed in the foreshadowed costs order.

13. [46]

    I accept the submissions of the Plaintiff with respect to the foreshadowed costs order. There was a proper basis for a costs determination on an indemnity basis for the interlocutory costs order made in favour of the Plaintiff on 22 October 2020. The reserved costs of 12 November 2020 should also favour the Plaintiff.

14. [47]

    Costs are in the discretion of the Court: s.98 Civil Procedure Act 2005; Rules 42.1, 42.7 Uniform Civil Procedure Rules 2005.

15. [48]

    Rather than further dissecting the issue of costs, and absorbing further time and costs in assessing costs for the purpose of making separate interlocutory and final costs orders, I remain of the view that the appropriate and fair outcome is the cost determination foreshadowed in the judgment of 30 April 2021.

16. [49]

    I am satisfied that the foreshadowed costs order constitutes a just and proportionate outcome with respect to costs in the circumstances of this case.

17. [50]

    As it is the intention of the Court that the foreshadowed costs order will be the single order dealing with all aspects of costs in this litigation, it is appropriate to make an order revoking the interlocutory costs order made in the Plaintiff’s favour on 22 October 2020.

18. [51]

    In addition, I am satisfied that the Defendants should pay the Plaintiff’s costs, calculated on the ordinary basis, concerning the costs issue determined on written submissions furnished after 30 April 2021.

19. [52]

    Accordingly, I make the following orders: