Ye v Chen

By amended summons filed on 10 September 2021, Rebecca Ye, the first plaintiff, and Ucer Investment and Resources Pty Ltd (Ucer), the second plaintiff, appeal, or in the alternative seek leave to appeal, against the judgment ordered against them in the Local Court by Stapleton LCM in favour of Yu Chen on 11 December 2020 and the order for costs on an indemnity basis ordered by her Honour against them.

This Court’s jurisdiction derives from s 39 of the Local Court Act 2007 (NSW), which provides for appeals to this Court on a question of law, and s 40 of the Local Court Act, which provides for appeals to this Court, by leave, against a judgment or order on a ground that involves a question of mixed law and fact, or against an order as to costs.

As the plaintiffs in this Court were the defendants in the Court below and the defendant in this Court was the plaintiff in the Court below, it is convenient to refer to the parties by name. I shall refer to the defendant in this Court, Yu Chen, by her full name to distinguish her from her cousin, Ying Chen, and her cousin’s husband, Jun Chen, each of whom will be referred to by their full names.

Ms Ye and Ucer seek to have the judgment and the order for costs set aside and an order remitting the matter to the Local Court, with leave being granted to them to rely on expert evidence (such leave having been refused in the Court below).

The grounds of appeal in the amended summons fall into three categories. The first category comprises grounds 1-5 and concerns the finding of the Court below that Ms Ye was personally liable to Yu Chen based on a document dated 17 December 2017 (the December 2017 document). The second category comprises grounds 6-8, which allege that the Court below denied procedural fairness to Ms Ye and Ucer by refusing their application to lead expert evidence at the hearing. The third category comprises ground 9, which challenges the order for costs.

Yu Chen’s case in the Court below was as follows. Following a recommendation from her cousin, Ying Chen, who in turn had received a recommendation from a friend, Jing Xie, Yu Chen contacted Ms Ye in late 2016 for assistance with applying for an Australian Permanent Residence Visa (the Visa). Yu Chen and Ms Ye subsequently communicated with each other by WeChat, a messaging application, about what would be required for the Visa application, including her resume, qualifications and work history. The communications were in Mandarin and have been translated into English by an accredited translator.

According to the WeChat records, Yu Chen sent back the application form to Ms Ye on 24 April 2017. On 25 April 2017, Ms Ye provided bank account details to Yu Chen so that the initial fee for the services could be paid into that account. Later that day, Yu Chen proposed (as requested by her husband) that the second amount would only be payable after the Visa was granted and that a provision to that effect be included in the contract.

Ultimately, a draft agreement between Yu Chen and Ucer was sent to Yu Chen by email and was executed on about 26 April 2017 by Yu Chen on her own behalf and Ms Ye, as a director of Ucer, (the Agreement) and returned to Ms Ye.

The Agreement provided that in return for Ucer providing migration agency services for Yu Chen, Yu Chen would pay Ucer USD50,000 in advance and a further USD110,000, as provided below.

The Agreement identified Ucer as “Party A” and Yun Chen as “Party B”. It relevantly provided:

The first amount, USD50,000, was paid by about 27 April 2017 into an account identified by Ms Ye via WeChat.

Thereafter Yu Chen regularly communicated with Ms Ye as to when the Visa would be approved.

In about July 2017, Ms Xie, Ying Chen and Ms Ye met at a restaurant in Auburn (a location chosen by Ms Ye, who lived nearby) to discuss the progress of the Visa application. According to Ms Xie and Ying Chen, Ying Chen asked Ms Ye about the progress of Yu Chen’s application, to which Ms Ye responded that the application had been lodged with the Department of Home Affairs and was being considered by the Department. Ying Chen then asked Ms Ye for the reference number from the Department, to which Ms Ye responded that she did not have the number but would find it and provide it.

Yu Chen also mentioned to Ms Ye in WeChat messages that she was intending to fly to Australia. On 16 September 2017, Yu Chen informed Ms Ye by WeChat that she would be in Sydney from 29 September 2017 until 16 October 2017 and proposed that they meet.

While Yu Chen was in Sydney, on 4 October 2017, she, Jun Chen (Ying Chen’s husband), and Wanyun Huang (another person for whom Ucer and Ms Ye purported to provide migration services) met Ms Ye at a Chinese restaurant in Auburn, near Ms Ye’s residence. Ms Ye had suggested the location in a WeChat message to Yu Chen.

According to Yu Chen, and Jun Chen, Jun Chen said to Ms Ye:

Ms Ye responded:

On that occasion, while Ms Ye was on the telephone, Yu Chen took a photograph of Ms Ye. Although it was an agreed fact that the person in the photograph was Ms Ye, Ms Ye denied ever having met Yu Chen.

On 15 December 2017, Ms Ye sent a WeChat message to Yu Chen which said:

The WeChat records show that there was a call between Yu Chen and Ms Ye’s number of 9 minutes 36 seconds duration on 15 December 2017 after the message set out above. According to Yu Chen’s evidence, Ms Ye rang Yu Chen to tell her that the application could not proceed and that she was unable to give further information.

Later on 15 December 2017, Yu Chen sent the following WeChat message to Ms Ye:

On 16 December 2017, Ms Ye rang Ms Xie to tell her that the application could not proceed. On 17 December 2017, Jing Chen and Ms Xie, who wanted to help Yu Chen, met again with Ms Ye. In the course of that meeting Ms Ye asked them to give her until 31 January 2018 to provide the reference number and told them that, if she did not provide the application reference number to Yu Chen by 31 January 2018, she would refund the USD50,000 which had been paid in April 2017. At the meeting, Ms Ye wrote out a document to that effect, which she signed in front of Jing Chen and Ms Xie.

The translation of the December 2017 document read as follows:

Ms Ye did not provide the information which she had said she would provide by 31 January 2018 or at all.

On 8 May 2018, Yu Chen sent a WeChat message to Ms Ye as follows:

In support of her case, Yu Chen gave evidence and called oral evidence from Ms Xie, Ying Chen and Jun Chen, each of whom was cross-examined. Yu Chen tendered documents, which were attached to affidavits read in her case, which included WeChat records, company searches of Ucer and extracts from its website, as well as telephone records.

The defence case in the Court below was that neither Ucer nor Ms Ye was involved in the Agreement or the December 2017 document at all and that Ms Ye had never met Yu Chen. Ms Ye said that she had never been involved in the provision of migration services and nor had Ucer during the period of her association with that company. Although she identified the WeChat account as bearing her name and accepted that she operated a WeChat account under that name, she denied that she had sent any of the messages that appeared to come from that account. Ms Ye gave oral evidence and was cross-examined.

On about 12 July 2018, Yu Chen commenced proceedings in the Local Court by filing a statement of claim which claimed from Ucer and Ms Ye the sum of $72,350.66, being the Australian dollar equivalent of USD50,000, plus interest.

The defence was filed on 31 August 2018. Although Ms Ye admitted that she was a director of Ucer, she denied any connection, or communication, with Yu Chen. She signed the defence herself as she was not, at that stage, represented by a solicitor.

On 15 October 2018, Malouf Solicitors, who had filed a notice of appearance, filed an amended defence on behalf of Ms Ye and Ucer. Apart from prefatory paragraphs, each paragraph of the statement of claim was denied. Paragraph 14 of the amended defence said:

Malouf Solicitors served a notice to produce on Lawside Lawyers, who acted for Yu Chen in the proceedings in the Court below. Under cover of letter dated 2 November 2018, Lawside Lawyers provided documents in answer to that notice, which comprised WeChat messages, documents evidencing payment to Ucer, a receipt issued by Ucer and the Agreement which appeared to have been signed by Ms Ye on behalf of Ucer on 26 April 2017.

On 31 January 2019, Yu Chen was ordered to pay security for costs in an amount of $30,000, as she resides outside of Australia.

On 16 September 2019, the Local Court made the following directions by consent:

An amended statement of claim was filed on 17 September 2019. A defence to the amended statement of claim was filed on 8 October 2019.

Yu Chen alleged in the amended statement of claim that Ucer had breached the Agreement by failing to lodge the Visa application and that she was, accordingly, entitled to a refund of USD50,000 as damages for breach from Ucer. She further alleged that, pursuant to the December 2017 document, she was entitled to USD50,000 from Ms Ye since the application reference for the Visa had not been provided by 31 January 2018.

As referred to above, in the defence to the amended statement of claim, Ms Ye denied any involvement with Yu Chen at all.

In accordance with the directions, Yu Chen filed the following affidavits, which were read at the substantive hearing:

At the substantive hearing, Yu Chen also read affidavits of each of these deponents, which were affirmed in February 2020, relating to the photograph alleged to have been taken at the Auburn restaurant in October 2017.

Ms Ye and Ucer failed to comply with the direction that they file and serve their affidavits by 2 December 2019.

On 20 December 2019, Yu Chen served an offer of compromise on Malouf Solicitors which offered “judgment in favour of [Yu Chen] against [Ms Ye and Ucer] in the sum of $68,000.00 plus costs as agreed or assessed.” The offer was expressed to have been made in accordance with Uniform Civil Procedure Rules (UCPR), r 20.26 and was open for acceptance until 4pm on 31 January 2020 (being four weeks before the hearing was due to take place).

By notice of motion filed on 8 January 2020, Ms Ye sought orders relating to a notice to produce and, of present relevance, she also sought the following orders:

In an affidavit affirmed on 8 January 2020, by Ms Ye’s solicitor, Gabrielle Polczynski, filed in support of the notice of motion, Ms Polczynski relevantly deposed:

Subsequently, Ms Ye affirmed an affidavit on the substantive proceedings on 17 January 2020.

Ms Ye’s notice of motion was heard and determined on 12 February 2020, just over a fortnight before the hearing was set down to commence. In a judgment which appears to have been delivered ex tempore, her Honour analysed Ms Ye’s defence as being one which relied on identity theft. Her Honour identified the principal issue in the case as being whether the person who attended the meeting at the restaurant in Auburn on 4 October 2017 was Ms Ye and noted that Yu Chen had adduced the evidence of the photograph and the evidence of Jun Chen, who was present.

Her Honour found that the case was likely to turn on whether the Court could be satisfied on the balance of probabilities that Ms Ye was at the restaurant. Her Honour did not consider the evidence of a handwriting expert to be particularly germane to that issue, which would depend on the evidence of witnesses who were said to be present (and the credibility of Ms Ye, who denied being present). Her Honour also noted (referring to the Local Court Practice Note) that, to avoid a disproportionality between costs and the amount at issue, leave of the Local Court was required before expert evidence could be adduced. Her Honour noted that no expert report had been obtained and that it was therefore not possible to ascertain whether an expert could opine as to whether the photograph was genuine, whether the WeChat messages could have been concocted and whether a handwriting expert could give material evidence.

Her Honour concluded:

Following delivery of these reasons, Ms Ye served her further affidavit affirmed on 27 February 2020.

The hearing commenced on Friday 28 February 2020 with a one day estimate (which had been given by the parties on 16 September 2019). As the hearing did not finish in one day, it was stood over to 23 September 2020 and continued on 24 September 2020. As the hearing had not been completed, the matter was stood over to 20 October 2020. At the conclusion of 20 October 2020, the matter was stood over to 27 October 2020 for oral submissions (directions having been made for the filing and service of written submissions). On 27 October 2020, her Honour indicated that oral reasons for decision would be given on 8 December 2020.

On 8 or 11 December 2020, her Honour gave reasons for ordering judgment for Yu Chen in the sum of $72,350.66 plus interest from 1 February 2018 and costs.

In substance, her Honour accepted Yu Chen’s case and accepted the evidence of Yu Chen, Ying Chen, Jun Chen and Ms Xie whom she found to be credible and reliable witnesses. Her Honour rejected Ms Ye’s evidence.

Her Honour referred extensively to the documentary evidence, including the WeChat messages, which she regarded as corroborating the oral evidence of witnesses called on behalf of Yu Chen.

At [13] of her Honour’s reasons, she said, of the meeting on 4 October 2017:

Of the meeting on 7 December 2017, at which the December 2017 document was signed, and the aftermath, her Honour found at [18]:

At [19], her Honour referred back to the application for leave to adduce expert evidence and said as follows:

Her Honour’s ultimate findings at [23] were as follows:

Her Honour then proceeded to address the alternative argument put on behalf of Ms Ye and Ucer: that Yu Chen was not entitled to judgment against either of them as a matter of law as neither the Agreement nor the December 2017 document was sufficient to impose a liability on them.

Her Honour addressed Ucer’s argument that Yu Chen had not established that it had breached the Agreement at [33] as follows:

Her Honour addressed Ms Ye’s argument that Yu Chen had not established that she was entitled to judgment against Ms Ye as follows. Her Honour set out the December 2017 document in full, which she referred to as a “Guarantee” (it having been defined as such in the amended statement of claim). Her Honour noted Ms Ye’s submission that:

Her Honour considered the December 2017 document to be ambiguous since it did not state whether it was Ms Ye or Ucer who would be responsible for refunding the entire sum. Her Honour referred to Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 (Codelfa) as authorising regard to the surrounding circumstances. Her Honour, at [37], set out these circumstances and found:

Her Honour adverted to the form of the December 2017 Agreement at [38] and said:

Her Honour found, at [39], that the December 2017 document comprised:

Her Honour found, at [40], that the consideration for Ms Ye’s promise in (3) above was the extension of time granted to Ucer to perform the Agreement to 31 January 2018. Thus, her Honour found that the promise in (3) was enforceable by Yu Chen against Ms Ye and that Ms Ye was, accordingly, liable to refund the monies paid by Yu Chen in April 2017 plus interest from 1 February 2018. At the conclusion of her reasons, her Honour noted that Yu Chen sought indemnity costs and made directions for written submissions to address the application.

On 23 March 2021, her Honour ordered that Ms Ye and Ucer pay Yu Chen’s costs of the proceedings on an indemnity basis. Her Honour referred to the authorities on which Yu Chen relied in support of Yu Chen’s submission that indemnity costs ought be ordered in her favour on the basis of Ms Ye and Ucer’s delinquency. Her Honour found:

Her Honour referred to Grant v Grant; Grant v Grant (No. 3) [2021] NSWSC 1 where Slattery J said at [8]:

Her Honour found that the evidence adduced on behalf of Yu Chen was powerful and that Ms Ye and Ucer had maintained a defence which had no reasonable prospects of success. Her Honour said:

Her Honour then addressed Yu Chen’s alternative argument that she was entitled to indemnity costs pursuant to the UCPR on the basis of the offer of compromise dated 20 December 2019 referred to above. Her Honour rejected the argument put by Ms Ye and Ucer that the offer was invalid because it did not comply with r 20.26 of the UCPR and said that if she was wrong about ordering the costs on an indemnity basis for the whole proceedings, Yu Chen would be entitled to an order for costs in accordance with the UCPR.

Ms Ye and Ucer sought to challenge the judgment on the basis of an alleged error in her Honour’s interlocutory decision to refuse to vacate the hearing in order to permit them to obtain expert evidence from a handwriting expert and a computer expert.

The grounds relevant to this matter are as follows:

Mr Cheema, who appeared on behalf of Ms Ye and Ucer in this Court, argued that her Honour’s failure to permit them to explore the possibility of obtaining expert evidence to challenge the genuineness of the WeChat messages and Ms Ye’s signature on the Agreement or the December 2017 document was erroneous. He argued that the dismissal of their notice of motion amounted to a denial of procedural fairness which was sufficient to warrant the judgment being set aside and the matter being remitted to the Local Court for a new hearing.

Mr Cheema argued that her Honour had underestimated the importance of the expert evidence which Ms Ye and Ucer hoped to obtain and had incorrectly assessed its potential probative value as being “of no importance in the case”. He also submitted that her Honour was incorrect to reason that the issues in the proceedings would depend on the credit of witnesses rather than the authenticity of documents. He further contended that the importance placed on the WeChat evidence and the photograph in the reasons for judgment showed that, contrary to her Honour’s reasoning in dismissing the motion for leave to adduce expert evidence, the WeChat evidence and the photograph were significant to her Honour’s factual determination.

Mr Cheema submitted that Ms Ye was “in hindsight” prevented from properly presenting her case because the expert evidence could have shed light on the origin of the WeChat messages and whether they could be attributed to a device other than one associated with Ms Ye.

Mr Cheema also submitted (despite the absence of evidence to support the submission) that Ms Ye’s name “appears to have been written on [the December 2017 document] as opposed to being signed.”

Further, Mr Cheema contended that her Honour was not entitled to draw inferences from the apparent similarities between Ms Ye’s signatures on the defence, the Agreement and the December 2017 document, in circumstances where her Honour had prevented Ms Ye and Ucer from obtaining expert evidence on that matter.

Mr Harrison, who appeared for Yu Chen in the Court below and in this Court, argued that, in effect, Ms Ye and Ucer were seeking to challenge an interlocutory decision, for which they required an extension of time, which he submitted ought not be granted.

In Gerlach v Clifton Bricks Pty Limited (2002) 209 CLR 478; [2002] HCA 22, the majority (Gaudron, McHugh and Hayne JJ) expressed the relevant principle governing the circumstances in which an interlocutory order can be challenged in an appeal against a final judgment as follows:

On the basis of this principle, I am satisfied that it is open to Ms Ye and Ucer to seek leave to appeal against the judgment on grounds 6, 7 and 8. Leave is required under s 40 of the Local Court Act as these grounds involve a question of mixed fact and law.

In Wang v Farkas (2014) 85 NSWLR 390; [2014] NSWCA 29, the Court of Appeal considered whether the Local Court had failed to comply with an obligation to accord procedural fairness. Basten JA (Bathurst CJ and Beazley P agreeing) said, at [41]:

By the time her Honour determined Ms Ye and Ucer’s application for vacation of the hearing date to enable them to obtain expert evidence, a significant amount of evidence had been filed in the proceedings. Her Honour was aware of the issues in the proceedings and the defence that neither Ms Ye nor Ucer had any involvement with Yu Chen. It is apparent from her Honour’s reasons that she appreciated that Yu Chen’s case depended on several sources of evidence but that the in-person identification of Ms Ye by Ms Xie (who had known her for some years) at the meetings in July and December 2017 was, if accepted, fatal to the defence (leaving aside legal arguments about the effect of the Agreement and the December 2017 document).

Thus, Yu Chen’s case did not depend on the WeChat messages or the photograph which Yu Chen took of Ms Ye in October 2017 although they corroborated it. Although to describe the potentially corroborative evidence of the WeChat messages, the photograph and the signature of Ms Ye was being of little or no importance may be to understate their potential power as corroboration, it is significant that the reasons on the notice of motion were given ex tempore. Some latitude is appropriate in these circumstances since slips in expression (which do not amount to error) can occur due to the demands of giving reasons orally: Acuthan v Coates (1986) 6 NSWLR 472 at 479A (Kirby P, Glass JA agreeing) and at 485C-D (Mahoney JA).

Further, her Honour’s reasons for rejecting the application were not confined to the probative value of the (as yet unobtained) expert evidence. Her Honour was concerned about the lateness of the application, the need to vacate the hearing date if the application were granted and the fact that Malouf Solicitors had not obtained any indication from an expert as to the evidence which could be adduced. As can be seen from the narrative of the procedural history above, Malouf Solicitors had the WeChat messages and the photograph for over a year before the notice of motion was filed on 8 January 2020. These are all matters which were relevant to the decision by reason of the provisions of Part 6 of the Civil Procedure Act 2005 (NSW).

I am not persuaded that there was any error in her Honour’s decision, either at the time or having regard to her Honour’s final reasons. Ms Ye and Ucer had ample opportunity to adduce evidence in support of the application and to be heard. Her Honour was obliged, by s 56 of the Civil Procedure Act, “to facilitate the just, quick and cheap resolution of the real issues in the proceedings”. The real issue in the proceedings was whether Ms Ye was the person who attended the meetings in July, October and December 2017 regarding Yu Chen’s Visa application. Her Honour was correct to find that that question largely depended on the oral evidence of the persons called by Yu Chen.

I am not persuaded that the dismissal of the application for leave to adduce expert evidence disentitled her Honour from taking into account a comparison between Ms Ye’s signature on the defence (which was accepted to be her signature) and her signature on the Agreement and the December 2017 document. Her Honour, as the tribunal of fact, was entitled, in the absence of expert evidence, to draw such an inference for herself. The authorship of disputed documents is a question of fact. Thus, her Honour was entitled to compare the defence (which Ms Ye had incontrovertibly signed) and the Agreement and the December 2017 document to determine whether the documents were written by the same person, even without the assistance of expert evidence: Adami v The Queen (1959) 108 CLR 605 at 617-618 (Dixon CJ, McTiernan, Fullagar, Kitto and Menzies JJ); [1959] HCA 70; R v Knight [2001] NSWCCA 114 at [59] (G James J, Heydon JA and Studdert J agreeing); (2001) 120 A Crim R 38; Singh v De Castro [2017] NSWCA 241 at [61] (Sackville AJA, Macfarlan and Gleeson JJA) and Jeans v Cleary [2006] NSWSC 647 at [157] (Johnson J), following R v Doney [2001] NSWCCA 463 at [61] (Ipp AJA, Hidden and Barr JJ agreeing); (2001) 126 A Crim R 271.

It is questionable whether her Honour was entitled to have regard to the absence of evidence challenging the WeChat messages in circumstances where such evidence might have been led, had leave been granted. However, I do not consider this matter to have been significant in her Honour’s decision.

I am not persuaded that there was any material error in her Honour’s approach or that the effect of the ruling was, in light of all of the evidence adduced at the substantive hearing, capable of affecting the result. Each of grounds 6, 7 or 8 raises a question of mixed fact and law which requires leave. I am not persuaded that leave ought be granted in respect of any of these grounds.

The grounds concerning the contractual liability of Ucer and Ms Ye are as follows:

It is apparent from the grounds that they concern only Ms Ye’s liability since Ucer’s liability derives from the Agreement. As there is significant overlap between the grounds, it is convenient to address them together.

For the purposes of these grounds, Mr Cheema did not seek to challenge her Honour’s findings regarding the credibility of witnesses. Rather, he argued, that Ms Ye ought not have been found liable under the December 2017 document on the basis of its terms, even accepting (for the purposes of these proceedings) that she signed it.

Mr Cheema argued that her Honour was in error in construing the December 2017 document as imposing a liability on Ms Ye for the following reasons:

Although the Agreement did not stipulate a time within which the Visa was to be lodged, business efficacy would require a reasonable time to be implied: see category (2) in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] 52 ALJR 20 at 26; cited by Mason J in Codelfa at 347 and Falconer v Wilson [1973] 2 NSWLR 131 at 140D-141D (Mahoney J). While this implied term was not pleaded, the case was conducted on that basis: Dare v Pulham (1982) 148 CLR 658 at 664 (Murphy, Wilson, Brennan, Deane and Dawson JJ); [1982] HCA 70.

Furthermore, Ms Ye had made repeated representations to Yu Chen and her associates that the Visa application had been lodged. It was open to her Honour to infer that, had this occurred, Ms Ye, as a director of Ucer, would have been able to produce the reference number, given the length of time since Ms Ye assured Yu Chen that the Visa application had been lodged.

The December 2017 document, which is extracted in full earlier in these reasons, cannot be understood without reference to the surrounding circumstances. Her Honour was entitled, for the reasons given by Mason J at 352-353 in Codelfa, to have regard to the objective circumstances as established by the evidence to construe the December 2017 document.

I reject Mr Cheema’s submission that Ms Ye ought be taken to have signed the December 2017 document on behalf of Ucer and not on her own behalf. First, there is no mention of Ucer in the document. Secondly, the words, “to investigate the progress and circumstances” are apt to refer to Ms Ye rather than to Ucer which was the entity responsible under the Agreement for lodging the Visa application. Thirdly, the surrounding circumstances indicate that Yun Chen’s associates were looking to Ms Ye to provide a guarantee of Ucer’s performance.

I am not persuaded that any error has been shown in her Honour’s conclusion that the December 2017 document contained a promise by Ms Ye in return for a forbearance to sue. Indeed, this construction is one which is consistent with the objective circumstances and the text of the document and is, in my view, correct. On this basis, the promise made by Ms Ye to Yu Chen was supported by consideration flowing from Yu Chen: see the summary of authorities in Edlin v Williams [2000] ANZConvR 43 (McMurdo P and Shepherdson J) at [41]-[43].

I reject the submission that the December 2017 document was no more than an attempt to vary the Agreement. The parties were, in any event, different. Yu Chen was not promising Ucer that she would not sue Ucer before 31 January 2018; her promise was made to Ms Ye, in return for Ms Ye’s promise that if proof of lodgement of the Visa application was not provided by 31 January 2018, Ms Ye would be liable for the refund. On this basis, her Honour was not in error in finding Ms Ye liable on the basis of the December 2017 document (or Ucer liable on the basis of its breach of the Agreement).

It was common ground that, in accordance with Andar, a doubt as to the construction of a provision in a guarantee or indemnity should be resolved in favour of the surety or indemnifier. I am not persuaded that, when regard is had to the surrounding circumstances, in so far as they affect the parties’ objective intentions, there is any real doubt as to the meaning to be accorded to the December 2017 document. Thus, I am not persuaded that there is any scope for the application of the principle set out in Andar.

Her Honour was correct to find that Ms Ye had requested that Yu Chen forbear from suing Ucer until 31 January 2018 in return for Ms Ye’s promise to refund the amounts paid if the reference number of the Visa application was not provided by 31 January 2018. This is sufficient, for the reasons given by her Honour, to render Ms Ye personally liable to Yu Chen.

I am not persuaded that any of grounds 1, 2, 3, 4 or 5 has been made out. However, I am disposed to grant leave in respect of these grounds.

Ground 9 in the amended summons is as follows:

Mr Cheema argued, in support of ground 9, that her Honour was in error in finding Ucer and Ms Ye to have been delinquent when they were entitled to put Yu Chen to proof of her case. He submitted in writing:

He contended that, in the absence of a finding of delinquency, there was no justification for the costs of the proceedings to be awarded on an indemnity basis.

In the alternative, Mr Cheema argued that the offer of compromise was invalid as it did not comply with UCPR r 20.26 and that, accordingly, her Honour’s alternative order ought not stand.

Her Honour’s reasons for the finding of delinquency are set out above and do not need to be paraphrased. The finding of delinquency was based, in substance, on Ms Ye and Ucer’s conduct in maintaining a defence which they knew to be untrue for the purposes of delaying the administration of justice. Thus, it was not a question of merely putting Yu Chen to proof of the allegations made in her statement of claim, but rather of maintaining a defence which they knew to be untrue. I am not persuaded that any error has been shown in her Honour’s finding of delinquency or in the exercise of her Honour’s discretion to order indemnity costs on that basis. I am not persuaded that ground 9 warrants a grant of leave to appeal, as required by s 40(2) of the Local Court Act.

In these circumstances, it is not necessary to address Mr Cheema’s alternative argument that the offer of compromise was invalid as it included the words “plus costs as agreed or assessed.” However, as this question may be of general significance in the Local Court and elsewhere, it is useful to set out some relevant authorities.

In Whitney v Dream Developments Pty Ltd [2013] NSWCA 188 (Whitney), the Court of Appeal (Bathurst CJ, Beazley P, McColl, Barrett and Emmett JJA) held that an offer made in the form “[judgment sum] plus costs as agreed or assessed” was invalid as the then applicable version of UCPR r 20.26 required an offer to be “exclusive of costs”. Thus, Whitney followed Old v McInnes and Hodgkinson [2011] NSWCA 410 which held that an offer that included a clause that the offeree pay the offeror’s costs as agreed or assessed has been held not to be exclusive of costs.

UCPR, r 20.26 was amended following Whitney to provide that offers made after 7 June 2013 “must not include an amount for costs and must not be expressed to be inclusive of costs”: UCPR r 20.26(2)(c).

In Curtis v Harden Shire Council (No 2) [2015] NSWCA 45 (Curtis), the Court of Appeal considered the effect of the amendment. In Curtis, the appellant made two offers of compromise on 23 September 2013 in the following terms:

The Court (Bathurst CJ, Beazley P and Basten JA) noted, at [23], that under the pre-7 June 2013 version of UCPR r 20.26, such an offer would have been invalid. However, the Court held at [25] that the offers in the form made by the appellant “neither contained an amount for costs nor were they expressed to be inclusive of costs…[and] were therefore compliant with UCPR, r 20.26”.

The offer of compromise served by Yu Chen in the present case did not include an amount for costs and was not expressed to be inclusive of costs.

Mr Cheema argued further that the offer of compromise was invalid since it did not fall within UCPR, r 20.26(3), which relevantly provided:

An argument to this effect was not made in Curtis although UCPR, r 20.26(3) was in the same terms as apply to the present case. Mr Cheema’s argument depended on the proposition that UCPR, r 20.26(3) set out exhaustively the circumstances in which an offer could be made which included a reference to “costs as agreed or assessed”. I do not accept that proposition but it is not necessary to decide it.

The point did not arise in my decision of Dailhou v Kelly (No 3) [2014] NSWSC 1220 (Dailhou) because in Dailhou, the offer of compromise was made by the defendant who offered: “Judgment for the plaintiff against the defendants in the sum of $600,000 plus costs as agreed or assessed.” Thus, I found, at [9], that the offer was in accordance with UCPR, r 20.26(3)(b).

It is not necessary, having regard to my reasons above, to address this matter further.

The parties submitted that it would be appropriate to make a default order in accordance with the general rule that costs follow the event but to preserve their rights to argue for a different order.

Several orders were made by the Court to protect the administration of justice which had the effect of constraining the parties’ rights to deal with their property and funds. I understood it ultimately to be common ground that no orders should be made at this stage to vary those orders, with the intention that, once the parties have had a chance to consider my reasons and any right the unsuccessful parties may have to challenge my orders, they can address the Court on the making of further orders to bring these proceedings to an end. To that end, I propose to stand the matter over for mention for the making of orders, in the event that the parties cannot agree on orders which can otherwise be made in chambers.

For the reasons given above, I make the following orders: