Han v Jiang (No 3)

THE COURT: Shortly following the conclusion of submissions, the Court ordered that the summons seeking leave to appeal be dismissed with costs, and indicated that our reasons would follow. These are our reasons.

The respondent, Mr Zhao Qing Jiang, brought proceedings as long ago as 2021 against the applicants, Mr Kairan Han and Fortune New City (Yarraville) Development Pty Ltd. There was delay on both sides, but Mr Jiang’s evidence was served on 5 December 2023. Subsequently there were five extensions of time granted throughout 2024 for the defendants/applicants to file their evidence. The proceedings were listed on 19 June 2024 for a final hearing to commence more than 1 year later, on 30 June 2025, with an estimate of 10 days. At the outset of that hearing, the applicants appeared by counsel and sought an adjournment, which was refused: Jiang v Han (No 4) [2025] NSWSC 695 at [13]-[22]. After a brief adjournment, the applicants instructed their counsel to withdraw from the remainder of the hearing. The Court continued to hear the proceedings, resulting in a final judgment in favour of Mr Jiang entered on 1 July 2025 with reasons given on 3 July 2025: Jiang v Han (No 4) at [11].

None of the foregoing is sought to be challenged.

There is another important aspect of the procedural history. In response to Mr Jiang’s claim based on contract, the applicants filed a cross-claim, and also relied in their defence on alleged misrepresentations. On 13 February 2025, the Court ordered following a contested hearing that security for the costs of the cross-claim, in the amount of $185,000, be paid within 14 days, in default of which it would be stayed: Jiang v Han (No 2) [2025] NSWSC 48. The security was not paid. Subsequently, following a further contested hearing, the Court ordered that the cross-claim be dismissed and the parts of the defence alleging misrepresentation be struck out: Jiang v Han (No 3) [2025] NSWSC 452. That occurred on 12 May 2025.

On 25 June 2025, as part of the same notice of motion which sought to vacate the hearing of the 10 day trial, the applicants also sought leave to rely on the cross-claim and the parts of the defence which had previously been struck out. That application was also rejected by the primary judge on 30 June 2025.

No application for leave to appeal has been brought from any of the decisions concerning security for costs, or staying or dismissing the cross-claim or striking out that part of the pleading which alleged misrepresentation, or refusing to permit reliance on the cross-claim or the parts of the defence which had been struck out.

Instead, this summons seeking leave to appeal turns on a motion filed on 18 July 2025 seeking to set aside the judgment and other orders so that there could be a contested trial. The motion also sought, once again, to reinstate the misrepresentation cases which had been contained in the cross-claim and the parts of the defence which had been struck out on 12 May 2025 and in respect of which a further application to reinstate it had been dismissed on 30 June 2025.

There was an oral hearing on 1 August 2025 and by a reserved judgment delivered on 21 August 2025 the primary judge dismissed the motion: Jiang v Han (No 5) [2025] NSWSC 948. It is from those orders that the applicants seek leave to appeal.

It is convenient to defer for the moment addressing the evidence relied on in support of their motion, and instead to proceed directly to her Honour’s reasons.

The primary judge recorded at [12] that there was no dispute about the principles applicable to an application to set aside a final judgment. Her Honour reproduced those principles at [20], encapsulating them at [22] by saying that what is required is that the applicants “give a satisfactory explanation of the course which they actually pursued, as well as that they advance their claims bona fide and that they have an arguable case”. After setting out the parties’ submissions, her Honour’s dispositive reasoning is at [53]-[69], which are best reproduced in full:

By summons filed promptly after judgment was entered, the applicants seek leave to appeal (leave being required because the application was interlocutory). There are two proposed grounds of appeal:

Thus there is no challenge to the finding that there was no satisfactory explanation for the applicants’ decision not to contest the hearing. Instead, the applicants complain that the primary judge did not address the merits of the case which they now seek to go to trial. Proposed ground 2 supplements proposed ground 1 by contending that the result is impermissibly penal.

There are two succinct answers to this.

First, where there is a concededly inadequate explanation for the failure of the defendants to appear at trial, it is difficult to see how it could be appropriate to grant leave to appeal. There is no dispute that one of the matters which, generally speaking, an applicant must establish in such a case is that there was an adequate explanation. In Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243, Jordan CJ said that:

In Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331 at [51], Hodgson JA, with whom M W Campbell AJA agreed, referred to “the long-established requirement that a person applying to set aside an order, regularly made in his or her absence, ordinarily bears an onus of showing an arguable case on the merits, that is, a case that might reasonably bring about a different result, as well as an explanation for his or her absence” (emphasis added). The necessity to have regard to the adequacy of the explanation is reaffirmed in Pham v Gall (2020) 102 NSWLR 269; [2020] NSWCA 116 at [57] and [110].

True it is, as Jordan CJ explained, that those principles do not in every case operate as rigid rules. But one of the starting points for the exercise of the discretionary power to set aside a judgment obtained in the absence of the other party is the explanation for that party’s absence. Ordinarily if there is no satisfactory explanation, the judgment will stand. In the present case there is no challenge to her Honour’s conclusion that there was no adequate explanation. It is very hard to see how, in the event the discretion were re-exercised, any different result could be reached by this Court from that reached by the primary judge. That tells powerfully against the grant of leave.

That is to say, even if there were error in the assessment of the case which the applicants have not been able to advance, in the absence of any satisfactory explanation for their decision to instruct their legal representatives not to appear, it is difficult to see how any other result could realistically be reached in the event that the discretion was re-exercised following a grant of leave. The result is the absence of a proper basis for the grant of leave.

This was pointed out, prominently and succinctly, in the written submissions supplied in advance of the hearing by the respondent. There was no response in the submissions filed in reply. When it was raised in oral address, Mr Marshall agreed that there was no adequate explanation, said that the failure was regrettable, but insisted that what nonetheless needed to be done was to assess the merits of the entire defence and cross-claim which the applicants had wished to advance. We do not agree. There may in principle be a case where the merits of the unadjudicated case weigh so heavily in the exercise of discretion that the adequacy of the explanation does not greatly matter. However, in a case such as this where the applicants’ absence from the trial was a consequence of a conscious decision to gamble on the success of an adjournment application made at the commencement of a hearing which had been set down more than a year before, it is very difficult to see that there was any real prospect of a favourable exercise of discretion absent a satisfactory explanation.

Secondly, there is no challenge to the assessment by the primary judge of the absence of strength in the case extant on the pleadings. The gravamen of the complaint is that her Honour failed to go further to consider the broader case which the applicants wished to put forward. In particular, they complain that there was no consideration of their cross-claim and the parts of their defence which alleged misrepresentation. However, those parts were dismissed or struck out on 12 May 2025, and an application to reinstate them was rejected on 30 June 2025.

The respondent submitted that it was not open to the primary judge to consider the merits of the case which had been struck out or dismissed. The applicants said that it was mandatory to do so, having regard to the fact that their application extended to reinstating the cross-claim and the misrepresentation defence.

However, that issue does not arise. By way of fallback, the respondent maintained that if there were to be any consideration of the misrepresentation defence and cross-claim, it was necessary first for the applicants to establish a proper basis to set aside the orders made on 12 May 2025, bearing in mind the failed attempt to reinstate that aspect of their case on 30 June 2025. That in turn requires establishing some material change of circumstance in the weeks after 30 June 2025.

True it is that after final judgment had been entered against them the applicants served a suite of evidence. Part of this was an affidavit made by Mr Han in April 2025, and as her Honour observed at [55], there was no explanation for why this had not earlier been relied upon. There were also affidavits filed more recently, but once again Mr Marshall was unable to point to any evidence explaining why it had been impossible for those affidavits to have been filed earlier. In the absence of such evidence, the existence of those affidavits cannot amount to a material change of circumstances in the period after 30 June 2025. As much is reflected in the reasoning of the primary judge at [57]-[63].

In the absence of any basis to set aside the earlier unchallenged procedural orders which continued to bind the parties until and unless set aside, it would have been wrong for the assessment made by the primary judge of the merits of the case sought to be advanced to extend to matters outside the scope of the pleadings.

That is to say, the substance of both proposed grounds of appeal proceeds on a misapprehension that the assessment of the case which the applicants seek to be permitted to run extends to the whole of their case, contrary to unchallenged orders limiting it to the aspect of the case in fact considered by the primary judge.

The result is that no basis for a grant of leave has been made out. For those reasons, the Court ordered shortly after the conclusion of submissions that the summons seeking leave to appeal be dismissed with costs.