Winau Aust Pty Ltd v LCC Property Development Pty Ltd

These are long running multi-party proceedings which have been before the court since 2018. There are now four plaintiffs and seven active defendants. Most of the active defendants have joined together to bring applications to end the proceedings against them.

Before me today is a notice of motion filed 7 September 2023 by the first defendant, LCC Property Development Pty Ltd (Receivers and Managers appointed), which seeks an order pursuant to r 12.7(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that the proceedings against it by the first, second and fourth plaintiffs (respectively Winau Aust Pty Ltd, Shunjiyuan Investments Pty Ltd and Junde Hong) be dismissed for want of due despatch (Motion).

LCC Property does not seek the further orders with respect to security for its costs contained in the Motion.

Originally, notices of motion filed 10 October 2023 by the twelfth defendant, (L’Orient Legal Pty Ltd), filed 13 October 2023 by the third, fourth and fifth defendants (respectively Ippin Textiles Pty Ltd, Jia He Family Investments Pty Ltd and M Wang Family Pty Ltd) and filed 3 November 2023 by the eighth defendant (CK Consulting Pty Ltd) also seeking summary dismissal pursuant to r 12.7(1) of the UCPR were fixed to be heard before me in addition to the Motion (together the Other Motions). However, the Other Motions were adjourned in the following circumstances.

On 6 November 2023, Daniel O’Brien was appointed the liquidator of the third plaintiff, 183 Eastwood Pty Ltd. Mr O’Brien is now conducting investigations and obtaining advice to enable him to determine whether the claims made by 183 Eastwood in the proceedings against the third, fourth, fifth, eighth and twelfth defendants should be maintained. To enable Mr O’Brien a proper period in which to conduct those investigations and obtain that advice, today I have adjourned the hearing of the Other Motions until 23 November 2023.

The second defendant, Scott Chan, has taken no active role in the proceedings.

The Motion comes after the plaintiffs have punctuated the progress of the proceedings with various stops and starts involving repeated amendments to their claims, multiple changes of their legal representatives, unexplained failures to adhere to directed timetables and a recent apparent attitude of languid indifference as to whether the proceedings progress at all.

LCC Property relied on the following evidence at the hearing:

At the hearing of the Motion, Mr J Foley appeared as counsel for LCC Property instructed by W Advisers.

At the hearing of the Motion, there was no appearance by Winau, Shunjiyuan or Mr Hong, including after they were called outside the courtroom.

On 31 May 2018, the proceedings were commenced by Winau and Shunjiyuan filing the summons seeking urgent injunctive relief before Lindsay J as the Duty Judge of this court. At that time, Wang Lawyers trading as Herald Legal acted for Winau and Shunjiyuan.

On 15 October 2018, the amended summons was filed by Winau, Shunjiyuan and 183 Eastwood, the latter having been added as the third plaintiff. At that time, Aitken Lawyers acted for Winau, Shunjiyuan and 183 Eastwood.

On 29 October 2018, Aitken Lawyers filed a notice of intention of ceasing to act for Winau, Shunjiyuan and 183 Eastwood.

On 5 November 2018, Francis Lim Barristers & Solicitors filed a notice of change of solicitors to act on behalf of Winau, Shunjiyuan and 183 Eastwood in place of Aitken Lawyers.

On 12 November 2018, the statement of claim was filed by Winau, Shunjiyuan and 183 Eastwood. At that time, Francis Lim Barristers & Solicitors were again acting for Winau, Shunjiyuan and 183 Eastwood.

On 8 July 2019, the amended statement of claim was filed by Winau, Shunjiyuan and 183 Eastwood. At that time, Francis Lim Barristers & Solicitors were still acting for Winau, Shunjiyuan and 183 Eastwood.

On 5 August 2019, the further amended statement of claim was filed by Winau, Shunjiyuan and 183 Eastwood. At that time, Francis Lim Barristers & Solicitors were still acting for Winau, Shunjiyuan and 183 Eastwood.

There have been seven judgments of this court and the Court of Appeal between 2019 and 2023 dealing with various applications made in the proceedings: Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2019] NSWSC 499, Ward CJ in Eq (as her Honour then was); Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2020] NSWSC 434, Kunc J; Winau Aust Pty Ltd v LCC Property Development Pty Ltd (No 2) [2020] NSWSC 586, Kunc J; Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2021] NSWSC 612, Rein J; Ippin Textiles Pty Ltd v Winau Aust Pty Ltd [2021] NSWCA 9, Macfarlan, Leeming and Brereton JJA; Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2021] NSWSC 1361, Henry J; Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2022] NSWSC 1258, Richmond J.

In Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2021] NSWSC 612, Rein J set out the factual and procedural history of the disputes in the proceedings to that point which it is unnecessary for me to repeat. At the heart of them is 183 Eastwood as the former registered proprietor of three parcels of land in Eastwood, an alleged fraudster who purported to be the sole director and shareholder of 183 Eastwood (being the second defendant, Scott Chan), and the third to fifth defendants who as mortgagees mistakenly believed that they were dealing with the sole authorised officer of 183 Eastwood.

On 12 April 2021, the second further amended statement of claim was filed by the plaintiffs. By those amendments, the fourth plaintiff, Mr Hong, became a party to the proceedings. At that time, Francis Lim Barristers & Solicitors were acting for all of the plaintiffs.

On 8 June 2021, Winau, Shunjiyuan and Mr Hong filed a notice of motion seeking summary judgment against LCC Property, which was dismissed with costs on 15 October 2021: Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2021] NSWSC 1361, Henry J.

On 16 December 2021, Winau, Shunjiyuan and Mr Hong filed a notice of motion seeking orders that the appearance and defence filed by W Advisers on behalf of LCC Property be struck out, the essential issue being a challenge to the validity of the appointment of receivers of the properties which are the subject of the proceedings, which was dismissed with costs on 16 September 2022: Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2022] NSWSC 1258, Richmond J.

On 11 March 2022, the third, fourth and fifth defendants served a notice to produce on the plaintiffs, to which they have failed to respond or produce any documents.

On 2 September 2021, the plaintiffs were directed to file and serve their expert and lay evidence by 31 October 2021. The plaintiffs failed to comply with that direction.

On 24 November 2021, the plaintiffs were directed to serve their expert evidence by 31 January 2021. The plaintiffs failed to comply with that direction.

On 16 February 2022, the plaintiffs were directed to file and serve expert evidence in relation to liability by 4 March 2022. The plaintiffs failed to comply with that direction.

On 14 March 2022, Ma & Company Solicitors filed a notice of change of solicitor to act on behalf of the plaintiffs in place of Francis Lim Solicitors & Barristers.

On 11 July 2022, the fourth amended statement of claim was filed by the plaintiffs.

On 10 October 2022, the plaintiffs gave notice of their intention to amend the fourth amended statement of claim.

On 11 November 2022, orders were made requiring the plaintiffs to serve any proposed fifth amended statement of claim by 28 November 2022. The plaintiffs did not comply with that order.

On 19 December 2022, the plaintiffs served a proposed fifth amended statement of claim, indicating that it was incomplete.

On 14 February 2023, the plaintiffs circulated a second version of a proposed fifth amended statement of claim (5ASOC). At the date of the hearing of the Motion, the plaintiffs still have not taken any steps to seek to obtain leave to file the 5ASOC.

On 17 March 2023, the plaintiffs filed a notice of motion seeking summary dismissal of the cross-claim brought by the third, fourth and fifth defendants against 12 cross-defendants. That motion was brought two years after that cross-claim had been filed.

On 30 March 2023, the parties were ordered to attend mediation, which then was scheduled to take place on 20 July 2023.

On 18 July 2023 (two days before the scheduled mediation), Ma & Company Solicitors filed a notice of intention of ceasing to act for the plaintiffs.

On 20 July 2023, the parties attended a mediation which did not resolve the claims.

On 25 July 2023, Ma & Company Solicitors filed a notice of ceasing to act for the plaintiffs.

On 26 July 2023, Thuy Pham, a solicitor from W Advisers for the first defendant, sent an email to various officers of the plaintiffs asking a number of questions, including whether 183 Eastwood intended to pursue an application to set aside a statutory demand, whether the plaintiffs intended to engage legal representatives in the proceedings, whether the plaintiffs intended to press their notice of motion seeking summary dismissal of the cross-claim, and noting that the proceedings were listed for directions on 1 August 2023. In the email it was suggested that the proceedings be adjourned for four weeks to enable the position of the plaintiffs to be clarified.

On 31 July 2023, Viki Chen responded to the email from Ms Pham, stating that they would not be able to attend the directions hearing and that they were looking for a suitable lawyer.

On 1 August 2023, by consent Registrar Walton adjourned the proceedings for four weeks until 29 August 2023 to give the plaintiffs an opportunity to retain new solicitors. At that hearing, also by consent, Registrar Walton dismissed the cross-claim against LCC Property.

On 15 August 2023, the first defendant served a notice to produce on the plaintiffs, to which they have failed to respond or produce any documents.

On 24 August 2023, Viki Chen sent an email to the court, copied to the solicitors for the defendants, stating that as the plaintiffs had not been able to find a suitable lawyer to represent them, they would not be able to participate in the hearing on (mistakenly) 30 August 2023 and requested an adjournment of two months until 30 October 2023.

On 25 August 2023, Registrar Walton sent an email to Vicki Chen declining to grant an adjournment in chambers unless by consent and stating that the matter would remain in the list and if the plaintiffs failed to appear then orders would be made in their absence.

On 29 August 2023, the matter was listed for directions before Registrar Walton, at which time Rongjie Yuan (also known as Grace Yuan), a director of Winau and 183 Eastwood, appeared and sought a further adjournment of 8 weeks. At that directions hearing, Registrar Walton granted leave to the defendants to apply to dismiss the proceedings and stood over the plaintiffs’ motion seeking summary dismissal of the cross-claim to 12 September 2023 and the proceedings to the same date.

On 29 August 2023, Ms Pham sent a letter by email to the plaintiffs referring to the history of the proceedings and asking that they state their intentions for the future conduct of the case by 1 September 2023, in particular what they intended to do regarding the proposed 5ASOC. The letter concluded by stating that if an adequate response was not received by that time, they intended to bring a motion to dismiss the proceedings for want of due despatch.

On 1 September 2023 at 10.21am, Ms Yuan sent an email to Ms Pham stating:

On 1 September 2023 at 2:54pm, Ms Pham sent an email to Ms Yuan and others pointing out that the email she had received did not address the concerns raised in the letter of 29 August 2023, with the proposal entirely silent as to the time by which the proposed action is to be done and did not propose any meaningful way in which the proceedings could be progressed, including by remaining silent on the issue of representation. The email concluded that if a detailed proposal of how and by when the plaintiffs intended to address the issue of representation and a proposal to progress the proceedings was not received by 10am on 4 September 2023, LCC Property would file a motion to dismiss the plaintiffs’ claims.

On 3 September 2023, Ms Yuan sent an email to Ms Pham stating that:

On 4 September 2023, Nicholas Parsons, a solicitor from W Advisers for the first defendant, sent an email to Ms Yuan asking if the plaintiffs had retained new lawyers yet and concluding that “the proceedings need to be meaningfully progressed”. There has been no response to that email.

On 11 September 2023, JLT Lawyers served a notice of appointment of solicitor stating that they acted for the plaintiffs.

On 12 September 2023, the proceedings were listed for directions and a solicitor appeared on behalf of the plaintiffs and indicated that the plaintiffs had retained a new firm of solicitors that had not yet had the opportunity to obtain instructions. At the directions hearing, the proceedings were further adjourned and directions were made for the filing of motions for summary dismissal and security for costs.

Also on 12 September 2023, the court dismissed the plaintiffs’ application for summary dismissal of the cross-claim which had been filed on 17 March 2023, with costs.

On 1 October 2023, JLT Lawyers filed a notice of ceasing to act for the plaintiffs.

On 5 October 2023, Chen Shan Lawyers served a notice of appointment of solicitor stating that they acted for the plaintiffs.

On 26 October 2023, Chen Shan Lawyers filed a notice of intention of ceasing to act for the plaintiffs.

On 2 November 2023, Chen Shan Lawyers filed a notice of ceasing to act for the plaintiffs.

Since that time, Winau, Shunjiyan and Mr Hong have failed to progress the claims, failed to provide any explanation for their intentions with respect to the claims, and have failed to obtain any new solicitors to act for them.

Rule 12.7(1) of the UCPR is in the following terms:

Rule 12.7 provides a judicial discretion which is not required to be exercised within a rigid formula, the decision being one where the court must strike a balance between the parties to “decide whether or not on balance justice demands that the action should be dismissed”: Stollznow v Calvert [1980] 2 NSWLR 749, Moffitt P at [6], citing Witten v Lombard Australia Ltd (1968) 88 WN (Pt 1) (NSW) 405, Walsh J at 411. In Stollznow at [7], Moffit P further cited the judgment in Witten at 412 as follows:

It is also worth keeping in mind the matters referenced in Udowenko and Ors v Chief Executive Officer and Board of Directors of St George Bank - A Division of Westpac Banking Corporation and Ors (No. 2) [2011] NSWSC 1122 at [120]-[121] where Johnson J stated as follows:

In Ghosh v NineMSN Pty Ltd (2015) 90 NSWLR 595; [2015] NSWCA 334, Macfarlan JA (with whom Leeming JA and Adamson J agreed) after emphasising that the discretion in r 12.7 of the UCPR is broad and not confined by rigid formula (citing Stollznow and Witten), said at [42]-[43] as follows:

Importantly, across a number of judgments, the following factors have been emphasised in the exercise of a broad discretion:

In the present case, the proceedings have been on foot for some five years, yet the proceedings are no closer to resolution than they were several years ago. There has been a failure by the plaintiffs to file the proposed 5ASOC, repeated failures by the plaintiffs to comply with court orders, failures by the plaintiffs to comply with multiple notices to produce and failures by the plaintiffs to progress the proceedings in any meaningful way.

The first, second and fourth plaintiffs have not provided any explanation as to why they have failed across these multiple grounds. The first, second and fourth plaintiffs have not explained why they have consistently changed solicitors, particularly in the most recent months.

Five years into these proceedings, pleadings are still not closed, no expert evidence has been served more than 2 years after it was first ordered, and no hearing date has been fixed.

The first, second and fourth plaintiffs did not even appear at the hearing of the Motion to indicate what their intentions were with respect to the proceedings against LCC Property.

The first, second and fourth plaintiffs’ approach has been the antithesis of what is required of parties in this court pursuant to their obligations under the Civil Procedure Act 2005 (NSW) and the UCPR to ensure that there is a just, quick and cheap resolution of the real issues in the proceedings. The consistent and continuing failures to adhere to these obligations indicates to me that LCC Property should no longer be troubled by the proceedings brought against them by Winau, Shunjiyuan and Mr Hong.

Accordingly, I make the following orders: