Wang v Yu (No 2)

On 5 October 2023, I delivered reasons for judgment in this matter (Wang v Yu [2023] NSWSC 1182 (principal judgment)), consequent upon a hearing for six days (3 days in mid-June 2023 and 3 days in early August 2023) involving issues between the parties regarding enforceability of a deed and payment of monies arising out of arrangements between them relating to the development of a property at Meadowbank. These reasons assume a familiarity with the principal judgment and will adopt its nomenclature and abbreviations.

At its highest level there were two sets of claims brought in the proceedings. First, there were claims by Dr Wang for specific performance of the deed, which I rejected essentially based on findings that the deed sought to be enforced had been procured by duress. I found that purported affirmations of the deed occurred in a context in which the duress was still operative and that the defendants effectively elected to avoid the deed in April 2021 in a context where the duress was still operative. I found that the purported election to avoid the deed was effective (main claim).

Secondly, there were claims by Mr Yu in respect of payments of money, specifically payments of $10,000 by Mr Yu in favour of Mr Yang and payments of amounts totalling $200,000 in favour of Dr Wang all of which payments were made under duress and that Mr Yu was entitled to repayment of that sum (cross-claim).

I summarised the findings at the conclusion of the principal judgment: principal judgment at [758].

Broadly speaking, following the delivery of the reasons for judgment two types of orders were required to be addressed namely:

These reasons for judgment:

On 5 October 2023, I directed the parties to bring in short minutes of order to give effect to the reasons for judgment in relation to the relief in the main claim and the cross-claim.

The judgment was lengthy and it was clear that it would take at least some time for the parties to review the judgment and reflect on it.

The proceedings were stood over to 9 AM on 27 November 2023. I directed that in the event that there was dispute regarding orders or costs the party should provide a brief outline of submissions and proposed orders and any brief evidence to be relied upon by Thursday, 23 November 2023.

On 23 November 2023, Mr Yu’s legal representatives provided proposed short minutes of order, submissions on costs and an affidavit of Ibrahim Kammoun in respect of the issue of costs, affirmed on 23 November 2023.

On the afternoon of 24 November 2023, the Friday before the Monday relisting of the matter, Ms Sidey, the solicitor for Mr Yang, sent an email to my associate (copied to the other parties) indicating that counsel Mr Mack was extremely unwell and not in a position to finalise the submissions and proposed orders and that it was unlikely that he would be well enough to appear on the Monday. She sought to have the matter stood over.

In a context in which there was still sufficient time before the end of the term for an adjourned listing to occur and the content of final orders to be debated, I proposed that the listing be vacated and requested counsel to confer to arrange a mutually convenient time for the relisting of the matter before the end of the term.

Later on 24 November 2023 at 6:29 PM, Mr Luo, the solicitor for Dr Wang, sent an email to my Associate attaching a Notice of Removal of Solicitor which Dr Wang had filed on 23 November 2023 terminating the authority of Mr Luo and his firm to act on her behalf in the proceedings. Mr Yu’s representatives were agreeable to the vacating of the listing.

Early on Monday, 27 November 2023, I made an order vacating the listing for that day and I directed the representatives to respond by Wednesday, 29 November 2023 with proposed alternative dates.

Dr Wang indicated that her only availability to address the matter was on 15 December 2023 before noon.

That had some significance as 15 December 2023 was the final date of the Court term last year. The Court would then be in vacation before resuming a new Court term on Monday, 29 January 2024.

In the above circumstances I listed the matter for 9 AM on 15 December 2023.

On 12 December 2023, Ms Sidey provided proposed short minutes of order on behalf of Mr Yang and submissions on the question of costs. Notwithstanding that the parties had had the principal judgment available to them since 5 October 2023, Dr Wang had not by 13 December 2023 provided any proposed orders, evidence or submissions for the purposes of my making final orders.

On 13 December 2023 at 2:12 PM, Dr Wang sent an email to my associate (copied to the other representatives) asserting that two days prior she had received a diagnosis indicating a “severe *** deficiency illness” which could potentially be life-threatening and asserted that:

The email requested a postponement of the hearing and stated:

Later that afternoon I arranged for my Associate to send an email requesting Dr Wang to provide by noon the following day (14 December) a written medical certificate confirming her medical condition and requesting the parties to confer with one another to advise whether they would be available in the following week (18 - 22 December 2023). It was advised that if they were not mutually available, consideration would need to be given to allocating a date in the new Court term.

Dr Wang sent an email shortly after giving thanks for the “prompt response” but stating:

My Associate on my behalf sent an email to Dr Wang, copying the other parties, noting that I did indeed require the medical certificate which Dr Wang’s earlier email had indicated she was willing to provide and that I had not vacated the listing for Friday. I noted that before I was prepared to consider vacating the listing I would require appropriate medical evidence. I noted that matter would remain listed until I had the opportunity to review any such appropriate medical evidence. I indicated that my request for the provision of the medical certificate remained.

On the morning of 14 December, Dr Wang sent an email with an attachment that was unable to be opened, which email was not copied to the other parties.

My Associate at my request sent an email noting that the attachment was unable to be opened and reminding all parties that correspondence should not be sent to the Court without being at least copied to the other parties. Dr Wang replied then by an email stating:

The certificate, apparently signed by a doctor Maciej Mazurek and dated 14 December 2023, stated:

The solicitors for Mr Yu sent an email to my Associate indicating that counsel for Mr Yu and Mr Yang were not available the following week to hear the matter and made a number of comments regarding the medical certificate indicating that it did not identify how the medical practitioner was able to identify that Dr Wang was suffering from a “severe iron deficiency”, did not identify any urgent requirement for treatment including the nature of any such treatment and noting that it was unclear why the certificate referred to Dr Wang being unfit for work/study in a period predating at least in part the date of the certificate. A request was made for the listing to remain.

In the above circumstances I instructed my Associate to advise the parties including Dr Wang that the matter would remain listed.

On 15 December 2023 at 8:41 AM, Dr Wang sent an email to my Associate copying the other legal representatives in the following terms:

Embedded in the space below the email text was a “HotDoc” appointment confirmation for Dr Wang to see Dr Mazurek at 10:15 AM on 15 December 2023.

At the listing, Mr Lonergan appeared for the defendants and Mr Mack appeared for Mr Yang. Dr Wang did not appear, nor was there any appearance by anyone on her behalf.

I considered it appropriate to formalise the context in which Dr Wang had failed to appear and provided to Mr Lonergan and Mr Mack the bundle of email correspondence as between Dr Wang and my Associate from 12 December 2023 to 15 December 2023 (which in all cases of emails from my Associate had been copied to the legal representatives of the other parties). Mr Lonergan tendered that material which became exhibit D1.

I indicated to Mr Lonergan and Mr Mack that whilst there was no formal application before the Court, I regarded the email from Dr Wang as being in substance an adjournment application. They did not seek to contend otherwise.

Having regard to a number of matters including the fact that Mr Lonergan foreshadowed that he wished to seek a type of costs order being either a "Bullock order" or a "Sanderson order" against Dr Wang (see below), which had not been previously foreshadowed to her, I considered that the appropriate course was to address what could be appropriately addressed on the listing and adjourn the balance of the matters to be addressed for a brief period of time. This would allow Dr Wang an opportunity to consider any further aspect of the orders that Mr Lonergan foreshadowed would be sought against her in respect of costs.

Ultimately, I made orders which were intended to give Dr Wang a fair opportunity to address in particular the question of the proposed Bullock order or Sanderson order, bearing in mind that Dr Wang had previously had available to her since 23 November 2023 all the other material affecting her interests regarding orders sought against her, being the affidavit of Mr Kammoun affirmed 23 November 2023 and Mr Lonergan's proposed orders and submissions.

The orders that I made on 15 December 2023 were as follows:

Further, on 15 December 2023, Mr Lonergan provided to my Associate the following documents which had been served upon Dr Wang:

Later, on 15 December 2023, my Associate emailed Dr Wang and the legal representatives for the parties a copy of the transcript of the hearing on 15 December 2023 which included reference to the orders.

On 19 December 2023, Mr Mack provided further submissions on costs and final orders.

Each of Mr Lonergan and Dr Wang, for different reasons, sought permission to appear by AVL. I gave permission for that to occur, subject to objection. No party objected to that permission being given.

Dr Wang’s reason for appearing by AVL in the email requesting it made reference to the state of her health, but also included the following statement:

On the morning of 20 December 2023, the matter was listed to commence at 9 AM. When I first entered the Court Dr Wang was visible on the AVL connection but in the process of driving a car. It was evident that she had joined by a mobile phone. She had not prior to my coming into Court indicated to my staff that she was in some way delayed and would require time to arrive at a destination where she could access AVL whilst not in transit. She had not requested even a brief opportunity for her to pull the car over and proceed whilst sitting in the car as parked.

I indicated to her that it was unsatisfactory that she should appear in that way and that I would immediately adjourn so as to enable her to pull over and seek to connect in a safe environment.

Ultimately, approximately half an hour later Dr Wang had arrived at her office and appeared by AVL that way.

In Zhang v Zhang [2022] NSWSC 924, I stated:

With limited exception, the Supreme Court Practice Notes do not appear to address the use of AVL in civil matters. Practice Note SC Gen 15 ‘Use of audio-visual links in criminal and certain civil proceedings’ is limited to criminal proceedings and, relevantly for civil proceedings, applications by designated government agencies to make AVL directions and appearances by government agency witnesses.

Practice Note SC Gen 7 ‘Use of technology’ relevantly provides as follows:

The ‘document’ referenced in paragraph 8 of the Practice Note is a Fact Sheet headed ‘The Virtual Courtroom’. It is accessible on the Court website via a link as follows:

The start of that Fact Sheet relevantly states:

The Fact Sheet also addresses and relevantly states:

The nature of AVL appearances requiring observation of all normal court etiquette and protocols in the virtual courtroom environment is reinforced by other Court practices involving technology. Thus similar considerations apply in relation to use of the Online Court.

Practice Note SC Gen 12 ‘Online Court Protocol’ (issued 8 February 2007) provides in part:

Practice Note SC Eq 14 ‘Online Court Protocol’ issued 11 years later (31 August 2018) is to like effect, providing in part:

One might have thought it self-evident that it is not appropriate that anyone should even consider the possibility of attempting to appear by AVL whilst driving a car, let alone in fact appear in that manner.

The fact that Dr Wang even entertained the possibility of appearing whilst driving in traffic one might think was at odds with her assertion in the request for permission to appear by AVL that she understood the importance and gravity of the matter at hand and that appearing through AVL would ensure her active and undivided participation in the case.

Whilst I do not wish to unnecessarily dwell upon the matter, the matter is of some seriousness and should not pass without some salutary comment.

The usual court etiquette, protocols, procedures and restrictions which apply to in-person hearings apply to a virtual hearing whether virtual in whole (with all participants joining remotely) or virtual in part (with some participants in person and others joining remotely).

Whilst I have as counsel seen occasions on which witnesses or other participants appear by AVL informally quite apart from the question of the solemnity of the occasion, the Court expects participants to use their common sense in appearing.

Parties, legal representatives or any other persons given leave to appear by AVL should understand that the appearance is to be done in a way consistent with the appropriate decorum and solemnity of the occasion that would apply as if the person appearing were physically present in the courtroom.

The Court does from time to time understand that on some occasions exigencies will give rise to participants appearing in remote locations. For example, sometimes witnesses are sought to be cross-examined at extremely late notice and, despite some inconvenience, willingly make themselves available to assist in the administration of justice by connecting whilst located in a remote location. I recall one occasion as counsel where a deponent was required for cross-examination and appeared by mobile phone in the midst of a rural retreat or vineyard.

However, lest there be any doubt about it, anyone given permission to appear by AVL should not do so in a manner or environment in which they might be distracted or unable to give their undivided attention properly and safely to the proceedings before the Court. Specifically, an AVL participant should never participate by AVL in a manner which by dint of their situation or surroundings gives rise to any appreciable risk of placing themselves or others in their vicinity in danger (in this case appearing whilst driving a car with potential risk to herself, other vehicle drivers, passengers and pedestrians).

Mr Lonergan on behalf of Mr Yu proposed the following orders dealing with the substantive claims both in his initial proposed short minutes of order provided on 23 November 2023 and in his amended proposed short minutes of order dated 15 December 2023:

Dr Wang initially did not provide any proposed orders in relation to the main claim. Mr Mack on behalf of Mr Yang proposed an order on the cross-claim which accorded with Mr Yu’s proposal.

At the listing on 15 December 2023, considering that in relation to the substantive orders there did not appear to be any substantial dispute as to what was necessary in order to give effect to the reasons for judgment, I foreshadowed that I proposed to make the substantive orders as sought by Mr Yu but reserving to Dr Wang the right at the adjourned listing to make any residual submission that she might wish to make in respect of that.

In light of Dr Wang’s absence, I deferred making any final substantive orders so as to permit her a final opportunity to comment on the orders.

At the listing on 20 December 2023, I raised with Dr Wang what was proposed in relation to the making of the substantive orders. Subject to one matter, Dr Wang did not seek to oppose those orders as being appropriate to give effect to the reasons for judgment.

Dr Wang stated (T 3):

Thus, in relation to the delivery up of the deed for cancellation, Dr Wang intimated that she had lodged a Notice of Intention to Appeal and did not wish for the deed to be cancelled.

The period of time for the filing and serving of a notice of intention to appeal is addressed by r 51.6 Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and to be filed within 3 months after the material date or such other period as the Court may order. The periods for appeal and leave to appeal are addressed in rr 51.10 and 51.16 UCPR which also make reference to filing in certain cases “after” the material date.

The general position is that where a judge delivers reasons for judgment, but stands the proceedings over for the making of formal orders and for any argument on costs, the material date is the later date when the formal orders are actually made, as distinct from the date for delivery of the principal reasons for judgment: e.g. Erasmus v Jackson (Supreme Court (NSW), Wootten J, 15 April 1975, unrep).

I briefly explained to Dr Wang the difference between reasons for judgment and the making of orders and noted that all that had been done thus far was for reasons for judgment to be delivered and that to formalise the parties’ rights orders needed to be made.

I explained to Dr Wang that once the formal orders were made it became a matter for her as to whether she wished to seek a stay of the orders or not.

I then asked Dr Wang whether there was anything further she wished to address me on in relation to the proposed orders. She stated (T 4):

The orders proposed on behalf of Mr Yu to deal with the substantive relief on the main claim in the cross-claim seemed appropriate to me to give effect to my reasons for judgment and accordingly at the conclusion of the listing on 20 December 2023, I stated in Court the orders in accordance with the proposed orders.

In finalising the record of proceedings, immediately following the listing of the matter, I inserted the word “forthwith” in the order in relation to the delivery up of the deed for cancellation to clarify the intent of the order, consistent with the other orders having immediate effect. I arranged for my Associate to notify the party of the orders and to send an email to the parties confirming that I had inserted the word “forthwith” for the purposes of clarity.

The Orders made, were as follows:

I also made an order reserving my decision on the questions of costs: Order 6.

In the first set of proposed orders dated 23 November 2023, Mr Lonergan, on Mr Yu’s behalf, sought the following cost orders:

In the amended proposed short minutes of order prepared on 15 December 2023, Mr Yu sought additionally the following two orders:

Ultimately, Mr Lonergan did not press orders (4) and (5) dealing specifically with the costs of the notices of motion, having accepted, following a query from me, that the proposed order (1) (regarding the plaintiff to pay the defendants’ costs on the plaintiff’s claim) effectively covered what was sought by Mr Yu in that regard.

Further, it was formally clarified that the date from which the indemnity costs were sought was 15 September 2022 (not 15 September 2023).

Mr Mack, on behalf of Mr Yang, proposed an order that Mr Yu pay Mr Yang’s costs of the cross-claim. He also proposed an alternative costs order that in the event that the Court was not minded to characterise the “event” as being Mr Yang’s successful defence of the claim for the sum of $200,000, the Court should apportion costs and order Mr Yu to pay 80% of Mr Yang’s costs as agreed or assessed.

Costs are in the discretion of the Court, subject to the Civil Procedure Act 2005 (NSW) (CPA), rules of Court and any other Act: s 98(1)(a) CPA.

The Court:

The general position is that if the Court makes any order as to costs, the Court is to order that the costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs: r 42.1 UCPR.

If the Court makes an order for dismissal of the proceedings, then generally speaking, unless the Court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed: r 42.20(1) UCPR.

Generally, costs payable to a party under an order of the Court are to be assessed on the ordinary basis: r 42.2 UCPR.

An award of costs, of its nature, is compensatory in the sense of being awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings. Costs are not awarded by way of punishment of the unsuccessful party: Latoudis v Casey (1990) 170 CLR 534 at 543 (per Mason CJ); [1990] HCA 59.

The UCPR provides a regime by which offers of compromise may be served, in which case there is what is described under the rules as an ‘entitlement’ of a party who has obtained a favourable outcome, having regard to the terms of the offer, to have costs assessed on an indemnity basis, unless the Court orders otherwise: see r 42.13A to 42.15A UCPR.

In Horn v GA & RG Horn Pty Ltd (No 2) [2022] NSWSC 1747, I stated

In contrast, for offers outside the offer of compromise regime, such as offers expressed to be without prejudice except as to costs and relied upon in accordance with the principles in Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333 (Calderbank), there is no prima facie entitlement of a party who has achieved a favourable outcome under the terms of the offer to have an indemnity costs order made in its favour. Rather, the making of a Calderbank offer is one of a number of circumstances the Court takes into account in exercising its discretion to make an order for costs on an indemnity basis.

Determination of costs in relation to the main claim requires consideration of the principles regarding an offer of compromise made by a defendant and not accepted by a plaintiff.

On 15 September 2022, Mr Yu, by his solicitor, served an offer of compromise. The terms of the offer of compromise are as follows:

Mr Lonergan raised an issue as to whether the offer was a compliant offer of compromise.

Rule 42.15A UCPR deals with the situation where an offer of compromise has been made in accordance with the UCPR by the defendant, but not accepted by the plaintiff, and the defendant obtains an order on the claim no less favourable to the defendant than the terms of the offer.

Rule 42.15A(2) provides as follows:

In his initial written submissions, Mr Lonergan appeared to assume based on the remarks of Bathurst CJ in Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188 at [19]-[28] that an offer which included a provision for payment of costs as agreed or assessed did not comply with r 20.26 UCPR because it was not exclusive of costs.

At the hearing on 20 December 2023, I raised with the parties the fact that Mr Lonergan’s assumption regarding the non-compliance of the offer with the provisions of r 20.26 did not appear to take account of rule amendments.

The provision of r 20.26 UCPR was amended following the decision in Whitney.

In Horn v Horn (No 2) I stated as follows:

The change in the text of r 20.26 was adverted to by Bathurst CJ in Curtis v Harden Shire Council (No 2) [2015] NSWCA 45 in which his Honour considered the then amended form of r 20.26. His Honour's decision in that regard in that case involved an offer including relevantly "plus costs as agreed or assessed", which was regarded as being a compliant offer: at [19]-[25].

That purpose of the rule as amended was referred to in Jojeni Investments Pty Ltd v Mosman Municipal Council (No 2) [2015] NSWCA 208 (Jojeni). In Horn v Horn (No 2), I stated:

Mr Lonergan readily accepted that that was the proper position. Dr Wang did not submit otherwise.

In the circumstances of this case, the provisions for costs in Mr Yu’s offer of compromise dated 15 September 2022 in my opinion does not fall foul of the provisions of rule 20.26(2)(c) in that neither of the cost provisions contain an amount for costs nor are expressed to be inclusive of costs.

Having regard to that, I consider that the offer of compromise was a compliant offer.

The terms of the offer of compromise in relation to the main claim as noted provided judgment in favour of the defendants but with no order as to costs. No party in the proceedings provided the Court with estimates or indications of the level of costs each had incurred. However, whilst the costs were not quantified, the proceedings by 15 September 2022 had been on foot for 23 months and it is hardly to be thought that the costs of the main claim were at that point minimal.

The defendants have succeeded in obtaining an order for judgment on the plaintiff's claim. That in its terms is no less favourable to the defendant than the terms of the offer.

However, when one has regard to the terms of the offer which expressly included that there be no order as to costs, it seems to me that the provisions of r 42.15A(2) UCPR are engaged and the costs consequences of the rule follow.

Further, in the circumstances of this case, there does not seem to me to be any appropriate basis to "order otherwise". Dr Wang, when I asked her, did not suggest any such basis: T 8.

Mr Lonergan put alternate submissions on the basis that the offer of compromise might not be compliant.

In the event that I am incorrect, and the offer of compromise is not a compliant offer, it is necessary to consider those submissions.

The letter enclosing the offer of compromise sent by KSL to Dr Wang's then lawyers Brydens on 15 September 2022 foreshadowed that the form of offer of compromise should also be alternatively regarded as being a type of offer known as a Calderbank offer. The letter stated in paragraph 2 as follows:

I accept that in light of the covering letter the offer of compromise may be permissibly regarded as being in the form of a Calderbank offer.

Mr Lonergan submitted that the offer clearly demonstrated a compromise on the part of the defendants in that in the outcome of the matter the defendants have achieved a result that there be judgment in their favour on the plaintiff's claim, and at the time that the offer was made the defendants had incurred costs in the proceeding including in preparation of the defence.

The letter from KSL to Brydens Lawyers included a paragraph (five) asserting that "our clients have incurred substantial legal costs to date". Further, as I have noted above, the proceedings by 15 September 2022 had been on foot for 23 months and the costs at that point would not have been insignificant.

There was clearly risk to all parties in relation to the outcome of the proceedings and I consider that the offer in the form of a Calderbank offer represented a reasonable compromise of the proceedings. I consider that if it failed as being a form of offer of compromise, it ought to have been accepted as a Calderbank offer and accordingly, Dr Wang ought to pay the costs of the defendants on the indemnity basis from the beginning of the day following the day on which the offer was made.

As is evident from the form of offer of compromise, the offer by Mr Yu related not merely to the main claim but also to compromising as between himself and Dr Wang the proceedings in respect of the cross-claim.

Rule 42.14 UCPR deals with the situation in which an Offer of Compromise is made in accordance with the rules by a plaintiff and not accepted by the defendant and the plaintiff obtains an order or judgment on the claim which is no less favourable to the plaintiff than the terms of the offer. For the purposes of the UCPR, unless otherwise indicated, references to the plaintiff include reference to a cross-claimant.

In Estate of Guamani; Guamani v De Cruzado [2023] NSWSC 502, I noted:

Rule 42.14(2) provides as follows:

The position in relation to an offer before the first day of the trial which comes within the terms of the rule is that costs are payable on an indemnity basis from the day following the day the offer was made: r 42.14(2)(b)(i).

The power to order otherwise is evident from the terms of subrule (2).

The precise order sought by Mr Lonergan on Mr Yu’s behalf is that:

I addressed under the heading “Issue 5” in the principal judgment particular matters regarding whether Mr Yu had paid Dr Wang or Mr Yang $10,000 on or about 12 May 2015 and $200,000 in or about November 2015, and if so whether those sums should be repaid.

During the course of the main hearing, it became clear that it was necessary to distinguish between the $10,000 amount and the $200,000 amount.

The tenor of the pleading by Mr Yu regarding the sum of $200,000 is that it was paid as a loan: principal judgment [530]. I addressed the evidence regarding the sums totalling $200,000 (principal judgment [554]-[565]) and made findings regarding the $200,000 amount at principal judgment [566]-[572].

In relation to the $200,000 amount, I noted that Dr Wang in her first affidavit, which predated the cross-claim, accepted that she had received the sum of $200,000: principal judgment [554].

I found that the sum of at least $190,000 was paid by four instalments to Mr Yang’s account being $100,000 on 4 January 2016; $20,000 on 22 January 2016; $50,000 on 25 January 2016; and $20,000 on 1 April 2016: principal judgment [570].

Mr Yu accepted in evidence that an additional amount of $10,000 was paid to Dr Wang in September 2015. However, it was clear that that was not part of the pleaded $200,000 sum alleged to have been paid “in about November 2015”: CB 141. Rather, I observed in the principal judgment that it was not obvious to me how the additional sum of $10,000 which made up the balance of the $200,000 was paid to Dr Wang. However, as no party suggested that it is critical for me to make a finding regarding how and when the additional $10,000 payment was made, I did not make any precise finding regarding that: principal judgment [571]-[572].

A critical part of the findings in relation to the $200,000 was not merely who the money had been paid to but also why the payments were made and whether they were initiated by duress.

I found that having regard to the totality of the evidence, the $200,000 was paid consequent upon Dr Wang and Mr Yang pressing Mr Yu for payment and recognition of the amounts that she had paid to APG which led to the discussions and negotiations over the draft deed in December 2015 and is the amount of $200,000 that is ultimately referenced in the Deed: principal judgment [576].

I found that the payments were vitiated by duress.

The particulars of the pleading by Mr Yu regarding the sum of $10,000 paid to him at the request of Mr Yang did not describe the sum as a loan but the pleading did indicate that it was made under duress: principal judgment [529]. Mr Yang’s defence did not deny that Mr Yu paid him the sum of $10,000 in or about May 2015, but simply did not admit that allegation: principal judgment [538].

As indicated in the principal judgment, the evidence regarding the payment of $10,000 was an unsatisfactory part of the case. Whilst I accepted that on one view there is arguably inconsistency between Mr Yu’s affidavit and his cross-examination account regarding the precise purpose of the payment, I noted that there was not an inconsistency in Mr Yu’s version about the fact that the payment was made: principal judgment [548].

Ultimately, on balance, I was persuaded to accept Mr Yu’s evidence which only emerged belatedly during cross-examination regarding his conversation with Mr Yang about the request for a sum of $10,000: principal judgment [544]. In particular, I accepted that the amount was some form of “sweat fee” and found that the payment was a sum demanded by Mr Yang from Mr Yu in a context in which he had the prior evening assaulted Mr Yu. I found that the reason why the payment was made was the consequence of the bashing that Mr Yu had received: principal judgment [553].

In summary, I concluded at principal judgment [758]:

Thus, in the final analysis, I found it was clear that there was a distinction between the $10,000 amount and the $200,000 amount.

Contrary to the orders sought on the cross-claim, I did not make any finding that Dr Wang and Mr Yang were jointly liable for each of the amounts of $10,000 and $200,000.

Bearing the above in mind, I return to consider the offer of compromise in relation to the cross-claim as between Mr Yu and Dr Wang. I consider that within the terms of r 42.14(1) UCPR, Mr Yu as cross claimant obtained a judgment on the claim against Dr Wang which was relevantly no less favourable to him than the terms of the offer. In fact, it was more favourable in that the offer was for judgment against Dr Wang in the sum of $150,000 rather than the sum of $200,000 that is found.

However, in light of my findings and what I am about to address regarding costs as between Mr Yu and Mr Yang, I consider that it is proper to confine the extent of the costs order to the costs on the cross-claim referable to the claim for the sum of $200,000.

I do not consider that the costs Dr Wang ought to pay should include the costs in respect of the recovery of the sum of $10,000 against Mr Yang on the cross-claim. Mr Yu did not succeed at any point in making out a case that Dr Wang had received a sum greater than $200,000. Mr Yu did not succeed in establishing that he had paid Dr Wang for her own benefit a sum of $10,000 on or about 12 May 2015 by reason of duress.

Thus, in accordance with r 42.14(2) UCPR, I order otherwise, leading to the outcome that Dr Wang ought to pay Mr Yu’s costs on the cross-claim referable to the sum of $200,000 on the ordinary basis up to 15 September 2022 and on the indemnity basis thereafter as agreed or assessed.

As noted, Mr Yu sought as relief in the cross-claim judgment against both Dr Wang and Mr Yang a sum of $210,000 ($10,000 alleged to have been paid in May 2015 [CB 140 pleadings [2]] and $200,000 paid in December 2015: CB 142 pleadings [4c]).

On 15 December 2023, I heard submissions from Mr Lonergan and Mr Mack in relation to the costs of the cross claim as between Mr Yu and Mr Yang. Mr Mack addressed submissions regarding what is an “event”, distinguishing the claims of Mr Yu against Dr Wang from the claims against Mr Yang. In particular, he sought to distinguish between what was found to be Dr Wang’s liability in relation to the $200,000 payment and Mr Yang’s liability in respect of the $10,000 payment.

In relation to the question of what is a relevant "event" for the purposes of a cost order, Mr Mack referred to my decision in Horn v Horn (No 2) in which I stated as follows:

In Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 (Doppstadt), apart from what I have cited above, the Court of Appeal stated at [17]–[19] the following:

In relation to apportionment of costs, Brereton J in the matter of Optimisation Australia Pty Ltd (Costs) [2018] NSWSC 280 stated at [13] as follows (omitting footnotes):

Recently in Taylor v Stav Investments Pty Ltd as trustee for the Stav Investments Family Trust (No 2) [2023] NSWCA 322 at [7], the Court of Appeal referenced its earlier decision in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (cited in the extract from Doppstadt above), in which it had summarised the principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which a successful part in the proceedings on an appeal did not succeed.

Mr Mack submitted that the claim against Mr Yang was “always at the margins” for various reasons including that Mr Yu expressed an intention not to enforce (any judgment) against Mr Yang.

In addressing the costs of the cross-claim as between Mr Yu and Mr Yang in which the parties had mixed success, Mr Lonergan sought to explain why the claim in respect of the $200,000 sum was persisted against Mr Yang. Mr Lonergan referred to Dr Wang's defence to the cross-claim observing that she had admitted that the sum of $200,000 was paid to her: CB 150 (amended) defence 4a; T 11 – T 12.

I asked why in that context, where Dr Wang had accepted the position in relation to the $200,000 amount, the claim for that sum was prosecuted against Mr Yang. Mr Lonergan’s response related to paragraph 11 of the amended defence filed on 31 May 2023. Paragraph 11 of the amended defence by Dr Wang is in the following terms:

Mr Lonergan essentially submitted that the pleading by Dr Wang of paragraph 11 of the amended defence gave rise to a conflation of the $10,000 amount and $200,000 amount and effectively left Mr Yu in a position where he was obliged to "disentangle" the $10,000 sum in the $200,000 sum: T 15 – T 16 (15 December 2023). He additionally submitted that the characterisation of the $200,000 sum was always in dispute: T 17.

Mr Mack in his written submissions (12 and 19 December 2023) and oral submissions (15 and 20 December 2023) strongly disputed the appropriateness of Mr Yang’s joinder. He submitted that there was a fundamental distinction between the $10,000 sum and the $200,000 sum. He submitted that there were always obvious deficiencies in the case against Mr Yang for the $200,000 sum and submitted that it was ultimately “functionally abandoned”. He submitted that the “vast bulk” of the disputed facts arose in relation to the main claim and would have been litigated absent the cross-claim. He further submitted that the case in relation to how Mr Yang was liable had not been articulated on Mr Yu’s behalf and that the Court was left to make a determination about that, finding that Mr Yang was the agent of Dr Wang: written submissions 12 December 2023.

During the course of the argument, at first blush, it seemed to me that there was some force in Mr Mack’s submissions in relation to costs of the cross-claim against Mr Yang.

Initially on 15 December 2023, I had a sense of unease as to whether it was necessary for Mr Yu to sue Mr Yang in respect of both sums, or at least continue to sue Mr Yang in respect of the $200,000 sum. On no view of the matter was it seriously suggested that Mr Yang had received the sum of $200,000 such that in his own right he ought to be responsible for repayment of that sum to Mr Yu.

I wondered whether Mr Yu, by persisting in a claim for $200,000 against Mr Yang in addition to the $10,000 claim, had unnecessarily complicated the matter and more importantly deprived Mr Yang of the possibility of considering whether he might have consented to a judgment in respect of the $10,000 claim. On any view of it, that claim was an extremely small one which, had it been isolated against Mr Yang, might well have led to different forensic choices by him in addressing it.

It did occur to me whether this is one of those cases in which the amount claimed does bear some significance in respect of the costs of the proceedings.

Whilst it is true that Mr Yu succeeded in relation to recovering the sum of $10,000 from Mr Yang on the cross-claim, the basis on which he recovered it was not the pleaded basis nor indeed on the evidence which he had advanced leading into the hearing. Rather, the basis on which he recovered the sum was in respect of evidence that emerged from Mr Yu in cross examination.

During the course of submissions on 20 December 2023, I considered further the submission of Mr Lonergan regarding whether the late amendment by Dr Wang of her defence to the cross-claim in paragraph 11 amounted to sufficient reasonable justification for Mr Yu to continue a cross-claim against Mr Yang for the sum of $200,000.

I also reflected on the fact that where there are proceedings for differing amounts against a party or a number of parties, the dollar amount which is sued for does not necessarily reflect the time and effort and forensic engagement that is involved in running proceedings.

Thus, if one takes the situation here, it would not be correct to think that the time, effort and costs associated with running the part of the cross-claim regarding the payment of $200,000 were twenty times the time, effort and costs required to run the part of the cross-claim for $10,000.

On one view it might be said that Mr Yu and Mr Yang have had mixed success on the cross-claim.

Thus, towards the end of the further listing on 20 December 2023, I raised with Mr Lonergan and Mr Mack a number of other possibilities.

Specifically, for the purposes of testing potential cost outcomes, I ventured the notion of whether it might be appropriate that each of them bear their own costs of the cross-claim, or alternatively for Mr Yang to pay Mr Yu’s costs in relation to the part of the cross-claim referable to the sum of $10,000 and for Mr Yu to pay Mr Yang’s costs in relation to the part of the cross-claim referable to the sum of $200,000.

During further discussion it emerged that neither counsel regarded those alternatives as being effectively the same, essentially because, from different perspectives, they submitted that the time taken in the hearing in relation to particular aspects of the matter differed.

Mr Mack for his part submitted that the costs, and time and effort taken in relation to the $200,000 part of the cross-claim were all considerably more than the $10,000 part of the cross-claim. He submitted that the $10,000 part of the cross-claim was clearly severable from the cause of action related to the $200,000: T 16 (20 December 2023).

I observed that there was some interconnectedness and raised the issue of the duress pervading both payments: T 17 (20 December 2023).

Mr Mack specifically submitted as follows:

As the case law I have referred to above makes clear, whilst an “event” may refer to the determination of a particular cause of action, that is not necessarily so. It may include certain disputed questions of fact or law.

Ultimately, I am not convinced that the late amendment to the defence (on 31 May 2023) prior to the commencement of the hearing on 13 June 2023 amounted to sufficient reason for Mr Yu to continue a cross-claim against Mr Yang for the sum of $200,000.

However, Mr Yang was in my opinion properly joined in relation to the claim regarding the $10,000 sum. As I ultimately found, part of the claim for recovery of the $10,000 involved a finding that the sum had been demanded by Mr Yang as a ‘sweat fee’ in the context of having assaulted Mr Yu. The fact of the assault and the fact of the duress and extent of the duress were common questions of fact not merely confined to payment of the $10,000 but to the entry into the deed and also the payment of the amounts totalling $200,000. A joinder of persons may occur as of right or by leave where there are common questions of fact in all the relief claimed: r 6.19 UCPR.

Whilst I have found that Mr Yu should not be entitled to judgment against Mr Yang in relation to the $200,000 amount, that speaks to a discrete head of relief rather than to the appropriateness of his joinder to the proceedings. Mr Yang could have made relevant offers in relation to the $200,000. Whether he did or not is not known to me. Certainly, no offers were tendered by Mr Mack in respect of Mr Yang’s defence of the cross-claim in whole or any part of it.

Mr Yang, having been properly joined in relation to the claim for the $10,000 sum, strongly contested the disputed issue of whether Mr Yu had been the subject of duress. I do not regard his involvement in that respect as being minimal. My impression is that Mr Mack spent a not insubstantial part of his cross examination on issues testing the reliability and credit of Mr Yu’s version in relation to whether he had been the subject of an assault and the issue of duress.

Mr Lonergan for his part submitted that a significant part of the findings on the cross-claim related to the duress aspect and submitted that Mr Mack had cross-examined far more significantly in relation to that than he had in relation to the details of the payments of the $200,000 sum or the $10,000 sum: T 17 (20 December 2023).

Ultimately, I am persuaded that it is appropriate to approach the costs of the cross-claim as one in which each of Mr Yu and Mr Yang had mixed success in relation to the $200,000 part of the cross-claim and the $10,000 part of the cross-claim.

In light of the dispute regarding the proportion of time and effort taken in relation to the $200,000 part of the cross-claim and the $10,000 part of the cross-claim, I consider that the most appropriate order is to not order that each party bear their own costs but rather to order that Mr Yang pay Mr Yu’s costs in relation to the part of the cross-claim referable to the sum of $10,000 and for Mr Yu to pay Mr Yang’s costs in relation to the part of the cross-claim referable to the sum of $200,000. That way, the parties can choose should they wish to do so, to make submissions to a costs assessor regarding the extent of the costs associated with the claims for recovery in respect of those amounts.

A “Bullock order" is commonly understood as an order requiring an unsuccessful defendant to pay a plaintiff the amount of the plaintiff's costs liability to other (successful) defendants: Bullock v London General Omnibus Co [1907] 1 KB 264.

A "Sanderson order" is commonly understood as an order requiring an unsuccessful defendant to pay directly to successful co-defendants the amount of their costs: Sanderson v Blyth Theatre Co [1903] 2 KB 533; see generally G E Dal Pont, Law of Costs (5th edition, 2021, LexisNexis) at [11.12].

In the event that I were to find that Mr Yang was a successful party against Mr Yu in respect of the cross-claim in relation to the sum of $200,000, Mr Lonergan on Mr Yu’s behalf sought against Dr Wang either a Sanderson or a Bullock order for such costs. His preference was for a form of Sanderson order that Dr Wang be liable to pay directly to Mr Yang any costs that Mr Yu was ordered to pay to Mr Yang: written submissions 15 December 2023.

Dr Wang submitted that the notion that she should bear any part of Mr Yu’s costs liability to Mr Yang in respect of the cross-claim was “ridiculous”: T 13 (20 December 2023).

Mr Lonergan in his submissions observed that the difference at least in part related to the credit risk exposure of Mr Yu and Mr Yang. In relation to whether a Sanderson order or a Bullock order should be made, Mr Lonergan submitted that it was administratively expedient for the order to be a Sanderson order, referring to the judgment of Campbell JA (with whom Beazley JA and Giles JA agreed) in ACQ v Cook (No 2); Aircair Moree v Cook (No 2) [2008] NSWCA 306 at [52]. Mr Mack disputed any such administrative expediency: T 14 (20 December 2023).

In support of the Bullock or Sanderson orders, Mr Lonergan submitted that once Dr Wang characterised the payment of $200,000 as being related to the deed on which she sued on the main claim, any claim brought by Mr Yu required the characterisation of monies to be addressed. As Mr Yang was the person who Mr Yu asserted and was found to have propagated fear upon Mr Yu "and the initial recipient of the monies", it was appropriate for Mr Yang to be joined to the proceedings.

Mr Yang’s joinder to the proceedings regarding the claim for $10,000 was, as I have noted, proper. However, I reject that submission to the extent that it seeks to justify claims for both amounts against Mr Yang. Whilst I found that an amount of $200,000 had been paid by Mr Yu to Mr Yang's account (principal judgment at [564]) it was clear that the $200,000 amount was intended for Dr Wang.

The mere fact that Mr Yang was the person who propagated fear upon Mr Yu and was the conduit through which Dr Wang received the $200,000 did not to my mind justify the persistence of the cross-claim against Mr Yang for the sum of $200,000.

Mr Mack opposed the making of any Bullock order or Sanderson order. He submitted, technically correctly, that Dr Wang successfully defended the part of the cross-claim which sought judgment against her for the $10,000 cash sum. Indeed, more forcefully, he submitted that Dr Wang had in light of the evidence I have referred to above effectively accepted that she had received the sum of $200,000, even before the cross-claim was filed.

In all the circumstances, I do not consider that it is appropriate for a Bullock order or Sanderson order, or some varied order like those orders, to be made against Dr Wang in respect of Mr Yu’s liability for the costs of Mr Yang on the cross-claim.

Whilst there was debate as noted above as to whether a Bullock order or a Sanderson order ought to be made, I consider that some consideration should be given to setting off of the cost liabilities as between Mr Yu and Mr Yang.

In Riva NSW Pty Ltd v Key Nominees Pty Ltd [2023] NSWSC 711, I addressed the power of the Court to make orders in relation to setting off of costs. I noted that:

Rather than Mr Yu and Mr Yang either agreeing on costs or obtaining cost assessments for costs and then attempting to execute those sums, it seems to me that it is appropriate to direct that the amounts for costs due in the cross-claim be set off against one another so that there is only ultimately a balance owing one way or the other for the difference between the amount of the agreed or assessed costs.

The orders of the Court are as follows.

In respect of substantive orders on the main claim and the cross-claim, the orders made on 20 December 2023 are (the Court):

In respect of cost orders on the main claim and the cross-claim, I order as follows (the Court):