CHP Asset Management Pty Limited v Maison Global Property Pty Limited

HIS HONOUR: By Summons dated 3 August 2023, the Plaintiffs seek an order pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act) that proceedings which are currently before the District Court, being proceedings 2021/00140959 (the District Court proceedings), be transferred to this Court.

The Plaintiffs in this Court, whom I will refer to as the CHP parties, are the defendants in the District Court proceedings. Those proceedings have been brought by Maison Global Property Pty Ltd (Maison). The CHP parties are in the business of property development and Maison is a real estate agency business.

The District Court proceedings concern a Selling Agency Agreement dated 4 May 2016 that was entered between CHP Asset Management Pty Ltd (CHP) and Maison in relation to an apartment building at the Sydney Olympic Park, which is known as the Boomerang Building. A hearing is listed to commence in one month’s time, on 18 September 2023, on a six day estimate.

In the District Court proceedings, Maison has claimed payments in the nature of fees said to be due for agency services provided in relation to apartments in the Boomerang Building. Issues include whether CHP breached the terms of the Selling Agency Agreement, whether there were oral variations of those terms, and whether the CHP parties engaged in misleading or deceptive conduct.

As well as seeking an order for the transfer of the District Court proceedings to this Court, the CHP parties seek an order that they be granted leave to file a cross claim against Maison and Ms Liu, who is the sole director of Maison. The application for transfer is based, and reliant, upon the proposed cross claim.

The proposed cross claim alleges that Maison and Ms Liu were in a position of a significant conflict of interest by reason that prior to the entry by Maison into the Selling Agency Agreement with CHP, Ms Liu had entered into another arrangement with a different property developer, Mr Fu, which related to other proposed apartment developments in Sydney. The remedies sought in the proposed cross claim include that the Selling Agency Agreement between CHP and Maison be set aside, together with either equitable compensation or an account of profits.

Although the quantum of the proposed cross claim is not clear, I will address the CHP parties’ application on the basis that the cross claim exceeds the jurisdictional limit of the District Court. In that regard, senior counsel for Maison and Ms Liu did not contend that the application should be rejected on the basis that it was plainly within that limit.

In submissions on this application, reference was also made to another set of proceedings which are in the Real Property List in this Court, and which relate to the sale of certain apartments in the Boomerang Building, being proceedings 2020/00320612 (the Chen proceedings).

The Plaintiffs in the Chen proceedings are persons who purchased three apartments on Level 38 of the Boomerang Building. The Defendants include CHP, Maison and Ms Liu. In essence, the Plaintiffs in the Chen proceedings allege that the Defendants misled them into thinking that the three Level 38 apartments were top floor apartments, which is not the case, and that they would not have entered into the contract if they had known the true position. They seek the recovery of amounts paid in respect of the contracts to purchase those apartments. No hearing date has yet been set.

In submissions, the CHP parties contended that if the District Court proceedings were to be transferred to this Court and leave to file the proposed cross claim were granted, then the transferred proceedings should be heard after the Chen proceedings are determined.

For reasons that I explain below, it is of some significance that one of the Plaintiffs in the Chen proceedings is Mr Fu, with whom Ms Liu entered the agreement that is the subject of the proposed cross claim.

Section 140(1) of the Civil Procedure Act is in the following terms:

In relation to the exercise of the power under s 140(1), the CHP parties relied on the following statements of principle set out by Walton J in TH Drake & Associates Pty Ltd v Safaei [2022] NSWSC 1008 at [17]:

The CHP parties accepted that, in considering whether to exercise the power under s 140 of the Civil Procedure Act, I must have regard to the dictates of ss 56-58 of that Act and that I must seek to give effect to the overarching purpose of that Act being to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

In light of those matters, it is important to have regard to the procedural history of the District Court proceedings and also the point in time when the CHP parties became aware of the relationship between Ms Liu and Mr Fu which has given rise to the proposed cross claim.

The evidence before me on this application revealed the following matters:

I am not satisfied that in the exercise of my discretion I should exercise the power under s 140 of the Civil Procedure Act to transfer the District Court proceedings into this Court. I do not consider that the transfer of those proceedings would facilitate, and instead am concerned that it would likely frustrate, the just, quick and cheap resolution of the real issues in the District Court proceedings. This is for five main reasons.

First, I consider that there would be significant prejudice to Ms Liu if the orders sought were made and the hearing of the District Court proceedings were vacated. That is particularly so where this would be the second time that shortly before a hearing of Ms Liu's claim, the hearing had been vacated as a result of a procedural indulgence sought by the CHP parties. Ms Liu gave sworn evidence of the toll that these delays have had on her. Orders for costs can only go so far in alleviating the real prejudice caused to an individual such as Ms Liu when the hearing of a claim is repeatedly delayed at the last minute.

Secondly, there has been no explanation for the delay on the part of the CHP parties in raising an issue about Ms Liu's relationship with Mr Fu, about which it has known for over two years. The essence of the allegations in the proposed cross claim is that Ms Liu was in a fiduciary relationship with CHP and the existence of her arrangement with Mr Fu gave rise to a patent and significant conflict of interest. If that is correct, this is a matter which would have caused immediate concern for the CHP parties as soon as they became aware of it, but there is no evidence at all from the CHP parties as to why they have taken two years in order to act upon such knowledge or why it was not raised as an issue in the District Court proceedings until a short time ago. There was reference in submissions to the fact that the CHP parties’ current solicitor only commenced acting for them in April of this year, but the issue is not when their current solicitors, about whom I make no criticism, obtained knowledge of those matters, but rather why the CHP parties did not act on the knowledge that they had for some two years before the proposed cross claim was formulated.

Thirdly, any prejudice to the CHP parties if the application is refused does not outweigh the significant prejudice to Ms Liu if it is allowed. It was accepted that there will not be any issue of an Anshun estoppel [2] in the District Court proceedings if the application to bring the cross claim is refused and that the CHP parties will be at liberty to bring separate proceedings in respect of the claims made in the proposed cross claim. I acknowledge that there is a risk that if the CHP parties do subsequently bring separate proceedings of this type, that may lead to increased costs compared to a situation where the two sets of proceedings were heard together. However, it is difficult to quantify the extent of the difference in the absence of evidence regarding those comparative costs, and in circumstances where the course proposed by the CHP parties would lead to costs being thrown away by reason of the vacation of the current hearing.

On the issue of prejudice to the CHP parties, there was a suggestion, without reference to any evidence of the financial position of either Maison or Ms Liu, that if Maison succeeded in the District Court proceedings and damages were paid, and the CHP parties then succeeded on their proposed claim regarding the arrangement between Ms Liu and Mr Fu, with the Selling Agency Agreement being set aside, the CHP parties might then find themselves in the position where they are unable to recover amounts previously paid as damages in the District Court proceedings. However, if it does eventuate that Maison is successful in the District Court proceedings and the CHP parties have such a concern at that time, it will be open to them to consider whether to bring an application for a stay of the whole or part of the judgment pending determination of their proposed claim against Ms Liu and Maison (assuming it is by then on foot), which would be a matter for determination based on the evidence then available.

Fourthly, there is no substantial factual overlap between the District Court proceedings and the proposed cross claim. Although they involve essentially the same set of parties, the claim in the District Court proceedings is solely concerned with the terms of the agency arrangements in relation to the Boomerang Building, the performance of those arrangements, and the fees payable. In contrast, the proposed cross claim is primarily concerned with the separate arrangements between Ms Liu and Mr Fu, and whether they gave rise to a conflict of interest. Counsel did not identify any particular issue of fact which would arise for determination in both claims, or any significant risk of inconsistent findings if the two claims were to be heard separately. There is a risk that if the claims are pursued in separate proceedings, Ms Liu might need to be cross examined in each proceeding. However, it is plain from her evidence and her position on this application that she would prefer that course to having the hearing of her claim in the District Court vacated for a second time.

Fifthly, I do not consider that there is any significant relationship between the Chen proceedings and the District Court proceedings such as to bear upon the determination of this application. That conclusion is supported by the fact that despite the Chen proceedings having been commenced in 2020 and the District Court proceedings having been set down for hearing on two occasions since then, it does not appear, at any stage, to have been suggested to the District Court that the hearing of the District Court proceedings should await the determination of the Chen proceedings.

Submissions were made before me regarding the strength of the proposed cross claim. Senior counsel for Ms Liu and Maison did not contend that I should conclude that the claim was so weak as to be liable to be struck out if leave were granted but did make submissions as to why the claim was not so strong as to warrant the Court ordering a transfer, in particular having regard to the other matters I have mentioned.

I have approached this application on the assumed basis that the claim is reasonably arguable (without forming a view one way or the other on that issue), and have determined, in light of the factors I have identified, that it would not facilitate the overarching purpose for the relief which has been sought to be granted. In those circumstances, I do not think it is necessary or desirable to express any views on the merits of the proposed cross claim.

Accordingly, I make the following orders: