Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Australian Jade Mining Limited v Li [2021] NSWCA 251 Hearing dates: 14 October 2021 Date of orders: 20 October 2021 Decision date: 20 October 2021 Before: Macfarlan JA Decision: (1) Decline to extend the time for the filing of the Notice of Appeal. (2) Dismiss the appeal on the basis that it is out of time. (3) Order the appellants to pay the respondent's costs of the appeal. Catchwords: APPEALS – procedure – application to extend time for filing Notice of Appeal – no realistic prospect of success on appeal – no reasonable explanation for delay – extension of time refused and appeal dismissed Legislation Cited: Australian Consumer Law (NSW) Fair Trading Act 1987 (NSW), ss 27, 28, 32 Uniform Civil Procedure Rules 2005 (NSW), r 14.14(2) Cases Cited: Houghton v Arms (2006) 225 CLR 553; [2006] HCA 59 O'Brien v Dawson (1942) 66 CLR 18; [1942] HCA 8 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35 Category: Procedural rulings Parties: Australian Jade Mining Limited (First Appellant) De Hong Yu (Second Appellant) Haolin Li (Respondent) Representation: Counsel: T Atkin (solicitor) (Appellants) D Robertson (Respondent) Solicitors: Maddocks Lawyers (Appellants) Lin Tang & Co Lawyers (Respondent) File Number(s): 2021/112443 Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: [2021] NSWDC 93 Date of Decision: 26 March 2021 Before: A Coleman SC DCJ File Number(s): 2019/363268 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. The respondent to this appeal, Mr Haolin Li, seeks an order that the appeal be dismissed on the basis that the Notice of Appeal was filed out of time. The appellants acknowledge that their Notice of Appeal was filed late but seek an order extending the time for its filing. The respondent also seeks an order that in the event that the appeal remains on foot the appellants provide security for the respondent's costs of the appeal. The appellants in turn seek in that event an order staying the judgment below. 2. In the proceedings at first instance the respondent relevantly alleged that he had been induced by misleading and deceptive conduct of the first appellant and one of its directors, the second appellant, to enter in September 2017 into an Investment Agreement relating to investment by the respondent in proposed jade mining in Australia with which the appellants were associated. The agreement provided that for that purpose the respondent was to "transfer" amounts totalling AUD $1.2 million to GWM Resources NL by 30 November 2017. The respondent made payments of $150,000 and $184,692.90 (totalling $334,692.90). When the Investment Agreement did not proceed, he demanded, but did not get, his money back. 3. The respondent accordingly commenced recovery proceedings in the District Court, against both the appellants and GWM Resources. Proceedings against GWM Resources were however discontinued as it was placed into liquidation. 4. By judgment of 26 March 2021, A Coleman SC DCJ relevantly found that the appellants had both engaged in misleading and deceptive conduct concerning the proposed investment and that the respondent was entitled to judgment against each of them for damages in the sum of $389,933.60 which comprised the amount paid but not recovered, together with pre-judgment interest (Li v GWM Resources NL [2021] NSWDC 93). Following delivery of the judgment the appellants filed in this Court a Notice of Intention to Appeal which had the effect of extending the time for them to file a Notice of Appeal to 27 June 2021, being three months after delivery of the judgment at first instance. They did not however file their Notice of Appeal until 27 July 2021. 5. The Court has a broad discretion to extend the time for the filing of a Notice of Appeal. Amongst the relevant factors to be considered is whether the proposed appeal has prospects of success. I turn therefore to consider the three grounds upon which the appellants rely, the fourth (Ground 3) not having been pressed. Ground 1 – loss or damage 1. This Ground (which the appellants described as their primary ground) is to the effect that the primary judge erred in finding that the respondent made the irrecoverable payments of $150,000 and $184,692.90 because "the payments were made by the Respondent's mother, and not the Respondent" and there was no finding of any "arrangement or agreement between the Respondent and his mother as to the status of the funds". 2. This contention however confronts the difficulty that the appellants made relevant admissions in their Defence filed at first instance. 3. First, the respondent pleaded in para [8] of his Statement of Claim that "[p]ursuant to the terms of the Investment Agreement … [t]he plaintiff agreed to transfer the sum of $1.2 million to the first defendant, GWM, before 30 November 2017". This paragraph used the language (in particular, the word "transfer") of the Investment Agreement and was admitted by the appellants in their Defence. 4. Secondly, para [9] of the Statement of Claim was in the following terms: "Acting in reliance on the Representations, and pursuant to the terms of the Investment Agreement, in the period between about 8 September 2017 and 12 September 2017 the plaintiff transferred to the first defendant amounts totalling $334,692.90, comprised of: a. a payment of $150,000 made on about 8 September 2017; and b. a payment of $184,692.90 made on about 12 September 2017." 1. The appellants' response to this in their Defence was, first, to refer in their para [9] back to their para [6] which admitted that the respondent was to "provide a cash injection" to be used for the proposed mining. They then expressly admitted that "the Plaintiff made the 2 payments in 9a & 9b [of the Statement of Claim] in the sum[s] of $150,000 & $184,692.90". 2. In response in this Court to the respondent's reliance on these pleadings, the appellants referred to a part of the respondent's cross-examination in the District Court in which the respondent said that the balance of the $1.2 million the subject of the Investment Agreement was going to come from his mother. (He later said that the two payments he did make came from his mother but that evidence was arguably relevant to other issues such as reliance.) The cross-examiner then continued: "Q. Did she give that money to you or were you doing it for her? Who's the actual owner of the money?" 1. There was an objection to the question(s) and the following interchange then occurred between the solicitor for the appellants and the primary judge: "HIS HONOUR: What's the relevance of that? MILLER: Well, very much so. It's the capacity that the plaintiff holds the funds. So if he's a trustee or there's any number of capacities that he could have. HIS HONOUR: Why does that matter? He had the matter. His obligation was to cause the money to be paid under the agreement, if that's what the agreement says. Why does it matter, in money that wasn't paid, whether he held it-- MILLER: If the plaintiff is an agent or a trustee of some sort-- … HIS HONOUR: Is it pleaded by you in your defence that he did not enter into the agreement in his own capacity? MILLER: No, it's not. HIS HONOUR: Then I reject the question." 1. The appellants' contention in this Court is, as foreshadowed by the exchange just quoted, that the respondent did not prove that he suffered loss as a result of making the payments that were not recovered because he did not plead and prove that it was his own money that he paid or that he has any liability to return it to anyone (in particular, to his mother). 2. This is a most unusual point that in my view the appellants were obliged to plead in their Defence (under the surprise rule – r 14.14(2) of the Uniform Civil Procedure Rules 2005 (NSW)) if they were to maintain it. The appellants' general denial in their Defence that the respondent suffered loss was insufficient to do this. 3. At least in ordinary circumstances it is sufficient for a plaintiff to prove that it paid money that gave rise to a debt or loss without proving its ownership or the source of the money. The respondent did this in his Statement of Claim (using the language of "transfer" and "transferred", which reflected his obligation under the Investment Agreement). It is difficult to imagine a circumstance in which a plaintiff would not suffer loss as a result of not receiving back money paid (or receiving other consideration). If the money sourced here from the respondent's mother was a gift to him, the money was his. If it was subject to some obligation to repay his mother, the respondent would have suffered loss by reason of its irrecoverability. Moreover, it would not matter if the respondent received the money from his mother to hold as trustee or that, as her role was not disclosed in the course of the transaction, entry into the Investment Agreement and/or payment of the money was as agent for his mother. 4. Particularly in light of the terms of the pleadings in the Court below, the point the appellants now seek to raise ought to have been specifically pleaded. In any event the effect of the primary judge's ruling referred to in [12] above was to determine, rightly or wrongly, that the appellants' point was not available on the pleadings. If the appellants nevertheless wished to pursue the point, it was incumbent on them to seek leave to amend their Defence, which they did not do. In those circumstances, the respondent was entitled to proceed on the basis that the point was not in issue in the District Court, this being reaffirmed by the absence of any mention of it by the appellants in their closing address in that Court, or at any other time. 5. The consequence is that the appellants' point is a new one sought to be raised for the first time on appeal. As the respondent reasonably points out, if it had been properly raised in the District Court, the respondent may well have sought to address it by further evidence. That being the case, the point is not one that this Court would grant leave to the appellants to raise for the first time on appeal (see Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; [1950] HCA 35). 6. For these reasons, I conclude that Ground 1 has no realistic prospect of success on appeal. Ground 2 – whether the second appellant personally liable 1. The primary judge found that because the second appellant made the representations constituting misleading and deceptive conduct personally (albeit also on behalf of the first appellant) he was liable to pay damages under the Australian Consumer Law (NSW) (given effect to by the Fair Trading Act 1987 (NSW), ss 27, 28 and 32) in respect of that conduct. The proposed Ground 2 challenges the finding of the primary judge that the second appellant made the representations on his own behalf. Contrary to the appellants' submissions, the position is different from a claim in contract in relation to which a director may have no liability, because only his or her principal is the contracting party. As Starke J said in O'Brien v Dawson (1942) 66 CLR 18 at 32; [1942] HCA 8 in relation to a claim in tort, "it does not follow that a director of a company would escape personal liability under cover of the company's responsibility if he himself became an actor and invaded the plaintiff's rights, as by trespassing on his land, or seizing his goods and so forth". The same principle applies in respect of a claim against a director for statutory damages in respect of misleading and deceptive conduct (Houghton v Arms (2006) 225 CLR 553; [2006] HCA 59 at [40]). 2. For these reasons, Ground 2, like Ground 1, does not have any realistic prospect of success. Ground 4 – the payment of $184,692.90 1. The primary judge found, as alleged in para [9] of the Statement of Claim (see [9] above), that both payments were made in reliance on the misleading and deceptive conduct and pursuant to the terms of the Investment Agreement. The terms of the appellants' Defence (see [8] and [10] above) gave rise to the clear inference that the reason for the payments was not in dispute. The findings were in any event in accordance with the evidence which was all one way on this point. 2. The proposed Ground 4 fastens on a passing observation made by the primary judge in the course of the following paragraph of his judgment: "[28] After the plaintiff had signed the Investment Agreement, he spoke to his mother to arrange a further payment of $184,662.90 to the first defendant's bank account. Whilst the reason for payment of this particular amount is not clear, I am satisfied that it was part payment by the plaintiff of the amount he had agreed to pay to the first defendant pursuant to the Investment Agreement. There was no other identified reason for the plaintiff to make any payment to the first defendant." (Emphasis added.) 1. The appellants assert that as the primary judge did not know why the second payment was of the precise amount that it was, he ought not to have found that it was paid in reliance on the impugned conduct and the Investment Agreement. This argument has no merit in light of what I have said above about the pleadings and evidence. The amounts (paid in September 2017) were in total well under the amount that was due to be paid under the Investment Agreement by 30 November 2017. How the second amount was calculated is at best a matter of curiosity. This ground of appeal is therefore also devoid of any prospect of success. 2. For the reasons I have given above, the appeal has no realistic prospect of success and can therefore be regarded as hopeless. Whilst ordinarily other considerations come into play in the Court exercising its discretion to extend the time for the filing of a Notice of Appeal, this conclusion is in my view sufficient in the circumstances of this case to warrant refusal of that extension. Explanation for delay 1. I add that the appellants did not in any event provide any reasonable explanation for their delay. 2. The second appellant gave the following explanation in his affidavit of 10 August 2021: "[8] The last day for service of the notice of appeal was 26 June 2021. [9] At that time I was in negotiations with the respondent to try to resolve the matter and I believed we had reached an in principle agreement by then. For that reason I did not then reflect on the last day for filing the appeal and it passed without me realising. [10] My oversight was exacerbated by the disruption of the growing COVID outbreak in Sydney and the lockdowns that were first implemented about that time. [1] After I received the creditors petition on 9 July 2021 I still believed that the respondent wanted to resolve the proceedings by agreement. However, on about 21 July 2021, the respondent advised me that he no longer intended to resolve the proceedings." 1. The respondent's solicitor's affidavit in response indicated that the appellants' solicitors made an offer to him by email of 26 May 2021. On the respondent's instructions, his solicitors did not respond and no further correspondence regarding any settlement occurred between the solicitors before the Notice of Appeal was filed in late July. Nor was there any direct communication between the respondent (or anyone on his behalf) and the second appellant between late May 2021 and 17 July 2021. 2. In these circumstances there was no reasonable, or in fact any, basis upon which the second appellant could, as he said in his affidavit, have believed in the month preceding the last day for service of the Notice of Appeal (26 June 2021) that "we had reached an in principle agreement by then". 3. Moreover, the appellants were at all relevant times represented by solicitors and, as would be expected, the appellants were aware of the date by which their appeal needed to be instituted. They decided to let it pass without any good reason. Orders 1. As noted above, the appellants' appeal does not have any reasonable prospect of success and as they have not provided any satisfactory reason for their delay in filing a Notice of Appeal, I consider that an extension of time for that filing should be declined and the appeal should be dismissed on the basis that it is out of time. As there will in those circumstances be no appeal on foot, there is no basis for staying the judgment below or ordering security for the costs of an appeal. 2. For these reasons, I make the following orders: 1. Decline to extend the time for the filing of the Notice of Appeal. 2. Dismiss the appeal on the basis that it is out of time. 3. Order the appellants to pay the respondent's costs of the appeal. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 July 2022