Na Min Yu & anor v Brownvalley Investments Pty Ltd & ors [2011] NSWSC 396

Supreme Court New South Wales

Medium Neutral Citation: Na Min Yu & anor v Brownvalley Investments Pty Ltd & ors [2011] NSWSC 396 Hearing dates: 14 March 2011 Decision date: 14 March 2011 Jurisdiction: Equity Division Before: Brereton J Decision: Application to reopen case dismissed. Catchwords: PROCEDURE - application by plaintiff to reopen case after final judgment pronounced - relevant defendant not present at hearing - material relied on in support of claim available at original hearing - no evidence as to why material not relied on at original hearing - failure to advance case at original trial must be responsibility of plaintiff - held: motion to reopen case declined. Legislation Cited: (CTH) Corporations Act 2001, s 1324(10), s 1317H, s 1317HA (NSW) Fair Trading Act 1987 Cases Cited: Autodesk Inc & Anor v Dyason (No 2) (1993) 176 CLR 300 Na Min Yu & anor v Brownvalley Investments Pty Ltd & ors [2010] NSWSC 253 Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 Category: Consequential orders Parties: Na Min Yu (first plaintiff) Jing Qi Yao (second plaintiff) Wayne Snelson (fourth defendant) Luke Atkins (sixth defendant) Representation: Counsel: Mr Morahan (plaintiffs) Solicitors: Chen Shan Lawyers (plaintiffs) File Number(s): 2008/280505

Judgment ( ex tempore ) 1HIS HONOUR: The background to the present application is set out in the judgment given on 1 April 2010 [ Na Min Yu & anor v Brownvalley Investments Pty Ltd& ors [2010] NSWSC 253]. Consequent on that judgment, and after Short Minutes were brought in, orders were made on 6 May 2010, including: 3. Order that the plaintiffs' claims be otherwise dismissed. 2It having been foreshadowed that there might be an application to reopen the plaintiffs' case against the fourth defendant Wayne Snelson, in order to preserve that possibility for seven days, I directed that the orders not be entered before 14 May, and reserved liberty to the parties to apply prior to that date in relation to the judgment. On 14 May, counsel for the plaintiffs indicated that they did indeed seek leave to reopen their case against Mr Snelson, and also against the sixth defendant Mr Luke Atkins, and possibly the ninth defendant Mr Michael Lee. The orders of 6 May were thereupon varied by amending order 3, to read as follows: 3. Order that: 3.1 The plaintiffs' claims against the defendants other than the fourth defendant Wayne Snelson, the sixth defendant Luke Atkins, and the ninth defendant Michael Lee be otherwise dismissed. 3.2. The plaintiffs' claims against the fourth defendant Wayne Snelson, the sixth defendant Luke Atkins, and the ninth defendant Michael Lee be dismissed. 3It was further ordered that order 3.2, as so varied not be entered until further order, although the orders might otherwise be entered forthwith, and it was also directed that by 11 June 2010 the plaintiffs file and serve any Notice of Motion for leave to reopen the proceedings against Mr Snelson, Mr Atkins and Mr Lee, including any application for leave to amend the pleadings to be made in connection with the application for leave to reopen and together with all affidavit evidence to be relied on in connection therewith, any such motion was to be returnable before me on 22 July 2010. On 22 July, those steps had not been taken and, on the application of the plaintiffs, I extended until 24 August 2010 time for compliance with that direction and provided that any such motion be returnable before me on 16 September 2010. However, it was not until 15 September 2010 that the plaintiffs filed a Notice of Motion, claiming orders: (A) that leave be granted to the plaintiffs to reopen the proceedings as against Luke Atkins, the sixth defendant and Wayne Snelson, the fourth defendant; (B) that leave be granted to the plaintiffs to amend the Second Further Amended Statement of Claim in the form annexed to the Notice of Motion; and (C) costs of the Notice of Motion reserved. 4That motion was made returnable before the Registrar on 12 November. However, the plaintiffs encountered difficulties in serving both Mr Snelson and Mr Atkins, and on 12 November they filed an application for substituted service - by e-mail - on Mr Snelson. On 8 December, a Registrar made an order for substituted service of the motion and any supporting on Mr Snelson at an e-mail address. 5Although that order was made on 8 December 2010, nothing was done under it for the time being. It would seem that on 4 February 2011 the matter returned before the Registrar, who made directions that the plaintiffs file and serve evidence in support of their motion by 4 March 2011, and stood the proceedings over to 9 March. On 9 March, the plaintiffs' solicitors sent to Mr Snelson, by e-mail, notice of the proposed hearing of the motion today, 14 March 2011, and an electronic copy of the motion. Later that day, Mr Snelson sent an e-mail to Michael Lee, at Jack Li's e-mail address, which does not explicitly refer to receipt of the Notice of Motion, but could well be interpreted as indicating that he had received some notice of intended further legal action. 6In any event, it would appear that - albeit very belatedly and unaccompanied by any of the affidavit evidence to be relied on, but otherwise in compliance with the order for substituted service - the motion was served on Mr Snelson on 9 March. Subsequently - that is to say yesterday, Sunday, 13 March - some of the affidavit evidence relied on was sent by e-mail to Mr Snelson at the e-mail address referred to in the order for substituted service (but not to the address from which he had sent his e-mail to Michael Lee). 7Although he had been named as a defendant in earlier versions of the pleading, in the Second Further Amended Statement of Claim, on which the proceedings went to trial on 2 and 3 November 2009, culminating in the judgment of 1 April 2010, Mr Atkins was not so named in the list of defendants at the end of the pleading. He was, admittedly, referred to as the sixth defendant in paragraph 6 of the pleading, but no relief was claimed against him, and no cause of action was pleaded against him. His omission from the list of defendants implies that there was a discontinuance against him, but it is unnecessary today to determine that matter, because Mr Atkins has still not been served with the motion, and the plaintiffs do not, at least today, press the motion as against him. 8Although Mr Snelson had, at an early stage, filed an appearance in the proceedings, he did not appear and was not represented at the trial in November 2009. It would seem that he was last represented in the proceedings on 28 August 2009, when the proceedings were set down for hearing. He has not appeared today in response to the Notice of Motion. 9In the second further amended Statement of Claim, Mr Snelson was named as the fourth defendant. Claim 5 included a claim for damages as against Brownvalley, Golden Harvests, Golden Harvest and Mr Snelson, and claim 7 was for an order pursuant to sections 1324(10), 1317H and/or 1317HA - presumably of the (CTH) Corporations Act 2001 - that Mr Snelson and Golden Harvest or Golden Harvests pay the plaintiffs any such amount as the Commonwealth Bank pays to Brownvalley in respect of the guarantee. The pleading did not elaborate the Corporations Act claim at all. As against Mr Snelson, it was alleged, in substance, that he had given his personal guarantee to the plaintiffs that the bank guarantee would be returned to them by Brownvalley and not called upon. This personal guarantee was particularised as being contained in a statutory declaration of 2 August 2008 said to have been made on behalf of both himself and Golden Harvest [Statement of Claim, paras 47, 48]. It was further alleged that Mr Snelson, amongst others, is absolutely liable to the plaintiffs in respect of the bank guarantee [para 54]. The particulars do not illuminate how that is put against Mr Snelson. It is further alleged that Mr Snelson, amongst others, was a person involved with or concerned with the dealings concerning the bank guarantee [para 56]. Although it was particularised that Mr Snelson had been a director of Golden Harvest and was a director of Golden Harvests and had guaranteed the return of the bank guarantee to the plaintiff, it is not apparent what statutory if any provision was intended to be invoked by the reference to "persons involved with or concerned with the dealings". 10At trial, the plaintiffs' case was, to some extent, clarified by a written outline of submissions prepared by their then solicitor and dated 2 November 2009 in which it was said [para 15]: In a statutory declaration, Mr Snelson assumed personal responsibility for any losses incurred by the plaintiffs if he was unable to recover the original bank guarantee from Brownvalley. 11At trial, a statutory declaration dated 8 September 2008 was put in evidence and relied upon in this respect. For reasons given in the judgment of 1 April 2010 ([at 44]-[47]), I found that that statutory declaration, assuming it were promissory in nature, was unsupported by any consideration, as it had been given after the last of the bank guarantees had been called on, let alone after it was given. 12So far as I can recall and ascertain, an earlier statutory declaration of 2 August 2008, which has been tendered in connection with the application for leave to reopen, was neither tendered nor referred to at the trial, but had it been, the reason for dismissing the claim against Mr Snelson founded on the 8 September statutory declaration would also have resulted in dismissal of any claim based on the 2 August statutory declaration: it post-dated the last of the bank guarantees and was therefore unsupported by any consideration. 13The plaintiffs now wish to bring a case against Mr Snelson for damages under the (NSW) Fair Trading Act 1987, or equitable compensation, or damages for misrepresentation, said to have been occasioned by representations made in November 2007, to the effect that if the plaintiffs established a new replacement bank guarantee, there was in place an arrangement whereby Mr Snelson would pay the money guaranteed to Brownvalley and cause Brownvalley to return the original guarantee to the plaintiffs as soon as possible; that Brownvalley would not call on the bank guarantee; and that if Brownvalley called on the bank guarantee and drew down the moneys pursuant to it, he personally would reimburse the plaintiffs. It is said that the plaintiffs relied on these representations in establishing the new replacement bank guarantees, and subsequent guarantee and that the representations were false. 14The evidence that Mr Snelson made the alleged representations is in hearsay form only. So far as it goes, the statements attributed to Mr Snelson appear to be promissory rather than representational in nature, and the pleading itself suggests that they were understood on the basis that Mr Snelson would do what he could, but (as the third part of paragraph 62F indicates) that it might eventuate that in the worst case, Brownvalley might call on the guarantee and draw down the moneys, in which case Mr Snelson's promise was personally to reimburse the plaintiffs. While it is absolutely correct that that could amount to misleading and deceptive conduct if at the time he had no intention of honouring that promise or no reasonable basis for believing that he could do so, so much is not, at least at this stage, pleaded. 15A Court can recall a final judgment - at least before the formal entry of the judgment - if it has been pronounced against a person who, without fault on his or her part, has not had an opportunity to be heard as to why that judgment should not be pronounced [ Autodesk Inc & Anor v Dyason (No. 2) (1993) 176 CLR 300]. In Wentworth v Woollahra Municipal Council (1982) 149 CLR 672, Mason ACJ, Wilson and Brennan JJ said (at 684): The circumstances in which this Court will reopen a judgment which it has pronounced are extremely rare. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident, without fault on his part, he has not been heard. 16Mason CJ took a more liberal view than the majority in Autodesk , but even so his Honour said (at 301-303): The exercise of the jurisdiction to reopen a judgment and to grant a rehearing is not confined to circumstances in which the applicant can show that, by accident and without fault on the applicant's part, he or she has not been heard. It is true that the jurisdiction is to be exercised with great caution, having regard to the importance of the public interest in the finality of litigation. It is equally true, as this Court said in Wentworth v. Woollahra Municipal Council, that "generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard." But these statements do not exclude the exercise of jurisdiction to reopen a judgment which has apparently miscarried for other reasons, at least when the orders pronounced have not been perfected by the taking out of formal orders... the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law... What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. 17Dawson J, who was in the majority, observed (at 317): ... even though a party fails to present his case in a manner which is open on the pleadings and on the facts, a final appellate court with responsibility to determine the law cannot be precluded from disposing of a case upon the basis which appears to it to be correct. 18Without making any final findings on the matter, it appears likely that the plaintiffs have been enmeshed in a scheme by persons who may well have been fraudsters. One can only have the greatest sympathy for the position in which they find themselves. Moreover, the principle that the finality of litigation is in the public interest is of less significance in this case, where Mr Snelson did not participate in the final hearing. The consideration that reopening would be prejudicial to him, and would disrupt expectations that matters had been finalised, is of much less than usual concern, not only because of his non-participation in the final hearing, but also because of the absence of opposition on his part to the present motion. Those circumstances have led me to consider very closely whether there is not a way in which the plaintiffs could be given leave to prosecute their case against him, consistent with the principles to which I have referred. 19Essentially the proposed new case would seek to make Mr Snelson responsible, albeit by a different legal route, for exactly what it was sought to make him responsible for at the original trial. Although the plaintiffs have changed solicitors since the trial, there is no evidence or explanation as to why such a case was not advanced at the original hearing. There is no evidence or suggestion that the material now sought to be relied on was not available at the time of the original hearing. There is no explanation as to why the motion for leave to reopen was not filed within the time limited, as extended. 20It will be sufficiently evident from the matters I have so far mentioned that, were the matter argued, there would be formidable discretionary reasons for declining the plaintiffs an opportunity to reopen. Mr Snelson is not here to advance those arguments and might be taken in a way to have waived the benefit of them. Even if he were here, as I have foreshadowed, they would carry less weight because of his non-participation in the final hearing. 21All that said, and even applying the more generous test to be found in the dissenting judgment of Mason CJ, I cannot see how the failure to advance at trial the case that the plaintiffs now wish to advance cannot be attributed solely to the neglect or default of the plaintiff. It was plainly the plaintiff's responsibility to determine which case they would advance. The most generous view of the test for leave to reopen, which probably is more generous than the law permits, being that articulated by Mason CJ in dissent, is not satisfied by the evidence in the plaintiffs' application. That is without even coming to the various discretionary considerations to which I have referred. 22I am afraid, therefore, that I must decline the motion, as against Mr Snelson. 23I propose to order that, as against Mr Snelson, the motion be dismissed. 24In the light of the foregoing reasons, counsel for the plaintiffs has realistically and responsibly indicated that the application against Mr Atkins - which would encounter still greater difficulties than that against Mr Snelson - will not be pressed. 25Accordingly, I order that the motion be dismissed.