Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Yi Cheng Jiang v Wan Ze Property Development (Aust) Pty Ltd (in Liq) [2014] NSWCA 350 Hearing dates: 10 October 2014 Decision date: 14 October 2014 Before: Leeming JA Decision: 1. The notice of motion filed by the second and third respondents on 4 August 2014 be dismissed with costs. 2. The costs in order 1 to be calculated on an indemnity basis for the period on and after 2 September 2014. [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.] Catchwords: PRACTICE - application for stay pending payment of costs in previous proceedings - "outstanding costs rule" - application for stay pending provision of security for costs - application for stay refused Legislation Cited: Civil Procedure Act 2005 (NSW), s 67 Civil Procedure Rules 1998 (UK), r 52.9 Corporations Act 2001 (Cth), s 471B Supreme Court Act 1970 (NSW), ss 46(1)(d), 46(2)(a) Uniform Civil Procedure Rules 2005 (NSW), r 51.13(1) Cases Cited: Batiste v Gilmour-Latham [2001] NSWCA 392 Bowen v Hickey (1961) 78 WN (NSW) 820 Charara v Integrex Pty Ltd [2010] NSWCA 342 Fleming v Marshall [2010] NSWCA 152 Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065 In the matter of Wan Ze Property Development (Aust) Pty Ltd [2012] NSWSC 722; 90 ACSR 593 Phillip Morris Ltd v Attorney-General for the State of Victoria [2006] VSCA 21; 14 VR 538 Ren v Jiang [2013] NSWCA 194 Ren v Jiang [2014] NSWCA 1 Ren v Jiang (No 2) [2014] NSWCA 119 Ren v Jiang (No 3) [2014] NSWCA 204 Ren v Jiang (No 4) [2014] NSWCA 315 Rice v Henley (1915) 32 WN (NSW) 54 Societe Eram Shipping Co Ltd v Compagnie Internationale De Navigation [2001] EWCA Civ 568 Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 461 Category: Interlocutory applications Parties: Mr Yi Cheng Jiang (Applicant / Respondent on the motion) Wan Ze Property Development (Aust) Pty Ltd (in Liq) (1st Respondent) Ms Hong Jiang (2nd Respondent / Applicant on the motion) Mr Yongan Xie (3rd Respondent / Applicant on the motion) Representation: Counsel: Mr JC Giles / Mr E Yin (Applicant / Respondent on the motion) Mr DA Smallbone (2nd and 3rd Respondents / Applicants on the motion) Solicitors: Gadens (Applicant / Respondent on the motion) AHL Legal (2nd and 3rd Respondents / Applicants on the motion) File Number(s): 2014/211574 Decision under appeal Citation: [2012] NSWSC 821 Before: Black J File Number(s): 2011/51745 Judgment 1LEEMING JA: Ms Hong Jiang and Mr Yongan Xie, who are the second and third respondents in proceeding 2014/211574, which is an application for leave to appeal set down for hearing in the first week of November, seek orders that the proceeding be stayed until the applicant Mr Yi Cheng Jiang (a) pays various outstanding costs obligations, and (b) provides security in the amount of $50,000. It was common ground that I had power to deal with their motion, a view which I share by reason of s 46(1)(d) and (2)(a) of the Supreme Court Act 1970 (NSW). I have reached the conclusion that the whole of the notice of motion should be dismissed. In order to explain why, the starting point is the procedural history of the litigation between these parties. 2Mr Yi Cheng Jiang (also known as Mr Ken Jiang) seeks leave to challenge the same judgment - one given by Black J so long ago as 29 June 2012 (In the matter of Wan Ze Property Development (Aust) Pty Ltd [2012] NSWSC 722; 90 ACSR 593) - as is challenged in proceeding 2012/240805 (Ren v Jiang). The remaining moving parties in that proceeding are Mr Ren and Ms Xu, who were the first and second defendants at first instance; Mr Yi Cheng Jiang was the third defendant. (Leave is also sought under s 471B of the Corporations Act 2001 (Cth), but in what follows I shall refer merely to the application for leave.) This application has been the subject of no fewer than four interlocutory judgments in this Court over the last year. The most recent, Ren v Jiang (No 4) [2014] NSWCA 315, was my dismissal of the liquidator's application for security for costs, because of its delay and because security had already been provided. Although it was not known to me at the time, the current application was being prepared for hearing at the time I heard and dismissed the liquidator's application. Both counsel acknowledged, very properly, that it would have been appropriate for the existence of another interlocutory application to have been drawn to my attention; I should say immediately that I believe the failure to do so was entirely inadvertent. 3The applicant and respondent to the motion, Mr Yi Cheng Jiang, was, until very recently, the third applicant in the Ren v Jiang proceeding. In circumstances which were the subject of Ren v Jiang (No 3) [2014] NSWCA 204, on 27 June 2014 I refused his application to be represented separately from the other applicants within that proceeding. Following that decision, and in accordance with what was suggested during the hearing, Mr Yi Cheng Jiang filed a notice of discontinuance and commenced a separate proceeding, and directions have been made whereby that proceeding can be heard and determined at the same time as the Ren v Jiang proceeding. 4On around 17 July 2014, Mr Yi Cheng Jiang's summary of argument in support of leave was filed and served. It is a concise document of 10 pages. The summary of argument of the respondents, Ms Hong Jiang and Mr Yongan Xie, who are the applicants on the motion before me, has not been filed and served, notwithstanding the 28-day period specified in the r 51.13(1) of the Uniform Civil Procedure Rules 2005 (NSW), on the basis that they had moved to seek a stay on both of the bases indicated above, by their notice of motion filed 4 August 2014. It seems that thereafter the parties agreed to a leisurely timetable for the preparation of evidence in relation to the motion, until its existence came to my attention on 1 October 2014. 5Mr Smallbone told me when his clients' motion was heard that the new proceeding brought by Mr Yi Cheng Jiang had not been set down for hearing at the same time as the two days already fixed for Ren v Jiang and that it would be very difficult, but not impossible, in the three weeks remaining for his side to have it made ready for hearing. It became apparent that the application for security for costs was brought on the basis that the two applications for leave would be heard separately - and so indeed security was sought on the basis that there would be a separate two day hearing, and a large component of the costs was the costs of junior counsel and solicitor at that hearing. 6It does appear that there has been no order made formally setting down this proceeding for hearing next month. If indeed that is so, it is a mere technicality (and may be a consequence of the failure by Ms Hong Jiang and Mr Yongan Xie to file their submissions opposing leave). It is plain that the efficient and appropriate course to deal with the two applications for leave to appeal against the same judgment, which had comprised a single proceeding for well over a year, is that they should be heard and determined by the same Court on the same occasion, unless for some reason that be impossible. As much was common ground when the application for separate representation was heard on 26 June 2014, when senior counsel for Mr Ren and Ms Xu stated that what should be happening was the common practice of separately represented appellants bringing separate appeals "which are almost invariably heard together" (T 16.19). Mr Smallbone did not dispute that what I described, by reference to Mr Sexton's submission, as the "typical situation in which one has concurrent leave applications" could occur (T 19.45 - 20.3). As much was confirmed by my reasons at [21] and [22] in respect of the allocation of a date for the hearing of all applications and the making of directions to ready the new proceeding for hearing at the same time as the existing proceeding (emphasis added): "The third applicant may, if he chooses and they are willing to have him, retain the other applicants' solicitors. (They may or may not be willing to have him on terms that are acceptable to them or him; I am unaware of the terms of the former retainer, but his evidence is that he has not paid them any fees at all.) He may alternatively keep his newly chosen lawyers by discontinuing and starting afresh. I see no reason why the essentially mechanical task of preparing a summons for leave, a draft notice of appeal, and the summary of argument supplemental to the documents to be prepared by the other applicants need be particularly burdensome. Certainly, I see no need to duplicate material which is otherwise before the Court, and to the extent that the rules would otherwise require that to occur (for example, by the white folder containing the judgment and orders), I indicate that I would be disposed to dispense with the application of those rules to the third applicant if he wishes to discontinue. To that end, I should confirm that in the unusual circumstances of these proceedings, and subject to any agreement of the parties as to a course they regard as more efficient, it should be for the applicants to prepare materials in support of their applications, and for the respondents to prepare materials in support of their abuse of process application. I propose to stand this matter in the Registrar's list in some 3 weeks time, on Monday 21 July 2014. That time period provides ample opportunity for any party disappointed with my decision to seek, if he, she or it chooses, to have it reviewed. It also provides, in my view, ample opportunity for the third applicant to determine his position, and to file and serve a notice of discontinuance and a fresh originating process in his own name if that is his choice. On the occasion it is next before the Registrar, a date should be allocated, with an estimate of 1 day plus, and directions made so that all applications can be determined fairly and efficiently on that date." 7It will be seen that the directions contemplated in the passages emphasised above are inconsistent with a separate hearing of Mr Yi Cheng Jiang's application for leave. I return below to the consequences of the misapprehension that appears to have occurred on the part of Ms Hong Jiang and Mr Yongan Xie and their lawyers. Stay pending the payment of three outstanding costs obligations 8The first submission is that Mr Yi Cheng Jiang's application for leave should be stayed until he has paid various costs orders made against him. Paragraph 99 of the principal affidavit read in support of the application referred to seven orders for costs, but it was common ground that there were now only three, which are the largest, and that Mr Yi Cheng Jiang has paid several, relatively minor, amounts of costs incurred in the course of the litigation (including as I understand it, in at least one instance, interlocutory costs orders in this Court). 9The first of the three outstanding amounts of costs is the costs of the proceedings which are the subject of Mr Yi Cheng Jiang's application for leave to appeal. These have been assessed and registered as a judgment in the amount of $92,265.32. Notwithstanding what has been said above about his leave application being determined in November, Ms Hong Jiang and Mr Yongan Xie caused to be served a bankruptcy notice in that amount on 15 September 2014. In response, Mr Yi Cheng Jiang has invoked the jurisdiction of the Federal Circuit Court to set it aside. On 7 October 2014, a Registrar of that Court extended the time for compliance with the notice until 28 October 2014. 10I pause to say that one reason for the delayed determination of the applications for leave in this Court was that the parties twice applied for an adjournment by reason of extensive litigation brought by Mr Ren and Ms Xu in the Federal Court, seeking to challenge bankruptcy notices issued to them founded upon the judgment they had sought leave to appeal from: see Ren v Jiang (No 2) [2014] NSWCA 119. Those proceedings were heard over twelve days, and Mr Yi Cheng Jiang was a witness and was cross-examined: Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 461. The application was dismissed. 11The more recent bankruptcy litigation, to which Mr Yi Cheng Jiang is a party, was relied on by Mr Smallbone for three reasons: (a) as one aspect of his clients' difficulty in responding to the leave application in time for it to be heard in November, (b) as an element in his submissions that additional costs had been incurred by his clients attributable to Mr Yi Cheng Jiang as a witness, in respect of which they had no claim for costs against him, and (c) because it was said that Robertson J made a finding adverse to Mr Yi Cheng Jiang which was relevant to the exercise of my discretion. I do not consider reliance on these considerations to be well-founded. The difficulties of being involved in litigation in two courts at around the same time is a consequence of the decision of Ms Hong Jiang and Mr Yongan Xie to seek to bankrupt a man shortly before his application for leave is heard, and it was entirely foreseeable, given the earlier history, that their bankruptcy notice based on the judgment which he seeks to impugn would be met by an application to have it set aside. In any event, it is no large task to respond to submissions seeking leave, served three months ago, especially when the same lawyers are already retained to oppose leave to appeal against the same judgment. There is nothing in the second point. As for the third, it is plain from reading paragraph 111 of the reasons of Robertson J that no adverse finding was made of Mr Yi Cheng Jiang (which means it is not necessary for me to attempt to determine whether and if so any such finding could properly be used to inform my discretion on this application). 12However, what is of critical importance for present purposes is a fourth consideration. It will be seen below that the service of a bankruptcy notice, and, especially, Mr Yi Cheng Jiang's invocation of the jurisdiction of an Australian court to challenge it, means that this is a very different case from those on which Mr Smallbone relied in support of his application for a stay. 13The second outstanding amount is the costs of a second set of proceedings, brought to seek to re-open the judgment of Black J, which were dismissed, which at some stage were the subject of a second application for leave to appeal, but which were abandoned in the middle of this year. Those costs have been claimed in the amount of $141,686.76, and are in the process of being assessed. There has been prepared a bill of costs, and exchanges between the parties disclose that of that amount, some $70,000 is not disputed by Mr Yi Cheng Jiang. 14Thirdly, there are costs in the relatively small amount of $8,946.84 arising out of proceedings in the Local Court for a stay of the execution against Mr Yi Cheng Jiang of the Local Court judgment related to the first amount of costs referred to above. These were treated as linked to the first amount. 15It should be made clear that Mr Yi Cheng Jiang is but one of three natural persons who are jointly and severally liable for those costs obligations, who, prima facie, have rights of contribution against each other. (There has been evidence led before me to the effect that Mr Ren and Ms Xu arranged to retain their former solicitor, including paying him, and that Mr Yi Cheng Jiang was scarcely involved; nothing in these reasons should be read as touching upon the existence and nature of any right of contribution Mr Yi Cheng Jiang may have.) Of course, Ms Hong Jiang and Mr Yongan Xie are free to seek to enforce obligations against whichever judgment debtor they choose. 16Mr Smallbone submitted that s 67 of the Civil Procedure Act 2005 (NSW) empowered me to stay the proceedings pending the payment of those costs. He relied on Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, which dealt with a special power in the Civil Procedure Rules (r 52.9) which empowered an appeal court to impose conditions upon the bringing of an appeal, but only where there was a "compelling reason" to do so. Clarke LJ gave the judgment of the Court, granted security for costs and required that there be paid into court by way of security both the judgment debt and the orders for costs. His Lordship was of the view that there was a "compelling reason" for reasons set out at [41], the first of which was that the appellant was an entity registered in the British Virgin Islands with no assets in the United Kingdom, against which "it will be difficult to exercise the normal mechanisms of enforcement". 17Mr Smallbone said that the principles in Hammond Suddard should apply here. I disagree. Putting to one side the differences in the applicable rules of court, the British Virgin Islands entity with no assets in the jurisdiction against which normal mechanisms of enforcement could not readily be exercised is a world away from Mr Yi Cheng Jiang. The latter is a natural person, with assets in the jurisdiction, against whom Mr Smallbone's clients have shown no reluctance to exercise the "normal mechanisms of enforcement", notably, by bankruptcy. 18Mr Smallbone also relied on Societe Eram Shipping Co Ltd v Compagnie Internationale De Navigation [2001] EWCA Civ 568, a decision where Rix LJ declined to find "compelling reasons" to order a stay for the non-payment of costs against a company incorporated in Romania, about which "nothing whatsoever is known" save that Romania had not adhered to the Brussels or European Conventions. It is plain that this decision does not assist the present application for a stay against Mr Yi Cheng Jiang. It emphasises the difficulties confronting an application to stay proceedings properly invoking the Court's appellate jurisdiction. 19Mr Smallbone referred, at some length, to the elaborate analysis and reasons of Ormiston JA in Phillip Morris Ltd v Attorney-General for the State of Victoria [2006] VSCA 21; 14 VR 538 concerning the "outstanding costs rule". His Honour considered the way in which applications to re-litigate the same or similar proceedings had been addressed, both at common law and in equity, before and after the Judicature legislation. His Honour emphasised, both at the commencement and also at the conclusion of his analysis, at [123] and [147], that where there was a final judgment, the matter was resolved by res judicata and issue estoppel, but that there was a practice, varyingly expressed, of requiring earlier costs to be paid as the price of permitting re-litigation where there had not been a final judgment. 20His Honour's analysis is of interest, but is largely irrelevant to the application before me, which arises in the context of an application for leave to appeal. The principles on which Mr Smallbone relied were directed to repeated applications in the same court, not to appeals. Mr Yi Cheng Jiang is entitled to apply for leave to appeal from the judgment against him. Only to the extent that he had sought to do so on an earlier occasion, but had discontinued, and then applied again, there might be an occasion for those principles to be considered and invoked, by way of extrapolation to appeals. 21Likewise, the other decisions to which I was taken, including Bowen v Hickey (1961) 78 WN (NSW) 820 and Rice v Henley (1915) 32 WN (NSW) 54, were directed to bringing fresh actions at first instance following a non-suit or verdict against the plaintiff, not to the bringing of an application for leave to appeal. 22The submission is that "The present proceedings now comprise the 6th proceeding in which the Applicant herein has sought to impeach the orders made against him in the 2001 Proceedings" (paragraph 96 of the principal affidavit). That sentence very considerably overstates the issue. The deponent lists five proceedings. The fifth is the present proceeding, so that even if everything else in the paragraph were accepted, the double counting means that the present proceeding would be the 5th, not the 6th. The fourth is an interlocutory process which was filed and discontinued within three weeks, the costs for which ($1,188) have been paid in full; it likewise may swiftly be put to one side. The first two are the application to set aside the orders which Black J rejected, and from which a second application for leave to appeal was brought which was discontinued, which resulted in the second set of costs the subject of the present application. I do not think that the fact that Mr Yi Cheng Jiang was one of the applicants who applied to reopen the judgment, and who at one time sought leave to appeal from the primary judge's subsequent refusal to reopen, lends any material support to the application that the primary right, given by statute, for his application to seek leave to appeal, should be qualified by a stay pending the payment of costs. I hold that view principally because that was an application to seek leave to appeal from a different judgment, and subsequently given. 23The other proceeding listed (the third) in the affidavit is the Ren v Jiang proceeding, in which Mr Yi Cheng Jiang was for more than a year the third applicant. True it is that Mr Yi Cheng Jiang discontinued his participation in the Ren v Jiang leave application, on terms that Ms Hong Jiang and Mr Yongan Xie and the liquidator are entitled to their costs occasioned by it. But that took place in the circumstances referred to above, and it is far from clear what those costs may be at this stage (the evidence is that they are "presently being quantified in our office"). A further complaint is made that Mr Yi Cheng Jiang's proceedings are now being pursued on a different basis. However, as I read the submissions, it is a much narrower basis that was formerly the case. 24I was also taken by Mr Smallbone to Batiste v Gilmour-Latham [2001] NSWCA 392 which confirmed that it was open to a judge at first instance in an appropriate case to require, as the price of setting aside a default judgment, the payment of security. This has nothing to do with the present proceedings which are an application for leave. 25I was not taken to any Australian decision where a court ordered that an application for leave to appeal be stayed pending the payment of outstanding costs orders. I think there must be power to do so in an appropriate case, at least as an aspect of the powers of a court to protect itself and other litigants from abuses of process, and that power is now found at least primarily in this Court's inherent jurisdiction read with s 67 of the Civil Procedure Act. But there are two reasons why it comes as no surprise to me that Mr Smallbone could not point to an Australian case squarely on point. Ordinarily, applications for leave to appeal are inexpensive, and determined speedily, well before a party-party costs order is quantified and made enforceable. That is reflected in the rules, which make no provision for the security for the costs of a leave application (hence this application is in the Court's inherent jurisdiction: see Fleming v Marshall [2010] NSWCA 152 and Charara v Integrex Pty Ltd [2010] NSWCA 342 at [10]). Further, ordinarily, it is difficult to see how an application for a stay of an application for leave would be rational: applications for leave are customarily heard and determined in a short hearing; the costs of the application for a stay would in many cases approach the costs of responding to the application for leave. However, this is no ordinary case. The reason that the applications for leave have been set down for hearing for two days is that Ms Hong Jiang and Mr Yongan Xie contend that the application for leave is itself an abuse of process, and have served in excess of 1000 pages of material in support of that application. 26The English cases on which Mr Smallbone relied confirm my view that there is no occasion for requiring the payment of costs without which a leave application will be stayed where, as here, a natural person present in the jurisdiction, with assets, and against whom the normal mechanisms of enforcement are available and being availed of. I would dismiss this aspect of the motion. Security for costs 27Security for costs was sought against Mr Yi Cheng Jiang, when he was one of four applicants to the single proceeding, shortly after it was commenced, although that application was expressed to be confined to the costs of the application for leave under s 471B of the Corporations Act 2001 (Cth). It was the subject of orders made by consent, by a Judge of this Court: Ren v Jiang [2013] NSWCA 194, which in substance provided for (a) the payment into Court of the sum of $16,000 by Mr Ren and Ms Xu, and (b) the payment of the sum of $500,000 from a related party, thereafter to be paid into Court for security for the judgment. In the event that both of those payments were made, the motion seeking security for costs was agreed to be dismissed. As has been described in earlier judgments, the $16,000 was paid into Court, but the $500,000 was not. Nevertheless, Ms Hong Jiang and Mr Yongan Xie already have the benefit of some security for their costs. The evidence does not disclose any subsequent application for security for the costs incurred by Ms Hong Jiang and Mr Yongan Xie in relation to the application insofar as it is made by Mr Yi Cheng Jiang, until shortly after the current proceeding was commenced. 28In those circumstances, there is a question which is perhaps not free from difficulty as to the costs in respect of which Mr Yi Cheng Jiang may be required to provide security. It is certainly not the amount calculated in the affidavit upon which Ms Hong Jiang and Mr Yongan Xie relied. For one thing, those calculations presupposed a separate hearing of the leave application from the Ren v Jiang proceedings. For another, a deal of that hearing - perhaps even the majority - will be occupied by Ms Hong Jiang's and Mr Yongan Xie's abuse of process application, the costs of which should on no account be the subject of security. 29The work that needs to be done, by lawyers who have been immersed in the litigation for years and so are highly familiar with the issues, is to file submissions in response, supplement the White Book to the extent that is appropriate, and appear on the application for leave. The marginal cost of so doing, bearing in mind the same lawyers will be defending at the same time the application for leave brought by Mr Ren and Ms Xu in Ren v Jiang, is nothing like the $50,000 which is sought. 30I have considered whether some much smaller amount of security ought be ordered, bearing in mind a much more realistic estimate of the costs of Mr Yi Cheng Jiang's application for leave, the fact that not all costs incurred are recoverable, and that security for costs is often less than perfect security. Even so, many considerations tell against the grant of any security. For one thing, the application has not been made promptly, unless one puts entirely to one side the fact that Mr Yi Cheng Jiang has been an applicant for leave in the Ren v Jiang proceedings for more than a year. I think it would be wrong to put that fact to one side, because it would elevate form over substance, and it ignores the fact that some security has already been provided. Secondly, even if delay and the provision of earlier security is put to one side, and one focusses merely upon the new proceeding in which Mr Yi Cheng Jiang is the sole applicant, although the application was brought promptly, it has not been prosecuted promptly, when one bears in mind that the hearing of the application for leave is less than three weeks away. Thirdly, Mr Yi Cheng Jiang is a natural person, amenable to the jurisdiction of Australian courts, so far as I know a resident in Australia, with assets in Australia (including amounts held by his solicitors), who has invoked the right given to him by statute to seek leave to appeal from a judgment against him. Fourthly, there has been very considerable delay in the hearing of this application for leave, which is partly attributable to the highly unusual fact that Ms Hong Jiang and Mr Yongan Xie maintain that Mr Ren's and Ms Xu's application for leave itself is an abuse of process. 31All those factors point against this being a rare case where, in the exercise of the Court's inherent jurisdiction, security might be ordered for the costs of what is, after all, merely a leave application. I am conscious that it is said, trenchantly, that Mr Yi Cheng Jiang has not co-operated in paying the amounts of costs which have been ordered against him. ("It is vexatious for the Applicant to make his case once, walk away from it, re-cast his case, not pay the costs and want to run his new case nonetheless, all the while resisting recovery under other very substantial costs order and making it clear by his conduct that attempts to recover costs from him will be persistently resisted and collection made difficult. The proceedings are prima face vexatious": paragraph 39, written submissions dated 21 September). 32I do not consider that suffices to warrant security being ordered. When first I encountered this proceeding, I observed that Mr Smallbone's complaint that the other side had conducted a "scorched earth up to the Urals" approach of taking every point appeared equally attributable to his clients: Ren v Jiang [2014] NSWCA 1 at [15]. What I have subsequently seen confirms that impression. The enthusiasm on the part of Ms Hong Jiang and Mr Yongan Xie for making applications on their own part very much, to my mind, undercuts the force of the submission that Mr Yi Cheng Jiang is not making it easy to recover costs against him. It is also to be recalled that the costs which he is reluctant to pay were incurred when solicitors with whom he has apparently fallen out acted for him and Mr Ren and Ms Xu, and that Ms Hong Jiang and Mr Yongan Xie have recently been seeking to recover (as is their right) the whole of those costs from Mr Yi Cheng Jiang, leaving it to him to recover contribution from Mr Ren and Ms Xu. 33For those reasons, I am not persuaded that this is an appropriate case, less than three weeks from the hearing, to order security. Orders 34It follows that the notice of motion must be dismissed. By letter dated 21 August 2014, Mr Yi Cheng Jiang's solicitors wrote that it was entirely inappropriate that a stay was sought, and that it was likely that security for costs would be refused. Nevertheless, the letter made the following offer: "However, in order to save the parties' incurring unnecessary costs and wasting the parties' and the Court's time, our client wishes to make the following offer. Offer Our client offers to: (a) provide security for your clients' costs of his Appeal in the sum of $50,000 (Amount) as sought by order five of your clients' Motion; and (b) deposit the Amount into a controlled money account with a Gadens' partner being signatory to that account to be held until the outcome of the Appeal." 35The offer was expressed to be open until 5pm on 1 September 2014. The principles in Calderbank v Calderbank were expressly invoked. "Appeal" was defined, in bold, in the first sentence of the letter to mean "Court of Appeal of New South Wales Proceedings No. 2014/211574". The proceeding number is that of the summons for leave to appeal. 36The response was a letter from Ms Hong Jiang's and Mr Yongan Xie's solicitors: "We seek the following points of clarification with respect to your client's offer: (a) Is it an offer to compromise the claim in prayer 5 of our client's motion, leaving the balance of the motion in play, or is the offer intended to compromise the whole motion, thus requiring our client to give up the claims in prayers 1 to 4 in order to get what is offered in relation to prayer 5? (b) Your letter describes the security as security for the costs of his Appeal. Is that an error? Is the intention to offer the security as security for our client's costs of the proceedings on his present Summons in the 2014 matter? (c) Your letter does not refer to costs of the motion. Are we correct in understanding that your client makes no offer to pay the costs of the motion?" 37The response, sent the following day, repeated the definition of "Appeal" and stated: "(a) In our view, your clients' claim in prayers one to four of your clients' Motion have poor prospects. Our client's Offer is intended to compromise the entire Motion. (b) This is not an error. As stated in our client's Offer, our client has made an offer to provide $50,000 by way of security in respect of your clients' costs likely to be incurred in his Appeal, as sought in order five of your clients' Motion. If there is any confusion, please call me to discuss. (c) Yes. In the usual course, and this is why costs were not referred to in our client's Offer, the Offer was made on the basis that each party bear their costs of the Motion to date." 38The offer was not accepted. 39Mr Smallbone said that the letter amounted to an offer to provide security only in respect of the appeal if leave be granted, and not for the application for leave. I accept that he held that view, and I infer that it was shared by his solicitor. However, it is a very odd approach to take to correspondence which I regard to be transparently clear. First, the "Appeal" was defined by reference to a particular (numbered) proceeding - the present summons for leave to appeal. Secondly, the costs for which security can be sought to be provided are costs that might be ordered either (a) if and when leave be refused, or (b) if and when leave be granted but the appeal dismissed; it is entirely natural to read the offer as extending to both of those possibilities. 40All this was confirmed in writing by Mr Giles' written submissions dated 29 September 2014 ("offered security for costs of this application and an appeal in the amount of $50,000": paragraph 17). 41Mr Yi Cheng Jiang made a generous offer amounting to a genuine compromise. It was not accepted. It will be evident from the foregoing that I regard Ms Hong Jiang and Mr Yongan Xie to have acted unreasonably in not accepting it; I so find even if as is maintained they believed that Mr Yi Cheng Jiang's leave application would be heard separately from Ren v Jiang, and even if they misunderstood the offer that was being made to them. For the reasons which I have elaborated in some detail (the debate that took place on 26 June, my reasons and proposed directions made on 27 June, and the terms of the Calderbank correspondence), their subjective misunderstanding does not displace the unreasonableness of their refusing the offer. It follows that I accept Mr Giles' submission that Ms Hong Jiang and Mr Yongan Xie must pay Mr Yi Cheng Jiang's costs of their motion, after 1 September 2014, on an indemnity basis. ********** Amendments 05 November 2014 - Pursuant to the slip rule, in the first sentence, "2014/211575" has been amended to "2014/211574". Amended paragraphs: 1 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 November 2014