District Court New South Wales Medium Neutral Citation: Qiang v Raxigi Pty Ltd t/as V. Hovanessian & Associates (ABN 89 002 595 879) [2018] NSWDC 87 Hearing dates: 27 and 28 March 2018 Date of orders: 11 April 2018 Decision date: 11 April 2018 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) Judgment for the plaintiff against the defendant in the amount of $259,738.02, comprising the principal sum of $231,000.00 plus interest of $28,738.02 pursuant to s 100 of the Civil Procedure Act 2005 (NSW). (2) Defendant pay the plaintiff's costs of the proceedings as agreed or assessed, with liberty to apply. (3) Exhibits retained for 28 days. Catchwords: DEBT – plaintiff and defendant enter into contract for provision of services containing a "refund or repay" clause if the defendant does not perform the services set out in the contract to achieve the agreed result – defendant fails to achieve the agreed result – defence of mere denial and absence of evidence – judgment for the plaintiff. PRACTICE AND PROCEDURE – defendant fails to comply with any timetables despite three self-executing orders and costs orders – whether proceedings should be adjourned – whether defendant should be granted leave to adduce evidence despite filing no evidence – applications for adjournment and leave to adduce evidence at the hearing which has not been served beforehand refused – no issue of principle. Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56, 57, 58, 59, 60, 61, 62, 100 Uniform Civil Procedure Rules 2005 (NSW), r 12.7 Cases Cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Chief Executive Officer of Customs v Evenfont [2007] NSWSC 431 Douglas v John Fairfax & Sons Ltd [1983] 3 NSWLR 126 Dubois v R & V Bergin Pty Ltd [2011] NSWCA 309 Glover v Australian Ultra Concrete Floors Pty Ltd [2003] NSWCA 80 Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135 Lee v Cha [2009] NSWCA 13 Mohareb v Kelso [2017] NSWCA 98 Mohareb v Kelso (No 2) [2017] NSWCA 173 Mohareb v Kelso [2016] NSWDC 208 Muirhead v Commonwealth Bank of Australia [1997] 1 Qd R 567 Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116 Roberts v Morphett Constructions Pty Ltd [2018] NSWCATAP 33 Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208 Vale v Vale [2001] NSWCA 245 Young v Queensland Trustees Ltd (1956) 99 CLR 560 Zisis v Knighton [2008] NSWCA 42 Texts Cited: P. Taylor, Dr E. Elms, M. Meek SC, The Hon Justice G. Bellew, Ritchie's Uniform Civil Procedure NSW (LexisNexis, Australia) Category: Principal judgment Parties: Plaintiff: Yi (Chet) Qiang Defendant: Raxigi Pty Ltd t/as V. Hovanessian & Associates (ABN 89 002 595 879) Representation: Counsel: Plaintiff: Mr A Macauley Defendant: Mr V Hovanessian (with leave) Solicitors: Plaintiff: Jurisbridge Legal Defendant: Mr V Hovanessian (with leave) File Number(s): 2017/32298 Publication restriction: None Judgment The pleadings and evidence 1. The plaintiff by statement of claim filed on 31 January 2017 brings proceedings for recovery of a debt in the sum of $231,000.00, plus interest pursuant to s 100 Civil Procedure Act 2005 (NSW) and costs. The defence, filed on 27 March 2017, consists of denials. 2. The plaintiff served a lengthy affidavit on 15 July 2017, setting out the evidence and attaching the documentation he relies upon. As is set out in more detail below, despite being given numerous opportunities (including three self-executing orders) the defendant has not served any evidence. Mr Hovanessian, the sole director of the defendant, sought leave to appear on behalf of the defendant at the hearing (to which course no objection was taken by the plaintiff) and made a series of applications to the court designed to resolve the problems caused to the defendant by this non-compliance. The procedural history of this litigation 1. The statement of claim sets out in careful detail the nature of the parties' relationship and contractual dealings. The defence, by comparison, consists of a series of denials of such generality that the plaintiff would have difficulty knowing the case he was to meet. 2. Although the plaintiff served his evidence promptly and in accordance with timetable orders and repeatedly sought the defendant's compliance in return, the defendant continually breached orders and failed to provide essential information as follows: 1. Despite three costs orders (26 May, 4 September and 19 October 2017), two threats of show cause applications (26 May and 4 September 2017) and three self-executing orders (4 September, 19 October and 30 November 2017), the defendant never filed any evidence. 2. The defendant failed to provide answers to particulars of the defence in relation to issues essential to the determination of the issues in the case (Exhibit C). 3. Mr Hovanessian, the sole director of the defendant, came to the first day of the hearing to seek an adjournment or alternatively to be allowed to give his evidence orally, but brought no documents or witnesses with him to indicate the issues in dispute. 4. Although Mr Hovanessian acknowledged he had been aware for some time that the defendant was not ready for the trial because of its own inaction, he failed to comply with paragraphs 10 and 14 of the Standard Orders for Hearings dated 2 November 2011 by failing to file a Notice of Motion at the earliest opportunity seeking adjournment of these proceedings. He did, however, hand up an unfiled document headed "Notice of Motion", supported by an affidavit sworn 27 March 2018, which he had sworn before Mr Fasciullo, his former solicitor, so he had clearly been apprised of the procedure to follow. There was no attempt to comply with any other requirements of the Standard Orders, such as the provision of a Statement of Issues. 5. Although Mr Hovanessian claimed that the main reason for his difficulty was that the defendant's legal representatives ceased acting for the company in February 2018, they had served a notice of intention to do so in November 2017. The defendant's former solicitor not only witnessed Mr Hovanessian's affidavit of 27 March 2018 (the first day of the hearing) but also told him that he needed to file a Notice Disputing Facts, which suggests that the cessation of legal representation has not been the difficulty Mr Hovanessian claims it to be. 1. Much of the first day of the hearing was taken up with the defendant's series of applications for adjournments and to lead evidence at the hearing despite the defendant serving no affidavits. These were: 1. The defendant's application for adjournment of the hearing; 2. The defendant's application for a stay of proceedings pending his application for leave to appeal to the New South Wales Court of Appeal from my refusal of an adjournment; 3. The defendant's application to give and to call evidence in chief without affidavits; 4. The defendant's application to be released from the consequences of the three self-executing orders made by Judicial Registrar Howard; and 5. The defendant's application to cross-examine the plaintiff notwithstanding its failure to comply with any orders for the service of affidavit material or to give notice of its intention. The defendant's applications 1. This is a list of the orders I made on the first day of the hearing in relation to the defendant's applications for adjournments and for leave to adduce evidence at the trial despite failure to comply with timetables: 1. Defendant's application for an adjournment of these proceedings is refused. 2. Defendant's application to be excused from the consequences of the self-executing orders of Judicial Registrar Howard of 4 September 2017, 19 October 2017 and 2 November 2017 and to give oral evidence from the witness box and tender documents (undisclosed) in support of his case is refused. 3. Defendant's application to cross-examine the plaintiff without giving any prior notice for cross-examination, filing any evidence in reply and in contravention of the Judicial Registrar's self-executing orders (as set out in order (2) above) is refused. 4. Defendant's application for a stay of proceedings so that he can seek leave to appeal from my refusal of an adjournment is refused. 1. These applications raise issues concerning the ambit of ss 58(1)(a)(ii), s 58(2), 59 and 61(3) Civil Procedure Act 2005 (NSW), the principles enunciated in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, r 12.7 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") and the Standard Orders for hearing. 2. By way of general observation as to all these applications: 1. No timely notice of any of the defendant's applications was given either to the plaintiff or to the court, although the defendant, through Mr Hovanessian, had enough time to consult his solicitor about the form and contents of the unfiled Notice of Motion he brought before the court on the first day of the hearing. The Standard Orders for Hearing require the filing of a Notice of Motion beforehand, which application is then heard by the List Judge, not the Trial Judge, for obvious case management reasons. 2. The applications were unsupported by any evidence beyond a short affidavit of Mr Hovanessian which provided no information beyond generalised statements that the defendant needed an adjournment because he had been busy with other litigation and he was upset at the breakdown of his marriage and ill health in his family. However, Mr Hovanessian had sworn an affidavit in similar terms on 19 October 2017, although he had also stated that he could still be in a position to serve evidence by November 2017. No explanation was offered in the second affidavit as to why that date was not complied with. 3. As to the application to adduce evidence at the hearing and to be excused from non-compliance with the three self-executing orders, in the course of his submissions, Mr Hovanessian referred to documentation which he did not produce and to two named witnesses whom he admitted had been contacted only very recently and had not replied to him. He later conceded that the two named witnesses had not been present at the meeting where he claimed the plaintiff had agreed to vary the contract. 4. Mr Hovanessian's submissions were repetitive and at times couched in highly emotional terms, such as telling me his children were "suicidal" and that he himself was in an extreme "mental state". 1. I will deal first with the application for adjournment made shortly after the commencement of the hearing. The defendant's application for adjournment of the hearing 1. Mr Hovanessian explained the defendant's reasons for seeking an adjournment in his very brief affidavit of 27 March 2018 as well as his earlier affidavit of 19 October 2017, which he expanded upon orally. 1. Involvement in Family Court and Supreme Court proceedings 1. In March 2017 Mr Hovanessian's wife ended their lengthy marriage and he was obliged to leave the matrimonial home. His wife engaged a series of solicitors and commenced "actions" in the Equity Division of the Supreme Court "as well as commencing action in the Family Court", according to his affidavit of 19 October 2017. As a result of all this litigation, he had spent many months answering requests from his solicitors about the history of his 40-year marriage, and had paid them $17,000 in costs. His wife changed solicitors three times, which he said added considerably to the burden, and had taken an intransigent attitude. A picture was painted of regular court battles of some hostility. 2. However, when asked for court documents from the proceedings, Mr Hovanessian acknowledged that there had never been proceedings in the Family Court at all, and that the property settlement issues between himself and his wife (including liability for any judgment in these proceedings) are largely resolved. The Supreme Court proceedings were never the subject of any contested applications and were discontinued by his wife, without any costs orders, in January 2018. 3. I accept that the defendant's marital breakdown required him to change his place of residence in March 2017 and that the impact of the collapse of his marriage would have been significant. However, he has been able to continue to conduct his business and other legal affairs. I consider his claims about involvement in other litigation to be exaggerated, given the concessions that he made from the bar table, which are inconsistent with the statements made on oath in his affidavit of 19 October 2017. 2. Health and family issues 1. As set out in the affidavit of 19 October 2017, Mr Hovanessian's mother passed away in June 2017 and both his sisters have been seriously ill. In addition, he said that his children have been "suicidal" over the marriage breakdown. The defendant said that he himself was "a broken man" after these events. 2. Mr Hovanessian had already set out all this information in his affidavit of 19 October 2017, but had nevertheless been able to assure the court, in that affidavit, that the defendant could file its evidence by 9 November 2017. He was given until 24 November 2017, a further extension, and then to 12 December 2012, but did not do so, despite these being self-executing orders. 3. Mr Hovanessian told the court a number of times he was a businessman of thirty years' standing with considerable experience in the conduct of litigation, in the sense of being able to deal with the solicitors who were conducting his affairs. The material which he needed to provide to his solicitors consisted largely of a straightforward factual answer to the plaintiff's affidavit concerning the parties' activities, particularly in the first five months of 2016. The defendant's case appears to be that the plaintiff could not enforce the second agreement because the plaintiff had in fact entered into a third agreement with the defendant, the terms of which meant that the "refund or repay" clause in the second agreement had been waived. All the relevant documents in relation to this period of time were attached to the plaintiff's affidavit (see [69] – [71] below). Answering this by setting out the conversations and documents the defendant relied upon to counter the plaintiff's evidence for this period should have been a simple matter for an experienced commercial law firm such as the defendant's former solicitors. I regard the defendant's failure to serve any evidence in reply as a deliberate decision. 3. Other factors 1. The defendant said that he had been stressed by the need to refinance loans, prepare his tax returns and move office twice, and that these activities, in a firm which was effectively a "one man office" had prevented him from having time to attend to this litigation. 2. The defendant was represented by an efficient firm of solicitors who would have been able to read the plaintiff's affidavit and obtain instructions in relation to the disputed areas of fact in relation to the January – May 2016 discussions without difficulty. The fact that the defendant had other ongoing concerns such as preparing his tax returns, refinancing a loan and moving office should not have prevented him from performing these tasks. His affidavit of 19 October 2017 states that he could nevertheless complete the affidavit by November 2017 and he was unable to identify what fresh difficulties of that kind he has had since that date, beyond referring to a need to refinance at some date in the immediate future. The relevant principles 1. Applications for adjournments on or shortly before the day of the hearing are increasingly frequent in the District Court. This is one of the reasons why they are dealt with by the List Judge. The List Judge determines these applications with regard to, inter alia, ss 56 – 62 Civil Procedure Act 2005 (NSW), the principles enunciated in Aon Risk Services Australia Ltd v Australian National University. The procedure set out in the Standard Orders for Hearing and District Court Practice Note 1 must be followed. 2. This court does not have a preconceived prejudice against adjournments. Such applications are often necessary for very good reasons and are granted when that is the case. In the present case, however, the application for adjournment is not brought because of recently discovered evidence, or a gap in the evidence provided by the defendant, or a suddenly unavailable witness, or a medical emergency. It is brought because of the total non-compliance of the defendant with any case management orders, a relevant factor for s 61(3) Civil Procedure Act. 3. The timing of the application is also relevant. The defendant waited until the proceedings were listed before me for hearing and for the hearing to commence, thereby avoiding the well-established procedure in this court of all applications for adjournments on the day of the hearing to be heard by the List Judge. In this regard, I note the following clauses in the District Court Practice Note 1: "13.1 If a hearing date is in jeopardy as a result of non-compliance with orders or intervening events, either party must immediately approach the Court by filing an affidavit in the registry. The registry will allocate a directions hearing before the Civil List Judge. The affidavit and details of the listing date and time must be served on all other parties forthwith. If adjournment of the hearing date is later sought, the Court will take any failure to approach the Court under this clause into account when considering the adjournment application. 13.2 The Court will only grant adjournment applications where there are very good reasons. The following will normally not be sufficient reasons for adjournment: (a) the unavailability of counsel or; (b) the failure to comply with the Standard Orders for Hearings or any other orders or directions made by the Court or; (c) the failure to properly prepare the matter for hearing. 13.3 Parties who breach the Standard Orders for Hearings or any other Court orders may be restricted in the evidence which they can rely on at the hearing. 13.4 An application for adjournment of a trial or mediation is made by notice of motion and supporting affidavit and must be made at the earliest possible opportunity." 1. There have been occasions where the New South Wales Court of Appeal has shown generosity to parties seeking an adjournment on the day of the hearing. For example, in Dubois v R & V Bergin Pty Ltd [2011] NSWCA 309, Young JA (at [42] – [49]) criticised the first instance judge for not accepting the opinions of the experienced counsel for both parties that, due to oversights by both parties' legal teams, the case was not ready to proceed. 2. Young JA's observations that adjournments should not be refused just because an adjournment "wastes costs and causes some delay" (at [46]) are, however, not an expression of a general rule of indulgence, particularly where the reason is failure to collect evidence in a timely manner despite opportunities being provided: see the authorities referred to in Roberts v Morphett Constructions Pty Ltd [2018] NSWCATAP 33 at [66] and [69]. In addition, delays in proceedings of a commercial nature may be viewed as less acceptable than in proceedings for personal injury, particularly where the defaulting party is a person with ongoing physical disabilities. 3. The context in which the adjournment is sought is also relevant. An adjournment sought after a series of failure to comply (particularly of the kind demonstrated here) may be viewed by the court as yet another attempt to deny an opponent a fair hearing. Courts must be aware, as a matter of practicality, that trial tactics, rather than misfortune or oversight, are often the rationale behind delay tactics. In Vale v Vale [2001] NSWCA 245 at [92] Mason P commented (when rejecting a submission concerning an assertedly important failure to call a witness) that, while the goddess of justice may be wearing a blindfold, she was not blinded to "the realities of trial tactics." Similar observations concerning "trial by ambush" (in relation to the conduct of defendants in this court) were made by Young A-JA in Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116. 4. In particular, in relation to preparation for hearing, the parties are expected to take the "cards on the table" approach and to comply with their obligations under timetables: Glover v Australian Ultra Concrete Floors Pty Ltd [2003] NSWCA 80 at [60]; Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208 at [205]; Zisis v Knighton [2008] NSWCA 42 at [50]. 5. The length of the delay involved may also be a factor. Mr Hovanessian indicated that any future hearing of these proceedings could not take place in this court. While Mr Hovanessian was uncertain about many aspects of his case, he was certain that the sum involved in the cross-claim he proposed to bring if permitted to run this case in the way he wanted would well exceed the jurisdiction of this court, which would mean, he said, that the proceedings would have to be transferred to the Supreme Court, which he claimed would be a preferable venue in any event if issues of unconscionability were to be raised, which he considered this court might have difficulty understanding. This would add further delay. 6. Individually, any one or combination of more than one of the above factors would warrant the refusal of an adjournment. Collectively, Mr Hovanessian's reasons for seeking an adjournment demonstrate a clear case of trial by ambush. The defendant should not be given any further opportunities to delay the hearing of these proceedings and for the above reasons the hearing should proceed. The defendant's application for a stay of proceedings pending appeal 1. Mr Hovanessian said that the defendant intended to appeal my refusal of an adjournment and asked me to stay the proceedings to give the defendant time to do so. The application for a stay of these proceedings so that the defendant could seek leave to appeal my refusal of an adjournment would amount to granting the adjournment which I have already refused. In the circumstances of this case, that would cause significant prejudice to the plaintiff, who has prepared for the hearing and is ready to conduct his case. 2. The significance of prejudice to the other party, and the ability of the party in default to remedy the breach by an appropriate costs order, will depend upon the circumstances. In the present case, Mr Hovanessian submits that there is no prejudice and that the award of costs on a party/party basis at the end of the proceedings is sufficient to compensate the plaintiff. He acknowledges at the same time that he is in no position to do so, and hopes that any costs order made if an adjournment is granted will be deferred until these proceedings have been heard at some time in the future. That is unacceptable. 3. The prejudice to the plaintiff would be overwhelming, and the application for a stay pending appeal was accordingly refused. The defendant's application for leave to adduce evidence and to cross-examine notwithstanding its failure to serve evidence 1. On the subject of prejudice to the plaintiff, this brings me to the next series of applications the defendant brought, namely for leave to adduce evidence at this hearing despite not serving any evidence and to cross-examine the plaintiff on his affidavit despite failing to give any prior notice. The defendant made no objection to the affidavit of the plaintiff going into evidence as an exhibit or to any part of its contents for evidentiary reasons such as relevance. 2. It is hard to see how the defendant could be in a position either to call evidence or to cross-examine, given Mr Hovanessian's admissions that the defendant will not be in any position to complete its part of any future timetable for these proceedings for some months. He answered inquiries about his evidence by saying that he was in a state of confusion because of his emotional problems and/or that his former solicitors had only given him their file on the morning of the hearing. 3. What is more, this disarray is likely to continue. While Mr Hovanessian hoped that the Family Court proceedings would result in confirmation of a settlement which can be finalised some months in the future, that is by no means certain. He proposed a date of 27 June 2018 for his affidavit in reply, but could not prognosticate as to when any affidavits from other witnesses could be served, as he had not yet received confirmation from the two named persons he had spoken to (and had not spoken to any other asserted potential witnesses) that they would comply. He later conceded, in relation to the first two of these witnesses, that they had not been present at the relevant meeting; he could not even remember the names of the other two witnesses he said would give relevant evidence. He could not provide any date for the bringing of a cross-claim, or even identify what the nature of what that cross-claim would be except to say that it would be for an amount so large that the proceedings would have to be transferred to the Supreme Court. 4. None of this suggests that the defendant is in any way ready to put evidence before the court or to cross-examine the defendant. To permit Mr Hovanessian to attempt such a task would amount, in any event, to trial by ambush, particularly since this would include bringing a cross-claim (as yet undrafted), even though the time for filing that claim, foreshadowed in a timetable almost a year ago, has long since expired. 5. The prejudice to the plaintiff if such conduct were permitted would be overwhelming. The application was accordingly refused. The defendant's application to be released from the consequences of the three self-executing orders 1. An application was made by the defendant to set aside the three self-executing orders or to regard these as having no effect: Douglas v John Fairfax & Sons Ltd [1983] 3 NSWLR 126 at 134. 2. Self-executing orders are not set aside lightly. The miscreant party in Douglas v John Fairfax & Sons Ltd only failed to comply with one such order, well in advance of the hearing. In the present case the delay has been extensive and the application is simply brought too late. 3. In refusing this leave I have taken into account the warnings of the Court of Appeal in Mohareb v Kelso [2017] NSWCA 98. The plaintiff in those proceedings repeatedly failed to comply with court orders, including a self-executing order for the filing of all evidence (Mohareb v Kelso [2016] NSWDC 208 at [24]) but then brought an application to amend the statement of claim very substantially and to join new parties. Although dismissing the appeal, Simpson JA (with whom Basten JA agreed) considered that the first instance judge should have taken into account, when determining whether to grant leave to amend, that the plaintiff could simply have commenced a second set of proceedings against the new defendants (who were asserted to be vicariously liable for the existing defendant's conduct) and led the new evidence in the new proceedings, which could be heard at the same time as the existing claim (see also Mohareb v Kelso (No 2) [2017] NSWCA 173 at [21]). These observations were made even though permitting such a course would effectively render the self-executing order made against Mr Mohareb a nullity. 4. However, the entitlement of the defendant to bring further proceedings against the plaintiff in place of the cross-claim it had hoped to bring in these proceedings is just as "double-edged" (Mohareb v Kelso (No 2) at [21]) to the defendant in these proceedings as it was to Mr Mohareb, in that it is also a factor militating against the relief sought (as it was for Mr Mohareb). 5. This is not a case where the party in default can point to the clarity of its pleadings and particulars, or its prior good conduct of the case. The defendant has failed at every step of these proceedings to comply with orders. There can be no basis for the setting aside of so many self-executing orders. The defendant's application to cross-examine the plaintiff 1. For similar reasons, I also refused Mr Hovanessian's request to cross-examine the plaintiff on his affidavit in order to elicit material favourable to the defendant. 2. While ordinarily such a right appears axiomatic (see s 62(4)(d)), s 56 Civil Procedure Act 2005 (NSW) will permit the court to dispense with cross-examination in circumstances of the kind noted in Ritchie's Uniform Civil Procedure (NSW) at [s.62.15] (see also the cases discussed in Chief Executive Officer of Customs v Evenfont [2007] NSWSC 431, where there was a failure to file affidavits). The circumstances of such a refusal would nevertheless have to be exceptional. I also note that courts give special indulgences to litigants in person; in Lee v Cha [2009] NSWCA 13 at [72] – [84] the Court endorsed the right of a litigant in person to cross-examine for five days although he had failed to provide any particulars or discovery. 3. However, this is a defendant whose defence gives no hint of the matters concerning which Mr Hovanessian proposes to cross-examine (cf Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135) and is in repeated breach of self-executing orders. Mr Hovanessian, when asked to give an indication of the kind of material about which he would cross-examine the plaintiff, could not do so. Moreover, in circumstances where the plaintiff had been entitled to assume that he would not be required for cross-examination given the total absence of affidavits in reply, he had not given any notice of his requirement to have the plaintiff attend for cross-examination. In addition, there would be considerable difficulties for evidence rulings; Mr Hovanessian has referred to four witnesses whose evidence he proposes to rely upon, although he was unable to remember the names of two of them and the two he named were not at the relevant meeting; it would be difficult to deal with hearsay or Brown v Dunn issues where the defendant's evidence is of such an unknown quality. 4. There are also problems to the length of the hearing if applications of this sort are permitted "on the run". The defendant considered that, if these proceedings remained in this court, the proceedings could be completed in three days, although this appears an optimistic estimate for commercial proceedings, whether or not there is a cross-claim. Upon being told that even if an adjournment were granted, no trial could be set down until the affidavits and cross-claim were filed and that, even if this occurred in June or July, a three day hearing would be unlikely to obtain a date until 2019, the defendant submitted that the court should try to finish the case in two days, presumably by late sittings, which would impose a burden upon the resources of the court. 5. How long the case might take if Mr Hovanessian were permitted to conduct his case now without affidavits was never elucidated. Given the length of time Mr Hovanessian took with his applications for adjournment, a stay and to give evidence and cross-examine, the likelihood is that, if he had been permitted to conduct his case in this fashion, it would have taken more than the hearing time currently allotted. 6. The reality is that all of the court's case management methods, including self-executing orders and costs, have failed to ensure any form of compliance with the basic rules of fairness upon which litigation must be conducted. The defendant's case before the court was never revealed in the form of a properly drafted defence setting out the issues the plaintiff had to meet, or answers to particulars, or evidence of any kind. No cross-claim has been provided; Mr Hovanessian says it has not yet been drafted. Even the evidence for failure to comply with the timetable, in the form of two affidavits from Mr Hovanessian, is vague in the extreme. It is impossible to place any weight on any of Mr Hovanessian's contradictory and self-serving statements on this or indeed on any issue in these proceedings. 7. As my orders show, I refused the defendant's successive series of applications for adjournment on the basis of the material set out above. Although the applications for adjournment are expressed to be on slightly different grounds (such as, for example, the application that I should stay these proceedings so that the defendant could seek leave to appeal), the same material was relied upon by the defendant for each application. The defendant's method of presentation of these submissions was to continue talking until he was interrupted and to repeat himself many times. This made the resolution of these applications in a timely fashion difficult. 8. Having noted the basis upon which I refused each of the defendant's applications for adjournment, I now turn to a consideration of the issues in dispute. In this part of the judgment, the plaintiff is referred to alternatively as "Mr Qiang", Mr Hovanessian is referred to as "Mr Hovanessian" and the defendant is referred to on occasion as "Raxigi". References to "Ex YQ" are to the documents set out in the bundle of material tendered without objection by the plaintiff. The plaintiff's claim 1. Mr Qiang's claim against the defendant Raxigi is made pursuant to a contractual term that if the defendant did not obtain an identified result (namely, securing for Mr Qiang an 80% shareholding in the ASX-listed company, Mandalong Resources Ltd ("Mandalong")), the monies the plaintiff paid to the defendant would be refunded. The claim brought is one in debt for the sums paid. 2. The circumstances leading to the provision of services by the defendant to the plaintiff were as follows. In May 2015, Mr Qiang retained Ms Sophie Gerber, a solicitor, to act on his behalf in relation to a proposal for him to acquire an 80% shareholding in an ASX-listed company (Ex YQ-1, Tab 5). Ms Gerber had discussions with Mr Hovanessian, the sole director and secretary of Raxigi (Ex YQ-1, Tab 12, pp 63-64), about retaining Raxigi to provide to Mr Qiang corporate advisory/finance services. Mr Qiang wanted an 80% shareholding in an ASX-listed company (Ex YQ-1, Tabs 5-10). In an email dated 6 June 2015, Mr Hovanessian proposed Mandalong as a suitable target. This was a company with which he and family members, including his son, were already associated. 3. On 1 July 2015, Raxigi entered into a formal written agreement with Ms Gerber and Mr Qiang. The engagement and mandate portion of the agreement stated: "Sophie Grace has engaged and mandated VH&A [the defendant] to structure, negotiate and implement all of the steps of a transaction that is in accordance with applicable laws and regulations, ASX Listing Rules and ASX Operating Rules and that secures control of Mandalong for the Client with an approximate 80% shareholding (the Transaction), including the vend-in of an AFSL holder company at the start of the Transaction and the placement of a minimum of One Hundred & Ten (110) million shares at 2.4773 cents/share, for an amount of $2,725,000, in the capital of Mandalong…" 1. The terms and condition of the July 2015 Agreement provided for Raxigi to undertake the following: 1. Organise for Mandalong to acquire a company holding an AFSL (Australian Financial Services Licence) for a sum of no greater than $25,000 – cl (iv); 2. Arrange for share sale agreements to be entered into pursuant to which Mr Qiang (or his nominee) was to acquire 7,023,000 existing shares in Mandalong for the sum of $980,000 (being, approximately, $0.13954 per share) – cl (v). This included arranging and obtaining all shareholder and ASX approval for this sale – cl (x); 3. Arrange for 110 million shares in Mandalong to be placed at a price of $0.024773 per share – cl (vi). This included arranging and obtaining all shareholder and ASX approval for this sale – cl (x); and 4. Arrange for two nominees of Mr Qiang to be appointed directors of Mandalong – cl (vi). 1. Pursuant to clause (v) of the terms encompassing the "Scope of Transactions & Acknowledgements", Raxigi undertook to achieve an 80% shareholding for Mr Qiang (reiterating what had been set out in the mandate section of the agreement). 2. The total cost of acquiring the 80% shareholding was $1.4m, comprising the $980,000 payable to purchase 7,023,000 existing shares in Mandalong and $420,000 (plus GST) payable to Raxigi for its services – see clauses (i), (viii), (ix) and (xiv). That sum of $420,000 (plus GST) was payable in tranches upon the completion of certain milestones. 3. On the same day as the July 2015 Agreement was entered into (i.e. 1 July 2015), Mr Qiang, via Sophie Grace Legal, paid to Raxigi the sum of $154,000 (being the $140,000 plus GST payable on executing the July 2015 Agreement – see cl (i) of the terms and conditions) (Ex YQ-1, Tab 14. SOC at [6], Defence at [6]). This is admitted on the pleadings (SOC at [6], Defence at [6]). 4. Following this, a number of steps pursuant to the July 2015 Agreement were performed/achieved and, on 19 August 2015, Mr Qiang (via Sophie Grace Legal) paid to Raxigi the further sum of $77,000 (being $70,000 plus GST payable pursuant to cl (viii) of the terms and conditions). This is admitted on the pleadings (Defence at [13]). The defendant fails to complete the agreement 1. On 10 September 2015, ASIC wrote to representatives of Raxigi inquiring about the Placement and the Share Sale Agreements, the relationship of the parties, and how the transactions had come about (Ex YQ-1, Tab 28, pp 227-228). It became clear there were intractable problems preventing the progress of the Placement and the Share-Sale Agreements (and, for this reason, the achievement of an 80% shareholding by Mr Qiang in Mandalong). 2. As a result, on 18 September 2015, Mr Hovanessian wrote to Ms Gerber confirming that the notice of meeting submitted by Mandalong to ASIC (informing it of the Placement and the Share-Sale Agreements) had been withdrawn. Mr Hovanessian stated in that email that he would devise a new plan to achieve for Mr Qiang an 80% shareholding in Mandalong. Following this, on 21 September 2015, a meeting was held between Ms Gerber and Mr Hovanessian (amongst others), at which meeting an informal and skeleton agreement was reached regarding the progression of Raxigi's mandate. The October 2015 Agreement 1. On 30 October 2015, Raxigi entered into a formal written agreement with Mr Qiang. The agreement commenced by reciting: "The letter replaces the letter dated on or about 1 July 2015, between VHA and Sophie Grace (the Old Engagement Letter) in its entirety. From the date of this letter, the Old Engagement Letter is of no further force or effect." 1. Like the July 2015 Agreement, the October 2015 Agreement was also expressed to be a legally binding agreement 2. The engagement and mandate portion of the agreement stated the following: "VH&A is mandated to structure, negotiate and implement all of the steps of a transaction that is in accordance with applicable laws and regulations…that secures control of Mandalong for the Client with an approximate 80% shareholding (the Transaction), including the termination of the transaction as set out in the Old Engagement Letter and the placement of One Hundred & Forty Seven (147) million shares at 2.520408 cents/share, for an aggregate sum of $3,705,000 (the Placement)…" 1. The October 2015 Agreement provided for: (a) the Placement to be terminated and to be replaced by a revised replacement concerning 147 million shares at $0.2520408/share, with 109,372,800 shares to be placed with Golden Star and 37,637,200 shares with Chetwin (the Revised Placement); (b) the Share Sale Agreements to be terminated; and (c) the VIMG Share Sale Agreement to be terminated – see cls (iv) and (vi) of the terms and conditions. 2. The October 2015 Agreement set out the fees payable to Raxigi in relation to the above mandate, being $350,000 plus GST, payable in three tranches of $140,000, $70,000 and $140,000 (the last being payable on completion). The October 2015 Agreement then recorded that the first two instalments of Raxigi's fee had already been paid (being $210,000 plus GST – totalling $231,000) and set out a clause of vital importance to these procedures. It provided a time by which the above events (primarily the effecting of the Revised Placement) were required to be accomplished. Clause (ix) of the portion of the agreement setting out acknowledgments and agreements clearly stated this obligation to "refund or repay" as follows: "If all of the events referred to in the Acceptance, Terms and Conditions clauses (ii) to (vii) (inclusive) and (ix) to (xii) (inclusive) do not occur on or before 31 December 2015, then: (A) the parties must, within 10 business days of 31 December 2015, agree on a revised mandate letter in substantially similar terms to replace this Engagement/Mandate letter in relation to a transaction which achieves over 80% ownership by the Client of ASX listed shares in Mandalong (or another listed ASX company) on or before 30 April 2016; or (B) where no revised mandate letter as referred to in sub-paragraph (A) is entered into within 10 business days of 31 December 2015, then VH&A will not be entitled to (and will refund or repay to the client) all fees or amounts paid or payable to or for the benefit of VH&A (or Raxigi Pty Ltd) as referred to in Acceptance, Terms & Conditions clauses (i), (viii) and (xiii), and this Engagement/Mandate letter will be terminated and of no further force or effect." (emphasis added) 1. It is on the basis of this "refund or repay" clause that the plaintiff sues. Events following the October 2015 Agreement 1. As counsel for the plaintiff sets out in his helpful submissions, following the execution of the October 2015 Agreement, some of the matters contemplated by the October 2015 Agreement were accomplished. These were: 1. The Placement was terminated (Ex YQ-1, Tabs 40-42; SOC at [18], Defence at [18]); 2. The Share Sale Agreements were terminated (Ex YQ-1, Tabs 34-38; SOC at [18], Defence at [18]); and 3. The VIMG Share Sale Agreement was terminated (Ex YQ-1, Tabs 39; SOC at [18], Defence at [18]). 1. However, the Revised Placement was not effected, nor were the other matters the subject of the relevant clauses of the October 2015 Agreement. 2. On or before 31 December 2015, the following did not occur (which reflect the events contained in clauses (ii) to (vii) (inclusive) and (ix) to (xii) (inclusive) of the terms and conditions of the October 2015 Agreement): 1. Raxigi did not effect the Revised Placement; 2. Upon completion of the Revised Placement, Raxigi did not procure Mandalong to make an application to the ASX to list the shares issued pursuant to the Revised Placement; 3. Upon completion of the Revised Placement, Raxigi did not procure Mandalong to issue a 'cleansing notice' under s 708A(5)(e) of the Corporations Act 2001 (Cth) to remove any restriction on the shares issued pursuant to the Revised Placement; 4. Within seven days of the issuance of the shares pursuant to the Revised Placement, Raxigi did not procure the resignation of all directors of Mandalong except for Mr Qiang's two nominee directors and Mr Hovanessian; 5. Raxigi did not procure, or cause Mandalong to arrange, an independent expert report to be prepared in respect of the Revised Placement; 6. Raxigi did not prepare, or cause Mandalong to prepare, a notice of shareholder meeting to approve the Revised Placement; 7. Raxigi did not arrange for the notice of shareholder meeting, the expert report and all other necessary documentation to be completed and submitted to ASIC and the ASX; and 8. Raxigi did not arrange for the notice of shareholder meeting, the expert report and all other necessary documentation to be printed and sent to all shareholders of Mandalong (after approval from ASIC and the ASX). 1. Subsequent to 31 December 2015, and not before 15 January 2016 (being 10 business days after 31 December 2015), or at any time subsequently, Raxigi did not enter into any new agreement with Mr Qiang (let alone one meeting the description in the clause set out above). That triggered the "refund or repay" provision which is set out above. What happened next? 1. Although the agreement had come to an end and the plaintiff was entitled to a refund, Mr Hovanessian and the plaintiff continued to try to rescue the transaction in the hope that they could enter into a third agreement. They had a series of meetings from January to May 2016. However, it was made clear to Raxigi and Mr Hovanessian that there was no implied or actual consent to extend any timetable in the existing contract, as the following email from Ms Gerber of 23 January 2016 sets out: "Hi Vaz Where are the questions? We are concerned that you will not be able to meet the timetable set out in the mandate if you don't get the questions to us immediately. As Chet already mentioned, there is no implied or actual consent that has been granted to you to extend any timetable set out in the mandate. We also do not want to re-open discussions about the mandate, so please send the questions ASAP. Kind Regards Sophie" (Exhibit A, tab 46) 1. Mr Qiang has set all of this material out in his affidavit and, as I already noted, there is no affidavit material in reply. He describes these events in paragraphs 44 and 45 as follows: "44. During this time, I was still prepared to listen to Mr Hovanessian and proposals he had regarding MDD. However, I did not enter into any agreement with the defendant post 31 December 2015, nor at any time did I waive, or indicate that I waived, my rights under the 30 October 2015 Agreement. 45. In or around May 2016, I met with Mr Hovanessian and also had discussions with him regarding the proposed acquisition of an 80% interest in MDD and the defendant's previous mandate letters. On 30 May 2016, Mr Hovanessian sent me an email regarding a supposed "oral agreement" that had been reached at a meeting on 25 May 2016. This email and its attachment appears at Tab 44. In response to this communication, I say as follows: (a) on 25 May 2016 I met with Mr Hovanessian, along with Mr Colin Oi of Concisus Legal (at this time I had neither instructed Concisus Legal to act for me nor briefed Mr Oi about the dispute); (b) No agreement was reached at the meeting on 25 May 2016. Instead, at the meeting, I had words with Mr Hovanessian in words to the following effect: I said: Vaz, the deal is not going ahead. You have to pay me the $210,000. He said: That's not possible. I have done the work for you, and my people have to be paid too. I said: But that's not what we agreed on (in the 30 October 2015 Agreement). You can't keep changing what you say. He said: It's not my fault that the new rules have made it more difficult, but what I will do is put together a new proposal to get you your company. I said: It's been such a long time already, I just want my money back. He said: I cannot do that. I said: Fine, send me your proposal tomorrow. He said: Tomorrow is too tight. I said: This Friday then. He said: Alright. I said: If I don't hear from you on Friday, I will tell Sophie to start the legal process to get my money back. At that same time, I made a note on the note pad I had with me, which now appears at Tab 45. I did not hear from Mr Hovanessian on Friday 27 May 2016. (c) Upon receipt of Mr Hovanessian's email of 1 June 2016, I responded by email of 2 June 2016, which email appears at Tab 46. In that email, I stated to Mr Hovanessian that "this is not we agreed." I used these words in direct response to Mr Hovanessian's email where he stated "...as agreed to verbally." There was no agreement on 25 May 2016 at all." 1. One of the witnesses who Mr Hovanessian had claimed was at the meeting in question was Ms Gerber. As Mr Qiang's email at tab 46 makes clear, Mr Gerber was not merely somewhere else, but was unavailable to be contacted by Mr Qiang, and could not have played any part in this meeting. Nor did Mr Wood, the other person identified by Mr Hovanessian in the course of his submissions for an adjournment, attend. It is not to the credit of Mr Hovanessian that he asserted in his applications for an adjournment that these persons would, if asked, give evidence about what occurred at the meeting in which the plaintiff agreed to vary or nullify the October 2015 agreement. 2. In August 2016, the plaintiff's solicitors sent a letter of demand for the total sum of $231,000. No reply was received and the plaintiff then commenced these proceedings. 3. As the action is one in debt, once the existence of the debt is proven, the onus is on Raxigi to prove that the debt has been repaid or discharged: Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 569-570; Muirhead v Commonwealth Bank of Australia [1997] 1 Qd R 567 at 577 ("Once an indebtedness is established, it is for the defendant to plead and prove it has been discharged"). 4. Raxigi has not filed any evidence. The evidence of the plaintiff is to the contrary, and supported by contemporaneous documentation. The defendant's onus has not been discharged. 5. Mr Qiang is entitled to judgment against Raxigi in the amount of $231,000, plus interest pursuant to s 100 of the Civil Procedure Act 2005. As at 27 March 2018, the interest that has accrued at court rates on the sum of $231,000 since 15 January 2016 (being when the monies became payable by Raxigi to Mr Qiang) is $28,738.02, which sum is calculated as follows: Start Date End Date Days Rate Amount Per Day Total 15 Jan 2016 30 Jun 2016 168 6% $37.8689 $6,361.97 1 Jul 2016 31 Dec 2016 184 5.75% $36.2910 $6,677.54 1 Jan 2017 30 Jun 2017 181 5.5% $34.8082 $6,300.29 1 Jul 2017 31 Dec 2017 184 5.5% $34.8082 $6,404.71 1 Jan 2018 27 Mar 2018 86 5.5% $34.8082 $2,993.51 Total 803 $28,738.02 1. I set out below the orders for judgment and for costs, which must follow the event, but for which I have granted liberty to apply. 2. Additionally to these orders, I note the difficulties the plaintiff has incurred in the course of seeking case management orders to compel the defendant to comply with timetables despite an escalating series of self-executing and costs orders. Whether that is usual conduct by parties in this court, or indicative of the need for a Commercial List or some other form of oversight, is not an issue I need to be concerned with for the purposes of this judgment, although this conduct may be relevant as to costs, which is one of the reasons for my granting the leave referred to in the costs order. Orders 1. Judgment for the plaintiff against the defendant in the amount of $259,738.02, comprising the principal sum of $231,000.00 plus interest of $28,738.02 pursuant to s 100 of the Civil Procedure Act 2005 (NSW). 2. Defendant pay the plaintiff's costs of the proceedings as agreed or assessed, with liberty to apply. 3. Exhibits retained for 28 days. ********** 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: 11 April 2018