Supreme Court New South Wales Medium Neutral Citation: Dentown Pty Limited v PWI Group Pty Limited as trustee of Australia No 1 Group Trust (No 2) [2020] NSWSC 518 Hearing dates: 8 May 2020 Date of orders: 08 May 2020 Decision date: 08 May 2020 Jurisdiction: Equity - Corporations List Before: Rees J Decision: (1) Leave to discontinue against defendants who have declared bankruptcy, with no order as to those defendants' costs. (2) Order fourth and fifth defendants to pay second plaintiff $1,322,611.59 for unpaid commissions and interest of $226,854. (3) Indemnity costs from 14 July 2017 based on rejection of Calderbank offer. Catchwords: Judgments earlier entered against defendants for varying amounts, with quantum of unpaid commissions to be determined – in the meantime, defendants divest themselves of assets and declare bankruptcy – judgment entered against corporate defendants for unpaid commissions – indemnity costs order made Legislation Cited: Bankruptcy Act 1966 (Cth), s 58 Cases Cited: Dentown Pty Ltd v PWI Group Pty Ltd as trustee of The Australia No. 1 Group Trust (2019) 141 ACSR 330; [2019] NSWSC 1032 Category: Consequential orders (other than Costs) Parties: Dentown Pty Ltd ACN 138 476 141 (First Plaintiff) Desheng Wang (Second Plaintiff) PWI Group Pty Ltd ACN 600 452 739 as trustee of The Australia No. 1 Group Trust (First Defendant Ji Wang (Second Defendant) Chao Nie (Third Defendant) The DRT Group Pty Ltd ACN 149 277 047 (Fourth Defendant) NYL Partners Pty Ltd ACN 166 902 745 (Fifth Defendant) Prospect Wealth Investment Pty Ltd ACN 155 528 171 (Sixth Defendant) J&L Realty Pty Ltd ACN 620 752 687 (Seventh Defendant) Lan Chen (Eighth Defendant) Yilin Liu (Ninth Defendant) Representation: Counsel: Mr S Burchett (Plaintiffs) Solicitors: Juris Cor Legal (Plaintiffs) Mr Y Sukari of Kammoun Sukari Lawyers Pty Ltd (Trustee of the Bankrupt Estate of the Second Defendant) File Number(s): 2016/120476 ex tempore Judgment 1. HER HONOUR: This matter is listed for hearing today to fix an amount for unpaid commissions to be paid to the second plaintiff, Deshang (Jason) Wang, following my judgment on 15 August 2019, being the task described in Dentown Pty Ltd v PWI Group Pty Ltd as trustee of The Australia No. 1 Group Trust (2019) 141 ACSR 330; [2019] NSWSC 1032 at [310]-[311]. 2. Given recent events, it is timely to record that these proceedings began in 2016 in the Expedition List. As I noted in Dentown at [3], the matter was first listed for final hearing in August 2016, vacated and listed for hearing again in March 2018, vacated and listed for hearing again in April 2018 and vacated for a fourth time before I heard the matter in October 2018. Although the hearing concluded on 9 November 2018, the defendants' submissions were not received until 31 January 2019 after a series of extensions and the matter being re-listed by the Court. Given the height, depth and scale of those submissions, submissions in reply were received in March 2019 and delivery of my judgment was been substantially delayed. In the result, the plaintiffs succeeded and I ordered inter alia: 1. (Loans to joint venture) Judgment for the plaintiffs against the second to fifth defendants in the amount of $29,962. 2. (Personal loan to James) Judgment in favour of the second plaintiff against the second defendant in the amount of $279,480. 3. (Personal loan to Henry) Judgment in favour of the second plaintiff against the third defendant in the amount of $187,795. 4. (First payment under separation agreement) Judgment in favour of the plaintiffs against the second to fifth defendants in the amount of $214,725. 5. (Second payment under separation agreement) Judgment in favour of the plaintiffs against the second to fifth defendants in the amount of $308,846. 1. The only part of the plaintiffs' claim which failed was a claim by Jason that monies lent by him to the second defendant, Ji (James) Wang, and to the third defendant, Chao (Henry) Nie were secured over the real property purchased by James and Henry using those monies, and over which Jason had lodged a caveat. Having failed in that respect alone, James and Henry have since move with speed, in Henry's case, to sell the property and, in James' case, to transfer the property to his wife pursuant to a Binding Financial Agreement under the Family Law Act 1975 (Cth). It is timely to repeat my findings in respect of the credibility of James and Henry. In Dentown at [24]-[28], [127] and [276], I found that both were unsatisfactory witnesses who would say whatever they thought would help their case, whether it was true or not. 2. Since Dentown, the defendants have paid none of the amounts ordered to be paid. The plaintiffs have been engaged in the obviously frustrating task of attempting to enforce those orders whilst James and Henry have off-loaded their property in the manner described. It is apparent from the Court file that the plaintiffs have been put to a great deal of time and cost in endeavouring to enforce the orders which I made, but with no success. 3. As to the progress of this matter in terms of determining unpaid commissions, on 6 September 2019 the matter came before the Court for directions. The defendants' counsel appeared as a courtesy to the Court, his instructions and those of his instructing solicitors having been withdrawn. The matter was stood over to 13 September 2019. On 13 September 2019, James appeared in person and requested time to retain a new lawyer. I stood the matter over to 4 October 2019. On 4 October 2019, James appeared again and advised he was still in the process of retaining legal representation. I listed the matter for hearing on 28 February 2020, which was thought to be ample time to enable James to obtain legal representation if he wished to do so. 4. On 25 February 2020, Jason swore an affidavit setting out his calculations of unpaid commission, supported by eight volumes of documents. 5. On 28 February 2020, there was no appearance for Henry or James. Unfortunately, it was necessary to vacate the hearing and re-list the matter for hearing today as the plaintiffs had been so absorbed in their efforts to enforce the orders that they had left preparation of Jason's affidavit rather too late and it was necessary to adjourn the matter to give the defendants time to consider his evidence. At that time, only Henry was participating in the proceedings. An affidavit from the plaintiffs' solicitor, Xiaodan Cui, sworn in support of the application to adjourn the hearing recorded that James was evading service and the sheriff expressed a belief that James had fled to China. Emails to James' email account bounced back. I acceded to the plaintiffs' application to adjourn the hearing and re-listed the matter for hearing on 8 May 2020 but indicated that I would bring the hearing forward if an earlier hearing date became available. 6. On 10 March 2020, Henry became bankrupt on his own petition. 7. On 20 March 2020, my Chambers sent an email to the parties including James advising that an earlier hearing date had become available and proposing to re-list the matter before 8 May 2020. On 23 March 2020, the plaintiffs' counsel advised my Chambers that Henry had declared bankruptcy and sought that the remaining orders be made on the papers as James was no longer participating in the proceedings either. My Chambers advised the plaintiffs the same day that I was content to proceed in that manner and invited the plaintiffs to submit proposed short minutes of order and an explanatory note of Jason's affidavit and compendious exhibit to enable me to review the material in Chambers. On 24 March 2020, the plaintiffs' counsel sent an email to my Chambers agreeing to that course and proposing to submit the material requested early the following week. 8. On 27 March 2020, the plaintiffs' counsel provided my Chambers with proposed short minutes of order and an explanatory note for my consideration. The same day, my Chambers also received an email from James, saying that he had been sick, physically and mentally, and struggling to recover; that he had problems with his email address; that he was very confused and concerned but wanted to cooperate. James provided a new email address. My Chambers sent an email to James and the parties setting out the orders which had been made since he last appeared in the matter, subsequent emails which had been exchanged with the parties, and informed him that the matter was listed for hearing today. 9. On 31 March 2020, my Chambers sent an email to James advising him that he needed to file a Notice of Appearance and make arrangements to be served with the plaintiffs' evidence, and to inform my Chambers whether he wished to file any evidence or make any submissions in respect of unpaid commissions. 10. On 1 April 2020, my Chambers received an email from James saying that he wasn't well, didn't understand or agree with the plaintiffs' calculations of unpaid commissions and was unable to complete the Notice of Appearance form. My Chambers replied to James advising that I was prepared to dispense with the requirement to file a Notice of Appearance if James provided his address, a telephone number and advised whether he agreed to being served by email. Further, James was asked to advise whether he wished to file evidence or submissions in respect of unpaid commissions. James was also informed that he needed to supply the Court with medical evidence if he sought any further adjournment of the proceedings by reason of his health. 11. On 3 April 2020, James provided an address and telephone number and confirmed that he agreed to be served by email. He again referred to medical issues and said he wanted to put on evidence. My Chambers replied to the parties requiring the plaintiffs to provide James with a hardcopy of the plaintiffs' evidence and also set out proposed orders in respect of service of that material together with timeframes for James to put on any evidence and submissions. My Chambers enquired of the parties whether they agreed with those proposed orders or suggested other orders. The plaintiffs agreed but James did not respond. 12. On 7 April 2020, after initial difficulties, the plaintiffs served a hardcopy of the plaintiffs' evidence on James. On 8 April 2020, I made orders in Chambers for James and his company, the fourth defendant, The DRT Group Pty Ltd, to file and serve any affidavits or written submissions in respect of unpaid commissions by 24 April 2020. 13. On 24 April 2020, no evidence or submissions were filed by James. Instead, James was declared bankrupt on his own petition. James did not inform his trustee in bankruptcy, Danny Vrkic of DV Recovery Management, of these proceedings or the pending hearing today. 14. On 7 May 2020, the plaintiffs' solicitors sent an email to James noting that he had not filed any affidavits or submissions and asking if he would be attending the hearing today or would otherwise agree for the matter to be determined on the papers. That email was sent at 10.43 am yesterday. At 9.42 pm last night, DV Recovery Management sent an email to my Chambers and the plaintiffs' solicitors advising that James had become bankrupt and seeking a further adjournment of four weeks today. 15. This morning, the plaintiffs appeared and Mr Sukari appeared for the trustee in bankruptcy. It is agreed that, by operation of section 58 of the Bankruptcy Act 1966 (Cth), that these proceedings against James are stayed. The plaintiffs wish to discontinue these proceedings against James and Henry to avoid the plaintiffs being put to any further cost in respect of those defendants. I accede to the plaintiffs' request and note that the plaintiffs are not liable to pay the defendants' costs by reason of that discontinuance. 16. In respect of the unpaid commissions which the plaintiffs seek against the remaining corporate defendants, being The DRT Group Pty Ltd and NYL Partners Pty Ltd, Jason has made an admiral effort to quantify unpaid commissions. I have reviewed his affidavit and supporting documents and see no reason to depart from Jason's calculations. I am satisfied on the basis of the plaintiffs' evidence that the unpaid commissions amount to $1,322,611.59. Jason is entitled to judgment in that amount together with interest. James and Henry are also liable to Jason for unpaid commissions, indeed, primarily liable. But for their bankruptcies, judgment would also be entered against them in the same amounts. 17. In addition, the plaintiffs seek indemnity costs of the proceedings by reason of a Calderbank letter dated 14 July 2017. In that letter, the plaintiffs offered to accept $1,805,680 in settlement of the plaintiffs' claims. Self-evidently, that offer was not accepted and the plaintiffs have since obtained judgment in a far greater sum. I consider that the defendants' refusal to accept the Calderbank offer was unreasonable and the plaintiffs are entitled to their costs of these proceedings on an indemnity basis from 14 July 2017. 18. I note that the plaintiffs will now need to submit proofs of debt to the trustees in bankruptcy of James and Henry and I wish them well. 19. I make the following orders: 1. Grant leave to the plaintiffs to discontinue the proceedings against the second defendant, Ji Wang, and the third defendant, Chao Nie, without prejudice to any rights of the plaintiffs on the claims made against them and with no liability for the second and third defendants' costs (noting that they remain liable for the plaintiffs' costs under previous orders of the Court). 2. Dispense with the need for the plaintiffs to file a Notice of Discontinuance and note that the plaintiffs have discontinued the proceedings against the second and third defendant pursuant to the leave granted. 3. Order the fourth and fifth defendants to pay the second plaintiff: 1. the amount of $1,322,611.59, being his share of commissions on sales made by the joint venture to 29 February 2016 and completed by then or thereafter and owing pursuant to the Separation Agreement, less deductions, and 2. interest pursuant to section 100 of Civil Procedure Act 2005 on that amount from 1 March 2017 in the amount of $226,854. 1. Order the first and second plaintiffs, upon receipt of the monies payable under the Court's judgment and orders of 15 August 2019 ["the Principal Judgment"] and under these orders, to transfer: 1. the shares held by the Second Plaintiff in PWI Group, and 2. the units held by the First Plaintiff in Australia No 1 Group Trust, to the trustee of the bankrupt estate of the second defendant and to the trustee of the bankrupt estate of the third defendant or as they direct. 1. Order the fourth and fifth defendants to pay any additional costs of the plaintiffs in the proceedings not covered by the orders made in the Principal Judgment, if any. 2. Order that the costs payable by the fourth and fifth defendants be assessed on the indemnity basis from 14 July 2017. 3. Note, that the proceedings are now complete. ********** 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: 08 May 2020