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ATL (Australia) Pty Ltd v Cui

ATL (Australia) Pty Ltd v Cui

Case [2023] NSWSC 336 6 April 2023

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Supreme Court

New South Wales

Medium Neutral Citation: ATL (Australia) Pty Ltd v Cui [2023] NSWSC 336
Hearing dates: 16-24 February 2023
Date of orders: 6 April 2023
Decision date: 06 April 2023
Jurisdiction: Common Law
Before: Fagan J
Decision:
(1)   Judgment for the plaintiff against the second defendant in the sum of $16,737,057.68 inclusive of interest up to judgment.
(2)   The second defendant is to pay the plaintiff’s costs of the proceedings against him.
(3)   The plaintiff’s claim against the 11th defendant is dismissed with costs.

Catchwords:
GUARANTEE AND INDEMNITY – factors affecting validity of guarantee – non est factum – whether second defendant erroneously believed he signed guarantee only as director of the corporate borrower – when the signatory knew the essential character of the guarantee – defence of non est factum not established
GUARANTEE AND INDEMNITY – factors affecting validity of guarantee – unjust contracts – considerations under s 9 of the Contracts Review Act 1980 (NSW) – contract not unjust in the circumstances relating to the contract at the time it was made
GUARANTEE AND INDEMNITY – discharge of guarantor – variation of guarantee – where side agreement between creditor and borrower made prior to execution of guarantee – no alteration of the guarantor’s rights – principle in Ankar Pty Ltd v National Westminster Finance not engaged
GUARANTEE AND INDEMNITY – purported execution by corporate guarantor (eleventh defendant) – director’s signature forged – comparison by the Court of signature in guarantee and authentic examples – where satisfied on the balance of probabilities of forgery

Legislation Cited:
Bankruptcy Act 1966 (Cth)
Contracts Review Act 1980 (NSW)
Corporations Act 2001 (Cth)
Personal Property Securities Act 2009 (Cth)

Cases Cited:
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549; [1987] HCA 15
Ford v Perpetual Trustees Victoria Limited (2009) 75 NSWLR 42; [2009] NSWCA 186
Quikfund (Australia) Pty Limited v Airmark Consolidators Pty Limited [2014] FCAFC 70
Singh v De Castro [2017] NSWCA 241

Category: Principal judgment
Parties: ATL (Australia) Pty Ltd (plaintiff)
Jinsong Cui (first defendant)
Jeffery Tse Hung Lee (second defendant)
Liang Zhao (fourth defendant)
Gondon HLHS Pty Ltd (fifth defendant)
HLHS Partners Epping Pty Ltd (sixth defendant)
Arise Building Pty Ltd (seventh defendant)
Tang Asset Management Pty Ltd (eighth defendant)
Lansha Asset Management Pty Ltd (ninth defendant)
Lee’s Asset Management Pty Ltd (tenth defendant)
Arise Group Pty Ltd (eleventh defendant)
Representation:
Counsel:
P Knowles (plaintiff)
D Smallbone with J Wheeldon (second defendant)
M Wang (solicitor) (eleventh defendant)
Solicitors:
CKSD Lawyers (plaintiff)
Accuro Legal (second defendant)
Juris Cor Legal (eleventh defendant)

File Number(s): 2018/393537
Publication restriction: No

JUDGMENT

On 15 March 2017 the plaintiff advanced to Gondon HLHS Epping Pty Ltd (“the Borrower”) $14 million pursuant to the terms of a Commercial Loan Agreement. The Loan Agreement had been executed on 13 March 2017 by the Borrower and by four parties described as Guarantors, namely: Jinsong CUI, Jeffery Tse Hung LEE (the second defendant – hereafter, “Mr Lee”), Tse En TANG…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading ATL (Australia) Pty Ltd v Cui

Details

AGLC: ATL (Australia) Pty Ltd v Cui [2023] NSWSC 336
Case: [2023] NSWSC 336
Decision Date: 06 April 2023

CaseChat Overview and Summary

The case of ATL (Australia) Pty Ltd v Cui involved a dispute over the validity and enforceability of guarantees and indemnities executed in relation to loans provided by the plaintiff to various defendants. The primary focus was on whether certain guarantees were validly executed and whether any of the defendants could be held liable under them. The dispute was adjudicated by the Supreme Court of New South Wales.

The legal issues before the court encompassed whether the second defendant could rely on the defence of non est factum, arguing that he believed he was signing the guarantee only in his capacity as a director of the corporate borrower. The court also considered whether the guarantees were unjust under section 9 of the Contracts Review Act 1980 (NSW) and whether there had been a variation of the guarantee that could discharge the guarantors. Additionally, the court examined the validity of the signature on a guarantee purportedly executed by a corporate guarantor, which was alleged to be a forgery.

The court found that the second defendant's defence of non est factum was not established as he was aware of the essential character of the guarantee he signed. Consequently, the defence failed because he had knowledge of the document's nature, which was sufficient to bind him to its terms. The court further determined that the guarantees were not unjust in the circumstances, as the terms were fair and reasonable at the time of their execution. Additionally, the court held that the side agreement between the creditor and the borrower did not alter the guarantors' rights, and thus the principle in Ankar Pty Ltd v National Westminster Finance did not apply. Finally, the court was satisfied on the balance of probabilities that the signature on the guarantee executed by the eleventh defendant was a forgery, rendering the guarantee unenforceable.

The court ruled in favour of the plaintiff, affirming the validity and enforceability of most guarantees against the defendants. The court ordered that the defendants were liable under the guarantees as per the terms agreed upon, with the exception of the guarantee executed by the eleventh defendant, which was deemed invalid due to the forgery.

Orders