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Bai v Lightspeed Finance Pty Ltd

Bai v Lightspeed Finance Pty Ltd

Case [2022] VSCA 242 10 November 2022

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2021 0113

JUNPING BAI	Applicant
v
LIGHTSPEED FINANCE PTY LTD	Respondent

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JUDGES:	EMERTON P, SIFRIS and WALKER JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	12 July 2022
DATE OF JUDGMENT:	10 November 2022
MEDIUM NEUTRAL CITATION:	[2022] VSCA 242
JUDGMENT APPEALED FROM:	[2021] VSC 543 (Riordan J)

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CONTRACT – Formation – Whether subsequent agreement superseded earlier agreement to which lender was not a party – Whether implied agreement to terminate earlier agreement – Subsequent agreement and earlier agreement inconsistent – Implied agreement to terminate earlier agreement – Leave to appeal refused.

Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499, Taylor v Johnson (1983) 151 CLR 422, Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd) [2008] NSWCA 149, Queensland Phosphate Pty Ltd v Korda (as joint and several liquidators of Legend International Holdings Inc (in liq)) [2017] VSCA 269, Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, PRA Electrical Pty Ltd v Perseverance Exploration Pty Ltd (2007) 20 VR 487, discussed.

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Counsel
Applicant:		Dr G Griffith KC and Mr M Gronow KC with Mr P Donovan
Respondent:		Mr JD McKay with Mr C Dobbs
Solicitors
Applicant:	Roberts Gray Lawyers
Respondent:	E C Legal

EMERTON P
SIFRIS JA
WALKER JA:

Introduction

The critical issue in this application for leave to appeal, as it was at trial, is whether an agreement made in August 2017 for the provision of finance (‘Funder Agreement’) replaced or superseded an agreement made earlier in time for the provision of finance that took the form of a deed of loan (‘Deed of Loan’).
The Deed of Loan was an agreement made in March 2017 between the applicant, Mr Junping Bai, as lender, and the respondent, Lightspeed Finance Pty Ltd,[1] as borrower. Under the Deed of Loan, Mr Bai lent Lightspeed $1,500,000 for the express purpose of that sum being on-lent to 462 Victoria Parade Pty Ltd (‘Victoria Parade’). In accordance with that agreement, Lightspeed entered into a separate loan agreement with Victoria Parade for the sum of $1,500,000 (‘Victoria Parade Loan’).
[1]Lightspeed Finance Pty Ltd is referred to in this judgment both as ‘Lightspeed’ and ‘LSF’.
It transpired that both Mr Bai and Lightspeed wished to depart from the terms that had been agreed in the Deed of Loan. Mr Bai wished to alter the arrangement so that a company he controlled — Haide Holdings Ltd (‘Haide’) — was the lender, instead of Mr Bai personally. Lightspeed wished to ensure that it was not the borrower of money from Mr Bai (or Haide); rather, it wished to ensure that it was a mortgage manager that would act as an intermediary to procure and manage loans made by Haide directly to third parties.
In August 2017, after considerable correspondence and negotiation, Haide and Lightspeed entered into the Funder Agreement, which identified Haide as the funder (ie the lender…

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 Bai v Lightspeed Finance Pty Ltd

Details

AGLC: Bai v Lightspeed Finance Pty Ltd [2022] VSCA 242
Case: [2022] VSCA 242
Decision Date: 10 November 2022

CaseChat Overview and Summary

In Bai v Lightspeed Finance Pty Ltd, the dispute involved a question of contract formation and the effect of a subsequent agreement on an earlier one. The court was required to determine whether a subsequent agreement between the borrower and the lender effectively superseded an earlier agreement to which the lender was not a party. Furthermore, the court had to ascertain if an implied agreement to terminate the earlier agreement existed due to the inconsistency between the two agreements.

The legal issues before the court centred on the principles of contract formation and the effect of subsequent agreements. Specifically, the court needed to address whether the subsequent agreement constituted a novation, an implied termination of the earlier agreement, or merely an amendment. The court considered whether the lender's participation in the subsequent agreement was sufficient to imply a termination of the earlier agreement, given the inconsistency between the two. Relevant case law, including Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd, Taylor v Johnson, Sagacious Procurement Pty Ltd v Symbion Health Ltd, Queensland Phosphate Pty Ltd v Korda, Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd, and PRA Electrical Pty Ltd v Perseverance Exploration Pty Ltd, was discussed to inform the court's decision.

The court found that the subsequent agreement did not constitute a novation because the lender was not a party to the original agreement. However, the court held that an implied agreement to terminate the earlier agreement existed due to the inconsistency between the two agreements. The court reasoned that the lender's involvement in the subsequent agreement, coupled with the inconsistency, implied an intention to terminate the earlier agreement. Consequently, the court dismissed the borrower's claim based on the earlier agreement. The borrower's application for leave to appeal was subsequently refused.

Orders