Bi v Touvanna

Bi v Touvanna was a case heard in the Supreme Court of Victoria where the plaintiff, Bi, sought to amend his statement of claim against the defendants, Touvanna and Crefly. The dispute centred around the validity of a guarantee provided by the directors of Crefly, Xiaolong Zhang and Zhao, in relation to a contract of sale. The Touvannas argued that the nomination of Crefly as the purchaser under the contract did not constitute a novation, rendering the directors' guarantee invalid.

The primary legal issue before the court was whether the nomination of Crefly as the purchaser under the contract of sale resulted in a novation, thereby making Crefly's directors liable under the guarantee. The court examined the terms of the nomination clause in the contract, the guarantee document, and relevant case law to determine the effect of the nomination on the obligations of the parties. The court also considered the applicability of Rule 23.01 and Rule 36.01 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) in relation to the dismissal of frivolous or vexatious claims and the amendment of pleadings respectively.

The court found that the nomination of Crefly did not result in a novation, and therefore, the directors' guarantee was not valid. The court relied on the precedent set in Avzur Hotels Pty Ltd v Ivanhoe Entertainment Pty Ltd, where it was held that a nomination clause would only have the effect of making the nominee a substitute purchaser if it clearly provided for such an outcome. In this case, the nomination clause did not clearly state that Crefly would become a substitute purchaser, and thus, the directors' guarantee was not enforceable. The court also noted that the claim was not frivolous or vexatious as it was supported by an evidentiary basis, and therefore, leave to amend the statement of claim was granted.

The court allowed the plaintiff's application to amend the statement of claim, enabling him to pursue his claim against the appropriate parties. The court dismissed the Touvannas’ application to strike out the claim, and the case proceeded to trial with the amended statement of claim.