Cai v Tsang (No 2) - [2018] NSWSC 1860

Supreme Court

New South Wales

Medium Neutral Citation: Cai v Tsang (No 2) [2018] NSWSC 1860
Hearing dates: 3 December 2018
Date of orders: 03 December 2018
Decision date: 04 December 2018
Jurisdiction: Common Law
Before: Fagan J
Decision:
(1) Judgment for the plaintiff against the defendant in the sum of $4,289,593.60.
(2) The defendant is to pay the plaintiff’s costs of the proceedings.

Catchwords:
CONTRACTS – construction – context – plaintiff lender to company over which defendant was director – where contract included personal guarantee by defendant – where contract also included undertakings by company to procure unregistered mortgages over properties owned by defendant’s wife and daughter-in-law – where defendant’s wife and daughter-in-law not parties to loan agreement – whether procurement of unregistered mortgages condition precedent to personal guarantee – no condition precedent in contract as construed – judgment for plaintiff
GUARANTEE AND INDEMNITY – contract of guarantee – co-guarantors – where loan agreement included undertakings by debtor company to procure unregistered mortgages over properties owned by director defendant’s wife and daughter-in-law – whether wife and daughter-in-law co-guarantors – whether liability of defendant as personal guarantor excluded by non-signature of alleged co-guarantors to loan agreement and/or failure to procure unregistered mortgages over alleged co-guarantors’ property
Legislation Cited: Contracts Review Act 1980 (NSW)
Conveyancing Act 1919 (NSW)
Corporations Act 2001 (Cth)
Migration Regulations 1994 (Cth)
Cases Cited: CARS Pty Ltd v Brent [2015] TASSC 23
James Graham and Co (Timber) Ltd v Southgate-Sands [1986] QB 80
Keith Murphy Pty Ltd v Custom Credit Corporation Limited (1992) 6 WAR 332
Marston v Charles H Griffith & Co Pty Ltd (1982) 3 NSWLR 294
Re Farm Pride Foods Ltd [1999] QSC 174
Taubmans Pty Ltd v Loakes [1991] 2 Qd R 109
Texts Cited: David Marks and Gabriel Moss, Rowlatt on Principal and Surety (4th ed, 1982, Sweet and Maxwell)
Category: Principal judgment
Parties: Weiming Cai (plaintiff)
Andrew Tsang (defendant)
Representation:
Counsel:
R Gration (plaintiff)
J Cameron, solicitor (defendant)
Solicitors:
Jurisbridge Legal (plaintiff)
Johninfo Lawyers (defendant)

File Number(s): 2017/312707
Publication restriction: No

Judgment

In this action the plaintiff claims an amount of $4,289,593.60 for which the defendant is alleged to be liable as guarantor of a loan from the plaintiff to the defendant’s company, Xiang Rong (Australia) Investment Group Pty Ltd (“the company”). The defendant’s liability is said to arise under a written agreement entitled “Loan Agreement and Deed of Guarantee and Indemnity” made on 20 March 2015 (“the Loan Agreement”). The parties to the Agreement were the plaintiff as lender, the company as borrower and the defendant as guarantor. There is no dispute that the Loan Agreement was executed by these parties on 20 March 2015. The defendant however contends that the Agreement provided for third-party mortgage security to be given in favour of the plaintiff and that as this security was not forthcoming he is relieved of liability.
The debt claimed by the plaintiff comprises principal of $3.5 million and interest of $789,593.60. Most of the interest consists of overdue…

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 Cai v Tsang (No 2)

Details

AGLC: Cai v Tsang (No 2) [2018] NSWSC 1860
Case: [2018] NSWSC 1860
Decision Date: 04 December 2018

CaseChat Overview and Summary

In Cai v Tsang (No 2), the Federal Court was tasked with determining the enforceability of a personal guarantee provided by a director of a company, Tsang, who had borrowed funds from the plaintiff, Cai. The dispute centred around the terms of a loan agreement, which included a personal guarantee by Tsang and undertakings by the company to secure unregistered mortgages over properties owned by Tsang’s wife and daughter-in-law. These properties were not the subject of the loan agreement and neither Tsang’s wife nor his daughter-in-law were parties to the agreement.

The court was required to decide whether the procurement of unregistered mortgages over the properties owned by Tsang’s wife and daughter-in-law was a condition precedent to the enforceability of Tsang’s personal guarantee. Additionally, it had to determine if Tsang’s wife and daughter-in-law could be considered co-guarantors of the loan and whether Tsang’s liability as a personal guarantor was affected by the non-signature of these alleged co-guarantors to the loan agreement or the failure to procure unregistered mortgages over their properties.

The court found that the contract did not include a condition precedent that required the procurement of unregistered mortgages over the properties in question before Tsang’s personal guarantee became effective. The court also held that Tsang’s wife and daughter-in-law were not co-guarantors and that Tsang’s liability as a personal guarantor was not affected by their non-signature or the failure to procure unregistered mortgages. Consequently, the court ruled in favour of the plaintiff, Cai, and held that the personal guarantee provided by Tsang was enforceable.

As a result of the court’s decision, judgment was entered in favour of Cai, the lender, against Tsang, the guarantor. The court ordered Tsang to honour the personal guarantee and meet the obligations under the loan agreement.

Orders