Deborah Lee Shenton and Stephen John Thorpe as Executor of the Estate of Kevin Owen Robson v Lung - [2023] WASC 454

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   DEBORAH LEE SHENTON AND STEPHEN JOHN THORPE as Executor of the Estate of KEVIN OWEN ROBSON -v- LUNG [2023] WASC 454
CORAM:   LEMONIS J
HEARD:   16 NOVEMBER 2023
DELIVERED          :   16 NOVEMBER 2023
PUBLISHED           :   28 NOVEMBER 2023
FILE NO/S:   CIV 1199 of 2023
BETWEEN:   DEBORAH LEE SHENTON AND STEPHEN JOHN THORPE as Executor of the Estate of KEVIN OWEN ROBSON
Plaintiff

AND

TIMOTHY LUNG
Defendant

Catchwords:

Application for summary judgment - Loan agreement between plaintiff and defendant - Judgment sought pursuant to loan agreement

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Judgment granted

Category: B

Representation:

Counsel:

Plaintiff	:	P D C Robinson
Defendant	:	No appearance

Solicitors:

Plaintiff	:	Williams + Hughes
Defendant	:	No appearance

Case(s) referred to in decision(s):

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14
ZYX (pseudonym initials) v Cable [No 5] [2023] WADC 61

LEMONIS J:

(These reasons were delivered orally on 16 November 2023. They have been amended to modify matters of language and to include full citations).

The plaintiffs in these proceedings are the executors of the estate of Mr Kevin Owen Robson. The proceedings relate to a written loan agreement said to be made between Mr Robson and the defendant, Mr Lung, on 20 April 2019. The plaintiffs apply for summary judgment for the principal and interest they say are outstanding under the loan agreement. The application is brought pursuant to O 14 of the Rules of the Supreme Court 1971 (WA) (RSC).
The defendant did not appear at the hearing of the summary judgment application. The defendant filed a memorandum of appearance in the proceedings. Amongst other things, it set out the defendant's email address. The notice of the listing for the hearing was sent to the defendant to the same email address as contained in his memorandum of appearance.
The procedural history to the proceedings is as follows. The proceedings were commenced by writ of summons filed 24 February 2023. The writ contained a statement of claim. The defendant filed his appearance on 14 March 2023. The plaintiffs filed the application for summary judgment on 22 June 2023. It ought to have been filed by 4 April 2023, being 21 days after the appearance.[1] The court may, however, grant leave to extend the time to bring the application. The plaintiffs filed in support of the application an affidavit of the first‑named plaintiff Ms Shenton, sworn 22 June 2023. The affidavit complies with the requirements of the rules in that it sets out Ms Shenton's belief that there is no defence to the claim. [2]
[1] Rules of the Supreme Court 1971 (WA) O 14 r 1.
[2] Rules of the Supreme Court 1971 (WA) O 14 r 2(1).
There have been a number of different iterations of the statement of claim, the latest of which is the re‑amended statement of claim filed 22 June 2023. The plaintiffs' counsel has filed an outline of submissions in support of the summary judgment application. Mr Lung has not filed a defence. He has not filed any affidavits in opposition to the summary judgment application.
I now turn to the applicable principles.
The principles applicable to an application of this nature are well established. In Sutton Investments Pty Ltd v Realistic Investments Pty Ltd,[3] the Court of Appeal in a joint judgment observed:
Summary judgment will be granted only when there is no real question to be tried. The power to order summary judgment is one that should be exercised with great care. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted. (Case references omitted).
[3] Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14 [24].
Further, in relation to the granting of an extension of time, the onus is on the plaintiffs to justify the delay and satisfy the court that the necessary extension should be granted. The discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties.
I now turn to the evidence.
Ms Shenton's affidavit establishes the following matters.
Ms Shenton and her fellow plaintiff, Mr Thorpe, are the joint executors of Mr Robson's estate. Mr Robson died on 27 November 2019.
Mr Lung operated a Chinese restaurant in East Perth. In January or February of 2019, Ms Shenton went with Mr Robson to a meeting at the Chinese restaurant. The meeting was attended by Mr Robson, Mr Lung, Ms Sook Khun Foong and Ms Shenton. Ms Foong was introduced to Ms Shenton as Mr Lung's accountant. Ms Shenton cannot recall precisely what was said, however she formed the view from the discussion that Ms Foong was assisting Mr Lung and facilitating a loan from Mr Robson to Mr Lung.
On 19 February 2019, by way of an international money transfer, Mr Robson transferred to Ms Foong as the beneficiary the sum of $500,000. On 20 April 2019 a written loan agreement - stated to be between Mr Robson as lender and Mr Lung as borrower - was executed. Ms Shenton recognises Mr Robson's signature on the loan agreement. The signature clause for Mr Lung is completed. The same person is described as witnessing the signatures that appear for Mr Robson and Mr Lung on the loan agreement. I will return later to the terms of the loan agreement.
Between April 2019 and Mr Robson's death, Mr Lung paid to Mr Robson monthly interest payments in accordance with the loan agreement. The payments were predominantly made in cash. They totalled $28,107.40. Following Mr Robson's death, Mr Lung paid a total of $66,249.31 into Mr Robson's security pensioner account, such payments being made over the period from 10 January 2020 to 25 October 2021. The total of the payments made is $94,356.71.
No payments of the principal sum of $500,000 have been made. The moneys that have been paid are payments of interest. By letter of 18 November 2022 from the plaintiffs' solicitors to Mr Lung, the plaintiffs demanded payment of the sum of $595,323.37 which the plaintiffs contended was constituted by the principal of $500,000 and overdue interest in the sum of $95,323.37. The letter was sent by post and email and demanded payment by 2 December 2022. The postal address to which the letter was sent was Mr Lung's address for service contained in the loan agreement.
Mr Lung has not made any payments in response to that demand. During March and April 2023, Ms Shenton attempted to resolve the matter on commercial terms with Mr Lung however, obviously that was unsuccessful.
I turn now to the terms of the loan agreement.
As will be apparent, it was executed after the transfer of $500,000 was made to Ms Foong on 19 February 2019. Under the loan agreement, Mr Robson was defined as the lender, and Mr Lung as the borrower. The interpretation clause at cl 1.2.9 stated that a reference to a party included that person's successors, personal representatives and administrators.
The commencement date was defined as 19 February 2019. The principal sum was defined as meaning the amount of $500,000, with that sum able to be varied. The funding date was defined as meaning the date on which the entire principal sum was advanced to the borrower. The repayment date was defined as meaning the date that is 24 months from the funding date, subject to variation in accordance with the loan agreement. Interest rate was defined as meaning 8% per annum.
Clause 2.1 provided that the lender had agreed to advance the principal sum to the borrower within seven days after the date of the loan agreement and on its terms. Clause 2.2 provided that the principal sum must be advanced to the borrower or his nominee by way of electronic funds transfer to an account nominated by him or by way of bank cheque. Clause 3 provided for the payment by the borrower to the lender of interest in arrears within seven days after the last day of each month. The method of computation is set out in cl 3.2 which I will not set out.
Clause 5.1 defines a number of events as constituting an event of default. One of such events is where the borrower does not pay any money due for payment under the loan agreement by the due date and such non‑payment continues for 14 days after the borrower receives notice from the lender of the non‑payment. While an event of default subsists, the lender may by notice in writing to the borrower declare that the whole of the outstanding moneys are immediately due and payable and demand that the borrower pay such moneys immediately. The phrase outstanding moneys is defined to include the principal sum to the extent it is unpaid.
Clause 5.4 provides that if the borrower fails to pay an amount due under the loan agreement on the due date for payment, interest on the overdue amount shall accrue at the rate of 2% per annum above the interest rate. The method of computation of interest payable under cl 5.4 is set out at cl 5.5, which again I will not set out.
Clause 5.3 provides that if an event of default subsists the lender may, by notice in writing, demand that the borrower reimburse the lender their costs and expenses, including legal costs and expenses on a full indemnity basis in relation to, amongst other matters, the exercise or attempted exercise of any rights of the lender under the loan agreement.
As can be seen from what I have just described, the loan agreement provides for the principal sum to be advanced within seven days. However, in my view, the overwhelming inference is that the loan agreement applies to the sum of $500,000 transferred to Ms Foong on 19 February 2019. That inference arises from the following circumstances taken as a whole: the meeting and its subject matter; the transfer by Mr Robson to Ms Foong of the sum of $500,000, relatively soon after the meeting; the reference in the loan agreement to the principal sum being the sum of $500,000 and the commencement date being 19 February 2019, which reflects the transfer made to Ms Foong and that Mr Lung made payments to Mr Robson of interest following the execution of the loan agreement.
In my view, the same circumstances sustain the inference that Mr Lung signed the loan agreement. Further, Mr Lung has not denied that he signed the loan agreement. Consistently with the principles in Jones v Dunkel,[4] this gives me greater confidence to draw the inference that Mr Lung signed the loan agreement.
[4] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298; see also ZYX (pseudonym initials) v Cable [No 5][2023] WADC 61 [335] ‑ [338].
For these reasons, in my view, there is a high degree of certainty that Mr Lung is liable to pay to Mr Robson's estate pursuant to the loan agreement the sum of $500,000 plus interest calculated in accordance with the loan agreement.
In relation to the calculation of interest, in my view, cl 5.4 only requires the payment of the higher interest rate of 10% in respect of those moneys that are overdue, which means due for payment and not paid. Here the plaintiffs have initially formulated their interest claim on the basis that once there was a default in payment of interest, the higher interest rate of 10% applied to the principal, irrespective of whether the principal was overdue.
I do not agree with that approach. Under the terms of the loan agreement, the principal did not become due and owing simply because there was a default in paying interest. The relevant event of default provisions needed to be activated before the principal became due and owing. Accordingly, the plaintiffs will need to revise the interest schedule to accord with what I consider to be the correct interpretation of cl 5.4.
In my view, the time for the plaintiffs to bring the application should be extended to its date of filing by reason of the following matters. There is a high degree of certainty that Mr Lung is liable to pay the principal and the interest that I have just described to the plaintiffs. The delay in bringing the application was partly due to an attempt to resolve the matter. Mr Lung has not actively defended the matter, and accordingly significant costs have not been wasted because of the delay.
In relation to costs, the plaintiffs had initially sought indemnity costs. However, the plaintiffs now only seek costs other than on an indemnity basis. It is appropriate that the plaintiffs have the costs of this application and of the action, to be taxed if not agreed.
Turning then to the plaintiffs' minute of proposed orders. The orders that I would make are as follows.
Firstly, in accordance with par 1, the time for the plaintiffs to bring the application for summary judgment be extended to the date of filing of the application.
In respect of order 2, judgment be entered for the plaintiffs against the defendant for:
2.1$500,000; and
2.2interest to be calculated in accordance with my reasons.
And then order 3, the defendant pay the plaintiffs' costs of the application and the action, to be taxed if not agreed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CA
Associate to the Honourable Justice Lemonis
28 NOVEMBER 2023