In the matter of L & C Property Investment (Aust) Pty Ltd

[2018] NSWSC 1095

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of L & C Property Investment (Aust) Pty Ltd [2018] NSWSC 1095
Hearing dates:	25 June 2018
Decision date:	25 June 2018
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Judgment given in favour of the Plaintiff against the Second Defendant in respect of the separate issues.
Catchwords:	PRACTICE AND PROCEDURE – application for the decision of a question separately before the determination of other questions under Uniform Civil Procedure Rules 2005 (NSW) r 28.2 – where defendant had been given a sufficient opportunity to lead evidence – where no defence to the claim was established by the defendant – whether judgment should be given in respect of the separate issues prior to the determination of other issues
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW) r 28.2
Category:	Procedural and other rulings
Parties:	Fu Leung Cheng (Plaintiff) L & C Property Investment (Aust) Pty Ltd (First Defendant) Scott Chan (Second Defendant)
Representation:	Counsel: J E Thomson (Plaintiff)   Solicitors: Wong Tang (Plaintiff) S Chan (Second Defendant – In Person)
File Number(s):	2018/85165

Judgment – EX TEMPORE JUDGMENT (REVISED 28 JUNE 2018)

1. By Interlocutory Process filed on 30 May 2018 the Plaintiff, Mr Cheng, seeks an order under Uniform Civil Procedure Rules 2005 (NSW) r 28.2 that two claims in debt against the Second Defendant, Mr Chan, under two deeds be heard and determined separately and before the hearing and determination of other questions arising on the Originating Process, which include issues as to oppression in respect of the conduct of the affairs of L & C Property Investments (Aust) Pty Limited (“Company”). Mr Cheng seeks, on the basis that the matter be separately determined, judgment against Mr Chan in the amount of $1,154,315.07, and an order for costs.

2. I am satisfied that this is a proper case for the hearing and determination of that separate question where, notwithstanding several opportunities provided to Mr Chan to identify a defence to the monetary claims, he has not done so. Today he seeks a further adjournment, and identifies certain other claims, which I will address below. Mr Cheng relies on his affidavit dated 30 May 2018 which refers, in paragraph 10, to a deed dated 12 April 2017 by which Mr Cheng advanced the amount of $500,000 to an entity that appears to have been associated with the Company, with Mr Chan as guarantor, with that amount being repayable on or before 31 August 2017. By a further Amendment Deed dated 17 September 2017, the repayment date was extended to 16 October 2017, and it appears further to have been extended to 21 March 2018 by a subsequent email exchange on 1 March 2018. Mr Cheng's evidence, which was not controverted by Mr Chan, was that no amounts had been received in respect of that loan, and he quantified unpaid interest as $29,246.57.

3. The Deed of Guarantee and Indemnity of a Loan is in evidence and provides, in cl 2.2.2, that the guarantee given by Mr Chan may be called upon for payment, although no demand has been made on the borrower, and the lender may proceed against Mr Chan as though he were the party principally liable under the loan agreement. That is what Mr Cheng now seeks to do. The Schedule confirms the amount of the loan and the repayment date which was, as I noted, further extended by an Amendment Deed dated 17 September 2017, and by the further email to which I have referred above.

4. Mr Cheng also leads evidence of a further loan made on 30 May 2017, directly to Mr Chan, under a loan agreement, also in the amount of $500,000. Mr Cheng indicates that no amount has been received in respect of that loan and quantifies the amount of interest unpaid as $25,068.50. That amount was originally repayable one year after its commencement date, on 30 May 2018. That date was subsequently amended by the email dated 1 March 2018, to which I have referred above, to bring forward the repayment date from 30 May 2018 to 4 April 2018.

5. Mr Cheng also claims a fee of $100,000, which appears to be consideration to extend the first loan, agreed under the email dated 1 March 2018. While there is no doubt that that fee is substantial, there is no contest to it in any defence raised by Mr Chan.

6. The Court has, on several occasions, made orders requiring Mr Chan to identify any defence which he may have to the application. On 4 June 2018, the Court ordered that Mr Chan provide notice of his grounds for opposing the relief sought by 6 June 2018. He did not do so and, on 12 June 2018, the Court extended the time for him to give that notice to 15 June 2018, on the basis that no grounds of opposition were to be relied on without leave that were not identified in that notice. No such notice was given.

7. Mr Chan has orally advised the Court, first, that there were several loans by Mr Cheng to him and he has repaid some but not all loans and seeks to confirm whether these loans were repaid or not. He has also orally advised, from the bar table, that he has had difficulty in obtaining the relevant documents, because his former solicitor will not release those documents until the solicitor's fees are paid. It does not seem to me that the first of those matters establishes any defence to the claim under the loan, because it is no more than a speculation that, while some loans have not have been repaid, these loans may have been repaid. That speculation does not establish the fact, which could only be established by proof of payment. There is no evidence, for example, of any payment from Mr Chan's bank account which establishes any repayment of the relevant debts. Such evidence would not need to be obtained from his former solicitor. It does not seem to me that the matter can, having regard to the need for the just, quick and cheap resolution of the real issues in dispute, be further adjourned to permit Mr Chan to obtain documents from his former solicitor, when he does not indicate what steps he would take to do so or when he would do so.

8. Mr Chan also identifies, today, a matter on which he sought to rely by way of defence, that Mr Cheng is a shareholder in the Company and has allegedly caused harm to the Company. That submission, even if it were established by evidence, which it is not, would not assist Mr Chan, because the Company is of course a separate entity to Mr Chan. If the Company has suffered loss, by reason of conduct of Mr Cheng, then the Company may have a claim against Mr Cheng. That is not a claim by Mr Chan against Mr Cheng, and cannot be set off against any amounts payable by Mr Chan to Mr Cheng.

9. In these circumstances, no defence has been established to the claim by Mr Cheng, in the absence of evidence led by Mr Chan, after he had been given a sufficient opportunity to lead such evidence. I am satisfied that this is a proper case to give judgment, in respect of the separate issues, in favour of the Plaintiff. The determination of those issues should not be deferred until the wider oppression case is determined, not least because the determination of these issues, and any question whether Mr Chan has the capacity to meet a judgment against him, may be a matter that is relevant to whether the wider oppression case would sensibly be continued, including in respect of any other relief sought against Mr Chan.

10. Accordingly, I make orders in accordance with the short Minutes of Order initialled by me and placed in the file. I note that the balance of the proceedings, other than paragraphs 7 and 8 of the Originating Process that I have now determined, are listed in the Corporations List for further directions on 9 July 2018. The orders that I have made include an order that Mr Chan pay Mr Cheng's costs of the Interlocutory Process, as agreed or as assessed. That order reflects the fact that costs should follow the event in this application.

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Decision last updated: 16 July 2018