Shao v Crown Global Capital Pty Ltd

The dispute in *Shao v Crown Global Capital Pty Ltd* concerned the construction of a Facility Agreement between joint lenders and a borrower company. The central question was whether the term "Lender" in the agreement referred to both individual lenders collectively or to each lender individually, particularly in the context of redemption notices and the nomination of a bank account for the proceeds of the facility. The proceedings were heard in the Court of Appeal of New South Wales.

The Court of Appeal was required to determine two primary legal issues. Firstly, it had to construe the meaning of "Lender" throughout the Facility Agreement, specifically whether a reference to "the Lender" in a clause concerning redemption notices meant either or both of the joint lenders. Secondly, the Court had to consider whether the borrower obtained a good discharge of its debt, given that only one of the two required lenders had nominated a bank account into which the proceeds of the facility were paid, which was contrary to the agreement's requirements. This involved examining whether subsequent litigation between the two lenders amounted to a ratification of the sole nominated account, thereby validating the borrower's discharge of its debt.

The Court of Appeal reasoned that the opening words of the Facility Agreement, which referred to the parties as "the Lender" in a collective sense, established the primary construction of the term. This collective meaning was then applied to the various clauses of the agreement, including those relating to redemption notices and account nominations. The Court found that the agreement required both lenders to nominate an account, and the payment into a single nominated account did not constitute a good discharge of the borrower's debt. Furthermore, the Court determined that the subsequent litigation between the lenders did not amount to a ratification of the sole nominated account in a manner that would retrospectively validate the borrower's discharge.

The Court of Appeal dismissed the appeal and ordered the appellant to pay the respondents’ costs of the appeal.