Wu v Gu

[2020] NSWSC 909

Supreme Court

New South Wales

Medium Neutral Citation:

Wu and anor v Gu [2020] NSWSC 909

Hearing dates:

16 July 2020

Date of orders:

16 July 2020

Decision date:

16 July 2020

Jurisdiction:

Common Law

Before:

Bellew J

Decision:

(1)   I enter a verdict and judgment for the plaintiffs in the sum of $6,138,355.00.

(2)   I make no order in relation to the payment of interest from the date of judgment.

(3)   I order that the defendant pay the plaintiffs' costs of the proceedings as agreed or assessed.

Legislation Cited:

Civil Procedure Act2005 (NSW)

Corporations Act2001 (Cth)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] HCA 1

General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69

Shaw vNew South Wales [2012] NSWCA 102

Category:

Principal judgment

Parties:

Judy Xu Hui Wu – First plaintiff
Lian Xue – Second plaintiff
Menghong Gu – Defendant

Representation:

Counsel:
First and second plaintiffs – B Katekar
Defendant – R Lawson

Solicitors:
HWL Ebsworth Lawyers – Plaintiffs
Landerer and Company

File Number(s):

2020/44704

Publication restriction:

Nil

Judgment – EX TEMPORE (REVISED)

1. By a notice of motion filed on 9 June 2020 the plaintiffs in these proceedings seek orders in the following terms:

1. That summary judgment be entered in favour of the plaintiffs against the defendant in a sum of $6,015,038.00 pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW).

2. Further or in the alternative that, the defendant’s defence filed 30 March 2020 be struck out pursuant to r 14.28.

3. That an order for interest be made pursuant to s 101 of the Civil Procedure Act2005 (NSW).

4. That the defendant pay the plaintiffs' cost of the motion and the proceedings.

5. Such further or other orders as the Court deems fit.    

2. The motion is supported by an affidavit of Judy Xu Hui Wu of 9 June 2020, attached to which is exhibit JXHW-1. Those acting for the plaintiffs have provided a Court Book in advance to my Chambers containing the entirety of the evidentiary and related material which is relied upon. That Court Book was admitted by consent and marked exhibit A.

3. The facts of the matter are set out in the affidavit of Ms Wu and may be summarised as follows.

4. On 23 July 2019 the plaintiffs entered into a loan agreement with I-Prosperity Capital Group Pty Limited (I-Prosperity) and the defendant. Pursuant to that agreement the plaintiffs agreed to advance a loan to I-Prosperity in the sum of $3,000,000, which was to be repaid in full by 23 August 2019. Clause 9 of the loan agreement incorporated a guarantee from the defendant of the obligations of I-Prosperity. The purpose of the loan was to assist the acquisition of a hotel portfolio known as “IBIS” held by the Accor Hotel Group. The money the subject of the loan was transferred to I-Prosperity by two separate electronic transfers, each of $1.5 million, on 23 and 24 July 2019.

5. On 2 August 2019 the plaintiffs entered into a second loan agreement with I-Prosperity and the defendant. Pursuant to that agreement an additional amount of $2,000,000 was advanced, making the total loan amount $5,000,000. The maturity date for the loan remained at 23 August 2019 and the defendant again guaranteed the obligations of I-Prosperity under that agreement. The additional $2,000,000 was advanced by electronic transfer on 2 August 2019.

6. I-Prosperity defaulted under its obligations and the amount advanced was not repaid in full by 23 August 2019.

7. On 20 December 2019 the plaintiffs served a creditor’s statutory demand on I-Prosperity, with which I-Prosperity failed to comply. In view of that non-compliance, on 14 January 2020 the plaintiffs issued a demand to the defendant in respect of the amounts owing, the repayment of which he had guaranteed. The defendant failed to comply with that demand.

8. On 10 February 2020 the plaintiffs commenced proceedings in this Court seeking orders, amongst other things, that I-Prosperity be wound up in insolvency pursuant to the provisions of the Corporations Act2001 (Cth).

9. On 4 May 2020 the plaintiffs entered into a deed of settlement and release (the Deed) with I-Prosperity and the defendant. The Deed sought to resolve the issues in dispute both in these proceedings as well as in the proceedings brought to wind up I-Prosperity.

10. The Deed forms part of the exhibit to Ms Wu's affidavit. Clause 3.1 provided:

“The Borrower and Guarantor hereby release and discharge the Lender from all Claims that they have or may have in the future arising from, relating to or in connection with the Term Sheet, the Supplementary Term Sheet, the Loan Agreement, the Outstanding Money, and any other thing related to those matters."

11. Clause 3.4 provided:

“The Claims that are released by this Deed are barred, and this Deed may be relied upon or pleaded as a complete defence by any party to those Claims."

12. Clause 6.2 provided (inter alia):

“Upon Default

(a) the non-defaulting parties shall be entitled to take whatever action they deem or consider appropriate to enforce their rights arising under the this [sic] Deed, or the Loan Agreement; and

(b) upon default by [I-Prosperity] or [the defendant], [the plaintiffs] will be entitled to, among other things:

(i) continue with the Proceedings and any other action against [I-Prosperity] and any application against [the defendant] for the Outstanding Money […]"

13. In the winding up proceedings I-Prosperity had brought an application for leave pursuant to s 459S of the Corporations Act2001. On 6 May 2020, in correspondence with those acting for the plaintiffs, the defendant’s solicitor expressly conceded that because of the Deed, I-Prosperity was contractually barred from proceeding with that application.

14. On 20 May 2020 I-Prosperity and the defendant both defaulted in respect of their obligations pursuant to the Deed. I-Prosperity was subsequently wound up by an order of Rees J in this Court on 25 May 2020.

15. The defendant filed a defence in the present proceedings in which little was placed in dispute. Paragraph 8 of that defence sought to raise certain issues regarding the terms of the Deed.

16. The present application is brought pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) which is in the following terms:

(1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief--

(a) there is evidence of the facts on which the claim or part of the claim is based, and

(b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed,

the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires.

17. The principles which apply to an application for summary judgment are well-known. They were articulated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways. [1] In the course of his judgment the Chief Justice made reference to a decision of Dixon J (as his Honour then was) in Dey v Victorian Railways Commissioners,[2] where his Honour observed:

"A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury.”

1. (1964) 112 CLR 125 at 129-130.

2. (1949) 78 CLR 62 at [91].

18. Counsel for the plaintiffs drew my attention to the judgment of Barrett JA in Shaw vNew South Wales [3] where having reviewed a number of authorities, his Honour said:

“The question is therefore whether the claims in question are so obviously untenable or groundless that there is “a high degree of certainty” that they will fail if allowed to go to trial; and whether this is one of the “clearest of cases” in which the court may accordingly intervene to prevent the claims being litigated.”

3. [2012] NSWCA 102 at [32].

19. I accept the submission advanced by counsel for the plaintiffs that the terms of the Deed, and specifically those terms to which I have referred, are broad enough to encompass any basis on which the defendant could now claim that I-Prosperity was not required to repay the outstanding amount of the loan on 23 August 2019. The defendant, as counsel for the plaintiff has pointed out, gave the same release as I-Prosperity gave under the Deed. In doing so, the defendant released the plaintiffs from any of the issues that he has raised in his defence.

20. Specifically, having regard to the provisions of cl 3.4, the Deed stands as a complete defence to the issues sought to be raised by the defendant in these proceedings. Moreover, cl 6.2 of the Deed of release expressly permitted the plaintiffs to continue with these proceedings.

21. In all of these circumstances I am satisfied that the stringent test to which I have referred, and which governs an application of this nature, has been met. It should be noted that the solicitor for the defendant generally accepted the force of the submissions advanced by counsel for the plaintiffs, and made no submissions in response.

22. Accordingly and for those reasons I make the following orders:

1. I enter a verdict and judgment for the plaintiffs in the sum of $6,138,355.00.

2. I make no order in relation to the payment of interest from the date of judgment.

3. I order that the defendant pay the plaintiffs' costs of the proceedings as agreed or assessed.

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Endnotes

Decision last updated: 17 July 2020