Season Sheen Opportunity Ii Limited v Chen

[2024] NZHC 3613

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-295

[2024] NZHC 3613

BETWEEN

SEASON SHEEN OPPORTUNITY II LIMITED
Plaintiff

AND

YAWEN CHEN

Defendant

Hearing:	4 June 2024, with further submissions and evidence filed on 24 September and 4 October 2024
Appearances:	TB Fitzgerald and HE Cassone for the Plaintiff Y Chen, Defendant in Person
Judgment:	29 November 2024

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 29 November 2024 at 4 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Bell Gully, Auckland

SEASON SHEEN OPPORTUNITY II LTD v CHEN [2024] NZHC 3613 [29 November 2024]

Introduction

[1]    Season Sheen Opportunity II Limited (Season Sheen) applies for summary judgment against Yawen Chen as guarantor of a loan extended to Austino Parkside Limited (in receivership and in liquidation) (Austino).

[2]    Mr Chen accepts he owes a debt to the plaintiff but challenges the amount claimed. The  plaintiff  says  the  amount  outstanding  as  at  4  June  2024  is

$12,634,434.93. This  includes  the  “Tranche  1A principal”  of  $5,348,891.34  plus

$6,818,161.22 in establishment fees, line fees and interest and the “Tranche 1B principal” of $42,837.33 plus $131,372.11 in line fees and interest (in addition to an exit fee and legal costs).

[3]    Mr Chen is acting for himself and filed four affidavits prior to the hearing. In those affidavits he questioned how the establishment fees, line fees and interest charged for Tranches 1A and 1B exceed the principal owing yet the loan was only extended over a two-year period.

[4]    In addition, Mr Chen submits that as Season Sheen has appointed a receiver in respect of the assets, the interest charges and default costs should stop. Furthermore, he submits that the default interest rate of six per cent on top of the agreed interest of

7.49 per cent is too high and that the rental incomes received should be deducted.

[5]    Peter Law, the inhouse counsel for PAG, filed four affidavits prior to the hearing as well. Mr Law says Season Sheen is beneficially owned by entities or funds managed under PAG, describing PAG as an alternative investment firm focused on the Asia Pacific region. In his fourth affidavit, Mr Law attempts to clarify and explain the quantum claimed.

[6]    Following the hearing, I issued a minute requesting further submissions and affidavit evidence in relation to the following issues:

(a)confirming the date of “Financial Close” as this determines the event of default on which Season Sheen relies;

(b)addressing why default interest is charged from 5 February 2022 when the alleged breach apparently relied on by Season Sheen was the failure to repay all amounts owing  under  Tranche  1  by  5  August  2022, 12 months after the date of Financial Close; and

(c)addressing why the apparent election by Season Sheen in December 2022 to declare the principal outstanding and all other amounts owing by the borrower to the lender “payable on demand” rather than “due and payable” does not affect the ability to claim default interest.

[7]    A further memorandum and affidavit were filed on behalf of the plaintiff in response. In answer to the questions above:

(a)Evidence was provided that the date of Financial Close was 5 August 2021.

(b)Season Sheen submits that default interest properly accrued and was capitalised from 5 February 2022 because the imposition of default interest is an automatic consequence of an event of default and the earliest operative event of default occurred on 5 February 2022.

(c)Season Sheen says its letter dated 16 December 2022 was a letter of demand informing Austino of the amount outstanding and that it was not intended to be, and could not reasonably be understood as, an election making money that was already due and payable, payable on demand. Season Sheen says Mr Chen has never claimed to have understood the letter that way.

[8]    Mr Chen filed a further affidavit in response making similar submissions to his earlier affidavits.

[9]    I set out the background below and the principles applying to summary judgment applications before considering liability (which is essentially conceded) and then quantum.

Background

[10]   On 4 August 2021, Season Sheen entered into a loan agreement with Austino as borrower and Mr Chen as guarantor, referred to as a Senior Facility Agreement (Facility Agreement). Mr Chen is the sole director of Austino.

[11]   Under the Facility Agreement, Season Sheen agreed to provide a cash advance facility to Austino of $79,200,000 (excluding interest, line fees and establishment fees) in two tranches:

(a)a tranche of $18,200,000 (Tranche 1); and

(b)a tranche of $61,000,000 (Tranche 2).

[12]The interest rate agreed was 7.49 per cent.

[13]   By 27 January 2022, Austino had drawn down all $18,200,000 of Tranche 1, as well as an additional sum of $187,643.

[14]   On 5 May 2022, Season Sheen, Mr Chen and Austino executed a Deed of Amendment to the Facility Agreement (Deed of Amendment) to increase the facility from $79,200,000 to $79,387,643, with the original $18,200,000 becoming “Tranche 1A” and the extra $187,643 becoming “Tranche 1B” — together to be Tranche 1.

[15]   The Deed of Amendment acknowledged that Tranches 1A and 1B were drawn down in full on 27 January 2022.

[16]   The interest rates in the Deed of Amendment were the same for Tranche 1A and Tranche 2 as they were in the original Facility Agreement (7.49 per cent per annum) but the interest rate for Tranche 1B was 25 per cent per annum.

[17]   Item 3 of the Key Details of the Facility Agreement required Austino to repay all amounts owing under Tranches 1A and 1B by 12 months after the date of Financial Close. “Financial Close” is defined as the date Season Sheen confirmed to Austino that the conditions precedent in cl 4.1 had been satisfied or waived. Evidence has now

been provided by the plaintiff that Financial Close occurred on 5 August 2021 so the date by which Austino was required to repay all amounts owing under Tranches 1A and 1B was 5 August 2022.

[18]No amounts were paid on or by 5 August 2022.

[19]   Season Sheen received the gross sale proceeds from the sale of apartments constructed as part of Stage One (as defined in the Facility Agreement). Mr Law’s evidence is that the following three payments were received:

(a)       $7,863,057.59 on 5 December 2022;

(b)       $2,686,480.61 on 6 December 2022; and

(c)       $907,167.14 on 7 December 2022.

[20]   On 16 December 2022, Season Sheen sent a letter giving notice of breach of cl 10.1 of the Facility Agreement to Austino, copied to Mr Chen, as a result of the failure of Austino to repay all amounts owing under Tranche 1 on 5 August 2022, being the date 12 months after the date of Financial Close.

[21]   On the same date, Season Sheen, through its solicitors served Property Law Act 2007 (PLA) notices on Austino pursuant to ss 119 and 122 of the PLA, copying the notices to Mr Chen. The total amount Austino was said to have failed to pay was

$12,661,800.19.

[22]The PLA notices gave notice that if the default was not remedied on or before

1 March 2023 then certain powers of the mortgagee would become executable including the power to manage or demand and recover money from, or sell, certain properties at Barrack Road, Auckland.

[23]Further gross sale proceeds were received with payments made as follows:

(a)       $726,491.24 on 16 February 2023; and

(b) $910,753.21 on 11 May 2023.

[24]   On 10 July 2023, Season Sheen’s lawyers, Bell Gully, sent Mr Chen a letter of demand as guarantor under the Facility Agreement, referring to the PLA notices and recording that each had expired without repayment of the amounts required to be paid. The letter demanded payment of $10,567,101.64, which was referred to as all amounts owing under the Facility Agreement as at 5 pm on 13 July 2023.

[25]   On 24 November 2023, Season Sheen served Mr Chen with copies of additional ss 119 and 122 PLA notices served on Austino.

[26]   On 20 December 2023, Bell Gully sent Mr Chen a letter of demand for costs, charges and expenses incurred by Season Sheen of $110,624.63 in relation to the occurrence of default in addition to the amount owing set out in the PLA Notices.

[27]   On 9 February 2024, Season Sheen filed its application for summary judgment against Mr Chen. Mr Chen was served with the proceedings on 4 March 2024.

[28]   On 30 April 2024, Mr Chen filed a notice of opposition and supporting affidavit.

[29]   On 21 May 2024, Season Sheen sent Mr Chen a further letter of demand setting out the amount outstanding as at 20 May 2024 as $12,528,246.30.

Summary judgment legal principles

[30]Rule 12.2(1) of the High Court Rules 2016 provides:

The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

[31]   The principles applying to a plaintiff’s application for summary judgment were set out by the Court of Appeal in Krukziener v Hanover Finance Ltd and are well established:1

1      Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26] to [27].

(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried.2

(b)The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.3

(c)The court will not normally resolve material conflicts of evidence or assess the credibility of deponents. However, it need not accept uncritically evidence that is inherently lacking in credibility, as, for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable.4

(d)In the end the court’s assessment of the evidence is a matter of judgment. The court may take a robust and realistic approach where the facts warrant it.5

[32]   A defendant is under an obligation to lay a proper foundation for their defence in the affidavits filed in support of the notice of opposition.6

[33]   Finally, I record that the fact that the Court may be required to determine questions of law does not preclude summary judgment.7

Is Mr Chen liable as guarantor?

[34]Mr Chen does not dispute that he signed the Facility Agreement as guarantor.

2      Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.

3      MacLean v Stewart (1997) 11 PRNZ 66 (CA).

4      Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.

5      Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

6      Middleditch v New Zealand Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.

7      Zurich Australian Insurance Ltd t/a Zurich New Zealand v Cognition Education Ltd [2014] NZSC 188, [2015] 1 NZLR 383 at [37].

[35]   Clause 11.1 of the Facility Agreement set out the terms of the guarantee in favour of Season Sheen as follows:

For valuable consideration each Guarantor unconditionally and irrevocably guarantees the due and punctual payment by the Borrower to the Lender of the Guaranteed Money.

[36]   “Guaranteed Money” is defined in cl 1 of the Facility Agreement as “all of the Secured Money owing by the Borrower”. “Secured Money” is then defined as “Secured Indebtedness” as defined in the “General Security Deed” dated 4 August 2021 (General Security Deed).

[37]   The General Security Deed defines “Secured Indebtedness” as meaning all indebtedness of the debtor to the Secured Party (including, for the purposes of ss 71 and 72 of the Personal Property Securities Act 1999, future advances).

[38]   In addition, cl 11.2 of the Facility Agreement provides that each guarantor indemnifies Season Sheen as follows:

11.2     Indemnity

As an independent and principal obligation, each Guarantor indemnifies the Lender against any loss or liability sustained by the Lender (including all charges, costs and expenses incurred by the Lender) directly or indirectly in connection with:

(a)failure to pay

any failure of the Borrower to duly and punctually pay to the Lender the Guaranteed Money;

(b)liability unenforceable

any liability of the Borrower to pay the Guaranteed Money being or becoming void or otherwise unenforceable for any reason (including, as a result of any legal limitation, disability or incapacity affecting any person), irrespective of whether the Lender knew or ought to have known of the relevant facts or circumstances;

(c)Guaranteed Money irrecoverable

the Guaranteed Money (or money which, if recoverable, would have been Guaranteed Money) being or becoming irrecoverable from the Guarantor for any reason, irrespective of whether the Lender knew or ought to have known of the relevant facts or circumstances; or

(d)Insolvency Events and Avoided Transactions

the occurrence of an Insolvency Event in relation to the Borrower or the occurrence of any Avoided Transaction.

[39]   Clause 11.3 provides that the Guarantor must pay Season Sheen on demand the “Guaranteed Money” as provided for in cl 11.1 and an amount equal to any loss or liability in respect of the Guarantor’s indemnity under cl 11.2.

[40]   Clause 11.5 provides that the  Guarantor  is  liable  as  a  principal  obligor. Mr Chen submits that once the receivers were appointed he ought no longer to be liable. However, cl 11.6 provides that the Facility Agreement is enforceable against the Guarantor irrespective of whether Season Sheen has exercised its rights under any security document or made other demands or taken other enforcement action.

[41]   I record for the benefit of Mr Chen (and as confirmed on behalf of Season Sheen by Mr Fitzgerald in the hearing), if further apartments are sold the proceeds of sale will be applied to the amounts outstanding and so reduce the amount owed by Mr Chen.

[42]   Clause 11.13 then provides that the guarantor acknowledges that prior to entering into the agreement he has obtained, or waived his right to obtain, independent legal and financial advice prior to entering into the Finance Documents to which he is a party.

[43]   From the above, Mr Chen is therefore liable to pay the “Guaranteed Money” and the amount of any loss or liability falling within the indemnity in cl 11.2.

What is the quantum payable?

[44]As at 4 June 2024, Season Sheen submits the amount outstanding is

$12,634,434.93.22 comprised of:

(a)$5,348,891.34 being the principal sum owing under Tranche 1A;

(b)$6,818,161.22 being the Establishment Fee, Line Fee and Interest owing under Tranche 1A;

(c)$42,837.33 being the principal sum owing under Tranche 1B;

(d)$131,372.11 being the Line Fee and Interest owing under Tranche 1B;

(e)$195,000 being the Exit Fee;

(f)$138,241.49, being the legal costs, charges and expenses incurred by Season Sheen as at 30 April 2024 in connection with the occurrence of default; and

(g)less $40,068.56 being credit funds held by Bell Gully.

[45]   Mr Law annexed two spreadsheets to his fourth affidavit showing how the amounts have been calculated, one for Tranche 1A and one for Tranche 1B. A number of issues arise with the calculations which I discuss below.

Amounts and dates of repayments

[46]   The amounts and dates of the repayments do not align with the numbers referred to in Mr Law’s affidavits.

[47]   Mr Law’s evidence in the body of his affidavit is that the following sale proceeds have been received:

(a)       $7,863,057.59 on 5 December 2022;

(b)       $2,686,480.61 on 6 December 2022;

(c)       $907,167.14 on 7 December 2022;

(d)      $726,491.24 on 16 February 2023; and

(e)       $910,753.21 on 11 May 2023.

[48]   Yet the spreadsheets include the receipt of payments in respect of Tranches 1A and 1B on the following dates and totalling as follows:

Date	Tranche 1A ($)	Tranche 1B ($)	Total ($)
5 December 2022 6 December 2022 7 December 2022 23 December 2022 16 February 2023 11 May 2023	6,727,691.16 2,312,032.20 776,712.60 1,516,656.83 718,125.39 899,853.98	73,527.34 26,040.67 8,752.39 17,220.19 8,365.85 10,899.23	6,801,218.50 2,338,072.87 785,464.99 1,533,877.02 726,491.24 910,753.21

[49]The spreadsheets therefore include payments on 23 December 2022 totalling

$1,533,877.00 (in italics above) which are not listed by Mr Law in the body of his affidavit. The amount of these 23 December payments however equals the difference between the total of the amounts set out in the spreadsheets as having been paid on 5, 6 and 7 December 2022 and the numbers set out by Mr Law. However, by not including that difference of $1,533,877.02 as having been paid until 23 December 2022 in the spreadsheets, the total interest accruing is affected.

[50]   No separate evidence is provided of the amounts of the sale proceeds received or the dates of payment.

[51]   Mr Chen does not challenge the amounts or dates of the payments specifically but makes a general submission that he does not understand how the numbers have been calculated. Before determining the quantum payable, further evidence needs to be provided by Season Sheen of the sale proceeds received and the dates on which they were received. Interest will then need to be recalculated based on the correct dates. I include these directions below.

Application of sale proceeds to Tranches 1A and 1B

[52]   The sale proceeds received have been applied to reduction of the principal of both Tranches 1A and 1B but the basis on which the proceeds have been apportioned is not obvious. The Facility Agreement provides at cl 7.2 that the borrower must apply the sale proceeds firstly to repayment of the principal outstanding “under Tranche 1”. No amendment was made to this clause under the Deed of Amendment when Tranche 1B was added.

[53]   Given Tranche 1B is accruing standard interest at 25 per cent together with default interest of 6 per cent, it is arguable that, absent express agreement, the sale proceeds should be applied to Tranche 1B first. This is also simpler from a calculation perspective. If there is a basis for applying the sale proceeds in a different way then Season Sheen may make further submissions on that as directed below.

Capitalisation of standard interest and line fees after 5 August 2022

[54]   In the schedules from 5 August 2022 onwards (the date of the event of default, being the Final Repayment Date) interest is capitalised whenever it is calculated, sometimes on a daily basis. It is arguable that this is not consistent with the terms of the Agreement.

[55]   I accept that cl 6.2, which provides for the capitalisation of standard interest, in conjunction with the definition of “Interest Payment Date,” does not expressly provide for capitalisation after the Final Repayment Date. However, prior to the Final Repayment Date, capitalisation was to occur monthly on each Interest Repayment Date, the last working day of each month. Clause 14.5 expressly provides that default interest is to be capitalised monthly where there is no election, and one of the situations in which default interest is payable is where the principal has not been repaid by the Final Repayment Date. I consider it is arguable therefore that standard interest ought to continue to be capitalised monthly even after the Final Repayment Date.

[56]   In addition, after 5 August 2022, the line fees calculated appear to have been added to the principal balance whenever calculated, sometimes daily rather than monthly, taking the same approach as  to  capitalisation  of  standard  interest.  Clause 6.3(c) provides that the line fees, charged at 0.2 per cent per month, are to be capitalised on each Interest Payment Date (as for standard interest) but will be deemed to be a drawing under the Facility.

[57]   In the recalculation directed below for the purposes of summary judgment, standard interest and line fees are to be capitalised on the Interest Payment Dates or last working day of the month including after 5 August 2022, with the exception of an additional capitalisation on the Final Repayment Date itself.

Default interest

[58]   The schedules show that default interest has been applied since February 2022 rather than from 5 August 2022, which is the date Austino failed to repay the principal 12 months after Financial Close.

[59]   In his fifth affidavit following the request for further submissions, Mr Law deposes that events of default first occurred in February 2022, six months after Financial Close, in respect of undertakings defined as the Milestone Understanding (as set out in item 7 of the Key Details of the Facility Agreement) and the Minimum QPS Undertaking (as set out in item 6 of the Key Details). A third breach is also referred to, being a breach of the undertaking defined as the Latest Completion Date Undertaking (also set out in item 6 of the Key Details) allegedly occurring four months prior to Financial Close, so 5 April 2022.

[60]   Mr Law annexes a letter sent by Season Sheen  to Austino  and copied  to   Mr Chen on 12 July 2022 in relation to these three events of default. The letter records that as a consequence of these events of default, Season Sheen is entitled to charge default interest. Mr Law does not confirm whether there was any response to this July 2022 letter.

[61]   After considering the statement of claim and summary judgment application filed, I do not consider summary judgment ought to be awarded for default interest from February 2022 as the statement of claim only relies on the failure to comply with a monetary obligation as set out in cl 10.1(d), being the failure to repay the principal 12 months after Financial Close.

[62] As a result, in terms of the summary judgment application, default interest is only to be awarded from 5 August 2022. The interest is therefore to be recalculated as directed below at [87].

Capitalisation of default interest

[63]   Default interest has been capitalised in the calculation schedules from the dates the event of default occurred. However, it appears reasonably arguable that whilst

default interest accrues under cl 14.3 from an event of default it is not automatically due and payable. This is because cl 14.4 provides that interest accruing under cl 14.3 must be paid on the date of a demand for payment from Season Sheen (signed by two Authorised Officers of the Lender).

[64]Clause 14.5 then provides for capitalisation of interest as follows:

… interest that is not paid when due may be capitalised by the Lender at such intervals as the Lender elects. If no election is made, it is to be capitalised monthly. Interest will accrue and be payable in accordance with clause 6.1 on each amount which is capitalised in accordance with this clause 14.5.

[65]   This is by contrast to standard interest under the Facility Agreement which is automatically capitalised under cl 6.2 on each Interest Payment Date, defined as the last business day of each calendar month and the Final Repayment Date.

[66]   Season Sheen submits that its letter to Austino dated 16 December 2022 was a letter of demand that informed Austino of the amount outstanding as at that date, and it was not intended to be, and could not reasonably be understood to be, an election to make money already due and payable, payable on demand.

[67]   I accept that submission in respect of the amounts that were already due and payable. However, as set out above, default interest, although automatically accruing, is not automatically due and payable, with cl 14.4 providing it must be paid on the date of a demand signed by two authorised officers of Season Sheen.

[68]   The letter on 16 December 2022 was not signed by two authorised officers and recorded:

As a result of the breach [Season Sheen] has the right to declare the Principal Outstanding and all other amounts owed by [Austino] to [Season Sheen] (the Amount Owing) either immediately due and payable or payable on demand.

…

[Season Sheen] declares the Amount Owing payable on demand. …

[69]This is in accordance with cl 10.2 of the Facility Agreement which provides:

10.2Powers on default

If an Event of Default subsists, the Security Documents shall become immediately enforceable, and the Lender may, by notice to the Borrower do any one or more of the following:

(a)accelerate debt

declare that:

(i)the Principal Outstanding; and

(ii)all interest, fees and all other money payable to the Lender under or in connection with the Finance Documents,

are either:

(iii)immediately due and payable; or

(iv)payable on demand,

in which case they will become so; and

(b)terminate obligations

terminate the obligations of the Lender under the Finance Documents which are specified in the notice.

[70]    Bell Gully sent a letter on 10 July 2023 demanding payment of the whole of the amount allegedly outstanding as at that date but did not expressly demand payment of default interest. In any event, it was sent by Bell Gully as solicitors for Season Sheen and not signed by two authorised officers as cl 14.4 requires before default interest will be due and payable.

[71]   The first time a letter of demand for default interest signed by two authorised officers was sent was on 21 May 2024 — after these proceedings were filed. This letter expressly states that the demand for payment includes demand for default interest pursuant to cl 14.3.

[72]   This letter does not indicate when further default interest will be due and payable and nor is there any other evidence of such a demand. Clause 14.5 arguably prevents further default interest being capitalised until such a demand is made. The

only default interest that can therefore be capitalised for summary judgment is the default interest accrued as at 21 May 2024.

[73]   Clause 14.5 provides that where there is no election, default interest is to be capitalised monthly. There is no evidence of an election being made so for summary judgment purposes default interest that is due and payable ought to be capitalised monthly. Standard interest is capitalised monthly on the Interest Repayment Date which is defined as the last working day of the month. For the purposes of summary judgment, it appears to make sense for the default interest accrued between 5 August 2022 and 21 May 2024 to be capitalised at the same time, being the last working day of May 2024.

[74]   Furthermore, it is arguable that only standard interest and not default interest is payable on the default interest once capitalised. This is because cl 14.5, after providing for when default interest will be capitalised, records:

… Interest will accrue and be payable in accordance with cl 6.1 on each amount which is capitalised in accordance with this clause 14.5.

[75]   If default interest was also payable on the default interest once capitalised, there would be no need for the inclusion of the above sentence as standard and default interest would both accrue as the default interest would fall within the “unpaid amounts” included in cl 14.3(a).

[76]   In the recalculation directed below, only standard interest is therefore to be calculated as being payable on the default interest capitalised. As a result, the default interest will need to be separately provided for in the calculations.

Rental received

[77]   Mr Chen’s evidence is that he organised for the properties to be tenanted prior to the receivers being appointed and so the receivers should be receiving rental. Mr Chen questioned why there was no amount recorded as rental received.

[78]   The receiver, Bryan Williams, filed an affidavit just prior to the hearing saying that he had been asked to reply to Mr Chen’s affidavit on this point. Mr Williams

refers to Mr Chen’s evidence that “Seven units have been leased, and rental income is being collected” and responds:

4.This is not correct. There were some tenancies in place when the receivership commenced, but these have been terminated pursuant to s 51 of the Residential Tenancies Act 1986, as part of my attempts to sell those properties.

5.Accordingly, Austino is not currently receiving any rental income.

[79]   Mr Williams’ report filed with the Companies Office for the period dated 16 November 2023 to 15 May 2024 records that $65,214.70 was received in rental income. Although a relatively small amount when compared with the amount outstanding it appears this amount ought to be included as a receipt. This is therefore to be included in the recalculation (or further evidence given as to why it should not be).

Drawdown on 29 November 2023

[80]   The Tranche 1A schedule includes a $100,000 drawdown on 28 November 2023 that is not mentioned otherwise in the pleadings, evidence or submissions. For the purposes of summary judgment that amount is not to be included in the calculation of quantum.

Exit fee

[81]   The 16 December 2022 letter from Season Sheen to Austino and Mr Chen recorded that Season Sheen cancelled the unused commitment, Tranche 2, from the date of the letter, and confirmed that as a result the exit fee of $195,000 was due and payable from the date of the letter. This amount is properly included in the quantum to be ordered.

Legal costs and credit

[82]   The quantum sought includes legal costs, charges and expenses of $138,241.49 as at 30 April 2024 and subtracts a credit of $40,068.56 held by Bell Gully. There is no breakdown of the costs, charges and expenses claimed or explanation of the credit

held. Further evidence is to be provided of these amounts prior to quantum being ordered.

Conclusion on quantum

[83]   Given the issues with the calculation of the amount outstanding, I grant summary judgment on liability below but adjourn the application on quantum and make directions for the filing of amended schedules recalculating quantum together with supporting evidence where necessary and a further memorandum. Mr Chen is then to have an opportunity to respond.

[84]   Given sales may have occurred since the hearing, I include a direction that the further affidavit to be filed on behalf of Season Sheen updates the Court on any further sale proceeds and the dates on which those sale proceeds were received so these can be included in the recalculation.

Costs

[85]   The plaintiff is entitled to indemnity costs in accordance with cl 12.1(b) of the Facility Agreement. The plaintiff is to include in the memorandum and further evidence filed any claim to further costs and provide a breakdown by task, hourly rate and staffing level.

Result

[86]   I grant the plaintiff’s application for summary judgment as to liability but adjourn the application as to quantum for determination on the papers (unless a further hearing appears necessary) following the steps directed below.

[87]   The plaintiff is to file and serve by 20 December 2024 a memorandum on quantum and costs together with an affidavit(s) addressing the following to allow quantum to be determined for the purposes of summary judgment:

(a)providing evidence of the sale proceeds received and the dates of receipt and updating the Court as to any further sale proceeds received since 4 June 2024 and the date on which they were received;

(b)providing the basis, if any, for applying the sale proceeds to Tranches 1A and 1B in a manner different to that set out above at [53];

(c)including schedules for Tranche 1A and 1B recalculating the quantum payable on the basis of:

(i)the updated evidence of original and any further sale proceeds;

(ii)default interest only being payable from 5 August 2022 and only to be capitalised on 31 May 2024 with no default interest payable on the capitalised amount of default interest and no further default interest capitalised;

(iii)standard interest and line fees only to be capitalised on the last working day of each month in addition to 5 August 2022;

(iv)including rental of $65,214.70 on the dates received (unless further submissions made as to why it should not be included); and

(v)the drawdown of $100,000 on 28 November 2023 is not to be included in the amount owing;

(d)providing further evidence and a breakdown of the legal costs, charges and expenses claimed previously and the credit held by Bell Gully and when it was received; and

(e)providing evidence of any further costs and disbursements claimed including a breakdown by task, hourly rate and staffing level.

[88]   The defendant is to file any memorandum  and or affidavit  in  response  by 24 January 2024.

Associate Judge Sussock