Antares v Yang [2017] NSWSC 1619 | Case summary | Zoe

/

/

Antares v Yang [2017] NSWSC 1619 | Case summary | Zoe

EX TEMPORE Judgment

By notice of motion filed 17 August 2017 the plaintiffs seeks an order striking out the defendant's defence as well as orders for summary judgment under the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) 13.1.
The principles in which such orders might be made are well-established and I will insert references to some authorities when the judgment is published. [1] Similar principles apply when the defendant seeks to strike out the plaintiffs' statement of claim or summons. The party or parties seeking summary judgment must establish that the defendant's case, which in these proceedings is articulated in his pleadings, comprising of a notice of defence and a notice of cross-claim, raise no triable issue. To adopt some of the more colourful language used in the cases, the case must be "so obviously untenable that it cannot succeed". It must be "hopeless" or "manifestly groundless". [2] In spite of some submissions tending to suggest the opposite, the plaintiffs accept that they bear the onus on this issue and that the bar is a very high one.
The present case arises out of two loan agreements entered into between the first and second plaintiffs and the defendant in the middle of 2015. By the first of those agreements, the first plaintiff loaned the defendant $6,022,500. By the second loan agreement, the second plaintiff advanced to the defendant $365,000. The terms of the loans were such that repayment was not required for some time into the future. However, the repayment date was subject to a proviso or a number of provisos, relevantly in this case, the occurrence of "an insolvency event".
It seems to be uncontested and un-contestable that there was such an event; namely, the issue of a garnishee notice by the Australian Taxation Office. Accordingly, repayment of the money advanced under the loans is now overdue. Accordingly, the plaintiffs' case is that the repayment is due and the defendant has not repaid the money. That is perhaps an over simplified version of the plaintiffs' case as pleaded in its amended statement of claim. However, it will do for present purposes.
The substance of the claim is made out in the affidavit of Wayne Curtis Jones sworn 15 August 2017 and the various annexures to the affidavit which were filed in support of the notice of motion to strike out the defence and for summary judgment in favour of each of the plaintiffs.
The notice of defence makes various formal admissions, various denials and various non-admissions, seemingly putting the plaintiffs to proof concerning whether the defendant signed the loan agreements and other documents which lay at the foundation of the plaintiffs' case.
The defence calls into aid, and repeats, the contents of the first cross-claim filed in the proceedings. The first cross-claim and statement of cross-claim contain a number of allegations in the nature of deceptive or misleading conduct. That conduct is alleged to have been engaged in by Mr Wayne Jones, in the course of promoting what is described as the "2015 scheme".
It seems there is no dispute that Mr Jones is a director and company secretary of the second plaintiff. There is an assertion, at least implied in the cross-claim, that Mr Jones was acting as agent for both plaintiffs in the course of the promotion of the scheme into which the defendant invested the money subject of the loan agreements. That scheme, as described in the cross-claim, involved various parties investing in some form of agriculture business or a "softwood timber project".
The cross-claim asserts that the defendant invested in the scheme as a result of the representations made by Mr Jones. The cross-claim goes on to assert that the conduct in making representations engaged the provisions of four statutes; namely, the Competition and Consumer Act 2010 (Cth), the Fair Trading Act 1987 (NSW), the Corporations Act 2001 (Cth) and the Australian Securities and Investment Commission Act 2001 (Cth). The cross-claim asserts that the representations were misleading or deceptive or likely to mislead or deceive and particularises the basis of that allegation as: "19 If the cross-claimant is found to be liable under the document entitles "Loan Agreement" which purports to be an agreement dated 21 July 2015 made between Antares and the cross-claimant (Antares Loan Agreement), then: The making of each of the 2015 Representations was conduct that was misleading or deceptive, or likely to mislead or deceive, because: if the cross-claimant invested $10 million plus GST in the 2015 Scheme by 30 June 2015, the cross-claimant's net investment in the 2015 Scheme would not be $3.6 million; no amount was to be returned to the cross-claimant by way of refund or rebate in respect of his participation in the 2015 Scheme; any amounts returned to the cross-claimant in respect of his participation in the 2015 Scheme were loans which were required to be repaid; the 2015 Scheme Documents did not accord with the Initial Representations; and the claimant is liable to pay the amounts claimed by Antares by its amended statement of claim filed 30 May 2017"
It also asserts that if the representations concerned "future matters" there was no reasonable basis for making the representations. The cross-claim then asserts that the facts as asserted entitle the defendant to relief under the various statutes to which I have just made reference. That relief includes declaratory relief but, more importantly in the present context, an order or orders under those various statutes refusing to enforce the loan agreements.
Written submissions were filed on the notice of motion and I have heard oral arguments this morning. The plaintiffs sought to rely on observations made by the High Court in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 to put the submission that a verified pleading is not enough and there should be "in the context of a summary judgment application sworn testimony which renders a trial legitimate".
I do not accept that the High Court's decision in Fancourt requires such evidence in the context of the provisions of the Civil Procedure Act 2005 (NSW) and UCPR in New South Wales. I accept the defendant's submission that Fancourt was concerned with Queensland provisions or rules of practice that require a defendant to satisfy a judge or master by affidavit that there was a question of dispute to be tried. So much seems to be clear from the decision of Samuels JA in Sing v Varinder Kaur (1985) 61 ALR 720 at 722, if not from the judgment of the High Court in Fancourt itself.
One way or another, in the course of oral submissions the relevance of Fancourt fell away to a certain degree, although the subtext of the submission continued to rely on what was said to be the deficiencies in the defendant's case, that is, a lack of sworn evidence presented to contest the notice of motion.
I do not accept that there is a requirement for such evidence. I accept that a defendant confronted with an application for summary judgment is entitled to rely on its pleadings. In some cases, that may be a dangerous approach but if the allegations made in the pleadings, which in this case and generally in New South Wales are verified, raise a triable issue or arguable defence or, in this case, and arguable cross-claim, the application for summary judgment would fail.
In oral submissions the plaintiffs focused more on a submission that the cross-claim neither engaged nor "impeached" the loan documents upon which the amended statement of claim is based. The language of impeachment was considered and picked up the use of that expression in HP Mercantile v Dierickx [2013] NSWCA 479, particularly at paras 135 through to 139.
This submission was related to a statement to the effect that the cross-claim failed to seek a set off of the amount provided to the defendant under the loan agreements. In essence, it was put that because there was no money or damages claim under the cross-claim, the defence and cross-claim did not "impeach" the plaintiffs' claim under the loan agreements. This submission went on that it was not clear from the cross-claim that it was asserted that the events of entering the loan agreements of July 2015 was induced by the likely misleading and deceptive conduct. This involved drawing a distinction between those loan agreements and the "2015 scheme" as described in the cross-claim.
I am unable to accept those submissions. The first part of the submission appears to be contrary to what Emmett JA said in HP Mercantile at [139]: "The Borrowers' claim under s 52 of the Trade Practices Act and TROM's alleged breach of fiduciary duty, if successful, would impeach TROM's title to sue. That is to say, the Borrowers assert that, but for the alleged misleading conduct, they would not have entered into the suite of agreements with TROM, including the Loan Agreement. Similarly, they say that, had there been disclosure of the round robin arrangement, in satisfaction of the fiduciary obligation owed by TROM, they would not have entered into the suite of agreements, including the Loan Agreement. I consider that, if the Borrowers had established that there was a contravention of s 52 as alleged, or that there was a breach of fiduciary duty as alleged, those claims would relevantly impeach the entitlement of TROM and, therefore, the entitlement of HPM, to sue on the Loan Agreement."
As to the second part of the submission, I accept the defendant's submission that this is really a pleading point and does not entitle the plaintiffs to summary judgment.
In my view and on my reading of the documents, it is tolerably clear that the cross-claim is asserting that the defendant would not have entered the scheme and therefore entered into the loan agreements if it were not for the conduct said to be deceptive and misleading pursuant to the various statutes particularised in the cross-claim.
It may be that the defendant's case is weak and that the plaintiffs will succeed on final hearing of the matter. It certainly appears that he was advanced the money subject to the loans but the loans have now fallen due as a result of the insolvency event and that he has failed to pay the money back. However, if the assertions made in the cross-claim are substantiated at the final hearing of the matter, the defendant may be entitled to relief including an order that the loan agreements not be enforced. That is a triable issue.
In those circumstances, I am unable to find that the defendant's case is so obviously untenable or hopeless or baseless that he should be denied a proper hearing of the matter and, accordingly, the orders that I make are: 1. The notice of motion is dismissed. 2. The plaintiffs are to pay the costs of and incidental to the notice of motion. 3. The matter is listed before the registrar on Tuesday, 21 November 2017 for directions.