Perpetual Trustee Company Ltd v Michael Wilson Kwok
[2011] NSWSC 422
At a glance
Source factsCourt
Supreme Court of NSW
Decision date
2011-05-09
Before
Einstein J
Source
Original judgment source is linked above.
Judgment (13 paragraphs)
The proceedings 1These proceedings concern two notices of motion. The first was filed by the plaintiff seeking: (1)The Commercial List Response of the Defendant be struck out and summary judgment be entered in favour of the plaintiff, pursuant to rule 13.1(1) of the Uniform Civil Procedure Rules 2005. (2)Costs. (3)Such further or other order as this Honourable Court considers appropriate. 2The second was filed by the defendant seeking: (1)That leave be given to the defendant to file in this proceedings an Amended Commercial List Response and a Commercial List Statement of Cross Claim in the form annexed to the affidavit of Ryan Kim dated 6 May 2011. (2)Such other orders as the Court deems necessary to make. 3The gravamen of the dispute concerns a guarantee given by Mr Kwok to the plaintiff (Perpetual) for monies advanced to World Best Holdings Limited (World Best) by the plaintiff. 4The facts giving rise to this dispute are conveniently summarised in the defendant's chronology below.
CHRONOLOGY OF EVENTS DATE EVENT 10-Dec-2003 Loan entered into with Perpetual Trustee Company ("Perpetual") and Perpetual Investment Management Limited ("Perpetual Investments") brokered by Simon Levingston of Great Southern Loans Pty Limited ("Levingston") as broker for World Best Holdings Limited ("World Best"). By Letter of Offer & Facility Agreement (made on or about the same day), Perpetual Investment and Perpetual loaned to World Best a sum of $30,400,000.00 ("the Original Facility") 22-Dec-2004 World Best gave to Perpetual and Perpetual Investments a mortgage over Minto Mall Shopping Centre ("Minto Mall") as security Kwok guaranteed and indemnified the obligations of World Best 08-Dec-2006 By Letter of Offer, Perpetual and Perpetual Investment loaned World Best a further sum of $5,000,000.00 on the terms of the Original Facility were advanced and superseded and replaced ("the Facility") 16-Aug-2009 Helen James ("Helen") and Levingston went to Perpetual's offices and had a meeting with Marven Seeto ("Seeto") and Paul Burns ("Burns"), Seeto was a loan manager with Perpetual and Burns was his boss. Perpetual introduced World Best to an architecture firm DEM Aust Pty Limited ("DEM") 21-Aug-2009 Burns arranged a meeting in Chatswood with DEM, Levingston, Seeto and Helen. The purpose was to discuss improvements to Minto Mall. At the meeting Burns Told Helen that according to their records the Loan between World Bank and Perpetual was due for expiry on 5 December 2009 and that it would not be extended and would need to be paid in full by that day. Helen expressed surprise at this and advised Burns that the loans normally taken out by World Best were for 5 years and not 3. Burns said he was sure that it was expiring and no further funds were going to be advanced. Helen asked for a copy of the loan agreement to be forwarded to World Bank. Burns agreed to do this. To date Burns has never forwarded the loan agreement document to World Best. 21-Aug-2009 After the meeting Helen met with Kwok and told him that according to perpetual the whole loan needed to be repaid by 5 December 2009. Kwok asked Helen to speak to Levingston and see if this was right. He added that if this was right then to ask Levingston to try and find refinance. 21-Aug-2009 Helen called Levingston and asked him if he knew how long the loan with perpetual was for, he said that if they asserted that it was 3 years, then it was probably 3 years. Helen said that if that is so then World Best needed to find refinance as soon as possible 22-Aug-2009 Levingston called Helen and told her that he had been trying to find refinance options but there were none available due to the size of the loan and the global financial crisis ("GFC"). He advised that the only way to repay the loan was to sell the centre. 22-Aug-2009 Helen called Kwok and told him that Levingston couldn't find finance and that he thought the best option was to sell the centre to repay the loan. Kwok expressed concern because he did not want people thinking that this was a forced sale. He advised Helen to put several stored up for auction and to ask the agent to speak with some developers and investors to get them to make an offer. He advised looking overseas into South East Asia where the GFC may not be so bad, so as not to alarm tenants. He emphasized the need to settle quickly so the loan could be repaid. 24-Aug-2009 World Best retained Colliers International to carry out an Auction of the ALDI and Hungry Jack's stores in Minto Mall and to further market Minto Mall. 15-Sep-2009 World Best received a letter from Perpetual regarding the expiry of the loan 25-Sep-2009 World Best retained Savills Australia to market the property for sale Late Sept/Oct 2009 The Campbell Macarthur Advertiser ran a story about the financial situation of the Minto mall and the attempts by World Best to sell it. As a result some tenants left and others stopped paying their rent. The Value of Minto mall fell from $64.75m in 2006, to around $30m at this time. This value is based on the offers being received at this time 11-Nov-2009 World Best received a letter from Perpetual regarding the expiry of the loan 25-Nov-2009 Helen James on behalf of World Best wrote a letter to Perpetual and Perpetual Investments lawyers advising them that in actual fact the facility is not due to expire until 17 December 2011 26-Nov-2009 Letter in response to the above letter was received by World Best. It admits that as "Correctly pointed out in letter from the plaintiff dated 25 November 2009 the facility is not due to expire until December 2011" 30-Nov-2009 Offers were being received to purchase the mall around this time but they generally fell through due to the short settlement date. For example an offer from BB Retail Capital was unable to be completed due to the short timeframe required for settlement 24-Dec-2009 World Best commenced proceedings against Perpetual and Perpetual Investments in Supreme Court of New South Wales ("prior proceedings") . The relief claimed included a declaration that Perpetual and Perpetual Investments engaged in misleading and deceptive conduct or in the alternative, unconscionable conduct, or in the alternative that they had engaged in negligent conduct or made negligent mis-statements in breach of their duty, and damages/costs/interest 15-Apr-2010 Perpetual and Perpetual Investments filed a defence to the prior proceedings 23-Jun-2010 Proceedings Commenced by Perpetual in Supreme Court of New South Wales to wind up World Best 19-Jul-2010 Perpetual and Perpetual Investments filed a Notice of Motion seeking an order that the prior proceedings be dismissed due to the failure of World best to prosecute them. They also filed an Affidavit in Support of the Summary Dismissal motion setting out the history of the conduct of the prior proceedings until 19 July 2010 04-Aug-2010 World Best was wound up and Peter Marsden was appointed Liquidator 05-Aug-2010 Perpetual demanded payment from World Best under the facility and the Mortgage the outstanding sum of $35,580,093.86. Perpetual demanded payment from Kwok under the guarantee for the outstanding sum of $35,580,093.86 06-Aug-2010 Perpetual filed a Summons against Kwok claiming for relief in the form of Judgment in the sum of approx $35m, interest on the principal sum along with costs and other orders as the court sees fit on the basis that he guaranteed the loan to World Best from Perpetual and Perpetual Investment. In the Commercial List Statement filed on the same day, Perpetual seeks the relief set out in the summons on the basis that the loan facility was defaulted on when an application to wind up World Best was made, and when World Best was wound up. 15-Oct-2010 At the 6 th Listing of the prior proceedings there was no appearance on behalf of Kwok and the motion was dismissed with costs. 09-Nov-2010 Perpetual issued a Lenders certificate to Kwok