Wei & Fei Wu Family Investment Holding Pty Ltd v City Garden Australia Pty Ltd

Adjournment

1. There was no question that the Court had the power to grant the adjournment under s 66 of the Civil Procedure Act 2005 (NSW), which had to be exercised in accordance with the requirements of s 56, to give effect to the overriding purpose there specified of facilitating the just, quick and cheap resolution of the real issues in the proceedings.
2. In resolving what lay in issue, the requirements of ss 57, 58, 59 and 60 also had to be borne in mind. They included:

• the objects of the just determination of the proceedings and efficient disposal of the business of the Court and the efficient use of available resources and timely disposal of the proceedings, at an affordable cost: s 57;
• acting in accordance with the dictates of justice, which required regard to be had to the degree of difficulty or complexity of what was in issue; the degree of expedition with which the parties had approached the proceedings, and whether any lack of expedition had arisen from circumstances beyond their control; and the degree of injustice that would be suffered by the respective parties as a consequence of the adjournment: s 58;
• eliminating any delay between the commencement of the proceedings and their final determination, beyond what was reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute: s 59; and
• resolving what lay in issue in such a way that the cost was proportionate to the importance and complexity of the matters in dispute: s 60.

1. It was relevant to my conclusion that the adjournment had to be refused that City Garden's application was not made as the result of the late withdrawal of legal representation, but rather as the result of steps taken by Mr Liang only shortly before the scheduled hearing, for reasons which he did not disclose in his affidavit. The other parties had complied with the orders made for the filing and service of evidence and submissions, but City Garden had not. Why that was so was also not revealed.
2. Mr Liang is not a native English speaker and had the assistance of an interpreter because his English is only conversational. What he said in his affidavit had not provided a just basis for the adjournment sought, which was opposed by the plaintiff. He was given the opportunity to explain why City Garden had dispensed with the services of its solicitor, who had not only acted for it when it filed its defence, but also in advancing a claim for the provision of security for its costs.
3. Mr Liang said that he had had a disagreement with his solicitor and needed to find a better one, but he did not reveal what the nature of the disagreement was. When informed that what he had submitted still did not provide a sufficient basis for an adjournment, Mr Liang said that the disagreement was over the $1million in issue, which had come into City Garden's bank account and had been transferred out the same day. Further, that "we never know this money, but the previous solicitor did not take any legal action to protect our benefit. That's why I need to find another solicitor, to pay for the missing case".
4. The plaintiff's case was that what had been advanced by Mr Liang did not establish that it was reasonable for City Garden to put itself into the position of not being legally represented on the summary judgment hearing, nor that the timing of its decision had been reasonable, given that that there was no evidence about why Mr Liang's concerns had not been pursued until 3 December. Submitted to be relevant were the communications from City Garden's former solicitor about the defence it had filed, and the costs estimate provided on the issue of security for costs it had raised. They established that both junior and senior counsel had been briefed and that City Garden had junior counsel's assistance, when its defence was prepared.
5. Mr Dai and Ms Zhu's attitude to the application was neutral, but their counsel said that Mr Liang had not been involved in City Garden at the time the advance was made in December 2016 when Mr Dai was sole director, as Mr Liang became a director only in July 2017. He submitted that this suggested that City Garden's defence could be described as "somewhat provisional", pending further information. He also revealed that Mr Liang and Mr Dai had fallen out and that there was other litigation on foot between them, so that Mr Liang might have "an informational deficit" about the circumstances of what City Garden was suing on, so that the hearing of the summary judgment application might be premature.
6. It then emerged that the litigation on foot between Mr Liang and Mr Dai was not previously known to the plaintiff. What it concerned was not revealed. The plaintiff's case remained that no evidentiary basis for the adjournment had been established; it urged that it would not be accepted that the defence which City Garden had filed was "provisional" and submitted that there was an obvious conflict between City Garden and Mr Dai and Ms Zhu, which had to be considered.
7. In response, Mr Liang only revealed his opinion that City Garden's former solicitor had not done enough investigation and that he had himself gone to the ANZ Bank and learned that Mr Dai had opened the account into which the advance had been deposited. He also said that Mr Dai had never provided any bank statements for account keeping to him, even though he was a shareholder. But no evidence was led to support any of the submissions which Mr Liang advanced, or which established a basis for the concerns which he expressed.
8. On the evidence and the cases which the parties had advanced, I was thus satisfied that justice did not permit the adjournment City Garden had only belatedly sought.
9. As discussed in Dawson v Deputy Commissioner of Taxation (1984) 56 ALR 367; (1984) 71 FLR 364 at 365-7, "judges should be alert, as a general consideration when considering applications for an adjournment or postponement of trial, to the risk of persons endeavouring to manipulate the legal process as the means of escaping or deferring their just obligations".
10. Both the parties and their legal representatives also have obligations imposed upon them in respect of the overriding purpose specified in s 56 of the Civil Procedure Act.
11. The evidence and the cases which the parties advanced established that the adjournment of the hearing of the plaintiff's motion would not facilitate the Court achieving the statutory objective. City Garden's belated application, unsupported by any cogent evidence, had to be considered in circumstances where:

• the reason for the termination of the services of its former solicitors was not adequately explained;
• the case Mr Liang advanced confirmed that City Garden had received the claimed advance from the plaintiff, the money having been paid into its ANZ Bank account;
• there was not only a disagreement between Mr Liang, its current director, and Mr Dai, the former sole director who had obtained the advance and dealt with the funds in 2016, about what he had done with the advance, but also litigation on foot between them about undisclosed matters; and
• there was no pleading or any other suggestion that the plaintiff had any involvement in or responsibility for the matters about which Mr Liang was concerned, namely the use to which the advance had been put, which on his view was not for City Garden's benefit.

1. The case Mr Liang advanced was concerned with what Mr Dai had done with the loan City Garden received from the plaintiff. Mr Liang did not dispute that it had been advanced or that the plaintiff had a right to have the loan repaid.
2. Accordingly, I was satisfied that justice required that the adjournment be refused, Mr Liang's concerns about what Mr Dai had done with the money providing no just basis for the adjournment of the hearing of City Garden's motion.
3. The usual order as to costs under the Rules is that they follow the event, which in the case of this motion is an order that City Garden bear the plaintiff's costs of the motion. Unless the parties approach to be heard within 7 days, that will be the Court's order.

Mr Dai and Ms Zhu's motion

1. Consistently with their obligations under s 56 of the Civil Procedure Act, Mr Dai and Ms Zhu accepted that as the plaintiff's reply had earlier been filed with their consent, if their application to have cl 2(c) of the reply struck out succeeded, the plaintiff would have to be given leave to amend its statement of claim to include the disputed claims, and they be given leave to file an amended defence.
2. After hearing argument, I accepted the case advanced for the plaintiff that the quicker and cheaper course would be to give the defendants leave to file a rejoinder, and if necessary, the plaintiff leave to file a further rejoinder.
3. I came to these conclusions because the evidence established that the defendants had not been denied procedural fairness by what had been raised by the reply, given that it had been filed by consent. Even though counsel had not been instructed with the reply before the submissions on the summary judgment motion were filed, what was raised by the reply rested on matters raised by Mr Dai and Ms Zhu's defence and could have been addressed in their oral submissions or in amended written submissions. The evidence they had served already dealt with matters relevant to the claims so advanced in the reply.
4. I thus concluded that the defendants should have an opportunity to formally respond to cl 2(c) of the reply by way of rejoinder, and the plaintiff should have an opportunity to respond by a further rejoinder, if that was necessary.
5. Mr Dai and Ms Zhu also sought an order for costs of the motion. Given that their application was advanced on the basis of representative error, it is difficult to see that justice would permit such an order.
6. The obvious outcome of what had arisen could have resulted from a sensible discussion between the parties' legal representatives about the filing of a rejoinder by consent to the reply which had been filed by consent, consistent with the requirements of s 56. Given that the belated motion was also relied at on the hearing on 7 December to advance an unnecessary adjournment application, it is difficult to see that the plaintiff should bear the cost of what was so pursued.
7. If necessary, I will hear the parties on costs of this motion if anyone takes the view that the order should be other than an order that costs of the motion be costs in the cause, as was agreed in relation to Mr Dai and Ms Zhu's costs on the summary judgment application.

Summary judgement

1. There was no issue that r 13.1 permits summary judgment to be given in an appropriate case, but settled that no one will be denied a contested merits hearing, if there is a real defence: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 and Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.
2. While Mr Fei Wu and Ms Wei Wu, the plaintiff's directors, did not expressly say in their affidavits that they believe City Garden has no defence, that is what they must be understood to be saying, given their explanations about how the plaintiff came to advance it $1million which has never been repaid, nor any interest paid, despite further discussions with Mr Dai. If it be accepted that there has been a technical failure to comply with r 13.1(1)(b), given that the evidence of Mr Dai, City Garden's sole director and secretary at the time the loan was advanced corroborates their evidence that before the money was advanced he executed the deed on its behalf. There is no suggestion that it or interest have been paid and that the case which Mr Liang advanced confirmed that it had received the money, that failure could not justly result in the refusal of the application for summary judgment.
3. As Sheller JA discussed in Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512, on an application for summary judgment where the defendant appears, the pleadings, evidence and submissions must be considered and if it is concluded that there is no defence, the Court may give summary judgment, even if the plaintiff's affidavit does not comply with the requirements of the rule. That is because the rule is intended to prevent a defendant who knows that the sum claimed is owed from postponing the time of payment and putting the plaintiff to further expense in litigation which ought not to have taken place. To refuse such an application because of the form of an affidavit would defeat the purpose of what the rule intends to achieve: at 11, 516.
4. There must, however, be a high degree of certainty about the ultimate outcome of the plaintiff's case against City Garden, requiring exceptional caution to be exercised, before summary judgement is given: Webster v Lampard (1993) 177 CLR 598; (1993) 116 ALR 545 at 548. The power is to be exercised where there can be no reasonable doubt that the plaintiff is entitled to judgment and thus "inexpedient to allow a defendant to defend for mere purposes of delay": Clarke v The Union Bank of Australia Ltd (1917) 23 CLR 5; (1917) 23 ALR 113 at 113.
5. The burden lies on the plaintiff who seeks summary judgment to persuade the Court that there is no real question to be tried: Singh v Varinder Kaur (1985) 61 ALR 720 at 722. The relevant considerations were discussed in O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71 at [3]: "(a) On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded (at [23]). (b) The critical question can be expressed as whether there is more than a 'fanciful' prospect of success (at [25]) per French CJ and Gummow J) or whether the outcome is so certain that it would be an abuse of the process of the Court to allow the action to go forward (at [54] in the judgment of the plurality). Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success (ibid). (c) Powers to summarily terminate proceedings must be exercised with exceptional caution (ibid at [55]; see also French CJ and Gummow J at [24])."
6. Account must thus be taken of the fact that summary judgement is only sought in relation to City Garden and not on the claim advanced against Mr Dai and Ms Zhu under their guarantee and that there is an issue as to whether the deed is binding, given how it was executed. While there is no issue that it was signed by all parties, whether they signed in the presence of a witness is disputed. That turns on questions of credit. If not properly executed, there is also a question about whether there is an underpinning contract by which the parties to the deed are bound.
7. A defendant's mere denial of a claim will not be enough if a plaintiff has made out an entitlement to summary judgement, but it is also long settled that summary judgment should not be given where the defence raises a triable issue: Cloverdell Lumber Company Pty Ltd v Abbott [1924] HCA 4. This is particularly so on matters where there are serious conflicts as to matters of fact or credit: Sidebottom v Cureton (1937) 54 WN (NSW) 88 and Bank of New South Wales v Murray [1963] NSWR 515.
8. For reasons which I will explain, despite this issue as to the execution of the deed and the consequences, I am satisfied that the burden which falls on the plaintiff has been met.

The parties' cases

1. On the case pressed for the plaintiff the only conceivable defence which City Garden had was in relation to part of the outstanding interest, there being no issue that it had executed the deed, received the loan, failed to repay it when it fell due or at the times to which repayment was extended and also failed to pay any interest, notwithstanding the issue as to the consequence of how the deed was executed.
2. It was also submitted that there could be no issue that there was no agreement which bound the plaintiff, that part of the costs of the construction of Mr and Ms Wu's home were to be funded by a reduction of the interest payable by City Garden under the deed, by a total of $405,000. This was because not only had Mr Dai denied such an agreement both in writing and later in his affidavit, but also because the terms of the construction contract Mr and Ms Wu entered with Ming Tian, to which the plaintiff and City Garden were not parties, made no provision for such a set off. Instead, the contract contained an entire agreement clause, as well as a no set off clause, which provided: "Contract represents Entire Agreement 3d) Apart from any terms implied by Statute, the whole of the terms, conditions and warranties of this contract are as set out in the Contract. The same are not in any way varied or affected by reference to any prior negotiations, stipulations or agreement, whether written or verbal. 18. No right of set-off Except as expressly stated in this Deed, the Debtor has no right of set-off the Lender."
3. In the result, even if there was an earlier agreement about the claimed reduction of the interest the plaintiff was owed, it did not bind the plaintiff and City Garden and it was not in any event implemented, when the written construction contract was later entered. Even if that were not accepted, the agreement had either been breached or repudiated, but in that event it was accepted that there might be relevant consequences.
4. It was also relevant that City Garden's defence did not plead a set off in respect of interest it owed, rather: "6(c) further says that the second defendant has, to its knowledge, carried out construction works on behalf of and/or the benefit of the plaintiff at Chamberlain Street, Rose Bay, NSW, to reduce any amount the second defendant owed to the plaintiff pursuant to the agreement subject of these proceedings. To the best knowledge of the first defendant, the amount which was reduced is at least $405,000."
5. That was submitted to raise a hopeless defence, resting as it did on an agreement to which City Garden was not a party and on terms of which it was not aware. But if it were concluded that this could raise a triable issue, then the proper order would be to reduce the sum ordered to be paid by the disputed $405,000.
6. As to the documents Mr Liang relied on, it was submitted that they established City Garden's receipt of the advance and that his suspicions about Mr Dai having misappropriated the money were irrelevant to the plaintiff's claim to recover that advance and the outstanding interest.
7. That was established by the evidence that at the time the advance was agreed following Mr Dai's approach to Mr and Ms Wu, he was City Garden's sole director with undoubted authority to bind it as he did when the deed was executed and also to direct that payments later be made out of its accounts.
8. It was also relevant that at the time the money was advanced, Mr Dai and Ms Wu were also City Garden's shareholders. There was no evidence of any misappropriation or any suggestion that if any fraud had occurred, it was something in which the plaintiff was involved, or even of which it had knowledge. The evidence also established that the plaintiff had advanced the money for an identified commercial purpose identified in the deed, which provided in the Recitals and definitions: "B The Debtor acknowledges that Debt is to be used for the Permitted Purpose only. …. 1.16 Permitted Purpose means completion of the purchase of the Property in accordance with the Contract for the Sale and Purchase of Land as annexed to this Deed in Annexure 1 ('Contract')."
9. Accordingly, the consequences of any fraud could not be brought home to the plaintiff.
10. What Mr Liang submitted in response to the case so advanced, began with his belief that City Garden's ANZ Bank account, into which the plaintiff had paid the loan, had not been opened with the correct company information and that he "doesn't really owe this money". He also said that he was going to go to the police to report this case, "because it's stolen," because the money was transferred into the City Garden account and transferred out the same day for what he claimed to be Mr Dai's personal use, not the company's.
11. Mr Liang also said that the company was the trustee of a trust and had never used the money for the benefit of the trust. He thus considered that this was a criminal case, believing that Mr Dai had stolen the company's money for his personal use and that the money had been transferred after the land was purchased, with the whole of the construction being funded by a Westpac construction loan and mortgage.
12. Mr Liang was then given an opportunity over the lunch break to provide any documents on which he wished to rely to support the case he wished to advance. There was later no objection to his tender of City Garden's ANZ Bank account records, a document entitled "Ming Tian Property Group proposed development finance of 2/21 North Rocks" and a photograph of an unidentified building site.
13. What Mr Liang then argued was not that the loan monies had not been received by City Garden, which he now seemingly controls, nor that the loan and any interest owed had ever been paid to the plaintiff. His case remained that Mr Dai had stolen that money from City Garden for his personal use, with the result that it had never had the benefit of the borrowing. But the evidence which he tendered provided no basis for such a belief.
14. Mr Liang also submitted that the Ming Tian City Garden unit trust did not know about any deal between the plaintiff, Mr Dai and Ms Zhu. He also referred to an "internal deal" with the plaintiff for another project, not in relation to North Rocks City Australia Pty Ltd, which he was investigating further. But he did not reveal what he was referring to.
15. In his affidavit, Mr Liang had said he had become a unit holder in the trust in August 2016, but there was no evidence about its existence, or that of North Rocks City Australia, to which he also referred. Nor was the trust disclosed in either the deed or it seems in the contract for the purchase of the North Rocks development to which he referred, where the purchaser was identified to be City Garden.
16. Mr Liang also submitted that the agreement for the $1million advance was fake, but he advanced no explanation for that submission. It was also inconsistent with his own tender of the ANZ Bank records which evidenced the payment which the plaintiff had made to City Garden, as the evidence establishes had been agreed. He also said that he had confirmed with an unidentified solicitor that he had not prepared the agreement, by which I understood him to mean the deed, but the documents which he tendered also provided no evidence of this.
17. Mr Liang also said that in 2017, when he was already a director, he had not been informed of the second review of the loan by either Mr Dai or the plaintiff. There are documents in evidence which reflect discussions about which Mr Wu and Mr Dai gave evidence in relation to the extension of the loan, but they did not result in the execution of a further deed. Mr Liang said he was also not aware of this.

The evidence

1. The plaintiff relied on the affidavit evidence of its directors, Mr and Ms Wu, known as Eddie and Cathie; Ms Lyu, a solicitor; and Mr Dai and Ms Zhu.
2. There was no issue that Mr Dai ceased being a director of City Garden on 27 November 2019. There was no suggestion on the evidence or the case that Mr Liang advanced that anyone other than Mr Dai ever dealt with Mr Wu about the advance which the plaintiff made to City Garden, the payment of interest outstanding or the repayment of the loan. There is also no issue that the City Garden seal and Mr Dai's signature appear on the executed deed.
3. Mr Wu deposed to the friendship he and his wife had had with Mr Dai since 2014. Mr Dai was the sole director of City Garden when, in October 2016, he approached Ms Wu about finding investors in real estate development at North Rocks and in December, about a loan of $1million to City Garden. The terms of the loan were agreed and the deed executed on 21 December at a restaurant at Ashfield where they met Mr Dai and Ms Zhu. But the loan was not repaid when it fell due in June 2017.
4. Ms Wu corroborated this account and deposed to the final version of the deed being taken to the restaurant, where it was executed by Mr Dai and Ms Zhu and witnessed by one of their friends. Mr Dai had provided her with City Garden's bank account details and so they then immediately transferred the $1million to that account from the Commonwealth Bank at Ashfield.
5. There are issues of fact as to whether or not the deed was executed before the attesting witness, Mr Gu, which will turn on questions of credit, and also about whether a subsequent agreement was entered into in relation to some of the interest payable in respect of the loan.
6. Mr Dai responded to the affidavits of Mr and Ms Wu. He deposed that both he and Ms Zhu signed the loan deed and he stamped it with the City Garden seal at their office on the morning of 21 December, having received the deed, the contract for sale of the North Rocks property, a call option notice and notice of termination from Ms Wu the previous day. Their signatures were witnessed by an accountant Mr Zheng, working for his company, Ming Tian Pty Ltd. He emailed the executed documents to Ms Wu before lunch, together with City Garden's bank account details.
7. Mr Dai said that Ms Wu later advised that there were errors and formatting problems in the deed, which had to be re-executed. She and Mr Wu then came to his office. There was then no one there to witness the signatures, but they all signed the deed and he again applied the "City Garden stamp". They all then went to the restaurant where Mr Gu witnessed the deed, which they had already signed. He did not take the City Garden seal with him to the restaurant.
8. Ms Zhu's affidavit evidence also responded to Mr and Ms Wu's affidavit. She said that Mr Dai had dealt with the loan to City Garden and she did not have much input, but understood it was to be used to fund the North Rocks development.
9. Ms Zhu corroborated Mr Dai's account that they first signed the deed at their office, when it was witnessed by the accountant. Mr Dai told her it had to be resigned and they all signed the deed when Mr Wu and Ms Wu attended at the office and Mr Dai stamped it with the company stamp. They all then went to the restaurant and Mr Dai asked Mr Gu to witness it, which he did.
10. Mr Wu's evidence was that he later discussed repayment with Mr Dai and agreed to give City Garden time to pay until December 2017, which was later extended until June 2019. A second deed was prepared, but never properly executed.
11. There was no issue that in 2017, Mr Dai and Ms Zhu had agreed to have Ming Tian, a construction company of which Mr Dai was also a director, build their home at Rose Bay. Ms Wu said that it was mainly Mr Wu who dealt with Mr Dai, but that she had discussed with Mr Wu what he said was proposed and that they had agreed.
12. Mr Wu said that in March he had proposed and Mr Dai agreed that the interest City Garden owed the plaintiff could be paid directly to Ming Tian "and regarded as being paid by us". Mr Dai said, "Yes that's absolutely fine. As I am the director of both City Garden and Ming Tian I can arrange the payment from City Garden to Ming Tian directly," and it was agreed that there would be an adjustment every 6 to 12 months for "interest payment to construction cost".
13. Mr Wu signed the building contract with Ming Tian in May, but this arrangement was not there reflected.
14. Despite this, on Mr Wu's evidence, interest payments totalling $405,000 were treated as payments of their construction costs in December 2017, June and December 2018 and June 2019. But in the final progress payment claim, the $405,000 was not so treated. On 22 May 2020, Mr Dai advised on Ming Tian letterhead: "With Regarding towards AU$405,000.00 were deducted as interest paid towards loan for of $1million in principal through City Garden Australia. However due to the situation that Meng Dai is no longer the director of City Garden Australia Pty Ltd, this amount need to be separately treated and the shareholder of Ming Tian Real Property Pty Ltd does not agree with that treatment of transaction. Therefore it will not be counted as payment towards the contract sum."
15. While Mr Dai disputed Mr Wu's evidence as to how the deed was signed and that it had been agreed that part of the cost of construction of the home was to be funded by an reduction in interest payable by City Garden, he did not deny that extensions of its loan had been agreed, or that it had not paid the interest owing.
16. The proper inference on the cases advanced is that the reference to the shareholder in Mr Dai's letter was a reference to Mr Liang. The terms of this letter are inconsistent with there having been no agreement reached in relation to the money the plaintiff claims was loaned to City Garden, on which it had to pay interest, or there having been no agreement between Mr Wu and Mr Dai about the use of interest City Garden owed the plaintiff, to meet construction costs Mr and Ms Wu owed to Ming Tian.
17. Ms Wu spoke to Mr Dai after the letter was received. Their conversation was: "Cathie [Ms Wu]: Adam, why did your construction company not give any credit for a sum of $400,500 which was interest payable by City Garden? It was previously agreed! Adam [Mr Dai]: Hi Cathie, I am not able to offset the loan interest from your construction payment, because when Eddy and I agreed on the interest offset from your construction payment I acted as the director of City Garden and the sole director of Ming Tian. At that time I had a reasonable control of the final fund settlement between Ming Tian and City Garden, where Ming Tian also acted as the builder of City Garden's North Rocks project. However, things greatly changed last year. I was removed by the major shareholder Victor of City Garden from the role of director of City Garden. Recently he also rejected to pay the outstanding invoices from Ming Tian. Under such circumstances I cannot assure the offset amount from the construction payment will be fully repaid by City Garden after they receive the proceeds of property sales in the future few months. In addition, the other shareholder of Ming Tian also rejected the interest offset because it was not fair to him. I will write a formal letter to you and Eddy to clarify the current situation of the accrued interest payment."
18. Mr Dai did not deny this conversation. On his evidence, Ming Tian was paid $400,000 in May 2018, leaving $776,997.32 owing. There is no suggestion that it has taken any steps to recover what it claims still to be owed.
19. Mr Wu's evidence was that after the North Rocks development was completed and lots advertised for sale in April 2020, he pursued repayment of the loan. City Garden later commenced these proceedings.
20. The documents which Mr Liang tendered included an email in which Mr Liang said that the construction loan from Westpac was fully relied on for the whole construction loan; that he had obtained the records he tendered from ANZ Bank; that Mr Dai and Ms Zhu had used the $1million funds for an unidentified personal project and so had stolen company money for their personal use; that the unit trust had never known or gotten benefits from these funds; and that he believed that "the plaintiff also did mistakes".
21. What those mistakes were, was not disclosed and the attached documents established no basis for Mr Liang's beliefs and assertions.
22. What was attached was a document entitled the "Ming Tian Property Group proposed development finance of 221 North Rocks", which contained a letter from Westpac Commercial Banking with an undated expression of interest for its consideration; a development deed executed on 1 December 2016 by City Garden and North Rocks St Pty Ltd, which had only been signed by Mr Dai, not the other party; parts of contracts for sale of lots of land to various purchasers at 221 North Rocks Rd North Rocks and a photograph of an unidentified building site where a skip and digger can be seen.

Summary judgement must be given

1. The case which Mr Liang advanced evidenced a misunderstanding of the obligations and rights of City Garden, a separate legal entity from its directors and shareholders, and his rights and entitlements as a director of City Garden and unit holder of the trust he claimed to hold units in, about which there was no evidence.

The loan

1. The evidence well establishes that the plaintiff loaned City Garden $1million, for which it agreed to pay interest.
2. What City Garden did not admit in its defence was its entry into the deed and its failure to repay the loan, which it said it "does not know and cannot admit", but it denied that it had failed to pay interest. The defence was verified by Mr Liang. On the evidence and cases advanced what is certain, however, is that:

• Mr Dai, then City Garden's sole director and secretary, executed the deed on its behalf by signing it and affixing its seal on 21 December 2016;
• the plaintiff considered itself bound by the deed and thus advanced the agreed $1million loan to City Garden, as it admitted in its defence;
• the advance was deposited into City Garden's ANZ Bank account, as Mr Dai had directed; and
• City Garden also considered itself bound by the deed, Mr Dai successfully pursuing agreements for extension of the time for repayment of the loan;
• Despite this City Garden failed to repay the loan and never paid any of the agreed interest.

1. Even accepting Mr Liang's case that he was not aware of the 2016 discussions about the loan; the deed under which the advance was made to City Garden; the account into which the loan was paid; the extensions given to repay the loan; and the negotiations about the use of part of the interest it owed to pay Ming Tian construction costs which Mr and Ms Wu owed that company, the evidence neither suggested nor established that:

• Mr Dai did not have the authority to act as he did in arranging the loan, executing the deed, directing where the money it borrowed from the plaintiff was to be paid, or how that money was then dealt with;
• Mr Dai was either obliged to obtain Mr Liang's consent before City Garden borrowed the money from the plaintiff on the terms agreed, or even then to inform Mr Liang of what he had agreed and done.

1. On the evidence Mr Dai was then City Garden's controlling mind and thus entitled to borrow money for its commercial purposes and for that purpose to enter into the deed which, on his evidence, he executed for City Garden in December 2016 by signing and applying its seal, that being necessary for it to obtain the agreed borrowing from the plaintiff, given the terms of the deed. Those actions made it responsible for ensuring the payment of the agreed interest and the repayment of the loan when it fell due.
2. Nothing which Mr Liang advanced about his suspicions that Mr Dai misappropriated the money, established that there was a triable issue in relation to the plaintiff's right to summary judgment. That explains why such matters are not raised by its defence, which Mr Liang verified at a time when it had legal advice.
3. Whether the litigation on foot between Mr Liang and Mr Dai concerns the question of his authority to act as he did in relation to the loan, or the use to which the money was put after it was transferred out of City Garden's bank account, was not revealed. But any disagreement between them about such matters provides no basis for a conclusion that the orders which the plaintiff seeks cannot be made, notwithstanding the exceptional caution and great care with which the power to order summary judgment must be exercised: Webster v Lampard at 602.
4. Nor does such a conclusion follow from the requirement that City Garden's case must be taken at its highest: Simmons v NSW Trustee and Guardian [2014] NSWCA 405 at [200].
5. On City Garden's pleaded defence, the evidence and the case Mr Liang pursued in his submissions, it must be concluded that its defence is hopeless and that summary judgment must be entered against it, even though orders are not now pressed against Mr Dai and Ms Zhu on their guarantee.
6. City Garden's defence pleaded that it does not know and cannot admit the deed which the evidence established it executed in 2016, which induced the plaintiff to advance it the agreed $1million loan. That no doubt reflects Mr Liang's lack of knowledge, but as the evidence established, not that of Mr Dai, its controlling mind at the relevant time.
7. In the defence, City Garden did admit the receipt of the loan in issue, but also pleaded that it does not know and cannot admit its alleged failure to repay the loan or to pay any interest due under the deed. Again, that may reflect Mr Liang's lack of knowledge, but not that of Mr Dai given what the evidence establishes.
8. The issues raised on Mr Dai and Ms Zhu's defence about their execution of the deed go to the case advanced against them on the guarantee. But their evidence establishes that Mr Dai, then City Garden's sole director and secretary, signed the deed and affixed its seal, as s 127(2)(c) of the Corporations Act 2001 (Cth) permitted. That also permitted the plaintiff to assume that it had duly executed the deed, which was in any event established by the evidence: s 129(5). In the result it must be concluded that it was bound by the deed.
9. That Mr Dai and Ms Zhu may not have properly executed the deed does not prevent it binding City Garden. The resolution of that issue will not throw any additional burden upon it under the deed: Pratap v Permanent Custodians Limited [2013] NSWSC 1918 at [8], applying Mirzikinian v Tom & Bill Waterhouse Pty Ltd [2009] NSWCA 296. That is because the guarantee which they there provided did not relieve City Garden of its obligation to repay the loan, or to pay the agreed interest on the money it had borrowed.
10. Even if the deed was ineffective so far as City Garden is concerned, which I am satisfied it was not, the evidence also establishes that it executed the deed, intending to be bound by what was there provided as did the plaintiff.
11. Nothing in the evidence supports the view that they were not intending either to create legal relations or to be bound by what was provided in the deed, having given and received the promises there made, including importantly by the plaintiff to advance it $1million for its commercial purposes by way of consideration and City Garden to pay the agreed interest. The former was reflected in cl 3.1 of the recital and was confirmed by what Mr and Ms Wu did immediately after the signing of the deed, by going to the bank at Ashfield and transferring the money into City Garden's ANZ Bank account, as the deed contemplated.
12. In the result, there can be simply no question that the plaintiff is entitled to the judgment it seeks against City Garden.
13. Neither in the defence nor the case Mr Liang advanced was it suggested that the money advanced was a gift, or that City Garden was entitled to retain the money it had borrowed for some other reason. What he was concerned with was what he viewed to have been Mr Dai's misappropriation of City Garden's funds.
14. The case Mr Liang so advanced for City Garden provides no foundation for the conclusion that the plaintiff is not entitled to the summary judgment it seeks. Recovery of what City Garden borrowed under the deed it executed from Mr Dai depends on City Garden successfully pursuing a claim which it has seemingly not yet brought against him, in which it establishes that he misappropriated the funds, as Mr Liang believes. But City Garden's case establishes no basis for the conclusion that there is a basis for that belief, or that what Mr Liang suspects has anything to do with the plaintiff.

Interest

1. While City Garden's defence also denied the loss and damage which the plaintiff claimed to have suffered, that was also established, there being no issue that no interest has been paid and the loan has not been repaid. Ms Lyu explained in her 8 December affidavit her revised calculation of the 18% interest owing under the deed from the date of the loan until 7 December 2020, a total amount of $697,314.10.
2. Mr Liang's response to Ms Lyu's earlier, higher calculation, which she corrected in her later affidavit, was: "1 I do not believe that City Garden should pay interest calculated on the principal amount of the loan, because there was not a valid deed executed by City Garden and the plaintiff. 2 Even if there was a valid deed between City Garden and the plaintiff, the interest which City Garden is liable to pay to the plaintiff should be $713,588.05 - $405,000 = $308,588.05. 3 An email was sent by Mr Meng Dai (Adam) to me on 5 June 2020, confirming that $405,000, being part of the loan interest, was to be set off from the construction costs owed by the plaintiff to Ming Tian Real Property Pty Ltd. Ming Tian Real Property Pty Ltd is a building company who conducted construction work for the plaintiff in a project located at Rose Bay owned by the plaintiff. Adam is the sole director of Ming Tian Real Property Pty Ltd."
3. The annexed June 2020 email chain and documents concerned the construction work Ming Tian had performed for Mr and Ms Wu, which included the question it seems Mr Liang posed and the reply Mr Dai gave: "Adam says the total amount paid by Wu is $1,805.00. However, only $405,000 were treated as loan repayment (interest) for the $1m loan allegedly borrowed by City Garden. Where is the rest of the money? Why didn't he repay the $1m in full for City Garden? Please ask Adam to explain. The $1,805,000 is payment for construction of house, nothing to do with the $1million loan. The $405,000 was offset interests for the $1million loan towards the construction cost."
4. The plaintiff contended that as cl 14 of the deed provided that any amendment or variation is not effective unless in writing and signed by the parties, the claimed reduction of what was owed by $405,000 could not justly be made, there being no triable issue about the proper calculation of the outstanding interest.
5. On all of the evidence I have discussed, I am also satisfied that this must be accepted.
6. There is no evidence that either the plaintiff or City Garden ever agreed to such a reduction in the interest. While there were discussions about the execution of further documents, they were never executed.
7. In the result the order must reflect Ms Lyu's calculation.

Costs

1. The usual order as to costs is an order that City Garden bear the plaintiff's costs of the motion as agreed or assessed. Unless the parties approach to be heard within 7 days, that will be the Court's order.

Orders

1. For the reasons given I order that: 1. Judgment in the amount of $1,697,314.10 be entered for the plaintiff. 2. Unless the parties approach to be heard within 7 days, the Court's costs orders will be: 1. on Mr Dai and Ms Zhu's motion, that costs be costs in the cause; and 2. on the summary judgment motion, that City Garden bear the plaintiff's costs of the motion as agreed or assessed. 1. The matter be listed before the Registrar on 14 December at 10.50am.

Amendments 14 December 2020 - Typing error in regard to the amount of the Judgment in paragraph 107 that was also carried onto cover sheet. Both Paragraph 107 and cover sheet amounts amended to $1,697,314.10. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 December 2020