Solicitors:
Guantao & CS Lawyers (Plaintiff)
Norton Rose Fulbright (First Defendant)
Landerer & Company (Second Defendant)
File Number(s): 2020/36104
[2]
ex tempore Judgment
HIS HONOUR: By a notice of motion filed 14 July 2020, Mr Hua Zhong, the plaintiff, made application for the entry of partial judgment against each of the first and second defendants in the proceedings brought by the plaintiff by way of an amended statement of claim filed on 10 February 2020.
The first defendant is known as i-Prosperity Pty Ltd and the second defendant, Menghong Gu (collectively, "the defendants"). By virtue of the first defendant having been placed in administration, the plaintiff did not pursue, but not abandon, his claim for relief in the notice of motion against the first defendant. In the result, the first defendant did not appear in these proceedings today.
The motion, by its terms, seeks an order pursuant to r 17.7 or alternatively r 36.1 of the Uniform Civil Procedures Rules 2005 (NSW) ("UCPR"), for judgment in favour of the plaintiff against the defendants in the amount of $2,900,000 (being $2.9 million) together with an order for interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) for prejudgment interest for the period from 15 March 2020 until the date of judgment without prejudice to other entitlements held by the plaintiffs.
However, in submissions today, Mr V Bedrossian, who appeared for the plaintiff, did not press, properly in my view, the relief for interest, having regard to the basis upon which the claim for relief was pressed, that basis being admissions within the amended defence filed in the proceedings. Hence, the matter comes to the court, in its final form, as a claim for partial judgment against the second defendant in the sum of $2.9 million essentially in reliance upon r 17.7 of the UCPR.
That claim was pressed, in an evidentiary sense, upon the basis of an affidavit of Shun Cheng of 14 July 2020. Mr Cheng is the solicitor for the plaintiff. The affidavit is essentially a formal affidavit which appends to it an amended statement of claim and the amended defence in the proceedings.
One further matter should receive attention before I proceed to the arguments advanced in support of the motion in its amended form. An appearance was entered today by Mr Fragos, a solicitor for the second defendant,. That submission was properly entered notwithstanding a notice of intention to ceasing to act by the solicitors for the second defendant, because the actual cessation of the appearance of the solicitor has not yet occurred. It was indicated in the brief submissions made by Mr Fragos that Mr Gu did not wish to be heard on the application and that its determination would be a matter for the court.
The application essentially hinges upon what is said to be an admission within the amended defence corresponding to para 21 of the amended statement of claim. In particular reliance is placed upon para 21(e) and (f) of the amended defence. (I note for completeness that attention was also drawn to para 22 of the amended defence). However, before I come to that consideration, some parts of the amended statement of claim should receive attention.
Firstly, it is pleaded and admitted that the second defendant is a natural person and is liable to be sued in his name and that the second defendant is a director of the first defendant.
Secondly, in para 4 of the amended statement of claim, it is pleaded that on or about 10 November 2017 the plaintiff and the first and second defendants entered into a binding agreement comprising, inter alia, obligations on the part of the plaintiff to loan funds to the first defendant, and obligations on the part of the defendant to repay those funds together with interest. It is unclear why there is a singular reference to the defendant within that portion of the pleading, but it then proceeds to state that the second defendant provided a guarantee to the loan amount.
Thirdly, in para 10 of the amended statement of defence, it is pleaded that it was a term of the loan agreement that the first and second defendants would provide guarantee to the plaintiff with regard to the repayment of the principal sum and interest. No relevant pleading in the amended defence connects to that pleading that bears upon the present application.
Fourthly, and importantly, there is pleaded in para 11 of the amended statement of claim that in order to remedy a breach of the terms of the loan agreement the first and second defendants entered into a supplementary agreement to the loan agreement in Chinese with the plaintiff on 8 March 2019. It was pleaded further in para 13 that it was a term of the supplementary agreement that the first and second defendants are to pay AUD$4 million to the plaintiff on or before 31 August 2019.
The relevant portions of the amended defence in that respect contain the following entries; firstly, that the defendants deny para 11 of the amended statement of claim but say, inter alia, that the plaintiff and the defendants agreed on or around 8 March 2019 that because the plaintiff was continuing his investment for a longer period the return on his investment of $3 million would increase by $420,000 to $1 million, capitalising the interest, and resulting in a total payment of the amount of $4 million payable upon the completion of the Chatswood development. Secondly, that on around 8 March 2019 the plaintiffs and the defendants entered into the supplementary agreement in China, but various pleadings were advanced explaining or attempting to explain the circumstances in which Mr Gu was said to have entered the agreement.
Lastly, I turn to para 21 of the amended statement of claim which, as I have noted, is pivotal to the present application. Relevantly, for present purposes, para 21 of the amended statement of claim reads as follows: "The principal amount of AUD4 million is debt due and payable by first and second defendants to the plaintiff jointly and severally".
I note, again for completeness, that para 22 of the pleadings state that the first and second defendants are liable to pay interest on the unpaid amounts as pleaded above at prejudgment rates of interest applicable pursuant to s 100 of the Civil Procedure Act.
The responding pleading in the amended defence pleads, in a manner consistent with the form of much of the pleadings in the amended defence, that the defendants deny para 21 of the amended statement of claim, but state further various things.
I agree with the submission of Mr Bedrossian that the structure of the pleading is such that there is a denial, but various pleadings are excepted or saved such that the pleadings reads that notwithstanding the denial various matters are admitted by the particular pleading in the amended defence, in this case paras 21 (a) to (f) respectively.
Para 21(e) of the amended defence reads as follows:
The sum of $2.9 million therefore became due and payable to the plaintiff in around mid-March 2020, which sum remains unpaid to the plaintiff by the defendants, in relation to the plaintiff's investment made in November 2017 which had been documented in the loan agreement.
Further, para 21(f) of the amended defence reads:
The plaintiff is therefore not entitled to the sum claimed in the amended statement of claim, but rather is entitled to the sum of $2.9 million in total from the defendants as repayment of the plaintiff's investment made in November 2017, which had been documented in the loan agreement or, alternatively, as a repayment of the loan under the loan agreement.
I should note, before moving to a consideration of the claim further, that I understand that the reference to an investment made in November 2017 in the defence in my view incorporates the original loan as pleaded in para 4 of the amended statement of claim and the supplementary agreement which is referred to in para 11 and onwards in the amended statement of claim. So much is clear from the preceding parts of the amended defence.
In written submissions for the plaintiff by Mr Bedrossian a number of propositions of law are stated with which I agree. It is therefore sufficient that in discussing the questions of law and principle bearing upon the application I note my agreement to the following propositions within that written submission:
3. Pursuant to UCPR rule 17.7, the Court has a discretionary power to award judgment on admissions. As made clear by sub-rule (2), such a power may be exercised even if it does not result in the disposal of the entirety of the proceedings or claims.
4. The exercise of this power requires that the admissions are sufficiently clear. The discretionary aspect of the exercise of the power relates to whether it is 'just' for judgment to be entered. These principles were discussed by Barrett JA (with whom Basten and Ward JJA agreed) in Moon v Mun [2013] NSWCA 217 at [40]-[44].
5. UCPR 36.1 and CPA s 82 are provisions with general operation and do not add anything of substance to the power of the Court set out in UCPR 17.7.
I further note, for completeness, that admissions for the purposes of r 17.7 may be formal (as in this case) or informal, but must be expressed with clarity and in an unambiguous form in order to attract the operation of the rule. The court is not bound to act upon admissions made because, as noted in the submissions of Mr Bedrossian, it retains a discretion, but I note the observation in Ritchie's Uniform Civil Procedure at [17.7.30] that the court would ordinarily be reluctant to exercise the discretion so as to refuse to grant orders of the kind presently sought, in circumstances where, as here it is affirmatively satisfied that the admissions are clear and unambiguous.
In my view, cl 21 of the amended defence contains a formal admission made in pleadings at a time when the second defendant was legally represented. That formal admission is clear and unambiguous. It is an admission that an amount of $2.9 million became due and payable to the plaintiff in around mid-March 2020, and that, therefore, the plaintiff is not entitled to the sum claimed in the amended statement of claim, but rather is entitled to the sum of $2.9 million in total from the defendants. In short, the defendants admit that a payment of $2.9 million is due and payable at this time but deny the balance of the claim.
I raised with Mr Bedrossian, for more abundant caution, and notwithstanding the reference to the defendants in plural in para 21 of the amended defence, whether there were other parts of the pleadings which would relevantly connect to cl 21 reinforce its operation with respect to the second defendant. In my view, he amply demonstrated that that was so in two respects. In addition to the actual form of words used in the admission itself, namely, use of the plural "defendants", the corresponding entry in para 21 of the amended statement of claim refers to obligations which were held "jointly and severally". Further, the pleading in the amended defence in para 11 of the amended defence to which I have earlier referred also reinforce the admission falling against the second defendant.
It follows, in my, view that there is no proper discretionary basis to refuse the relief sought by the plaintiff in the amended motion. There is a proper basis for a partial judgment to be entered against the second defendant in the amount of $2.9 million.
I note, for completeness and accept, that the plaintiff identified that the motion was brought without prejudice to his continuation of his claims as against the second defendant with respect to additional damages, including principal and interest. I further note the position adopted by the plaintiff, without prejudice, that it did not abandon its claim against the first defendant but did not proceed against the first defendant today.
It follows that, finally, that I will grant the notice of motion in terms of para 1 of the orders sought as amended orally in the submissions advanced by counsel for the plaintiff today.
I will order that costs are reserved in the proceedings.
[3]
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Decision last updated: 13 August 2020