Gemi 193 Pty Ltd v Zhu [2024] NSWSC 1113

Supreme Court New South Wales

Medium Neutral Citation: Gemi 193 Pty Ltd v Zhu [2024] NSWSC 1113 Hearing dates: 11-15, 18 September, 4 October 2023 Date of orders: 30 August 2024 Decision date: 30 August 2024 Jurisdiction: Equity Before: Slattery J Decision: Defendant/cross claimant held to be in a position of special disadvantage in relation to the plaintiff. Defendant/cross claimant's secured guarantee may be set aside against the first cross-defendant. Second cross-defendant held not to have engaged in misleading and deceptive conduct. Final relief and costs reserved for further submissions. Catchwords: EQUITY — Unconscionable conduct — Special disability or disadvantage – other party's knowledge – whether unconscientious advantage taken – the plaintiff, a financier, loans a substantial sum to a special purpose corporate vehicle associated with the interests of the defendant's husband in relation to a property development – defendant provides a secured guarantee over her residence for the obligations of the corporate borrower to repay the loan – the loan to the corporate borrower covers temporary default interest and charges on other loans to parties and interests associated with the defendant's husband – the defendant executes the loan documents at the office of the defendant's husband in the presence of the solicitor for the defendant's husband – whether the defendant was in a position of special disadvantage in relation to the plaintiff lender at the time of giving a secured guarantee – whether the plaintiff took unconscientious advantage of the defendant in taking her secured guarantee – whether the defendant had independent legal advice – whether any legal advice that was available to the defendant overcame any special disadvantage that she had in giving her secured guarantee to support the loan transaction. CONSUMER LAW — Misleading or deceptive conduct – defendant cross claims alleging that a principal of the plaintiff, the second cross-defendant, engaged in misleading deceptive conduct which had the effect of inducing the defendant to provide a secured guarantee of the obligations of the corporate borrower – whether the principal of the plaintiff made the statements that the defendant alleges he made to her. Legislation Cited: Competition and Consumer Act 2010 (Cth), Schedule 2 (Australian Consumer Law), ss 4, 18, 20 Australian Securities and Investments Commission Act (2001) ss 12BB, 12BF, 12BA, 12CB, 12DA, 12GR Contracts Review Act 1980, s 7(1)(a)-(d), 9(2) Family Law Act 1975 (Cth) Personal Property Securities Act 2009 (Cth) Cases Cited: Alderton v Prudential Assurance Company Limited (1993) 41 FCR 435; FCA 164 Attorney-General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557; [2005] NSWCA 261 Blomley v Ryan (1956) 99 CLR 362 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; (1992) 110 ALR 608 Earl of Aylesford v Morris (1873) LR Ch App 484 Garcia v National Australia Bank Ltd [1998] HCA 48; 194 CLR 395 Hamilton v Watson (1845) 12 Cl & Fin 109; (1845) 8 ER 1339 Hume Plasterboard Pty Limited v Brilliant Interiors Pty Limited [2019] NSWSC 679 Jenkyns v Public Curator (Queensland) (1953) 90 CLR 113; [1953] HCA 2 Johnson v Smith [2010] NSWCA 306 Jones v Dunkel (1959) 101 CLR 298 Karavaz v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 Kings North Trust Ltd v Bell (1986) 1 WLR 119 and Alderton v Prudential Assurance Company Limited (1993) 41 FCR 435; FCA 164 Ledinh Sovereign Super Pty Ltd v CT Stone Pty Ltd [2023] NSWSC 1079 Nitopi v Nitopi (2022) 109 NSWLR 390; [2022] NSWCA 162 North Shore Ventures Ltd v Ansteod Holdings Inc (2011) EWCA Civ 230; [2012] Ch 31 O'Brien v ANZ Bank (1871) 5 SASR 347 Paciocco v Australia and New Zealand Banking Group Limited (2015) 236 FCR 199; [2015] FCAFC 50 Perpetual Trustee Company Limited v Albert and Rose Khoshaba (2005) 14 BPR 26,639; [2006] NSWCA 41 Provident Capital Ltd v Papa (2013) 84 NSWLR 231 Radin v Commonwealth Bank of Australia (1998) FCA 1361 Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell (2011) 15 BPR 29,699; [2011] NSWCA 389 West v AGC (Advances) Ltd & Ors (1986) 5 NSWLR 610 Westpac Banking Corporation v Robinson (1990) ASC 56-002 Wu v Ling [2016] NSWCA 322 Category: Principal judgment Parties: Plaintiff/Cross Defendant: GEMI 193 Pty Ltd (ACN 641 815 492) Second Cross Defendant: Justin Epstein First Defendant/Cross Claimant: Xian Zhu Second Defendant: Commonwealth Bank of Australia ACN 123 123 124 Representation: Counsel: Plaintiff/Cross Defendant: H. Somerville; L. Cooper-Hackman First Defendant/Cross Claimant: A. Zahra SC; J. C. Lee