Super Vision Resources Ltd v Xu (No 2) [2019] NSWSC 389

Supreme Court New South Wales

Medium Neutral Citation: Super Vision Resources Ltd v Xu (No 2) [2019] NSWSC 389 Hearing dates: 18 to 22 March 2019 and 8 April 2019 Decision date: 10 April 2019 Jurisdiction: Equity - Commercial List Before: Ball J Decision: (1) Judgment be entered for the plaintiff against the defendant in the total amount of HKD132,591,924.78.

(2) The defendant's First Cross-Claim Cross-Summons be dismissed.

(3) The plaintiff's costs of the proceedings, on and from 28 December 2018, be paid by the defendant on an indemnity basis, as agreed or assessed. Catchwords: GUARANTEE AND INDEMNITY – enforcement of guarantee – no issue of principle Legislation Cited: Civil Procedure Act 2005 (NSW) Category: Principal judgment Parties: Super Vision Resources Ltd (BVI Registered No 1810534) (Plaintiff) Lawrence Xu (Defendant) Representation: Counsel: J Knackstredt with M Connor (Plaintiff) A Bell SC with EL Beechey (Defendant)

Solicitors: Ashurst (Plaintiff) Lin Tang & Co Lawyers (Defendant) File Number(s): 2017/364476 Publication restriction: None

Judgment 1. By a loan agreement entered into on 4 July 2014 (the Loan Agreement), the plaintiff, Super Vision Resources Ltd (Super Vision), agreed to lend the Hong Kong Dollar (HKD) equivalent of AUD43,800,000 to Hua Cheng International Holdings Group Pty Ltd (Hua Cheng) in connection with the development by Hua Cheng of a mixed residential and commercial project in Hurstville, New South Wales. By a deed dated 16 May 2016, the loan was increased to the HKD equivalent of AUD52,080,000. Under the terms of the Loan Agreement the loan was repayable 30 calendar months from the first drawdown of the facility which was on 14 July 2014, making the loan repayable on 14 January 2017. Under the Loan Agreement, the defendant, Mr Lawrence Xu, Hua Cheng's sole director and shareholder, guaranteed Hua Cheng's obligations under it. 2. Hua Cheng defaulted under the Loan Agreement. Ultimately, it was placed into receivership and liquidation. In these proceedings, Super Vision seeks to recover from Mr Xu the balance of the amount outstanding under the Loan Agreement which is said to total HKD132,537,994.68 plus HKD26,965.05 interest per day from 8 April 2019. 3. The matter was listed before me for a hearing of five days commencing on 18 March 2019. At that time, Mr Bell SC appeared for Mr Xu. Mr Xu did not dispute that the money was lent, nor that the full amount has not been repaid. However, by an Amended Commercial List Response filed on 6 February 2019 and a First Cross-Claim Cross-Summons and Commercial List Cross-Claim Statement filed on the same day, Mr Xu contended that the maturity date of the loan was extended until 30 September 2017 by an oral agreement entered into in October 2016 or alternatively an oral agreement entered into in April 2017 or alternatively that oral representations made at those times gave rise to an estoppel. In addition, Mr Xu contended that Super Vision engaged in unconscionable conduct by reason of which it is disentitled from enforcing the guarantee. The unconscionable conduct principally consisted of resiling from the oral agreements or representations, serving notices of default based on the original repayment dates and refusing to allow Hua Cheng to sell or to complete the sale of units in the development, with the result that Hua Cheng did not have the proceeds of sale of those units available to repay the amount owing to Super Vision. A number of witnesses were called in relation to those issues, including Mr Xu. Evidence was completed on the fifth day and the matter was stood over until 8 April 2019 for final oral submissions. 4. It is apparent from what I have said that Mr Xu's defence of the claim depends on positive defences advanced by him. 5. On 5 April 2019, my Associate received an email from the solicitor for Mr Xu, which was copied to the solicitors for Super Vision, which said: We act for the defendant in this matter and write to you regarding the hearing on 8 April 2019 at 10:00am. Please be notified that Ms Emma Beechey will appear before the court on Monday instead [of] our senior counsel Mr Adam Bell, and also our client will not dispute the case except the quantum of plaintiff's claim. 1. Ms Beechey took a slightly different course when the matter came before the Court on 8 April 2019. At that time, she said that she had no submissions to make in respect of liability. She added: In my submission, your Honour will need to proceed to give reasons [for judgment] and should make orders when those reasons are handed down. The plaintiff's position will not be in any way prejudiced by that, as the interest continues to accrue in accordance with the rates set out in the proposed orders [that is, the orders proposed by Super Vision]. 1. Mr Xu bears the onus of proof in relation to the positive defences advanced by him. In circumstances where he has made no submissions in support of those positive defences, the only inference available to the Court is that those defences have been abandoned following the hearing from 18 to 22 March 2019. That conclusion is consistent with the email received by my Associate. It follows that Super Vision is entitled to judgment for the amount owing under the guarantee. 2. During the hearing on 8 April 2019, Ms Beechey informed me that there was agreement between the parties that the principal owing to Super Vision was HKD131,809,938.33. 3. Also during the hearing on 8 April 2019, I admitted into evidence without objection a schedule prepared by Super Vision setting out the calculation of the interest owing to Super Vision on the outstanding principal. No reason was advanced by Mr Xu for why the Court should not accept that schedule as accurate. According to that schedule, the total amount of interest owing to Super Vision up to 8 April 2019 is HKD728,056.35, calculated at a daily rate of HKD26,965.05 per day – making the total interest payable up to 10 April 2019 HKD781,986.45. 4. It follows that Super Vision is entitled to judgment in its favour in the sum of HKD132,591,924.78 (HKD131,809,938.33 plus HKD781,986.45). 5. The amount claimed by Super Vision includes Super Vision's costs up to and including 27 December 2018. 6. Clause 16.3 of the Loan Agreement relevantly provides: The Guarantor [Mr Xu] indemnifies the Financier [Super Vision] against any liability or loss arising from, and any Costs it incurs, if: (a) the Company [Hua Cheng] does not, or is unable to pay, the Guaranteed Money in accordance with the Transaction Documents; … (e) it defaults under this Guarantee. 1. "Costs" is defined to include "costs, charges and expenses, including those incurred in connection with advisers". 2. It follows that Mr Xu is liable to indemnify Super Vision for the legal costs it has incurred. There is no reason for the Court not to give effect to that indemnity. 3. The orders sought by Super Vision included an order for post judgment interest. However, s 101 of the Civil Procedure Act 2005 (NSW) provides for the payment of post judgment interest "[u]nless the court orders otherwise". In my opinion, it is unnecessary to make an order for post judgment interest, leaving s 101 to take effect according to its terms. 4. It follows that the orders of the Court are: 1. Judgment be entered for the plaintiff against the defendant in the amount of HKD132,591,924.78. 2. The defendant's First Cross-Claim Cross-Summons be dismissed. 3. The plaintiff's costs of the proceedings, on and from 28 December 2018, be paid by the defendant on an indemnity basis, as agreed or assessed.