Crane Distribution Limited v Yang

This case concerns the extent of the personal liability (if any) of the first defendant (“Mr Yang”) to the plaintiff, Crane Distribution Limited trading as Tradelink (“Tradelink”) and whether Tradelink has security for that liability over property owned by Mr Yang.

By an “application for a monthly credit account” dated 21 November 2007 (the “Application”), Tradelink entered into an agreement with Steve Yang Construction Pty Ltd (the “Company”) to sell plumbing and building supplies to the Company on credit. Mr Yang (who came to Australia from Korea in 1989 at the age of 45) was the sole director and shareholder of the Company. He signed the Application.

There was no dispute that the Company was bound to the terms of the Application by Mr Yang’s signature. The issue in these proceedings is whether, by his execution of the Application, Mr Yang was personally bound by it.

The Application provided for a credit limit. At the time the Application was entered into that limit was $150,000. Between August and November 2010 that credit limit was noted in Tradelink’s statements to the Company as having increased to $300,000 and then $450,000.

The Company went into administration in December 2010 and liquidators were appointed on 21 January 2011. At that time, the Company owed Tradelink more than $350,000. The Company was not a party to these proceedings.

Tradelink alleged not only that Mr Yang was personally liable, but that the Application also gave it a proprietary interest in Mr Yang’s real property, including two properties at Lidcombe (“No 27” and “No 64”) and a property at Campsie (“No 11”). Tradelink lodged a caveat over No 27 and, in return for withdrawing that caveat, received $174,538.62 in June 2011 from the sale of that property. In these proceedings Tradelink seeks orders for possession and sale of No 64 and No 11 to satisfy the balance of the Company’s debt it says is secured by the Application against those properties.

Mr Yang’s further amended defence and amended cross-claim raised a number of issues, some of which had no real prospect of success. They were given little or no attention at the hearing. As such, the Court treats them as having been, with respect, justifiably abandoned by Mr Yang’s counsel. The Court’s conclusions as to the issues that were argued in earnest are:

At the hearing Tradelink was represented by Mr M Condon of Senior Counsel, appearing with Mr K Josifoski of Counsel. Mr Yang was represented by Mr D P O’Connor of Counsel appearing with Ms F Boustos-McNeal of Counsel. Tradelink and Mr Yang were the only active protagonists.

The second defendant is Mr Yang’s wife. She was joined because she is joint tenant with Mr Yang of No 64 and No 11.

The third defendant, National Australia Bank (the “NAB”), holds a registered mortgage over No 64 and No 11.

The fourth defendant, Hong Kong Noodle Cuisine Pty Ltd, is the registered lessee of No 11. Tradelink does not wish to disturb the possession of that company.

The Court is satisfied that the second to fourth defendants were all properly on notice of the proceedings. None of them filed a defence and none of them took an active part.

In order to understand these reasons it is necessary to appreciate the headings, layout and structure of the various parts of the Application. This can be best done by seeing the Application in its original form. A copy of the original Application (redacted only in relation to privacy matters) is set out in Schedule 1 to these reasons. It will be seen that the Application is in three parts, which in these reasons are referred to as the “Terms and Conditions”, the “Agreement” and the “Guarantee”.

There was no dispute that Mr Yang had signed the Application in relation to the Terms and Conditions and Agreement. Tradelink had originally contended that Mr Yang had also signed the Guarantee, but abandoned reliance on that signature in these proceedings. The only matter agreed before me – and the only matter which I have taken into account on that topic - was that Mr Yang did not sign the separate Guarantee. The Court had no evidence before it and was not invited to make any findings about the circumstances in which a signature purporting to be Mr Yang’s had been affixed under the Guarantee. In reaching its conclusions the Court has not taken the purported signing of the Guarantee into consideration.

Some of the relevant terms of the Application are quite lengthy. In the interests of readability, quotation of particular terms and conditions is kept to a minimum in these reasons. The relevant parts of the Application in their entirety are set out in Schedule 2 to these reasons.

Mr Yang was born in 1943 in South Korea. He graduated from high school in Korea in 1961 and then from a Korean university with a degree in mechanical engineering. All of his studies were in the Korean language. He learnt English at high school in Korea.

Mr Yang migrated to Australia in 1989 at the age of 45 with his wife and two children. After working as a mechanical engineer in a company where he mainly spoke Korean at work, he studied plumbing at TAFE. He did not take any English course when he arrived in Australia or at any time afterwards. His evidence was that when he came to Australia he could speak very little English and could understand only very basic written English. He says he could barely write in English.

In 1992 he set up his own plumbing business which went on to become the Company. Mr Yang gave his evidence in Korean through an interpreter. The fact that a witness gives evidence through an interpreter is not necessarily determinative of the English language proficiency of the witness for all purposes, only perhaps that he or she was not sufficiently proficient in English for the purposes of understanding and answering questions in the setting of a court room. Even for native English speakers that can be a challenging experience. On the retainer of interpreters, s 30 of the Evidence Act 1995 (NSW) provides:

So it is that a witness may speak English sufficiently well to carry on day to day activities, including matters which they regularly encounter in the course of their employment. However, courts recognise that such a degree of proficiency may not be sufficient in the somewhat artificial, stressful and precision driven circumstances of a trial.

While I accept that Mr Yang does not present as a fluent speaker of English, having had the advantage of observing him in the witness box I am of the firm view that he sought to understate his capacity to speak English and, more importantly, his ability both to understand spoken and written English in environments with which he was familiar. That familiarity extended to documents he regularly encountered in the course of running the Company such as the Application. In addition to my general impression of Mr Yang, I make these findings by reference to the following specific matters:

The foregoing findings do not involve the Court rejecting Mr Yang’s evidence that when he found something difficult he would refer it to or have it translated for him by one of his staff members who understood English better than he did. The point is that the Court concludes that Mr Yang had a more than adequate understanding of written and spoken English in the world of the Company and its affairs which enabled him, for example, to identify matters as being important which he did not understand properly and, if he wanted to, refer to someone in the Company whose English was better. In that regard, the Court finds that Mr Yang could read and understand documents such as the Application, including understanding that they were intended to affix him with personal liability. He was very familiar with documents such as the Application. He understood that in signing the Application he would be personally liable for the Company’s debts to Tradelink and that his property was at risk. The findings in this paragraph rely upon the matters set out in the preceding paragraph and these additional matters:

The fundamental principles in relation to the construction of a contract have most recently been set out by the High Court in Electricity Generation Corporation Limited v Woodside Energy Limited [2014] HCA 7; (2014) 251 CLR 640 (citations omitted):

When a party signs a document which apparently embodies all the terms of a contract, the signing party is taken to have signified its assent to those terms, and to have held out to other parties that it has done so: Equus Corp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2012) 218 CLR 471 at [33]-[36]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 53; (2004) 219 CLR 165 at [42]-[48].

Next, in Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1989) 21 NSWLR 160 at 174 Giles J held:

Finally, the terms of the Application were considered by Lindsay J in Crane Distribution Ltd v Minnicelli [2013] NSWSC 1611; (2013) 17 BPR 32,593. In that case (unlike the present), the first defendant did not dispute that he was bound to Tradelink in terms identical to those of clauses 3 and 4 of the Application. The question in that case, not relevant here, was whether or not Tradelink had a security interest in property held by the first defendant as trustee. Nevertheless, the proper construction of clause 4 was critical to Lindsay J’s reasoning:

Without any disrespect to the thorough and careful way in which Mr Condon SC developed his client’s submissions, his fundamental argument may be shortly stated. It was that the Application (in particular, the Agreement) said what it meant and meant what it said. In other words, there was no relevant ambiguity: it was quite clear from an examination of the language of the Agreement itself that Mr Yang had accepted liability as principal debtor (i.e. put himself in exactly the same position towards Tradelink as the Company) and, if more was required, as guarantor in relation to whatever the Company owed Tradelink. The Court accepts that submission.

The objective matters relied upon by Mr Yang in opposition to Tradelink’s contract case were:

The matters relied upon by Mr Yang do not overcome the clear structure and language of the Application, to which the Court will now turn.

The Application is obviously intended to deal with the different ways in which Tradelink’s customers might organise their business affairs. So much is clear from the boxes at the top of page 1 referring to, for example, sole trader, partnership or Pty Ltd company, among others.

Irrespective of the method of operation used by the customer, the second and third boxes on page 1 (“Particulars of directors, proprietors and partners”) and “Details of Property (to include all private land and residences)” (emphasis added) are clear, objective indicators that the natural persons (and their assets) who stand behind the relevant business structure are, in accordance with the Application, sought to be brought within its ambit.

After the sections on page 1 and 2 where details relevant to the customer are required to be filled in, the Application has an obvious, tripartite structure. First, the Terms and Conditions headed “Crane Distribution Limited – terms and conditions of sale” set out the terms upon which Tradelink will do business with the customer. However, clause 1 of the Terms and Conditions immediately incorporates the next section of the Application by saying “In these Terms and Conditions and the following section of this document entitled “Agreement” ….”. Significantly, there is no execution clause at the end of the Terms and Conditions.

The second section of the Application, the Agreement, immediately begins in clause 1 with “Each of us acknowledges”. The “us” is obviously intended to incorporate, where appropriate, more than just the legal person with whom Tradelink is contracting as its customer. The place for execution of that part of the Application is immediately after the Agreement. The Court shall return to this shortly.

The third part of the Application is the Guarantee headed “Guarantee and Indemnity (“Guarantee”) and Charge” which has its own section for execution by the guarantor or guarantors, expressed (by reference to being “signed, sealed and delivered”) to be a deed.

The commercial object and structure of the Application is apparent from its terms. The Terms and Conditions and the Agreement are to be read as one. So much is made clear by the execution clause providing that the party signing has “read the preceding terms and conditions of sale and the terms of this Agreement” (emphasis added). The third part of the Application, the Guarantee (which has its own execution clause) is a document with separate legal effect. Again, its commercial purpose is obvious, being to obtain guarantees from persons who may not happen, in fact or law, to be able to execute the Terms and Conditions and Agreement on behalf of the customer with whom Tradelink is doing business but from whom Tradelink wants a guarantee.

Any of the alleged qualifications to Mr Yang’s signature which he now calls in aid (see paragraph [27] above) are, as an objective matter, completely subsumed in the very clear language of clause 4 of the Agreement and the execution clause (emphases added):

The terms of Clause 4 put beyond serious question that, by signing the Agreement, Mr Yang was objectively manifesting to the world that he was accepting the obligations in the Agreement both on behalf of the Company and “in his own name”, that is to say on his own behalf.

Contrary to the submission put on behalf of Mr Yang, the fact that Mr Yang did not sign the Guarantee is not a sufficient objective indication that would justify reading down the terms or effect of Mr Yang’s execution of the Agreement (including the Terms and Conditions). While there is a potential overlap between those who might sign the Agreement and the Guarantee, the two are clearly standalone documents as to their terms and effect.

Finally, in relation to the nature of Mr Yang’s obligation, it is as principal debtor and, if more be required, also as guarantor. Again adopting the approach taken in Tradelink’s submissions, accepting liability “as principal debtor” means what it says. In McGuinness v Norwich and Peterborough Building Society [2011] All ER(D) 63; [2011] EWCA Civ 1286, Patten LJ (with whom Moses and Ward LJJ agreed) said:

Mr Yang’s liability as principal debtor falls into the fourth category identified by Patten LJ, namely Mr Yang has a concurrent liability with the Company for what is due to Tradelink by the Company pursuant to the Terms and Conditions and the Agreement.

The last page of the Application, in unidentified handwriting, stated that the total amount of credit required was $150,000. It was common ground that limit was in place until monthly accounts were rendered that were due on 31 October 2010 and following. Those accounts (the relevant parts of which are set out in Schedule 3 to these reasons) record the credit limit as $300,000 and $450,000.

In support of his argument that if he had any liability to Tradelink it was limited to $150,000, Mr Yang drew attention to these clauses in the Terms and Conditions:

Relying on those sections, Mr Yang submitted that if he had any liability to Tradelink then the Company’s liability (and therefore his liability) was limited to $150,000, which, with interest, had almost been completely recovered by the payment referred to in paragraph [6] above. This argument was put as a “failure to comply with conditions”. From that the Court understood that Mr Yang was submitting that Tradelink was not entitled to recover any amount owing in excess of an existing credit limit if an increase in that credit limit had not been properly notified. This argument suggested that, on their proper construction, the Terms and Conditions somehow placed a cap on the Company’s (and therefore Mr Yang’s) liability equal to the extant credit limit until an increase had been notified in accordance with clause 4(e).

Tradelink correctly submitted that the entirety of clause 4(e) of the Terms and Conditions was a complete answer. In context, that clause provided:

Clause 4(e) makes Mr Yang’s construction unsustainable for these reasons:

Finally, Mr Yang submitted that changing the amount of the credit limit in subsequent monthly statements (see paragraph [40] above) did not constitute “notice to that effect” for the purposes of clause 4(e) of the Terms and Conditions. Given that the Court has taken the view that the notification of any alteration was not legally necessary or significant for the validity or efficacy of that alteration, the point is a moot one. However, were it necessary to decide it, the Court is satisfied that changing the amount in the box entitled “credit limit” is “notice to that effect” being notice of an alteration in the credit limit. The notice had to be “to that effect” and not “in those terms”. In other words, it did not have to say that a decision had been taken to effect an alteration. All that it had to notify was the alteration. That was sufficiently done by changing the amount in the box marked “credit limit”.

Clause 18 of the Terms and Conditions provides:

Tradelink relied on the Statement, which stated:

A similar clause was considered by Duggan J in the Supreme Court of South Australia in Commonwealth Bank of Australia v Oberdan [2000] SASC 428:

Before considering Mr Yang’s main attack on the Statement, it is convenient first to deal with his submission that, as a matter of construction of the Terms and Conditions, the Statement could not be deployed against him. The Court does not accept that submission for the reasons set out in the next paragraph.

By clause 4(a) of the Agreement, Mr Yang accepted liability to Tradelink “for the payment as principal debtor of all moneys owed by the [Company] to [Tradelink] from time to time”. A statement pursuant to clause 18 of the Terms and Conditions is prima facie evidence of “the moneys payable by the [Company] to [Tradelink]”. If the Court accepts the Statement as prima facie evidence of the amount owed by the Company to Tradelink then that necessarily quantifies the amount for which Mr Yang is liable as principal debtor to Tradelink. Being “principal debtor” can only mean that Mr Yang placed himself in a like position to the position of the Company. As such, the liability of the Company which Mr Yang promised to meet included its liability as established by the Statement. As a matter of construction, the objective intention of the parties is that Tradelink should be able to get payment from Mr Yang, if the Company did not pay, by reference to the Statement which determined the Company’s liability to Tradelink. For a similar question of construction and result, see the decision of this Court in Sabemo Pty Ltd v De Groote, Giles J, 28 March 1991, unreported, BC9102171 at pp32-33.

To adapt the language of Duggan J, the question then becomes whether Mr Yang has demonstrated by acceptable evidence that the Statement is incorrect. The only attack made by Mr Yang on the correctness of the Statement appears to be an argument that the goods said to give rise to the indebtedness were not delivered. For the reasons given in the next section of this judgment, that argument fails. It follows that Tradelink is entitled to rely on the Statement as against Mr Yang.

Mr Yang challenged the Statement insofar as it asserted that $198,001.97 represented the unpaid cost of goods sold and delivered to the Company. The author of the Statement, Tradelink’s National Credit Manager, Ms JL McHarg, proved how that figure was arrived at. Her evidence was that she obtained from Tradelink’s records a printout of all outstanding invoices for the Company collated on a month by month basis. These showed a total amount outstanding of $372,956.11. This figure was derived from the invoices for the months of September, October and November 2010. In accordance with the Terms and Conditions, those invoices were payable, respectively, on 31 October 2010, 30 November 2010 and 31 December 2010.

From the total figure of $372,956.11, Ms McHarg deducted miscellaneous payments received on 11 June 2010 of $415.52 and a further payment of $174,538.62, being the payment received from Mr Yang following the sale of one of his properties (see paragraph [6] above). Those deductions gave a balance outstanding of $198,001.97.

As the Court has already determined, the effect of the Statement was to put the onus on Mr Yang to demonstrate that it was incorrect. Insofar as the figure in relation to goods sold and delivered is concerned, the obvious way of doing so would be demonstrate that some of the goods had not been delivered. Unsurprisingly, Mr Yang’s evidence was that he was not personally aware of which goods had or had not been delivered. He said he could only determine this by reference to Tradelink’s delivery dockets.

Mr Yang’s argument was based upon his and his solicitors’ analysis of delivery dockets produced by Tradelink for the period 1 September 2010 to 9 November 2010. It was submitted that analysis demonstrated:

Although it was not quite put in these terms, the Court understood the effect of Mr Yang’s submissions on this point to be that the Statement had to be incorrect (at least in relation to goods sold and delivered) because Tradelink was only able to produce delivery dockets for goods to a value of $182,463.40 and, in any event, those signed on behalf of the Company evidencing delivery totalled only $155,406.45. It was therefore submitted that the amount owing by the Company to Tradelink as at 9 November 2010 for goods sold and delivered was the amount of $155,406.45.

Mr Yang submitted that the calculations in relation to the delivery dockets had to be understood in the context of how he had dealt with Tradelink. His affidavit evidence was:

In another part of his affidavit he said:

Tradelink cast doubt on Mr Yang’s evidence by its witnesses testifying that signed delivery dockets were retained by Tradelink and not the Company (which makes sense, given such documents were the Company’s evidence of receipt of the goods by the Customer). There was also evidence that not all goods delivered to the Company were signed for and that goods were collected from Tradelink’s premises by Mr Yang and others which did not involve delivery dockets.

For the reasons which follow, the Court does not accept that Mr Yang has discharged the onus of demonstrating that the figure for goods sold and delivered in the Statement – derived from the invoices - is incorrect. Alternatively, assuming in Mr Yang’s favour that he has discharged the onus, the Court relies on Tradelink’s uncontroverted evidence to find that the figures relied upon by Tradelink for goods sold and delivered are correct. These conclusions can be, and have been reached, without having to resolve the inconsistencies between the parties’ evidence in relation to delivery dockets where that evidence conflicts.

To accept Mr Yang’s analysis would require the Court to find that in excess of $180,000 in goods invoiced by Tradelink to the Company had not in fact been delivered in circumstances where the invoices for the goods were provided to the Company and were recorded on the monthly statements provided to the Company. The Court accepts Tradelink’s submissions, which may be reduced to three essential points:

The starting point is these clauses of the Terms and Conditions:

There are two important points to note from the preceding provisions. First, Tradelink was authorised by the Company to deliver product to the places nominated by the Company whether or not any person was present to accept delivery. Second, Tradelink was not obliged to obtain a signed receipt or acknowledgement from any person at the place of delivery.

Next, it was the uncontroverted evidence of various representatives of Tradelink that invoices were prepared as part of the process of delivery. That evidence may be summarised as being that when goods were prepared for delivery in response to an order, a Tradelink employee would place the order into Tradelink’s computer system, which would generate a delivery docket in duplicate to go with the goods as well as a corresponding invoice to be sent to the customer. The invoices would then be recorded in the monthly statement. The goods would be placed in a storage area with the delivery dockets to be delivered by Tradelink’s drivers. Those drivers were responsible for checking that in in relation to every delivery, the goods recorded on the delivery docket to be delivered were present on the delivery truck.

The matters set out in the previous paragraph enable the Court, as it does, to infer that delivery dockets and invoices were generated by Tradelink in response to orders placed by customers. Furthermore, the Court is satisfied that those documents were produced at the point of setting aside the goods in anticipation of their delivery to the customer by Tradelink’s drivers. The evidence also establishes that Tradelink’s drivers delivered goods that had been set aside for delivery with their delivery dockets. On the basis of that evidence the Court also infers that in the ordinary course of Tradelink’s business, goods intended to be delivered (as opposed to collected) to a site nominated by the Company, and in respect of which an invoice and delivery dockets were raised, were in fact delivered.

The finding in the last sentence of the preceding paragraph is also made by reference to the fact that there is no evidence (documentary or through Mr Yang) of complaint by the Company to Tradelink that a substantial amount of goods which were invoiced and referred to in the monthly statements for September, October and November 2010 were in fact not delivered. The obvious inference from Tradelink’s evidence as to its business practices is that the invoices relied upon by Tradelink for the purposes of the calculation in the Statement were generated in response to orders from the Company. The invoices were listed exhaustively in the monthly statements.

The Court takes all of these matters into account to infer that the goods the subject of the invoices relied upon by Tradelink were delivered because in addition to Tradelink’s evidence of how invoices were generated and goods were delivered, there is no evidence of contemporaneous complaint by the Company of non-delivery. Perusal of the monthly statements shows that the Company appears to have obtained credits in comparatively small amounts from time to time. However, none of those credits uses the code “PD”, which is the code in the monthly statements for “proof of delivery required”. Accepting for present purposes Mr Yang’s evidence about the care and attention he and his accounts department devoted to checking invoices and delivery dockets, it is fanciful to suggest that invoicing of in excess of $180,000 worth of goods over a three month period would have gone unnoticed. The Court concludes that there were no complaints because the Company did not dispute that the invoiced goods had been delivered.

The result is that the Company has failed to discharge its onus that the Statement is incorrect in relation to goods sold and delivered. Alternatively, in meeting that submission Tradelink has established that the Statement, derived from Tradelink’s invoices to the Company, is correct in relation to the value of goods sold and delivered by Tradelink to the Company.

Tradelink relies on clause 4(d) of the terms and conditions of sale:

Tradelink submits that by reason of Mr Yang’s position as having accepted liability under clause 4(a) of the Agreement as principal debtor and as a guarantor, then Mr Yang is liable for whatever the Company is liable under clause 4(d) of the Terms and Conditions. Tradelink refers to the decision of Ball J in MIS Funding No 1 Pty Ltd v Beefeater Sales International Pty Ltd [2015] NSWSC 1109:

Mr Yang made the following answers to Tradelink’s claim:

The fact that clause 4(d) of the Terms and Conditions is couched in terms that “the [Company] shall pay any legal costs (on a full indemnity basis) …” is not a basis for Mr Yang to avoid that liability. As the Court has already determined, under clause 4(a) of the Agreement Mr Yang has accepted liability as both principal debtor and guarantor of “all moneys owed by the [Company] to [Tradelink] from time to time”. Tradelink has an existing contractual right under clause 4(d) against the Company for its (Tradelink’s) legal costs on the indemnity basis “of and incidental to the … enforcement of or any litigation on” the Terms and Conditions. That right does not depend upon the Court making a costs order on the indemnity basis in favour of Tradelink against the Company (which is not a party to these proceedings).

However, Tradelink’s costs of these proceedings are costs of and incidental to litigation on the Terms and Conditions. Mr Yang’s obligations under clause 4(a) of the Agreement are to stand in the shoes of the Company in relation to Tradelink. Subject only to any relief to which Mr Yang is entitled under the CRA (see paragraphs [74] – [82] below), Mr Yang has failed to demonstrate any reason why the Court’s costs discretion should not be exercised consistently with his contractual obligations to stand in the Company’s shoes. The Court will exercise its costs discretion to give effect to Mr Yang’s contractual obligation by making an order that he pay Tradelink’s costs of these proceedings on the indemnity basis.

The relevant provisions of the CRA are:

I respectfully adopt the summary of the legal principles governing the application of the CRA set out by Sackar J in White v Wills [2014] NSWSC 1160 (“White”):

In his further amended defence Mr Yang pleaded his case under the CRA by reference to the following matters:

In response, Tradelink relied on a number of matters, including:

78 Insofar as the three stage process in an application for relief under s 7 of the CRA (see paragraph [111] of White set out in paragraph [75] above), the Court repeats its findings of fact concerning Mr Yang set out in paragraphs [20] and [21] above.

79 In the light of those findings and the terms of the Application, the outcome of the normative evaluation (see paragraph [110] in White set out in paragraph [75] above) is clear, particularly when the touchstone identified by Allsop P is taken into account: “At its heart, however, it is the recognition of the inadequacy of one party to protect her or his interests in the circumstances. Here, there was no predation. There was no behaviour in which [the lender] sought to take advantage of [the borrower].”

80 The terms of the Application – in particular the Terms and Conditions and the Agreement – are not, in and of themselves or in the circumstances of this case, unjust. They appear to be standard terms in a commonplace transaction. They were terms whose effect, and the transaction was a transaction, with which Mr Yang was well familiar, notwithstanding his linguistic limitations. Mr Yang has been unable to point to anything that could fairly be described as predation. Nor was there any behaviour in which Tradelink might be found to have been trying to take advantage of Mr Yang.

81 The Court is satisfied that Tradelink did not suggest to Mr Yang that he should obtain legal advice about the Application. That is unsurprising when the Application was the fifth iteration of a document, to like effect to its four predecessors, which Mr Yang had executed over a 24 year (in 2007) commercial relationship. In the circumstances of this case, failure to suggest he should obtain legal advice is not, in and of itself, sufficient to engage s 7 of the CRA. Mr Yang was well familiar with this type of transaction and there was no suggestion in the evidence that Tradelink did anything which would have had the effect of preventing Mr Yang from obtaining legal advice or having the Application translated for him to the extent that he was uncertain about any of its terms. Mr Yang was perfectly well able to protect his own interests in relation to the Application to the extent he wanted to do so. Instead, he chose to sign the Application with whatever level of understanding he had of the document, not as a result of any pressure or unfair tactics on the part of Tradelink, but as a result of his own voluntary decision recognising that he would be bound by the entirety of the document whether or not he had understood it.

82 The Court does not accept that there was anything in the circumstances relating to the Application at the time it was made that would make it just for the Court to grant relief to Mr Yang under s 7 of the CRA. While that conclusion is based upon the matters set out in paragraphs [78] to [81] above, I am fortified in that result by the strong impression that I formed from observing him that in executing the Application where he did after the Terms and Conditions and the Agreement, Mr Yang knew and expected that he would be personally liable to Tradelink. There is much force in Tradelink’s written submission that “the present allegations cynically take advantage of the fact that it is now apparent [Tradelink] cannot now rely upon the Guarantee component of” the Application”.

Pursuant to clause 3 of the Agreement, Tradelink:

By reference to the principles applicable to an application by an unregistered mortgagee to sell its security (being property registered under the Real Property Act 1900 (NSW)) set out by JC Campbell J (as his Honour then was) in King Investments Solutions v Hussain [2005] NSWSC 1076; (2005) 13 BPR 25,077 (“King”), Tradelink submitted:

Other than the various defences already dealt with in these reasons, Mr Yang did not raise any specific matters directed, in particular, to Tradelink’s claim for possession and sale of No 64 and No 11. Given the significant amount of equity Mr Yang has in the properties after the interests of the NAB as first mortgagee are taken into account, the Court is satisfied that orders should be made for the possession and sale of No 64 and No 11, subject to the following two matters.

First, in King (at [111]) JC Campbell J made the observation that “There will always be a question of discretion whether it is appropriate to order an immediate sale, or to allow some further time in which redemption can take place”. In the circumstances of the present case this discretion is enlivened by the fact that there are two properties in each of which, on the evidence, Mr Yang has sufficient equity after payment to the NAB to satisfy Tradelink’s debt. It appears from the evidence that Mr and Mrs Yang live in No 64. That circumstance may, in and of itself, be sufficient to dissuade the Court, in the exercise of its discretion, to make orders for the possession and sale of No 64 where there is another property that could be sold.

To give effect to these reasons, the Court directs Tradelink and Mr Yang to discuss which of the two properties should be sold first. If they are unable to agree, then the Court will decide the matter. If after the sale there is still an amount owing to Tradelink, the Court would also expect that a further, short opportunity should be given to Mr Yang to pay that balance before orders for the possession and sale of the other property are made.

Second, the Court directs Tradelink to ascertain if it can agree with the NAB what, if any, amount of security Tradelink should be ordered to provide (see King at [106] – [110]) for NAB and what reserve price should be fixed (see King at [104]-[105]). This latter matter should also be discussed with Mr Yang. If the parties are unable to agree these matters, then it will be necessary for the Court to receive further submissions as to what orders should be made to give effect to these reasons.

Tradelink has succeeded in demonstrating an entitlement to relief, the particulars of which will require some working out. Mr Yang’s amended cross-claim should be dismissed. Subject to hearing the parties, costs should follow the event. The Court will direct the parties to bring in short minutes to give effect to these reasons. Having regard to the matters referred to in paragraphs [87] and [88] above, those short minutes should also include liberty to apply. Schedule 1 Crane v Yang (805 KB, pdf) Schedule 2 - Crane Distribution v Yang (42.8 KB, pdf) Schedule 3 - Crane Distribution v Yang (7.29 KB, pdf)