Du v Feng

HIS HONOUR: Before the Court is a Motion for summary judgment brought by the plaintiff, Alan Du, who seeks orders that judgment be given in accordance with the prayers for relief in paragraphs 1 to 3 of the Statement of Claim filed 30 April 2020.

The Statement of Claim has six prayers for relief, one of which is the catch all of such further other orders, so there are five substantive prayers for relief. There are then 27 paragraphs of the substance of the pleadings over some six pages.

On 25 May 2020, a Defence was filed and executed. It is three paragraphs in length. It is appropriate for me to recite the Defence. It is:

That is the entirety of the Defence. The plaintiff, because of the situation that the defendants are unrepresented by legal practitioners and notwithstanding that one of them at least is a corporate entity, does not move for the dismissal of the Defence.

Nevertheless, the plaintiff moves for summary judgment on the basis of that which is before the Court, falling within the principles in General Steel Industries Inc v Commissioner for Railways (NSW) (1969) 112 CLR 125; [1964] HCA 69. The most oft-quoted passage from that judgment is at CLR 129, where his Honour Barwick CJ sets out the descriptions that are often utilised for the purpose of determining the principle to be applied in relation to summary judgment.

It is necessary to set out some background. The first and second defendants, Freda Feng and Jimmy Zhi-Min Liu, respectively, established the third defendant, a corporate body, United World Enterprises Pty Ltd in 1993 as a business exporting Australian beef, wine, hay and other agricultural commodities to China. Between 2012 and 17 October 2017, the plaintiff advanced $1,530,000 to the defendants pursuant to various agreements, which the plaintiff says are loan agreements. Each agreement was oral and involved different monetary amounts. The plaintiff states that interest was payable in accordance with the table which is an annexure to the plaintiff’s affidavit affirmed 7 July 2020.

On 30 April 2020, the plaintiff filed a Statement of Claim, as earlier stated, seeking the repayment of the principal and interest. On 25 May 2020, the defendants filed the Defence to which earlier reference has been made.

The defendant’s written submissions seek to clarify that they submit that at some stage there were negotiations between the plaintiff and the defendants as to an arrangement whereby the loan would no longer be considered a simple loan and, rather than the defendants being required to repay the principal along with interest, the plaintiff would obtain equity in the third defendant as consideration for the sums advanced.

It is neither suggested that this purported agreement was ever the subject of a concluded oral or written and executed agreement, nor is it suggested that there was ever any equity in the third defendant transferred to the plaintiff. On the face of the material that is before the Court, the discussions that occurred between the plaintiff and the individual defendants are discussions that, at best, were negotiations for the resolution of the matter and no agreement was finalised.

The plaintiff relies on the Affidavits of the plaintiff affirmed 7 July 2020 and his solicitor Haihan Pan affirmed 28 July 2020. The defendant relies upon the Affidavit of the first defendant sworn 30 June 2020.

The plaintiff relies upon r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) (hereinafter “the UCPR”) which deals with summary judgment and provides:

As is obvious from the foregoing, the issue of a summary judgment is discretionary but that discretion must be exercised judicially and on the basis of the principles that have been established over many years. What is clear from the principles is that the defendant will not be denied a contested merits hearing unless there is an absence of a defence and it is clearly demonstrated.

In the words of Barwick CJ in General Steel, to which earlier reference has been made and bearing in mind that his Honour was there talking of a summary dismissal of proceedings brought by a plaintiff, his Honour said this at CLR 129:

This is a most unusual case in that on one view of the three paragraph Defence there is an allegation of fact as to the existence of the loan. Further, it seeks summary judgment against the defendants; not, as was the situation in General Steel, summary dismissal of the proceedings.

However, as has been made clear in a number of statements by the defendants, including statements to the Court both to her Honour Lonergan J and indeed to the Court as presently constituted, the existence of the loan is not disputed. What is disputed is the basis upon which it is said that payment or repayment will be made and it is said the repayment will be made by the provision, at some undefined and otherwise unexpressed time in the future, of some equity in the third defendant.

The Court has before it correspondence from the defendants which make clear not only that the loan exists but the amounts of interest that are payable and the rate of interest that is payable. These text messages and other documentation pre-date and post-date the purported agreement in relation to the “not simple loan”.

There can be no doubt that the defendants have received an amount of $1,530,000. So much is acknowledged by the defendants themselves. The alleged agreement to convert the debt into shares in the third defendant is inconsistent on the face of the documents and the material before the Court with the second defendant asking the plaintiff for time to pay or give him shares in the third defendant in or about January 2020. [1]

It is also inconsistent with a payment made by the defendants to the plaintiff on 31 March 2020 [2] and further, it is inconsistent with the defendant’s entering into a loan repayment deed dated 3 April 2020 with the plaintiff which states:

Further again, the so called non “simple loan” agreement is inconsistent with the recently expressed intention on the part of the defendants to repay the plaintiff. [4]

The first defendant admitted the existence of an outstanding debt in a text message to the plaintiff dated 30 April 2018 when it was said that “payment will be started to reduce the loan amount and related the [sic] interest”. [5] In the same message, calculations of interest were referred to and corresponding tables calculating outstanding interest were attached.

The second defendant sent a text message to the plaintiff on 12 April 2019 in or to the same effect, stating that he, the second defendant, “would receive some payment next week” and if he did receive it, he would make part payment of the loan that is the subject of these proceedings. [6]

The defendants also admitted their indebtedness to the plaintiff in a table entitled “Liabilities of Jimmy Yang and Freda Feng (either directly or indirectly) via personal guarantees - as at 12/05/2020”. The table was attached to an email of 13 May 2020 at 12.40pm from the first defendant to the plaintiff’s legal representatives and is Annexure P to the Affidavit of the plaintiff. The email stated, amongst other things, the following:

The table recorded the plaintiff as the lender and “United World Enterprises and personal” as the borrower and the debt as $1,530,000 excluding interest.

In the proceedings when they were first before the Court on 3 July 2020, before her Honour Lonergan J, the first defendant did not dispute that moneys were owed by the defendants to the plaintiff in the following exchange. At page 28, line 22 to line 32 from which I extract the following exchange:

Lastly, can I say in relation to the defendant’s submission (unsupported by any allegation in the defence or any evidence) that they did not understand the effect of the loan repayment deed, that the deed shows that the defendants made handwritten amendments to the deed, agreeing to certain clauses and not others, which, in the view of the Court, makes clear that not only did the defendants understand the document, they read the document and understood those clauses that were applicable and relevant to the issues now before the Court.

In my view the defence and the notion that the proceedings would continue to a full hearing is frankly an abuse of process. On the defendants’ own case, no defence arises or is arguable. The Defence is manifestly untenable and unarguably wrong and, on the material before the Court, from the defendants themselves, there is no alternative and no point in allowing the matter to proceed to final hearing, notwithstanding that, on one view, albeit limited, there seems to be alleged a question of fact. In my view, that question of fact is ultimately not one which is in the least bit sustainable on the material presented by the defendants themselves.

For the foregoing reasons summary judgment will issue and the Court makes the following orders: