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Hume Plasterboard Pty Ltd v Yi Hao Pty Ltd [2022] NSWSC 183 (1 March 2022)

The first defendant defaulted on financial obligations to the plaintiff.  The plaintiff brought proceedings against the second defendant and other defendants.  The Court, in making its orders, assessed whether it was necessary to consider the second defendant’s pleaded defences.

Facts:

The plaintiff, Hume Plasterboard Pty Ltd ABN 70 101 562 270 (“Hume Plasterboard”), applies for judgment upon a guarantee signed by the second defendant, Mr Jinbiao Xu guaranteeing the financial obligations of the first defendant, Yi Hao Pty Ltd ABN 84 636 111 325 (“Yi Hao”) to the plaintiff.  The other defendants were legally represented and they settled with the plaintiff on the first hearing day.  But the second defendant did not appear, so Hume Plasterboard sought to proceed in his absence.  The first defendant, Yi Hao, is in liquidation.

The second defendant, Mr Jinbiao Xu, and the third defendant, another guarantor, Chujun Su, filed a cross-claim against Hume Plasterboard on 13 May 2020, seeking to set aside their respective guarantees.  At the hearing on 28 February 2022 the third and fourth defendants were legally represented and reached a settlement with the plaintiff on the principal claim.  At the same time the cross claim brought by the third defendant, as second cross claimant, was discontinued and dismissed by consent, with costs.  The plaintiff also discontinued proceedings against the first, third and fourth defendant on 28 February 2022. 

In an Amended Statement of Claim filed on 22 December 2021 the plaintiff claims: that the second defendant guaranteed the first defendant’s financial obligations to the plaintiff; that the first defendant defaulted on payments to the plaintiff for the supply of goods, materials and associated services between the months of December 2019 and February 2020; and that consequently $219,213.14 is due to the plaintiff under the terms of an executed Guarantee and Indemnity dated 28 October 2019 (“the Guarantee”).  The plaintiff claims interest under Civil Procedure Act 2005s 100 in the sum of $219,213.14 together with interest and costs.  The second defendant/first cross claimant did not appear at the hearing on 28 February 2022.  Mr I. Kammoun, the solicitor who represented the third and fourth defendants, had also acted for the second defendant between 22 April 2020 and 15 May 2021, when he filed a Notice of Ceasing to Act. 

On 28 October 2019, a representative of Yi Hao signed Hume Plasterboard’s ‘Confidential Credit Application Form’, which contained a form of Guarantee that was signed by the second and third defendants.  On 4 November 2019 the plaintiff established an account to permit the first defendant to obtain goods and materials from the plaintiff on credit.  Hume Plasterboard sent a letter to the second defendant on 4 November 2019, confirming that the account (account number ‘YH07’) had been opened with the plaintiff with a credit limit of $300,000.00.  The first defendant commenced receiving goods and materials from the plaintiff on credit, on 30-day payment terms from the statement issue date.

Monthly statements were issued as and from December 2019. On 24 February 2020, Zac Wang, an account manager for the plaintiff company, met with Mr Binbin Xu on behalf of the first defendant.  Mr Binbin Xu is the second defendant’s cousin.  At the time of the meeting, the first defendant’s account had already reached an outstanding amount of approximately $265,000, without the plaintiff receiving any substantial repayment.  Mr Binbin Xu proposed a payment plan for the first defendant company involving the payment of between $32,000 and $50,000 within the week, and $50,000 to $70,000 before the end of March. 

On 2 March, the second defendant sent a letter to Ms Williams proposing a further repayment plan.  The 2 March payment plan was not honoured.   On 18 March 2020, a third payment plan was proposed on behalf of the first defendant, under which it would make payments of $50,000 on 24 March 2020 and 31 March 2020, a payment of $70,000 on 15 April 2020 and a payment of $100,000 on 30 April 2020.  This plan was also not honoured.  On 20 March 2020 a Final Notice was sent by Ms Williams on behalf of the plaintiff to the first defendant, as well as the second and third defendants as guarantors, demanding payment of the balance of the first defendant’s outstanding account as at 31 March 2020, in a total amount of $219,213.14.

Issues:

I. Whether or not the second defendant is liable as surety. 

II. Whether or not adequate notice of hearing was given to the second defendant.

III. Whether or not it is necessary to consider the second defendant’s pleaded defences. 

Applicable law:

Civil Procedure Act 2005s 100 - pursuant to which judgment for interest against the Second Defendant is calculated from 31 March 2020 to 28 February 2022.

Analysis:

The plaintiff’s statement of account dated 1 April 2020 shows that as of 31 January 2020, the day after the December monthly account of $158,718.19 had fallen due, none of the outstanding money had been repaid.  The second defendant therefore was in default under Hume Plasterboard’s Account Terms, clause 1(a) on 31 January 2020 and the account was due and payable from that day.  As of 31 March 2020, an account statement shows that $219,213.14 remained as the net balance outstanding on the account.  The first defendant has remained in default to the plaintiff in this sum.

After Mr Kammoun’s retainer was terminated, the second defendant did not appoint new solicitors to represent him. Nor has he appeared personally and any directions hearing since then.  The second defendant was notified by mail of the 28 February 2022 hearing of these proceedings.  The plaintiff’s solicitor, Mr Giles Finney sent by express post a letter to two of the second defendant’s known addresses in Auburn and Merrylands.  These letters notified the second defendant that these proceedings were listed for hearing in this Court on 28 February 2022 and warned that the plaintiff would seek to proceed in the second defendant’s absence.   

Conclusion:

The Court is satisfied that the second defendant was served with notice of the hearing and the Court heard the plaintiff’s evidence in the second defendant’s absence.  The Court is satisfied that Hume Plasterboard has made out its claim on the guarantee and this judgment gives the Court’s reasons for entering judgment with interest and costs against the second defendant.  Judgment is entered against the second defendant for $219,213.14 plus interest of $17,741.67.  The Second Defendant is ordered to pay the Plaintiff’s costs of the proceedings. 

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