Read the full judgment text of CACV 000142/1989 on BabelCite. This Court of Appeal judgment was delivered on 19 January 1990 before Fuad, V.-P., Clough, J.A., Penlington, J.A..
Civil law – summary judgment – R.S.C. O.14 – loan agreement and personal guarantee – whether defendants' proposed defence and counterclaim raise triable issues – tort of conspiracy – predominant intent to injure as essential ingredient – set-offs for breach of loan agreement and late payment – Soft-Opening Agreement. Loan agreement of 30 May 1986 between the plaintiff and the 1st defendant to finance the 1st defendant's joint-venture obligations in respect of a hotel in Guilin was personally guaranteed by the 2nd defendant. Sums totalling US$2,200,000 were advanced between 18 September 1986 and 20 March 1987. The 1st defendant failed to pay interest due on 30 September 1987 and 29 March 1988, and the plaintiff accelerated the loan and claimed US$2,386,845.33. The defendants' proposed defence and counterclaim alleged, inter alia, conspiracy, malicious falsehood, inducement of breach of contract, breach of the loan agreement and breach of the Soft-Opening Agreement. Whether the defendants' conspiracy claim raised a triable issue – held no; following Metall und Rohstoff A.G. v. Donaldson Lufkin & Jenrette Inc. and the Court of Appeal's recent decision in The Wing On Bank Ltd. v. Wai Man Estates Ltd., a predominant intention to injure the plaintiff is an essential ingredient of the tort of conspiracy, and the pleaded objective of benefiting CYTS and Ramada International Inc. could not support such an inference. Whether viable set-offs were shown for breach of the loan agreement and late payment – held no; non-payment began only when the defendants' drawdowns would have exceeded permitted pre-opening expenses, and the 1st defendant was already in default of interest. Whether leave to defend should be granted for the Soft-Opening Agreement set-off – held yes, but only to the extent of US$162,000, the plaintiff not seeking to disturb that part of the judge's decision. The Court of Appeal set aside the order of Nazareth, J. of 11 July 1989, entered judgment for the plaintiff against the defendants jointly and severally in the sum of US$2,224,845.33 (US$2,386,845.33 less US$162,000 for the Soft-Opening Agreement set-off) with interest at 2 per cent over the London Inter-Bank Offered Rate from 15 April 1988 to 19 January 1990, and granted the defendants unconditional leave to defend up to US$162,000 with no stay of execution. An order nisi was made that the 2nd defendant pays the costs of the appeal, with liberty to apply.
Legal issues: Whether the alleged conspiracy claim discloses a triable issue requiring leave to defend · Whether the defendants have viable set-offs based on alleged breach of the loan agreement and late payment · Whether the O.14 application should have been dismissed
Outcome: Appeal allowed; the order of Nazareth, J. of 11 July 1989 is set aside and judgment is entered for the plaintiff against the defendants jointly and severally, with unconditional leave to defend only up to US$162,000 (the Soft-Opening Agreement set-off).