Shao v Crown Global Capital Pty Limited [2023] NSWSC 820

“You complied with the contract by paying someone else, but pay me too!”
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P and their (then) spouse, X, agreed to lend $1m to D. The money - which was actually P’s solely - was lent: [1]
X directed D to repay the money into one of X’s accounts. D did so. At this time P and X were separated. They later divorced: [2]
P sued X for the money and, X having been made bankrupt, expects receive under $20K from X on account of their claim: [4]
P went on to sue D alleging breach of the agreement and negligence: [5]
D said X had actual or ostensible authority to direct the payment. D also said that by suing X, P made an election to pursue X rather than P and so ratified X’s conduct: [6]
D was a developer. When P and X were introduced to D they were asked for a refundable for a development, and nominated a joint bank account for the refund if necessary: [8]
X agreed to buy a unit in the development and later added P’s name. There were subsequent EOIs for other units: [9], [10]
P and X entered into a note facility agreement with D: [17]
X provided D with $1m in bank cheques - the $1m being P’s money X held on trust: [18]
Interest was initially paid into a P and X joint account: [19]
X sought for refundable deposits to be repaid to an account of his choosing, which they were: [21]
P introduced herself to D and had various discussions about possible developments, the refunded deposits, and disclosed the marital difficulties between P and X: [23] - [28]
Ahead of the expiry of the notes facility, D asked X where the $1m should be repaid. X nominated an account that was solely X’s and it was paid there: [31], [32]
P pursued X for the $1m, and X was bankrupted on P’s application: [35], [36]
P now turned their attention to suing D.
Two questions arose. Did D discharge its obligations by paying X? By suing X did P make an election from which the couldn’t resile?: [37]
After giving the issue lengthy consideration, the Court found D was OK to make payment to an acct nominated by the “Lender”, and that X’s nomination met this: [52], [56], [68]
X did not have authority to nominate on P’s behalf *BUT* D nonetheless complied with the contract by making payment *HOWEVER* the question of whether P was still entitled to pursue D for the debt remained: [69]
An act done without authority can be ratified by the person on whose behalf the act was done: [72]
Once ratification happens, the principal cannot then exercise rights that are inconsistent with the ratification: [73]
P original claim against X proceeded on the basis that P had rights to bring the claim against X. By making that claim, and seeking to enforce that judgment P ratified the acts of X: [78]
P did not dispute this analysis specifically, but pursued D on the basis of a breach of contract. This claim failed. By repaying X, D had complied with their contractual obligations: [79]
The application was dismissed with P obliged to pay D’s legal costs: [90]

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