Canara Bank v. Grace on Ltd and Others

HCA 1759/2019

[2022] HKCFI 3525

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1759 OF 2019

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Before:  Deputy High Court Judge Winnie Tsui in Chambers

Date of Hearing: 9 December 2021

Date of Decision: 28 November 2022

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DECISION

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INTRODUCTION

1.This is the 1^st to 5^th defendants’ appeal against the decision of Master Sabrina Ho made on 7 July 2021.  The master granted summary judgment in favour of the plaintiff and dismissed the defendants’ counterclaim.

2.In this action, the plaintiff seeks to recover outstanding debts owed under banking facilities granted to the 1^st defendant as borrower and guaranteed by the 2^nd to 5^th defendants.  The debts are allegedly owed by the 1^st defendant under a sanction memorandum dated 5 March 2018 (“the Sanction Memorandum”) and incurred during the period from about March 2018 to about February 2019.

3.Judgment was entered as follows:

(1)  The 1^st defendant do pay the plaintiff US$5,008,100 (comprising the principal, processing charges and mortgage charges), HK$5,000 (for documentation charges), US$261,654.74 (representing interest up to 15 September 2019) and further interest.

(2)  The 2^nd to 5^th defendants do pay the plaintiff US$5,000,000 (representing the maximum liability under the guarantees), US$261,654.74 (representing interest up to 15 September 2019) and further interest.

4.The plaintiff is an Indian bank.  It carries on business of banking and financial services in Hong Kong and other places. During the period when the banking facilities were allegedly granted, Mr Muthukaruppan Krishnan was the chief executive of the plaintiff.

5.The 1^st defendant is a Hong Kong company. The 3^rd defendant is its sole director.  The 4^th and 5^th defendants are its shareholders.  They hold 10% and 90%, respectively, of the shareholding. The 2^nd defendant is a majority shareholder and a director of the 4^th defendant.

6.The plaintiff commenced the action in September 2019.  The statement of claim was filed in the following month.  The 1^st and 5^th defendants on the one hand and the 2^nd to 4^th defendants on the other are separately legally represented.  The former filed the defence and counterclaim in January 2020 and the latter in May 2020.  The content of the two pleadings are, however, substantially the same.  The plaintiff filed the reply and defence to counterclaim vis-à-vis the 1^st and 5^th defendants in March 2020, which was subsequently amended in August.  It filed the reply and defence to counterclaim vis-à-vis the 2^nd to 4^th defendants in May 2020.  Again, the content of the two pleadings of the plaintiff are substantially similar.  The references below to the defence and counterclaim and the reply may be taken as references to those filed in relation to the 1^st defendant.

7.By the time the plaintiff took out the summons for summary judgment in October 2020, the above pleadings had been filed. Subsequent to the summons, the 1^st and 5^th defendants each filed a rejoinder.

8.In support of the application, the plaintiff filed four affirmations in total.  Krishnan is one of the deponents.  He had already retired when he made the affirmation.  In addition, Mr Rajesh Kumar Redhu, Mr Rakesh Chandra Shandilya and Mr Vijay Bassi made affirmations on behalf of the plaintiff.  Redhu was the alternative chief executive when he made the affirmation in support.  By the time the reply affirmation was due to be filed by the plaintiff, he had been relocated back to India.  Shandilya made the reply affirmation instead in his capacity as alternate chief executive. Bassi was the senior manager when the alleged banking documentation was executed.

9.For the defendants, the 2^nd and 3^rd defendants together with Mr Anuj Kumar Jain, the director of the 5^th defendant, made affirmations opposing the summary judgment application.

10.As disclosed by the affirmation evidence, the defendants contend that they are not liable under the alleged banking facilities as no money had ever been advanced to the 1^st defendant under those facilities.  The bank documents relied on by the plaintiff purporting to show the indebtedness were forged documents.  The defendants had never signed them.  The defendants say that the evidence reveal numerous factual disputes, which ought to be tried.  There are also major and numerous flaws in the plaintiff’s case.  Further, there are “other reasons” why there should be a trial.  The defendants submit that I should therefore allow their appeal and set aside master’s judgment.

11.Mr Patrick Siu, counsel, appeared for the plaintiff.  The 1^st to 5^th defendants were represented by Mr Simon Wong and Ms Samantha Lau.

THE PLAINTIFF’S CASE

12.The plaintiff’s case is fairly straightforward.

13.The banking relationship between the plaintiff and the defendants started in September 2017.

(1)  The plaintiff issued a sanction memorandum on 28 September 2017 (which is to be distinguished from the Sanction Memorandum as defined above).  It was accepted by the 1^st defendant.

(2)  As security for the indebtedness due and payable by the 1^st defendant under the sanction memorandum of 2017, the 2^nd defendant granted an equitable mortgage of an Indian property in favour of the plaintiff on 16 November 2017.  The mortgage was duly registered on the same day.

(3)  Banking facilities had been advanced to the 1^st defendant pursuant to that sanction memorandum since late 2017.

(4)  The 2^nd, 4^th and 5^th defendants executed guarantees in respect of the facilities made available to the 1^st defendant.

14.Subsequently, the plaintiff issued the Sanction Memorandum with the general terms and conditions annexed.  Under those documents, the plaintiff agreed to lend and the 1^st defendant agreed to borrow under the credit limit of US$5,000,000 (though the plaintiff could grant facilities in excess of that).  The Sanction Memorandum was signed by the 1^st defendant.

15.On 6 April 2018, the 2^nd defendant re-granted a mortgage over the Indian property in favor of the plaintiff as continuing security for the indebtedness due and payable by the 1^st defendant under the Sanction Memorandum.  The mortgage was duly registered and the 2^nd defendant paid all registration expenses incurred including stamp duty and registration fee.

16.The plaintiff and the 1^st defendant further entered into the Terms and Conditions for General Customer Service of the Bank which, among other things, set out the repayment obligation of the 1^st defendant, being payment on demand of all indebtedness in respect of all outstanding, future or contingent liabilities.

17.Further, in consideration of the plaintiff's granting banking facilities to the 1^st defendant, each of the 2^nd to 5^th defendants executed their respective guarantees on 16 April 2018 and 10 May 2018, guaranteeing to pay solely or jointly to the plaintiff the 1^st defendant’s indebtedness up to the limit of US$5,000,000 and interest accrued.

18.Under the Sanction Memorandum, the plaintiff offered to the 1^st defendant a “Letters of Credit/ Bills discounting (DA/DP)/ Trust Receipt facility” with a limit of US$5,000,000.

19.From March 2018 to February 2019, under the Sanction Memorandum, the 1^st defendant tendered five bills of exchange to the plaintiff for discount and the plaintiff paid the proceeds to the 1^st defendant.  I shall refer to them below as “the 1^st, 2^nd, 3^rd, 4^th and 5^th bills”.  The 4^th and 5^th bills were dishonoured upon presentation to the drawee bank.  The 1^st defendant has therefore become liable for the principal sums due under those two bills, together with charges and interests.  These amounts form the subject-matter of the plaintiff’s claim.  It is however necessary to look at all the five bills in this action.

20.As regards the 1^st bill:

(1)  It was dated 16 March 2018.

(2)  It was drawn for the principal sum of US$3,005,000 on Innovative Trades Limited (“Innovative”).

(3)  Upon discounting and after the deduction of interest in advance, the plaintiff credited to the 1^st defendant’s account the sum of US$2,986,250 on 19 March 2018.

(4)  On the same day, a sum of US$2,980,000 was transferred from the 1^st defendant’s account to Jubilant Overseas Limited (“Jubilant”).

21.As regards the 2^nd bill:

(1)  It was dated 5 October 2018.

(2)  It was drawn for the principal sum of US$3,012,200 on IGC Enterprises Limited (“IGC”).

(3)  Upon discounting and after the deduction of interest in advance, the plaintiff credited to the 1^st defendant’s account the sum of US$2,983,208.33 on 19 October 2018.

(4)  On the same day, a sum of US$3,000,000 was debited from the 1^st defendant’s account to repay the 1^st bill.

22.As regards the 3^rd bill:

(1)  It was dated 22 October 2018.

(2)  It was drawn for the principal sum of US$2,002,000 on IGC.

(3)  Upon discounting and after the deduction of interest in advance, the plaintiff credited to the 1^st defendant’s account the sum of US$1,993,213.44 on 24 October 2018.

(4)  On the following day, a sum of US$1,933,998.83 was debited from the 1^st defendant’s account and paid to Ethos Venture Limited (“Ethos”).

(5)  The 3^rd bill was repaid out of money in the account on 15 February 2019.

23.As regards the 4^th bill:

(1)  It was dated 12 February 2019.

(2)  It was drawn for the principal sum of US$2,003,750 on IGC.

(3)  Upon discounting and after the deduction of interest in advance, the plaintiff credited to the 1^st defendant’s account the sum of US$1,991,414.53 on 15 February 2019.

(4)  On the same day, a sum of US$803,075 was transferred from the 1^st defendant’s account to Genesis Technologies Fze (“Genesis”) and a sum of US$1,194,675 transferred to Micron Technologies Fze (“Micron”).

24.As regards the 5^th bill:

(1)  It was also dated 15 February 2019.

(2)  It was drawn for the principal sum of US$3,001,350 on Trade Box Global Limited (“Trade Box”).

(3)  Upon discounting and after the deduction of interest in advance, the plaintiff credited to the 1^st defendant’s account the sum of US$2,981,278.50 on 15 February 2019.

(4)  On the same day, a sum of US$3,000,000 was debited for repaying the 2^nd bill.

25.In other words, the 1^st defendant had made use of the “Bills discounting” facility under the Sanction Memorandum broadly as follows:

(1)  It discounted the 1^st bill for making payment to Jubilant.

(2)  It discounted the 2^nd bill to repay the 1^st bill.

(3)  It discounted the 3^rd bill for making payment to Ethos.  The 3^rd bill was later repaid with money in the account.

(4)  It discounted the 4^th bill for making payments to Genesis and Micron.

(5)  It discounted the 5^th bill and the proceeds were applied to repay the 2^nd bill.

26.The plaintiff presented the 4^th and 5^th bills to Indian Overseas Bank, the drawee bank.  On 27 March 2019, the 5^th bill was returned unpaid according to the instruction of the drawee.  The drawee of the 4^th bill has not indicated its acceptance of the bill.  Accordingly, the two bills were dishonoured for non-acceptance.  The principal sums totalling US$5,005,100 together with charges and accrued interest have remained due and outstanding.

27.The plaintiff has issued a number of demands for repayment since April 2019.  The demand letters and emails were produced in the evidence.  They form an important part of the evidence in support of the plaintiff’s summary judgment application.  This is because, the plaintiff says, despite receiving these demands as early as in April 2019, the defendants did not make the allegation of forgery until the defence and counterclaim was filed in January 2020.  Upon discovering a forgery which potentially exposes the defendants to a substantial claim of over US$5,000,000, the plaintiff argues that it is inherently implausible for them not to raise it promptly and only to make the allegation some nine months later.

28.The demands include the following:

(1)  Letters before action dated 4 April 2019 sent by the plaintiff’s solicitors to the defendants respectively.  The letters expressly referred to the Sanction Memorandum by date and parties, stated the amount of their respectively liabilities and demanded their repayment.

(2)  Two emails dated 23 April 2019 and 21 May 2019 sent by the plaintiff’s operation department to the defendants chasing for repayment of the 5^th bill.  The emails expressly set out the details of the bill, including the principal amount, the due date and the name of the drawee.

(3)  A demand letter sent by the plaintiff to the defendants dated 28 June 2019.  The letter expressly referred to 5 March 2018 as the “Date of Sanction” and described the nature of the loan as “LC/Bills discounting (DA/DP)/TR Facility availed from Canara Bank, Hong Kong Branch”.

29.There was no response to any of the above demands, save for a short letter from the 2^nd defendant to the plaintiff’s solicitors dated 16 August 2019 stating that she did not recollect signing any guarantees and requesting copies of them.  The plaintiff proceeded to issue the writ in the present action in September 2019.

30.The plaintiff’s case is therefore in essence for debts owed by the 1^st defendant and guaranteed by the 2^nd to 5^th defendants under the Sanction Memorandum.

THE DEFENDANTS’ CASE

31.In gist, the defence is as follows:

(1)  While the defendants accept that the 1^st defendant had signed the Sanction Memorandum on 16 April 2018 and the 2^nd to 5^th defendants had signed the respective guarantees on the same day or shortly afterwards, they deny that the 1^st defendant had ever made use of the facilities under the Sanction Memorandum.  All along, the plaintiff had merely agreed to make available the facilities up to the limit of US$5,000,000, but it never actually advanced any sums to the 1^st defendant under those facilities.

(2)  While the defendants accept that a sum of money had gone into the 1^st defendant’s account after each alleged discount, a sum (or sums) of money of roughly the same amount was either transferred out and paid to some third parties or applied to repay some previous bill immediately.  The defendants deny that the 1^st defendant had had any business dealings, relationship or knowledge of the drawees of the bills (ie Innovative, IGC and Trade Box) or the recipients of the outgoing sums (ie Jubilant, Ethos, Genesis and Micron).  The 1^st defendant denies having authorised the transactions.

(3)  Hence, the 1^st defendant, and consequently the 2^nd to 5^th defendants, are never indebted to the plaintiff under the Sanction Memorandum or the guarantees.

(4)  The five bills and the related supporting documents are forged documents.  The defendants deny having ever prepared, signed or delivered them to the plaintiff.

32.The defendants contend that there are numerous factual disputes between the parties. 

33.In addition, the defendants say there are a large number of “peculiar” or “highly suspicious” features in the plaintiff’s documentary evidence.  These are all triable issues of fact.  Mr Wong submits that one important suspicious feature is a signature purporting to be the 1^st defendant’s and comprising a company chop and a handwritten signature.  He submits that it was obviously forged as it appeared in identical form in many of the plaintiff’s documents.  In his submissions, he referred to it as “the Suspicious Signature”.  I shall adopt this term below.

34.Furthermore, it is also the defendants’ case that the plaintiff and/or Krishnan is “somewhat involved in the scheme” behind the unauthorised transactions and the forged documents.  According to company documents available in the public domain, it is revealed that there is close connection among the drawees and the recipients of the funds as all these entities are closely connected to a Mr Natarajan, who was an auditor of the plaintiff.  There was a close business relationship between Krishnan and Natarajan.  In light of this, leave to defend should be granted so that a full investigation at trial can be conducted to find out the truth.  With discovery and interrogatories, the picture would become clearer and it is only fair to the defendants if further and proper investigation can be carried out.  All these investigations are ultimately relevant to their defence of forgery. There is therefore “some other reason” for a trial: Order 14, rule 3(1) of the Rules of the High Court.

35.Hence, the present case is not suitable for summary judgment.

The allegation of forgery and the defendants’ investigation

36.The allegation of forgery was made in the 3^rd defendant’s affirmations. 

37.The defendants only came to know about the bills for the first time when they started to receive the demands for repayment from the plaintiff from April 2019 onwards.  There is no dispute that the demands were sent, as detailed in para 28 above.

38.It is important to look at what the defendants did after the discovery of the bills. 

39.In his own words, the 3^rd defendant was “extremely astonished and frustrated” by the contents of the demands as the 1^st defendant had never discounted any bill with the plaintiff under the Sanction Memorandum.  He asked the 2^nd defendant and Jain (the director of the 5^th defendant) to pass all the demands to him for direct handling.  Being the sole director of the 1^st defendant, the 3^rd defendant would handle “the chaos” himself.

40.This is how the 3^rd defendant described the investigation which was undertaken after the discovery of the bills in his affirmation:

“43. After the Defendants received demand letters dated 4^th April 2019 from ONC, I contacted lawyers in Hong Kong to seek legal advice. I instructed my lawyers to look into the matter, and to claim against the Plaintiff if they found it appropriate.

44. When the 1^st Defendant’s legal team was still discussing and investigating the matter, the Plaintiff issued the Writ of Summons for the present action on 24^th September 2019. This shifted the focus of the 1^st Defendant’s legal team to defend the Plaintiff’s claims. Therefore, the Defendants did not yet have the full opportunity to raise any objection or complaint, and did not make any inquiry on their liabilities and the aforesaid notifications from the Plaintiff.

…

54. Indeed, I was extremely shocked by the fact that the Plaintiff would have processed the [1^st bill] at the time when the Sanction Memorandum had not even been signed by any of the Defendants. We are still investigating the reasons behind this apparent “mistake”. Indeed, I do not know whether I should describe it as a “mistake”. If there was some improper conduct behind this, and that was done deliberately, it cannot be regarded as a mistake. As will be seen later in this Affirmation, the investigations so far reveal that there was some improper conduct behind this matter. A trial is necessary to uncover the Plaintiff’s fault in dealing with these documents. On this, I verily believe that the purpose of the Plaintiff’s summary judgment application is to avoid the due process of discovery and interrogatories so as to hide their improper conduct.

…

96. As I mentioned above, I instructed the 1^st Defendant’s legal team to investigate what had happened. With the provision of more information and documents by the Plaintiff after the commencement of the present action, the investigation becomes more and more effective.

97. That said, as I will elaborate further hereinbelow, the investigation has not been complete thus far.  I do believe that more time and resources have to be spent on investigation to reveal the truth of all the matters.  Therefore, this is certainly not a case suitable for summary judgment.”

41.In the affirmation, the 3^rd defendant went on to talk about the close connection between the various entities, Natarajan and Krishnan, as revealed by the publicly available company documents and his own personal knowledge.

42.The “mistake” referred to in para 54 of the affirmation relates to the date when the 1^st bill was allegedly discounted, ie 19 March 2018, and the date when the Sanction Memorandum was executed by the 1^st defendant, ie 16 April 2018.  The defendants query why the discounting of the 1^st bill could have taken place under the Sanction Memorandum at a time when the latter had not even become effective.

43.To this, the plaintiff’s reply is that the 1^st bill was secured by the continuing security granted under the mortgage and the guarantees executed in relation to the sanction memorandum of 2017.  In response, the defendants point out that according to the cancellation of the 2017 mortgage dated 6 April 2018, the plaintiff stated that the 1^st defendant had not availed the sanction memorandum of 2017 and the sanction had expired on 27 December 2017.  Hence the 1^st bill could not have been discounted under the sanction memorandum of 2017.

The “highly suspicious” features in the plaintiff’s evidence

44.I now turn to the various parts of the plaintiff’s documentary evidence which the defendants have identified as “highly suspicious”. 

45.According to the plaintiff’s evidence, in respect of each discounting and the related transfer out, apart from the bill of exchange itself, the 1^st defendant would also tender a set of documents.  They would include all or some of the following:

(1)  A document entitled “Covering Letter for Documentary bill for Purchase/Negotiation/Discount/Collection”.  It appeared to be in standard form and was effectively a request by the 1^st defendant to the plaintiff for discounting the bill, enclosing the required documents;

(2)  An invoice issued by the 1^st defendant to its customer;

(3)  A packing list;

(4)  An airway bill;

(5)  An invoice issued by the recipient of the outgoing funds to the 1^st defendant; and

(6)  Remittance instruction.

46.Further, in respect of each discounting and transfer out, the plaintiff’s documents would include some or all of the following issued by it:

(1)  Advice for discount; and

(2)  Advice for outward telegraphic transfer.

47.In the main, the defendants query some of the signatures and dates appearing in the above documents and also some other information appearing there, and say they are suspicious and show that there is a triable issue as to whether they are forged documents.

48.As regards the 1^st bill:

(1)  The Suspicious Signature appeared on the 1^st bill and the remittance instruction.

(2)  The covering letter has a date chop on it which read 20 March 2018.  It was one day after the date when the 1^st bill was actually discounted and the money transferred to Jubilant. 

(3)  The remittance instruction was dated 16 March 2018.  It was even before the covering letter was sent to the plaintiff on 20 March 2018.

(4)  In light of (1) and (2) above, the defendants query how the plaintiff actually processed the discounting on 19 March 2018 in the absence of the covering letter.  The 1^st bill and the transfer to Jubilant, the defendants submit, are therefore highly suspicious to say the least.

49.As regards the 2^nd bill:

(1)  An identical signature (ignoring the company chop) appeared on the 2^nd bill and the second page of the covering letter (and also on the 3^rd bill and the second page of the covering letter for that bill).

(2)  The signature and the chop are copies, not originals.

(3)  In the reply affirmation, Shandilya said that the 2^nd bill and the related documents were tendered by fax. However, on the second page of the covering letter, the company chop appeared in blue.

(4)  The first page of the covering letter was not signed.

(5)  The covering letter was not dated.

(6)  The plaintiff did not disclose the invoice and the airway bill, which was mentioned to have been enclosed with the covering letter.

(7)  In light of the above, the defendants say the documents relating to the 2^nd bill were obviously forged.

50.As regards the 3^rd bill:

(1)  See para 49(1) above.

(2)  The Suspicious Signature appeared on the 3^rd bill and page two of the covering letter.

(3)  Page one of the covering letter was not signed.

(4)  The documents referred to in the covering letter, including the invoice and the airway bill, were not produced. 

(5)  Nor was the advice for transfer disclosed.

(6)  The defendants also have a number of queries over a set of documents which on their face relate to one payment made to Ethos in the sum of US$1,988,500 in about April 2018.  It will be recalled that Ethos was the recipient of US$1,933,998.93 coming out from the 1^st defendant’s account after the 3^rd bill was discounted in October 2018.

(7)  The queries revolve around the apparent discrepancies in the payment amount and the payment date.  Importantly, the transaction revealed by the documents show that it took place six months before the discounting of the 3^rd bill.  The defendants therefore say that these amount to suspicions on the genuineness of the documents.

51.I should say at once that it appears to me that the set of documents in question does not, on their face, relate to the 3^rd bill in the first place.  And that seems to be the obvious explanation why there are the differences in the payment amount and the payment date.  It is doubtful that the set of documents is related to the 3^rd bill at all.  It seems to be a case where the plaintiff has exhibited irrelevant documents. 

52.As regards the 4^th and 5^th bills:

(1)  The advances made by the plaintiff to the 1^st defendant under the two bills amounted to US$5,005,100 in total.   That exceeded the limit as set out in the Sanction Memorandum.  This is highly unusual.

(2)  The Suspicious Signature appeared on the 4^th bill and the related covering letter, invoice and packing list.  It also appeared on the 5^th bill and the related covering letter, invoice, and packing list.

(3)  The covering letter did not refer to any packing list as part of the documents enclosed.  However, a packing list was produced.

(4)  The invoice and the packing list relating to the 4^th bill were both dated 12 February 2019.  It was even after the flight on 31 January 2019, as shown in the airway bill.

(5)  Similarly, the invoice and the packing list relating to the 5^th bill were both dated 15 February 2019.  It was even after the flight on 31 January 2019, as shown in the airway bill.

(6)  The airway bills for the 4^th and 5^th bills were both numbered 160SIN01515835, while the identity of the shippers and consignees as stated in the two bills were different.

(7)  On the invoices issued by Genesis and Micron to the 1^st defendant, the name of the latter was stated as “Graceon Limited”, instead of the correct name of “Grace On Limited”.  The defendants say it is an unlikely coincidence that both companies would write the name of the 1^st defendant incorrectly in the same way.

(8)  In the advice for transfer in relation to each bill, the plaintiff mistakenly omitted the floor number (1/F) of the 1^st defendant’s address.  The same omission appeared in the invoices issued by Genesis and Micron.  The defendants suggest that it might have been one same person who prepared all these documents.  This is highly suspicious.

(9)  In light of the above, the defendants say that the two bills are clouded with highly suspicious features.

53.Lastly, the defendants also highlight an about-turn in the plaintiff’s pleadings.  In the statement of claim, the plaintiff pleaded that it had presented the originals of the 4^th and 5^th bills to Indian Overseas Bank for acceptance.  In the defence and counterclaim, the 1^st defendant pointed out that both bills contained the Suspicious Signature and therefore could not be genuine or original and hence no originals could have been presented to the drawee bank.  Then, the plaintiff in is reply pleaded that it had received the two bills from the 1^st defendant by fax.  The defendants say that there is a serious doubt over the plaintiff’s assertion on how it received the bills in the first place.

54.Furthermore, the plaintiff has not adduced any evidence that the bills and other documents were received by fax.  A lot of the copies of the documents exhibited do not contain any fax header or fax chop. The defendants also submit that it is highly unlikely for a bank to simply accept faxed instructions for substantial sums without taking any steps to verify the truthfulness of the instructions.

There ought to be a trial in order to investigate Krishnan and Natarajan

55.The investigation conducted by the defendants, based on publicly available company documents, reveal a web of connection among the plaintiff, Krishnan, Natarajan, Innovative, IGC, Trade Box, Jubilant and Ethos. 

(1)  The plaintiff engaged an accounting firm, Charles HC Cheung & CPA, as its external auditor.

(2)  Natarajan was an auditor of that firm.

(3)  Innovative, IGC, Trade Box, Jubilant and Ethos were connected to Natarajan in some way or another by, eg, shareholding, common directorship or company secretary, or the use of the same address as registered office.

(4)  In June 2018, Ethos executed a floating charge in favour of the plaintiff.  Krishnan executed the document on behalf of the plaintiff.

56.The 3^rd defendant said that Krishnan previously introduced Natarajan to him.  Through their interactions, he knew that Krishnan and Natarajan had a close personal and business relationship with each other.

57.For the above reasons, the 3^rd defendant concluded in his affirmation that Innovative, IGC, Trade Box, Jubilant, Ethos, Natarajan, Krishnan and the plaintiff were closely connected:

“For all the reasons as aforesaid, it is plainly indisputable that there is a close connection among IGC, Trade Box, Innovative, Jubilant and Ethos, which are all closely connected to Mr. Natarajan and Mr. Rao. I verily believe that, due to the close personal and business relationship between Mr. Natarajan and Mr. Krishnan, these corporate entities involved in the Transactions are also closely linked to Mr. Krishnan. Further, it is shown by the execution of the floating charge dated 1^st June 2018 that at least one of these companies, Ethos, did have business relationship with the plaintiff and Mr. Krishnan.” (underline added)

58.The defendants further concluded that the plaintiff and/or Krishnan were “somewhat involved in the scheme behind the list of unauthorized transactions and forged [bills]”.  They take the view that it “simply cannot be a coincidence that all these parties in different transactions are connected”.

59.It will be recalled that Krishnan made an affirmation which was filed as part of the plaintiff’s reply evidence.  It is a short affirmation.  Krishnan had already retired from the plaintiff by then.  He confirmed that at all material times, he had no personal or business relationship with any auditor of the plaintiff, including Natarajan.  Nor did he have any personal or business relationship with Innovative, IGC, Trade Box, Jubilant or Ethos.  The floating charge was entered into as security for facilities granted to Ethos back in 2018.  He simply executed the document on behalf of the plaintiff which is in the ordinary course of business of the bank’s operations.  He also noted that the Indian business community in Hong Kong is relatively small and close, and that many Indian companies cooperate with and do trades with each other.

60.The defendants do not accept Krishnan’s explanation.  They reiterate that the coincidence cannot be explained away and that there is clearly a scheme behind these transactions.  This matter warrants further investigation. With discovery and interrogatories, the picture would become clearer.  The concluding words in Order 14, rule 3(1) – “there ought for some other reason to be a trial” – are invoked in the present case: Talent Wise Ltd v Cheung Sui Ching [1998] 2 HKLRD 744 at 748H-750E.  The investigation is ultimately relevant to the defendants’ defence of forgery.

LEGAL PRINCIPLES

61.An appeal from a master to a judge under Order 58, rule 1(1) of the Rules of the High Court is by way of re-hearing.  I should treat the summons as though it came before me for the first time: Hong Kong Civil Procedure 2022 at 58/1/2. 

62.The Order 14 principles are well-known.  I set out the main ones below.  I have extracted them from counsel’s submissions.

63.Order 14 is for clear cases, ie cases in which there is no serious material factual dispute. The procedure is entirely inappropriate where the plaintiff’s entitlement to recover any sum is the subject of serious dispute whether of law or fact.

64.Unless it is obvious that the defence put forward by the defendant is frivolous and practically moonshine, summary judgment ought not to be applied.

65.When hearing an Order 14 application, the court must not embark on a mini-trial on affidavits.

66.In an Order 14 application, the issue is not whether the defendant’s assertions are to be believed, but whether those assertions are believable.

67.In considering whether there are triable issues, the court will not take the defence on its face value but test it against the evidence disclosed in the affidavit including matters such as contemporaneous documents, whether the alleged defence is inconsistent with the defence previously put forward or whether the defence is only recently raised despite opportunity being given to the defendant to respond earlier.  

68.The court will also consider the inherent probability of the defence.

69.If the court has suspicions concerning the plaintiff’s case, the correct course is to give the defendant unconditional leave to defend so that all matters can be ventilated at trial.  The importance of there being doubts or suspicion as to the validity of the plaintiff’s case is that such doubts detract from the plaintiff’s right to summary judgment. If possibly genuine weaknesses were exposed in the plaintiff’s case, this casts doubt on the plaintiff’s right to invoke the summary procedure in the first place. 

70.See, eg, Maintek Computer (Suzhou) Co Ltd v Blue Anchor Line HCAJ 106/2008, 2 April 2013 at paras 11 to 17; Time Rich 08 Ltd v DBE (HK) Ltd [2018] HKCA 404 at para 5.2.

71.The court can grant summary judgment even if a defendant raises a defence of alleged forgery, bearing in mind that an allegation of forgery is a serious allegation which the defendant will bear the burden of proving by cogent and compelling evidence since it is trite that the more serious the allegation, the less likely it is that the event occurred: Billion Wealth Group Limited v Strategic Media International Limited HCMP 2586/2009, 3 May 2010 at para 40, per Fok J (as he then was).

DISCUSSION

72.On the basis of the evidence before me, I find that the defence of forgery is unbelievable and the defendants have failed to raise any issue which should go to trial.   The defendants’ evidence is tainted with inherent improbabilities.  In this Order 14 application, the burden is on the defendants to raise triable issues with credible evidence but they have failed to condescend to give particulars on key aspects of their case.  Overall speaking, the defendants’ case is overwhelmingly unconvincing and incapable of belief.

73.I do not agree with the defendants’ submissions that the plaintiff’s evidence reveal any “highly suspicious” features or weaknesses which go to the validity of its claim such that these aspects of the case need to be further investigated at a trial.

74.Furthermore, I am not satisfied that the connection between Krishnan, Natarajan and the corporate entities involved in the five bills as alleged by the defendants warrant any investigation such that the claim should go to trial.

It is inherently implausible that the 1^st defendant was not aware of the sums of money going in and coming out of its account from March 2018 to February 2019

75.It is undisputed that sums of money were credited into and debited from the 1^st defendant’s account immediately following the discounting of each of the five bills.  This spanned over a period of 11 months from March 2018 to February 2019.  It is an inherent part of the defendants’ case that the 1^st defendant was not aware of the money flows in and out of its account at the time, as it only became aware of the alleged indebtedness under the Sanction Memorandum for the first time when it received the plaintiff’s solicitors’ letter in April 2019. 

76.I find the alleged ignorance of the money flows at the time to be inherently implausible.

77.It is important to ascertain the nature of the 1^st defendant as a company.  In the case of a dormant company, it is inherently possible that its shareholder or director may not pay attention to the company’s bank account, as they have no use for the company and its account in the meantime. And this may provide an opportunity for fraudsters to make use of the dormant company and its account for improper purposes. 

78.On the objective evidence before me, this cannot be said of the 1^st defendant.  The evidence shows that at the time it was a company carrying on a business and making actual use of its bank account with the plaintiff.  I say so for the following reasons.

79.In the statement of claim, the plaintiff pleads that the 1^st defendant carries on the business of trading of computer parts.  This plea is not admitted in the defence and counterclaim.  At the hearing, I asked Mr Wong whether the 1^st defendant was a trading company.  He submitted that there is no evidence suggesting that to be so.

80.Notwithstanding the above, there are two pieces of objective evidence which shows that the 1^st defendant was carrying on trade business and was making use of its bank account or banking relationship with the plaintiff at the relevant time.

81.First, the 1^st defendant entered into the sanction memorandum of 2017 and the Sanction Memorandum.  As security for these facilities, the 2^nd defendant mortgaged a real property in India in favour of the plaintiff.  Under the Sanction Memorandum, the plaintiff made available trade facilities to the 1^st defendant up to a limit of US$5,000,000.  They included letters of credit, bills discounting and trust receipt facility.  The existence and the nature of these facilities together with the size of the credit limit all credibly point to the conclusion that the 1^st defendant was carrying on a trading business.  Otherwise, it would not have gone to some lengths to mortgage a real property in order to secure a trading credit line.

82.Second, in the evidence is an email, attaching a letter on the 1^st defendant’s letterhead, sent by the 1^st defendant to the plaintiff dated 16 July 2018.  (I shall refer to the letter below as “the 1^st defendant’s letter of July 2018”.)  The letter read:

		“GRACE ON LTD Unit G, Mau Lam Commercial Bldg. 16-18 Mau Lam Street, Jordan Hong Kong
16 July 2018   To Canara Bank 904 Aon China Building 29 Queen’s Road Central Hong Kong   Dear Sir,   Sub: Our financial limits with you   We refer to our discussions and correspondences.  We thank you for providing us with financial limits and we are committed to conducting the account to your satisfaction.   We would like to inform you that because of prolonged downward trade cycles with little hope of revival, we have decided to close the operations of Grace On Ltd.  We are in the process of organizing to return the utilized facility amount, US$1.5 million shall be repaid on or before 15 August, 2018.  Balance limits will be closed within the month of September, 2018.  We request you to kindly release the security after settlement of the facility.   Thanking You   For and on behalf of GRACE ON LTD   [Signature]”

83.There was a reply by the plaintiff on the same day.  The plaintiff stated that the overdue amount was repayable immediately.  The letter is produced by the plaintiff in this application to show that the 1^st defendant was indeed fully aware that it was indebted to the plaintiff under the 1^st bill and the Sanction Memorandum.  The date of the letter was July 2018, which was three months after the due date of the 1^st bill.  The overdue amount then was US$3,000,000, which was also consistent with the amount referred to in the letter. 

84.The defendants do not dispute that the 1^st defendant had sent the letter.  Mr Wong’s submission on it is that it may at best suggest that the 1^st defendant owed to the plaintiff some utilised facility amount as of 16 July 2018, but it does not indicate that the indebtedness was in relation to the 1^st bill or the Sanction Memorandum.  He points out that there was no express reference to these documents in the body of the letter itself. 

85.The letter was indisputably sent by the 1^st defendant.  I have found it puzzling why it could not explain in this application what this letter was actually about but could only suggest what it may be about.  I raised this issue with Mr Wong at the hearing.  He explained that the letter was only produced in the plaintiff’s reply affirmation, and the defendants therefore had no opportunity to file further evidence to respond to it.  I am not entirely satisfied with this explanation.  It was up to the defendants to seek leave of the court to file further evidence which are material and relevant. The defendants had not even tried.  

86.In any event, what is relevant here is that its content clearly shows that the 1^st defendant was carrying on a trading business and was at the time quite closely monitoring its banking relationship with the plaintiff. The letter shows:

(1)  There were “discussions and correspondences” between the 1^st defendant and the plaintiff.

(2)  The 1^st defendant assured the plaintiff that it was “committed to conducting the account” to the plaintiff’s satisfaction.  (The word “account” might be used to refer to the actual bank account or the the banking relationship as a whole.)

(3)  The 1^st defendant was facing “prolonged downward trade cycles with little hope of revival”.

(4)  It therefore decided to close “the operations”.

(5)  It had utilised a facility amount of more than US$1,500,000 at that time.

87.In view of the ongoing activities of the 1^st defendant, whether in relation to its own trading business or its banking relationship with the plaintiff, it flies in the face of logic that the 1^st defendant would be completely ignorant for a period of 11 months of the sizable sums of moneys going in and out of its bank account. 

88.I note of course that on each occasion, the moneys were debited from the 1^st defendant’s account almost immediately after the discounting proceeds were credited.  This means that there might be no noticeable change in the day-end balance of the account if one did not look closely at each debit and credit entry.  However, it will be recalled that the 3^rd bill was repaid out of money already in the bank account.  The amount deducted was just over US$2,000,000 and was a net debit from the account.  This entry was certainly sizable and noticeable.  Yet, according to the defendants’ case, the 1^st defendant was completely ignorant of it at the time.

89.In my view, it is inherently implausible that the 1^st defendant did not know about the incoming funds from the discounting and the outgoing funds to Jubilant, Ethos, Genesis and Micron which took place during the period.  This stance is unconvincing.

It is inherently implausible that the defendants only alleged forgery for the first time almost nine months after its discovery and not before

90.It is an indisputable fact that the defendants made the allegation of forgery for the first time in January 2020 when the 1^st defendant filed its defence and counterclaim.  This is so notwithstanding that the plaintiff’s solicitors sent a formal demand letter chasing for repayment of the principal sums of the 4^th and 5^th bills back in April 2019.  There was a period of nine months in which further written demands were sent by the plaintiff and the defendants remained silent altogether (save for the 2^nd defendant’s request for copies of the guarantees).

91.Mr Siu submits that if the 1^st defendant’s allegation that it had not made use of the facilities under the Sanction Memorandum had been true, it would have been impossible for it not to raise immediate objections against the plaintiff’s demands.  He highlights the point that the sums involved are significant and the defence is a simple one.  There are no conceivable reasons for the defendants not to raise it in response to the demand letters and sit on the matter for nine months. 

92.I agree with these submissions.  Forgery is a serious matter.  Because of the forgery, the defendants are now exposed to a claim by the plaintiff of a significant sum, with interest accruing by the day.  In the demand letter dated 4 April 2019, the plaintiff’s solicitors made it clear that unless the outstanding sums were repaid, the plaintiff would commence legal proceedings without further notice.  One would think that if the defendants were genuinely not liable for the sums, they would respond to the plaintiff to deny the debt at the first opportunity, and to avert the possibility of an unjustified litigation commenced against it.

93.In the circumstances, it is plain that the defendants must proffer an explanation for their prolonged silence, which is at least capable of belief, if they are to resist summary judgment being entered against them.

94.Throughout their affirmation evidence, there was no serious attempt to put forward any explanation.  All we have is a submission made by Mr Wong where he says that the demands cannot assist the plaintiff because:

“There can be numerous possible reasons why a defendant does not respond in writing to a demand. The non-response cannot be considered as admission of liability.”

95.The submission is problematic.

96.First, in an Order 14 application, the burden is on the defendant to put forward an arguable defence.  Here, the defence is obviously tainted with the inherent unlikelihood that it was not raised at an earlier opportunity.  The defence is thus potentially rendered unbelievable.  To make the defence arguable, it is incumbent on the defendants to give an explanation.  However, the best they can do is to assert vaguely (and weakly) that there can be “numerous possible reasons”.  In this regard, the burden is far from being discharged.

97.Secondly, the plaintiff has not tried to construe the defendants’ silence as an admission of liability.  In my view, the silence speaks volumes about the defendants’ allegation of forgery.  If they had genuinely believed that the documents were forged, they would have spoken out soon after they received the demands in 2019.  They did not do so then but only put it forward as a defence after the legal action was commenced.  In my view, their conduct is inherently implausible.

98.Furthermore, at the hearing, Mr Siu highlights the following evidence of the 2^nd defendant.  In her affirmation, she said that when she received the demand letter in April 2019, she immediately contacted the 3^rd defendant.  She said that she had not participated in the daily operation of the 1^st defendant and was therefore not sure what was going on.  She went on to say:

“At that time, the 3^rd Defendant told me that the 1^st Defendant had never requested the Plaintiff to grant it banking facilities under and/or pursuant to the Sanction Memorandum; and had not drawn any bills of exchange.” (underline added)

99.The significance of this evidence is that immediately after the receipt of the demand letter of April 2019, the 3^rd defendant was fully aware that there was no facility drawn under the Sanction Memorandum.  It therefore begs the question as to why the 3^rd defendant, the sole director of the 1^st defendant, did not immediately approach the plaintiff to object to the demands.

100.For the above reasons, I conclude that if the allegation of forgery is true, it is inherently implausible that the defendants would only make that allegation for the first time in January 2020 but not earlier when they received the demand letter in April 2019 or when they received the subsequent demands later in that year.

The defendants fail to condescend to give particulars on their investigation of the alleged forgery

101.It is worth repeating that forgery is a serious crime.  In this case, if the documents had in fact been forged, the defendants have been exposed to a significant claim of over US$5,000,000 as a result.  One would naturally expect the defendants to investigate the matter promptly and thoroughly, and also to report the matter to the police for criminal investigation.

102.The defendants’ affirmations are silent on whether the matter had been reported to the police or other law enforcement agency. 

103.If it had been, it would be for the defendants to depose to that fact and give particulars of any progress or result of the police investigation.  No doubt such investigation, if any, would directly relate to the alleged forgery.  If the matter had not been reported, the obvious question which comes to mind must be – why not?  It is inherently unlikely that the defendants, who have found themselves to be victims of fraud, would be content to conduct their own investigation, without reporting such a serious crime to the police. 

104.Either way, the defendants’ case is glaringly unsatisfactory.

105.In para 40 above, I have extracted the relevant passages from the defendants’ affirmations on the extent of the investigation which had been carried out.  Plainly, not much has been going on.  All that the defendants manage to have done is to conduct public searches on the various companies involved in the discounting of the five bills.

106.The shifting of focus brought about by the issue of the writ referred to in para 44 of the 3^rd defendant’s affirmation is not understood.  From the defendants’ perspective, they are now being sued for bills which they say were forged. The focus of their investigation must be who had perpetrated the fraud using the 1^st defendant’s name.  That would be their main focus, whether in the context of answering the plaintiff’s demands or filing a defence in the present action.  The subject-matter has always been the same.

107.In para 54 of the 3^rd defendant’s affirmation, he said that the investigations “so far reveal that there was some improper conduct behind this matter”.  However, except for the alleged connection between Krishnan, Natarajan and the corporate entities, the 3^rd defendant failed to pinpoint what the “improper conduct” was about.  No particulars have been given.  The allegation of “improper conduct” is nothing but a bare assertion.

108.In sum, the failure on the part of the defendants to condescend on particulars about their investigation cast significant doubt on whether there had indeed been any investigation in the first place and that leads to doubt over their case that the documents relied on by the plaintiff were forged.

The “highly suspicious” features in the plaintiff’s case identified by the defendants

109.I set out in paras 48 to 54 above the “highly suspicious” features which the defendants have identified in the plaintiff’s case.  Their point is that the transactions which allegedly took place under the Sanction Memorandum are tainted with suspicions, which should be looked into at trial.  Before that is done, no judgment can be entered as there are doubts over the plaintiff’s own case and evidence.

110.In my view, the more significant feature identified by the defendants is the Suspicious Signature which appeared on the bills and the related documents. 

111.Does the existence of the Suspicious Signature cast genuine doubt on the validity of the plaintiff’s claim?  If so, the claim ought to be tried and no summary judgment should be entered: Billion Silver at 268C-D. 

112.On the one hand, the use of the Suspicious Signature may be said to be consistent with the allegation of forgery.   This is because if a document is properly signed, one would normally expect that the signatory would manually sign it by hand and affix the company chop by hand.  Here, it would appear that a copy was made of an already existing signature, comprising both the company chop and the individual’s signature, and that copy was pasted onto the relevant documents.  In other words, no fresh signature was made on those occasions.  This “copy and paste” method could be employed by the fraudster to make sure that the signature would appear to conform to the true one.

113.On the other hand, however, there might well be an innocent reason why such “copy and paste” method was used, which has nothing to do with any fraud or forgery. 

114.I therefore would not necessarily characterise the existence of the “copy and paste” signatures as a genuine doubt or suspicion on the validity of the plaintiff’s claim. 

115.Nonetheless, there has to be an answer why the “copy and paste” signature appeared on the bank documents.  The question before me is whether this issue needs to be resolved before judgment is entered in favour of the plaintiff.  I would tackle the question by first saying that when faced with factual issues in a summary judgment application, the court does not undertake a mechanical exercise and allows the case to go to trial merely on the ground that a factual issue has been identified.  Instead it should consider the factual issue with reference to the claim and the defence. 

116.In my view, the primary significance and relevance of the Suspicious Signature, and indeed the other “highly suspicious” features identified by the defendants, is that they may go to support the defendants’ allegation of forgery.  The material question therefore remains to be whether the alleged forgery is believable.    

117.As Fok J (as he then was) made clear in Billion Wealth, in the context of a summary judgment application, a defendant who makes an allegation of forgery bears the burden of proving it by cogent and compelling evidence since the more serious the allegation, the less likely it is that the event occurred.

118.I have already observed above that the defendants’ case contains highly inherently implausible allegations and overwhelming deficiencies in particulars on important aspects of their case.  When all the evidence is considered in the round, does the evidence which the defendants now rely on, including the Suspicious Signature and the other “highly suspicious” features, arguably amount to cogent and compelling evidence of the alleged forgery?

119.In my view, the answer is “No”.  I will deal with some of the “highly suspicious” features individually below.  On the whole, these features are equivocal in nature.  There may be innocent explanations for them.  When all the evidence is looked at together, these features do not pass the threshold of “cogent” or “compelling”.  Accordingly, while they present factual issues, it is unnecessary for these issues to be tried before the court adjudicates the claim in a summary way.

120.In any event, a number of the queries raised on the plaintiff’s documents do not even seem to be valid.

121.First, the query set out in para 52(1) above.  It does not appear to me to be unusual that the plaintiff made advance to the 1^st defendant in a total sum which exceeded the pre-set credit limit of US$5,000,000.  The overall excess was US$5,100 only.  In any event, according to the contractual documentation, the plaintiff had the discretion to modify the credit facilities.  See, eg, clause 2.1 of the “Terms and Conditions for General Customer Services”.

122.Second, the query set out in para 52(6) above.  In each of the two airway bills, apart from the number appearing at the top left-hand corner quoted by the defendants, there was another number appearing in the top right-hand corner, which was not quoted by them.  The latter number was different in the two airway bills.  It would appear that the defendants had only quoted the number appearing in the top left-hand corner as the airway bill number.  The number, as quoted by them, would therefore appear to be incomplete.  I note that in the amended reply and defence to counterclaim, when the plaintiff described each of the two airway bills, it quoted the airway bill number by combining the two numbers appearing in the two corners.  In light of that, I do not accept that it is a “highly suspicious” feature.

123.Third, the query set out in paras 52(8) above.  The omission of the floor number (1/F) in the address of the 1^st defendant in fact also appeared in its own letterhead.  An example is the address in the 1^st defendant’s letter of July 2018: see the extract reproduced in para 82 above.  That was also without the floor number of 1/F.  We do not know why the floor number is often omitted by different parties.  But the objective fact is that even the 1^st defendant itself had got it wrong.  In light of that, the defendants’ argument that the coincidence is an unlikely one sounds unconvincing to say the least.  I do not accept that the address issue is a “highly suspicious” feature in the plaintiff’s case.

124.Fourth, the query set out in para 54 above.  I do not share the observation that it is highly unlikely for a bank to accept faxed instructions for substantial sums.  It is for the defendants to adduce credible evidence to substantiate that assertion.   In any event, the indisputable fact is that the 1^st defendant signed a document entitled “Indemnity – Telephone, Telex, Email Fax and Facsimile Instructions” dated 16 April 2018.  The purpose was precisely to facilitate the plaintiff to act on instructions sent by fax on the basis that the 1^st defendant agreed to indemnify the plaintiff for so doing.  The defendants’ assertion in this regard seems to go contrary to the contemporaneous documents.  I do not accept that the acceptance of instructions by fax by the plaintiff is a “highly suspicious” feature.

There is no reason why there ought to be a trial

125.Lastly, I am also not satisfied that there ought to be a trial so that the alleged connection between Krishnan, Natarajan and the corporate entities can be investigated properly. 

126.In a High Court trial, the court does not take up an inquisitorial role.  In the present case, investigation of facts is only warranted if the defendants can show cogent and compelling evidence to support the allegation that the above parties were involved in improper conduct in relation to the alleged forgery. 

127.I have concluded above that the defendants have failed to pass the hurdle in relation to the forgery.  The fact that the parties were in some way connected, whether by shareholding, common directorship or same address, comes nowhere near anything cogent or compelling when an allegation as serious as forgery involving millions of US dollars is concerned.  There is therefore no basis for the court to investigate the relationship.

128.The conclusion of “improper conduct” drawn by the 3^rd defendant in his affirmation is plainly without any solid basis but mere conjecture.  Furthermore, the basis for him to assert that Krishnan on the one hand and the corporate entities on the other are closely connected to each other is the close relationship between Krishnan and Natarajan – see para 57 above.  However, it is only the 3^rd defendant’s own bare assertion that the two individuals had a close relationship.  He did not give any particular of his knowledge of that relationship. 

129.I should just add that the defendants try to rely on the fact that Krishnan signed a floating charge with Ethos as a piece of evidence to demonstrate the alleged connection.  It is clear that Krishnan was signing on behalf of the plaintiff.  We do not know the background leading to or the circumstances in which the floating charge was executed.  In the absence of such knowledge, Krishnan’s execution of the floating charge is a neutral piece of fact.  To infer from this any improper connection is entirely speculative and must be rejected.

CONCLUSION

130.The defendants have failed to put forward any arguable defence or any issue which ought to be tried.  The plaintiff should be entitled to judgment.

131.I uphold the master’s decision and dismiss the 1^st to 5^th defendants’ appeal.

132.I make an order nisi that the plaintiff do have costs of the appeal, to be taxed if not agreed.

133.Lastly, I should record that after the hearing, Messrs Oldham, Li & Nie, the 1^st and 5^th defendants’ solicitors, sent to the court a copy of the decision of K Yeung J in [2021] HKCFI 3747 and invited me to take into account that decision as an additional authority when deciding the appeal. 

134.I have read the decision.  That action concerns a claim by the same plaintiff in the present action for debts owed under banking facilities.  The borrower there is a corporate entity which does not feature in this appeal. The guarantor, however, is the 2^nd defendant in the present action. That action also concerns bills of exchange.  Some of the entities involved in those bills also feature in the present action.  The plaintiff’s Order 14 application was dismissed.

135.Notwithstanding the apparent similarities in the facts and the overlapping of parties, I do not consider that I can legitimately take into account the rulings and observations made in that decision for the purpose of deciding the present appeal.  This is because each case turns on its own facts and evidence and I do not have before me the evidence adduced in that case. 

Mr Patrick Siu, instructed by ONC Lawyers, for the plaintiff

Mr Simon Wong and Ms Samantha Lau, instructed by Oldham, Li & Nie, for the 1^st and 5^th defendants; and instructed by Tonys Lawyers, for the 2^nd to 4^th defendants