Waygood Investment Ltd. v. Grand Jewellery Manufacturing Ltd. and Others

CACV000080/2002

CACV 80/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 80 OF 2002

(ON APPEAL FROM HCA 2874 OF 2000)

______________

______________

Coram: Hon Mayo VP and Suffiad J in Court

Date of Hearing: 21 June 2002

Date of Judgment: 21 June 2002

_______________

J U D G M E N T

_______________

Hon Mayo VP (giving the judgment of the Court):

1.This is an appeal from a judgment of Tong J who in turn was hearing an appeal from a decision of Master Yuen.

2.It was an Order 14 application for summary judgment. The Master entered judgment for the plaintiff and the Judge upheld this decision.

3.The claim relates to a series of loans made by the plaintiff to the 1st defendant which were guaranteed by the 2nd and 3rd defendants. The total amount being claimed is US$1,693,135.69.

4.By a formal loan agreement dated 4 March 1995 the plaintiff agreed to lend to the 1st defendant US$1 million in two tranches, that is Tranches A and B. A was to be repayable on 3 September 1995 and Tranche B on 3 October 1995.

5.D2 and D3 were parties to the agreement. They guaranteed the loan and agreed to accept liability as principal debtors.

6.By a supplemental agreement which was referred to as the First Supplemental Agreement dated 13 October 1995 the plaintiff agreed to advance the 1st defendant a further US$500,000. At the same time the defendants executed a Deed of Confirmation under which they confirmed the agreements which have been referred to.

7.Later the 1st defendant repaid the moneys advanced under Tranche A together with interest and the commitment fee payable under the loan agreement.

8.The plaintiff advanced a further US$500,000 to the 1st defendant. This payment was evidenced by an agreement which was referred to as the Second Supplemental Agreement. Under this agreement the moneys comprised in Tranche B and the further loan which was described as Tranche C were repayable on 3 April and 13 October 1996 respectively.

9.The earlier agreements and guarantees were also confirmed.

10.No further repayments were made.

11.A number of demands were made for repayment to which no satisfactory response was obtained. Legal proceedings were commenced and this application for summary judgment was taken out.

12.On 5 June 2000 the 1st and 2nd defendants filed their defences which amounted to little more than a denial that the amount claimed was due and owing.

13.Shortly before the application before the Master the 3rd defendant filed an affirmation.

14.He claimed that at the time when the loan agreements were entered into he had verbally agreed with Mr Stephen Lau a director of the plaintiff that the agreements did not reflect the true agreement which had been agreed between them.

15.The moneys in question were to be used to finance a joint venture agreement in China. Mr Lau wanted to participate in this and it had been agreed that the moneys being advanced would be treated as Mr Lau's equity stake in the venture. He had been nervous in becoming an equity partner at an early stage hence the desire to disguise his investment as a series of loan.

16.There was a proliferation of affidavits. Seven were filed for the plaintiff and a similar number for the defendants.

17.What this all boiled down to was whether the defendants had managed to establish that there was a triable issue and that leave should be granted enabling them to proceed with the defence which had been filed.

18.The Judge summarised the submissions made by counsel on both sides and weighed and balanced the contentions advanced.

19.He considered also the principles enunciated in Bhagwandas Kewaleram Murjani and Ors v Bank of India [1990] 1 HKLR 586 and Ng Siu-kei v Choy Mee-mee [1999] 1 HKC 693 on the one part and Billion Silver Development Ltd v All Wide Investments Ltd [2000] 2 HKC 262 on the other side which had been cited to him by counsel for the defendants. The facts of that case were clearly distinguishable.

20.It has to be said that there are a number of features concerning the defendants' version of events which make it not only highly improbable but also stretch the limits of credibility beyond any reasonable bounds.

21.One example of this is the amount of effort expended by the parties in entering into the formal loan agreements and referring to the confirmation of the arrangement in the confirmation deed. All of this cannot be sensibly reconciled with the existence of a contemporaneous oral agreement of an entirely contrary nature.

22.There is also the timing of these arrangements being brought to the attention of the court.

23.The plaintiff pressed for payment on four occasions between 23 September 1999 and 13 March 2000. At no time did the 3rd defendant reply to these letters and refer to the alleged oral agreement.

24.There is also the fact that when a defence was filed no reference was made to the alleged real agreement between the parties.

25.It has to be said in all the circumstances that neither the Master nor the Judge can validly be criticised for forming the view that the defence being put forward by the 3rd defendant is incredible and contrary to all of the formal evidence adduced by the plaintiff.

26.For these reasons we dismiss this appeal with costs to the plaintiff.

Representation:

Mr Jeremy Bartlett, instructed by Messrs Siao, Wen & Leung, for the Plaintiff.

Mr David Hui Tai-wai, instructed by Messrs Kenneth C.C. Man & Co., for the Defendants.