Pa Investment Funds Spc Acting on behalf of and for The Account of Pa Finance Fund Segregated Portfolio v. Ablaze Rich Investments Ltd and Others
Read the full judgment text of HCA 1338/2022 on BabelCite. This High Court CFI judgment was delivered on 4 October 2024.
1. Upon the Plaintiff (“ P ”)’s application for summary judgment by its summons dated 13 January 2023 (“ the O14 Summons ”) and after a substantive hearing, Master Cruden on 6 June 2023 ordered (“ the June Order ”) that the 1 st to 3 rd Defendants (respectively “ D1 ”, “ D2 ” and “ D3 ”, together “ Ds ”) be given leave to defend conditional upon making a payment into court, the precise amount and term of which would be determined on papers after the parties have filed their affirmation evidence
Cites 11 cases
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HCA 1338/2022 [2024] HKCFI 2718 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1338 OF 2022 ______________ BETWEEN
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______________ DECISION ______________ A. INTRODUCTION 1.Upon the Plaintiff (“P”)’s application for summary judgment by its summons dated 13 January 2023 (“the O14 Summons”) and after a substantive hearing, Master Cruden on 6 June 2023 ordered (“the June Order”) that the 1st to 3rd Defendants (respectively “D1”, “D2” and “D3”, together “Ds”) be given leave to defend conditional upon making a payment into court, the precise amount and term of which would be determined on papers after the parties have filed their affirmation evidence and submissions thereon. 2.Then on 22 August 2023, the Master ordered that the condition for leave to defend was that Ds were to pay into Court within 3 months the sum of HK$30,000,000 (“the Condition”, which sum was about 15% of the full amount claimed by P), failing which P would be at liberty to enter judgment with costs (“the August Order”). 3.On 5 December 2023, upon Ds’ default in meeting the Condition, judgment was entered against Ds (“the Judgment”) that they do pay P:
4.By Notice of Appeal taken out on 8 December 2023, Ds sought an extension of time to appeal, and then to appeal against the June Order and the August Order to have them, and the Judgment, be set aside, and for an order that the O14 Summons be dismissed or alternatively that unconditional leave to defend be given to Ds. B. THE BASIC FACTS 5.The following narrative of the basic facts, which are undisputed, is largely taken from P’s Skeleton Submissions. B1. The parties 6.P is a segregated portfolio of an exempted company registered under the laws of Cayman Islands as a segregated portfolio company. It is currently managed by China PA Asset Management (Hong Kong) Company Limited, an indirect subsidiary of Ping An Insurance (Group) Company of China, Ltd. 7.D1, a BVI company, was and is a controlling shareholder of Great Harvest Maeta Holdings Limited (“Great Harvest”), a company listed on the Hong Kong Stock Exchange. 8.D2 and D3 were and are at all material times directors and shareholders of D1. They are also the Joint Chairpersons and Executive Directors of Great Harvest, and D3 is also the Chief Executive Officer of Great Harvest. B2. The Facility Agreement, the Guarantee, and Ds’ breach 9.On 29 April 2016, P as lender, D1 as borrower, and D2 and D3 as guarantors entered into the Facility Agreement whereby P agreed to lend to D1 a loan of US$30,550,000 (respectively “the Facility Agreement” and “the Loan”) which would be repaid together with interests (at 6% per annum) 24 months after the date on which the Loan was to be made. The Facility Agreement is governed by the laws of Hong Kong and the parties agreed therein that the Hong Kong courts have exclusive jurisdiction[1]. 10.On the same day, ie 29 April 2016, D2 and D3 as guarantors for the Loan entered into the Deed of Guarantee (“the Guarantee”). 11.On 4 May 2016, P advanced the Loan in the sum of US$30,550,000 to D1. The date for the repayment of the Loan and interest therefore fell on 4 May 2018. 12.On 4 May 2018, in breach of the Facility Agreement, D1 failed to repay to P the Loan plus interest in sum of US$3,666,000 totalling US$34,216,000 or any part thereof. 13.Despite 2 demand letters issued by P to each of Ds on 18 May 2018 and 8 June 2018, Ds still failed to repay the sum or any part thereof to P. 14.On 26 June 2018, P issued Statutory Demands against each of Ds demanding repayment of the sum. 15.On 8 August 2018, D1 repaid P HK$71,471,007 (equivalent to US$9,100,065.83) to partially settle the sum. 16.On the next day, ie. 9 August 2018, P issued another round of demand letters to each of Ds demanding repayment of the sum of US$25,859,224.38, being the amount of the outstanding indebtedness (including accrued interest) as on 9 August 2018. 17.On 9 November 2018, D1 repaid an additional sum of US$6,000,000 to partially settle the outstanding indebtedness. 18.On 26 July 2019, P issued further Statutory Demands to each of Ds demanding them to repay the outstanding indebtedness (including accrued interest) as on that date in the sum of US$21,561,214.54. 19.On 11 September 2020, P further issued another round of demand letters to each of Ds for the outstanding indebtedness (including accrued interest) as on that date in the sum of US$23,432,360.08. However, Ds failed to repay the outstanding indebtedness or any part thereof. 20.P emphasized, which was not disputed by Ds, that in the above-mentioned 5 instances in which P demanded repayment (by way of demand letter or Statutory Demand), Ds did not for once dispute their respective liability to repay, and that in the 2 instances in which D1 made partial repayments, it did so without protest. B3. HCA 1705 / 2020 and the Standstill Agreement 21.On 6 October 2020, P commenced HCA 1705/2020 against Ds to recover the outstanding indebtedness. 22.With a view to engaging in negotiation in relation to the settlement of the claims in HCA 1705/2020, P and Ds entered into the Standstill Agreement dated 1 February 2021 (“the Standstill Agreement”). 23.By paragraph A under “Background” in the Standstill Agreement, Ds acknowledged, inter alia, that they owed P the sums claimed in HCA 1705/2020. 24.As agreed by Clause 2.1 of the Standstill Agreement, and in performance thereof, the parties’ solicitors endorsed the Consent Summons dated 3 February 2021 to discontinue HCA 1705/2020 with no order as to costs. On 18 February 2021, leave was granted to formally discontinue HCA 1705/2020. 25.However, in breach of the Standstill Agreement, D1 only repaid 2 sums to P, respectively US$600,000 on 1 March 2021 and US$350,000 on 5 July 2021, to partially settle the outstanding indebtedness, despite repeated demand letters issued by P. 26.Under the Standstill Agreement, the standstill period expired on 31 December 2021. B4. This Action and relevant procedural history 27.On 12 October 2022, P commenced this Action against Ds claiming the sum of US$25,580,160.94 being the total outstanding indebtedness including interest accrued as at that date. 28.No Defence has been filed by any of Ds despite the grant of 3 orders for time extensions. 29.As said, P took out the O14 Summons on 13 January 2023. After multiple extensions and after an unless order was imposed by a Master on 28 March 2023, Ds filed on 25 April 2023 the 1st affirmation of D2 (“Yan 1st”) in opposition. 30.In Yan 1st, Ds for the first time disputed liability for the Loan and raised 3 matters by way of defence. 31.On 6 June 2023, the O14 Summons was heard substantively and, as said, Master Cruden granted conditional leave to defend. 32.Pursuant to the directions of the Master, Ds filed the 3rd affirmation of D2 (“Yan 3rd”) on 10 July 2023 showing their financial circumstances. It was there disclosed that after the due date for the repayment of the Loan and interest (ie. 4 May 2018):-
33.On 22 August 2023, the August Order was made, and as said, Ds failed to comply with the Condition and the Judgment was entered on 5 December 2023. C. PRINCIPLES ON EXTENDING TIME TO APPEAL 34.The principles are trite and not disputed:
D. LENGTH AND REASON FOR THE DELAY; PREJUDICE TO P 35.It is common ground that the time for appealing against the June Order and the August Order expired on 20 June 2023 and 5 September 2023 respectively. There was thus a delay of 5½ months and over 3 months. The delay was clearly substantial. 36.As said by Mr Ho (leading Mr Ng), counsel for P, the procedural history set out in §§27 to 33 above demonstrated that Ds all along have been dragging their feet to delay P’s claim. 37.While Ds acknowledged that they understood the time limit within which to appeal, the only explanations given for the delay was that they “have been tirelessly working behind the scenes since as early as June 2023 to explore a potential amicable settlement” and “have been working … to raise funds to satisfy the condition”[2]. 38.I accept Mr Ho’s comments that these were but allegations of having made efforts to try to comply with the 2 Orders (thus implicitly affirming that the Orders were rightly made) and not good explanations for not initiating the appeal earlier or in time; and as such, they indeed betrayed the disingenuity of Ds’ allegation that the intended appeal has merits. Mr Ng, counsel for Ds, did not attempt, in my view sensibly, to persuade the Court that these were good explanations for the delay. 39.Thus, no good reason or explanation for the delay has been given. 40.P said it will suffer prejudice if the time extension was granted, in that the outstanding indebtedness has been due since 3 May 2018 and 6 years have passed, while in the meantime, Ds have made substantial disposal of assets in the form of landed properties between March 2019 to September 2022 in the value of over HK$640 million, and D2 and D3 also transferred their shares in Top Gains Minerals Macao Commercial Offshore Limited to their son just before the O14 Summons was heard, and therefore if extension is granted, this action may be rendered nugatory, leaving no or insufficient Ds’ assets against which P can enforce. Such prejudice is not disputed by Ds. 41.Thus, I find that there is much force in Mr Ho’s submission that the unexplained substantial delay and prejudice to P tilt firmly against granting time extension for Ds’ intended appeal. That said, I turn next to consider whether the merits of the intended appeal are as strong such that unconditional leave to defend ought to be granted and that the discretion should be exercised to extend time nevertheless. E. DEFENCE 1: THE FACILITY AGREEMENT AND THE GUARANTEE WERE EXECUTED TO MISLEAD THE MAINLAND CHINESE AUTHORITIES
42.I think it is convenient to discuss these 2 Defences together. E1. The factual allegations 43.In relation to these 2 Defences, the factual allegations are as follows. 44.In §§14 to 16 of Yan 1st, D2 deposed to, in gist :
45.In Yan 1st, D2 continued to depose that it was later when Bosen sued him and Qiaopu in Guangzhou Intermediate People's Court that he gained some understanding into these transactions and structures. 46.D2 then deposed in §§17 to 18 in Yan 1st as to what that he “thought” (“認為”) the structures were. For convenience, I will quote the summary given in §12 of Mr Ng’s written submissions (together with the hearing bundles references he cited) :
47.Ds now said :
48.Ds principally relied on a one-page statement dated 17 April 2023 entitled “情況說明” allegedly signed by Gu[3] in which was said that all the other transactions and agreements were entered into by way of formality and the true purpose was to allow the fund to be transferred out of Mainland to reach D1 (actual words in Chinese: “其中委托管理、购买理財产品、投資基金等都是外在形式，各方签订的所有有关合同文件也只是形式上签订的，真正意思并非执行上述目的，实际仅是为了方便資金出境并到达耀丰投資有限公司”). E2. The expert evidence adduced by Ds 49.In support of Defence 2, Yan 1st exhibited the expert report of Li Gang[4] (“Li”). P exhibited the expert Opinion of Xie Qing[5], but at the hearing P did not refer or rely on it. 50.Mr Ng in his written submissions drew attention to Li’s opinion that:
51.However, of note and importantly, Li further opined that:
52.Therefore and in other words, Li in answering Question 3 did not opine that the other agreements, particularly the Facility Agreement or the Guarantee would be unenforceable under Mainland law. E3. Ds’ contentions 53.In Defence 1,
54.Under Defence 2, Mr Ng contented that arguably the illegality under Mainland law would taint and invalidate the Facility Agreement and the Guarantee. 55.Mr Ng further contended that such question of illegality is not suitable to be determined on a summary judgment application and therefore the O14 Summons ought to be dismissed. E4. Is Defence 1 an arguable defence ? 56.As have mentioned, Ds relied solely on Alexander v Rayson which was decided in 1934. 57.In Alexander v Rayson, the UK Court of Appeal allowed the appeal and applied the maxim ex turpi causa non oritur actio and refused to assist Alexander to enforce an agreement against Mrs Raydon. In that case, Mrs Rayson agreed to rent a flat in Piccadilly in the City of Westminster and signed with the landlord Alexander 2 documents of the same date which were provided by him. One of the documents was a lease of the flat with certain services at £450 a year, the other was an agreement for certain services most of which was already covered by the lease for £750. The CA held that essentially there was only one transaction between the parties, and that the splitting up of it into 2 documents was a device essential for the success of Alexander’s fraud against the Westminster City Council in deceiving the Council as to the true rateable value of the flat. 58.The case was but one of the many instances where the Court refused to lend its assistance to enforce between the parties certain terms contained in an agreement which was intended to be used for the purpose of effecting an unlawful purpose. In this regard, I accept Mr Ho’s submission that the case did not establish or support the vague, wide and stand-alone proposition now contended for by Mr Ng that a document executed “to mislead third parties”, per se and without more, is rendered unenforceable. Evidently, much more need to be shown to establish that the agreement was illegal or was executed for an unlawful purpose such as to make it unenforceable. 59.Indeed, the law regarding the defence of illegality has much developed since Alexander v Rayson. Recently, in Monat Investment Ltd v All Persons in Occupation of Part of No 16 Ma Po Tsuen [2023] 2 HKLRD 1311, the Court of Appeal has the occasion to discuss a number of UK Supreme Court cases leading to Patel v Mirza [2017] AC 467 and Patel itself, and held that “the range of factors approach” based on the trio of necessary considerations in Patel should be adopted as the test in Hong Kong. 60.It is not necessary for me to delve into this any deeper. The point is that, and with respect to Mr Ng, I do not accept that the law is such that the Facility Agreement and the Guarantee would be unenforceable merely because they allegedly “were executed to mislead the Mainland Chinese Authority”. I find Defence 1 not an arguable defence. Rather, Ds’ contention of illegality should be properly analysed in the context of Defence 2. E5. The Facility Agreement and the Guarantee “tainted” and invalidated or made unenforceable by illegality? 61.Mr Ng argued that there is a principle established by Spector v Ageda [1973] Ch 30 that an apparent innocent transaction would be regarded as “tainted” by an illegal one and thereby affected by the same illegality and becomes unenforceable. Mr Ng further cited the local case of Wa Lee Finance Co Ltd v Staryork Investment Ltd (HCMP 2242/2000, unrep., DHCJ To (as he then was), 13 May 2003) as an instance where Spector v Ageda was applied 62.Mr Ho’s contention in response is that Ds’ reliance on these cases was misconceived in that these cases have no application nor relevance in the present case where alleged foreign illegality is raised, in which situation the Court of Final Appeal has in Ryder Industries Ltd v Chan Shui Woo (2015) 18 HKCFAR 544 authoritatively laid down the principles. I will return to this in §67 below after I have said these. 63.Spector v Ageda was clearly decided on its own facts. Megarry J (as he then was) stated at the outset that he “shall have to consider a part of the law relating to illegality upon which there seems to be no authority directly in point” (at 35G) and later that he did “not wish to decide more than is necessary to dispose of this case” (at 45E). There, Spector was enforcing a second charge of a property against Ageda, one of the joint chargors, as security for a loan owed to Spector, which loan arose in this way. One Mrs Maxwell, the sister of Spector, lent £1040 to 2 joint borrowers, of which Ageda was one. Spector was a solicitor and acted for Mrs Maxwell in her action against the borrowers, which action ended when the borrowers raised questions of illegality over the loan in that the Moneylenders Act 1927 were contravened by reason that Mrs Maxwell claimed to be a licensed money lender when she was not licensed, the loan charged compound interest and the memorandum of loan did not meet the requirement of the Act, which memorandum as found by Megarry J in the judgment, was altered by Spector after they had come into being. Spector then acted for the borrowers in the meantime in their effort in trying to obtain another loan from another lender. Later, Spector lent to the borrowers a loan of £1,180 to pay off their said loan owed to Mrs Maxwell, on which now Spector sued. On those facts, Megarry J held
64.Again, the case was decided on its own facts. While the word “tainted” by illegality was used there by the learned judge, I do not think a general “doctrine of tainting” was established such as would help Ds here by characterizing vaguely that the Facility Agreement and the Guarantee were “tainted”. In my view, in raising such illegality defence, it all the more behoves Ds to condescend into particularity as to the precise basis, reasons and facts as to why the Facility Agreement and the Guarantee would become unenforceable thereby. 65.Equally, Wa Lee Finance Co Ltd was decided by To J on its facts. The learned judge applied the maxim of ex turpi causa non oritur actio when he found that:
66.Importantly and here, Ds confirmed before Master Cruden, and also confirmed at this hearing, that they did not contend that the Facility Agreement or the Guarantee was a sham. In other words, it is not contested that Ds’ contractual obligation to make repayment was indeed created by the Facility Agreement and the Guarantee, which otherwise are valid and enforceable transactions, save the contention that they were “tainted”. 67.In Ryder, the plaintiff sought to enforce a joint venture agreement governed by Hong Kong law, and claimed about HK$6.5 million due thereunder. The defendant contended that enforcement was barred as a result of certain acts of performance of the joint venture agreement which were illegal under PRC law, namely that the Commission Processing Enterprise used materials imported duty-free by a Wholly Foreign Owned Enterprise established by the plaintiff in the PRC for the production of mobile telephones contrary to the Measures of Customs of the PRC for the Supervision of Goods for Processing Trade. 68.There, the CFA reiterated that the HKSAR and the Mainland are parts of one country, but for the purposes of the conflict of laws they are separate law districts and held that the following 5 principles represented Hong Kong law:
69.Applying these principles, the CFA concluded that the joint venture agreement was enforceable as the breaches were not a very serious contravention of the law, not conduct which could be described as iniquitous, had not resulted in actual criminal or enforcement proceedings in the PRC and were mere administrative contraventions. 70.Mr Ng submitted that Ryder was concerned with “the question of the enforceability in Hong Kong of a contract governed by Hong Kong law when it has been performed in the PRC partly in breach of PRC law” (Ryder at §8), and not with the “doctrine of tainting” under Spector. 71.I do not accept such submission insofar as saying that Spector rather than the principles in Ryder is applicable in the present case. 72.Firstly, and as said, I do not accept that Spector established any “doctrine of tainting”. Moreover and as said, for the defence arising out of domestic illegality, the present law is what has been held in Monat Investment Ltd (see §58 above). Even if the present case merely concerned domestic illegality, Ds have not tried to address the Court as to how their present allegations of illegality would have been an arguable defence under the “the range of factors approach” as held to be applicable in Monat Investment Ltd, thereby making the Facility Agreement and the Guarantee arguably unenforceable. 73.Secondly and pivotally, if Mr Ng’s submission is correct, then this “doctrine of tainting” is trans-jurisdictional and, despite there is a conflict of law issue, transcends the analysis and authoritative holding and principles in Ryder and effectively making them otiose. This, in my view, could not be right. 74.Save it was submitted that Ryder does not concern the “doctrine of tainting”, Ds have not advanced any further contention where the principles in Ryder apply (as I hold above that they do). 75.Moreover and as have noted, Li did not even say that the law in Mainland might render the Facility Agreement and the Guarantee unenforceable, but only the Management Agreement and the Guangfa Subscription Agreement might be so rendered. 76.In this regard, it will be recalled that Ds are not now contending that the series of transactions or structures were sham or that they were indeed one, but are now very vaguely contending that “the true commercial transaction” or “the true meaning of these structures” was to enable the Loan to be made to D1 through an illegal use of the QDII investment quota. It seems to me that on proper analysis, what Ds are really saying are that the source of the fund P used to lend to D1 was obtained via a channel that involved the breach by Quangfa of the regulations governing the use of the QDII quota. Li opined that under Mainland law the penalty would be imposed against Guangfa and none other, and only the 2 agreements signed by Quangfa might be rendered unenforceable. It therefore seems to me that applying Ryder, it is not very arguable that the Facility Agreement and the Guarantee, both performed in Hong Kong and governed by Hong Kong law, would thereby be rendered unenforceable. 77.Mr Ho further submitted, which I accept, that in relation to whether the Guarantee would be affected by the alleged Mainland illegality, there was a further reason why it would not, as follows. 78.In Clause 2.1(c) of the Guarantee[6], D2 and D3 as guarantors had expressly agreed :-
79.Mr Ho submitted that in the following cases in which were construed similar provision in guarantees, it has been held :
80.Mr Ng first submitted that P should not be allowed to rely on Clause 2.1(c) as the clause was not pleaded in the Statement of Claim. I must reject that submission. It is strictly not necessary for P to pleaded Clause 2.1(c) to support its claim against D2 and D3 on the Guarantee. If Ds’ Defence raises the defence of illegality and if P relies on Clause 2.1(c) to counter that pleaded defence, then P is required to plead the clause in its Reply. However, No Defence is yet filed by Ds. This issue of illegality affecting the enforceability of the Guarantee was raised for the first time in Yan 1st. In a summary judgment application, P is clearly entitled to rely on Clause 2.1(c) to rebut the contention that illegality is an arguable defence against the enforcement of the Guarantee. 81.Secondly, Mr Ng cited the case of廣東匯立投資有限公司 v Wong Man Pan (HCA 10027/2000, unrep., Recorder Andrew Liao SC, 5 November 2001) as an instance that unconditional leave to defend was given when the plaintiff was enforcing a guarantee and the defence was that the underlying loan was illegal under Mainland law. Evidently, decisions on summary judgment applications are facts sensitive. In that case, it was common ground between the parties that the underlying loan was void. Also, the decision was pre-Ryder such that the learned Recorder did not really analyse the foreign illegality under the principles in Ryder. I think the case is distinguishable on the facts and in any case does not assist Ds here. 82.In the premises and in the round, I take the view that Defence 2 is shadowy. E5. Illegality defence not suitable for O14 ? 83.Mr Ng submitted that it is well-established that these illegality points could not be resolved in an O14 application and thus, as a rule, the O14 Summons should be dismissed, citing 廣東匯立投資有限公司 (supra) and Lesnina H DOO v Wave Shipping Trade Co Ltd [2022] 2 HKLRD 727, at §§58-60. 84.The relevant reasoning of the learned Recorder in 廣東匯立投資有限公司 was short, while Deputy High Court Judge Dawes SC in Lesnina only observed that “where the applicability and/or force of foreign law is in dispute, the Court cannot determine the summary application on assumed facts and would need to resolve the expert evidence before the Court can decide whether, as a matter of public policy, to enforce the specific transaction in question” (§58). Evidently, where those considerations apply, it is likely and generally, the point cannot be resolved summarily. Again, and in my view, the decision has to be taken on the specific facts and issues of the case. I do not accept that these cases established as a matter of course, or as a rule, that illegality points, once raised, would render an application for summary judgment necessarily inappropriate. 85.I therefore do not accept Mr Ng’s said submission. Rather and as set out above, the illegality point raised by Ds here does not involve resolving any conflict in expert evidence or any substantial disputes of relevant facts. F. DEFENCE 3: BREACH OF MONEY LENDERS ORDINANCE 86.Ds raised an issue that P was a money lender under Money Lenders Ordinance Cap 163 (“MLO”), and as P was unlicensed, the Facility Agreement and the Guarantee are not enforceable pursuant to section 23 thereof. 87.Section 2 of the MLO defines a “money lender” as “every person whose business (whether or not he carries on any other business) is that of making loans or who advertises or announces himself or holds himself out in any way as carrying on that business”. 88.Mr Ng relied on the cases of Xiao Zhiyong (supra) and Chan Siu Chu Zoe v Choi Chiu Yuk (HCA 698/2012, unrep., 21 February 2014, Registrar KW Lung) for the propositions that (a) whether one is a money lender within the meaning of MLO is a question of fact to be determined for each case, and each case must depends on its own facts, (b) the number of transactions made by the lender is not the determining factor, even one transaction may be sufficient if there is evidence to show that the lender was a money-lender at the time of the transaction. 89.Mr Ng contended that the fact that the amount of the Loan was substantial and that the Facility Agreement and the Guarantee are sophisticated documents would tend to show that P was a money lender. 90.Mr Ng also pointed to P’s internal committee materials in March 2016 which stated that P as a segregate fund would mainly lend funds to a BVI company (ie. D1), and that P’s activity concentrated on a single project “which mainly involved lending and borrowing”[7]. 91.Mr Ho referred to the case of Outstanding Management Consultation Ltd v. Gold Topmont Ltd [2023] HKCFI 155 at §§30 – 32 per Peter Ng J :
92.This Court respectfully agrees that in principle the carrying on of a “business” requires a degree of repetition, system and continuity. 93.Mr Ho also drew attention to that fact that the 1st defendant in Outstanding Management Consultation Ltd relied on the same matters as Ds here while was unable to proffer any evidence showing any system, repetitiveness or continuity, and the learned judge there so assessed the matter and then gave summary judgment:
94.The learned judge’s assessment in that case is apposite here, though in the present case I am not asked by P to find that this Defence 3 is completely unarguable, but merely that it is shadowy and so lacks merits such that I am prepared very nearly to give judgment to P on this point. By reason of the matters discussed above, I have no hesitation to come to that conclusion. G. ONE FURTHER POINT 95.Mr Ng also relied on Billion Silver Development Ltd v All Wide Investments Ltd [2000] 2 HKC 262 and submitted that, as in that case, while I take the view that Ds’ case lack merits, but there are here also unexplained features of the claim in that it also bears the appearance of falsity and questionable conduct, this Court therefore should not make tentative assessments of the respective chances of success of the parties, but should give unconditional leave to defend so that the matters can be ventilated at trial. 96.Mr Ng, however, did not specify what “the unexplained features” of P’s claim are and what “appearance of falsity and questionable conduct” he was referring to. I understand that he was referring to the same set of allegations Ds were making relating to the Mainland illegality. 97.I accept Mr Ho’s submission that Billion Silver Development Ltd is clearly distinguishable. By reason of matters said above and in the below section, I am prepared to accept that these matters should be allowed to go to trial, but I take the view that the leave to defend should be conditional. H. CONDITIONAL LEAVE 98.By reasons aforesaid, I am of the view that Defence 1 is unarguable and Defence 2 and Defence 3 are shadowy and on which I am prepared very nearly to give judgment. In my view, giving conditional leave to defend is appropriate. 99.My view is reinforced by the fact, as have been emphasized by Mr Ho, that all along until the Judgment was entered, Ds have not disputed liability and have been repeatedly making partial repayments and have negotiated and entered into the Standstill Agreement on the express basis that they acknowledged their liability. 100.Mr Ng barely submitted that the Condition should not be imposed because Ds could not meet it, but without referring to the evidence showing that Ds in fact did not have the financial means or contending how the Master’s assessment was wrong. As mentioned, Ds have filed affirmation evidence before the Master showing that they have substantial assets and have disposed of many after the due date of repayment of the Loan and while the O14 Summons was pending. In the affirmations, there were but mere assertions that Ds have to meet other financial obligations. The Master has carefully considered the matter and in my view set the appropriate amount for the Condition. There is simply no substance to this submission, and I reject it. I. DISPOSAL 101.In the premises, I refuse to grant leave to Ds to extend time to appeal, and as concluded above, even if I granted leave, I would have given conditional leave and hence dismissed Ds’ appeal. 102.Ds’ Notice of Appeal is accordingly dismissed. P asked for the costs to be paid by Ds to be taxed on indemnity basis under Clause 10.2(g) of the Facility Agreement with certificate for 2 counsel. Provisionally I think it appropriate and so order on nisi basis to become absolute after 14 days unless any party applies by summons to vary within that time. 103.I thank Mr Ho and both Mr Ng for their helpful assistance.
Mr Tom NG instructed by Messrs Reed Smith Richards Butler LLP for the 1st to 3rd Defendants Mr Ambrose HO SC leading Mr Michael NG instructed by Messrs So, Lung & Associates the Plaintiff |
Cases cited in this judgment