Citibank, N.A. v. Creative Concepts Manufacturing Ltd and Others

HCMP 249/2024

[2025] HKCFI 1760

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 249 OF 2024

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DECISION

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Introduction and Procedural Background

1.I have before me two applications:

(1)  An application by the Plaintiff (“P”) by Originating Summons filed on 15 February 2024 (“OS”) against the 1^st Defendant, 2^nd Defendant, 3^rd Defendant and 4^th Defendant (collectively, “Ds”) pursuant to O.88 of the Rules of the High Court, Cap. 4A (“RHC”) for inter alia an order for:

(a)  payment of all monies due to P by the 1^st, 2^nd and/or 4^th Defendants under a Legal Charge/Mortgage dated 16 August 2017 (“the Legal Charge”) and a number of Guarantees and Indemnities of divers date (collectively, “the Guarantees”);

(b)  delivery of vacant possession by the 2^nd and 3^rd Defendants of the charged property (“the Property”); and

(c)  costs on a full indemnity basis;

(2)  An application by Ds by Summons filed on 2 October 2024 (“the Summons”) for an order under O.28, r.8(1) of RHC that these proceedings be continued as if the cause or matter has begun by writ.

2.The following affirmations were filed in relation to the OS and the Summons:

(1)  Affirmation of Yung Wing Chi Peggie dated 7 March 2024 on behalf of P;

(2)  2^nd Affirmation of Yung Wing Chi Peggie dated 12 September 2024 on behalf of P;

(3)  3^rd Affirmation of Yung Wing Chi Peggie dated 8 January 2025 on behalf of P;

(4)  Affirmation of Advani Kunal Gulab (“D2”) dated 17 June 2024 on behalf of the 1^st Defendant (“D1”) and D2;

(5)  Affirmation of Advani Ekta Kunal (“D3”) dated 17 June 2024 on behalf of D3;

(6)  Affirmation of Advani Gulab Motiran (“D4”) dated 17 June 2024 on behalf of D4;

(7)  2^nd Affirmation of D2 dated 17 March 2025 on behalf of D1 and D2;

(8)  2^nd Affirmation of D3 dated 17 March 2025 on behalf of D3; and

(9)  2^nd Affirmation of D4 dated 17 March 2025 on behalf of D4.

3.By letter dated 11 April 2025, Messrs Oldham, Li & Nie, solicitors for Ds (“Ds’ Solicitors”) wrote to this court to inform that their firm has taken out a summons to apply to the court for leave to cease to act for Ds in these proceedings and to be removed from the court record.  I was informed that that summons is fixed for hearing on 25 April 2025.  It was further mentioned therein that as their firm has no instructions to proceed with these proceedings, no skeleton submissions would be filed.

4.Notwithstanding Ds’ Solicitors sought to be excused from attending today’s hearing, I refused to do so as they still remain on the record.  

5.In the late afternoon of yesterday, 15 April 2025, this Court also received a fax from D4 (“D4’s Fax”) seeking to adjourn today’s hearing on the grounds inter alia that Ds could not attend today’s hearing (by reason of D2 and D3 not being in Hong Kong and the medical condition of D4) and the need to obtain authorization to represent D1 a company but D2 (who is the director of D1) is out of town.  It was stated that Ds intend to act in person.

6.As held by the Court of Appeal in AXA China Region Insurance Company Limited (unrep) CACV 113/2016, 28 October 2016, at §43 unilateral communication to the court is inappropriate.  I refused to entertain any application to the court by fax, which was not made by summons and supported with affirmation, as it should have been (see ibid, §§51-54), and was not sent to the other parties.  I also indicated that if any application was to be made it should be made at today’s hearing by Ds’ solicitors who remains on the record.  I had caused my clerk to copy the court’s reply to D4 together with D4’s Fax to the solicitors for P and Ds’ Solicitors.

7.At the beginning of today’s hearing, Miss Wong confirmed that she had no instructions to further act in these proceedings and would make no submissions today in respect of the applications before me.  However, given the court’s prior indication that their firm remained on the record, she confirmed that she had instructions from Ds to make an application for adjournment of today’s hearing.

8.Mr Lau, counsel who appeared for P, opposed the application.  I agreed with his submissions that there was still no proper application by Summons supported by any affirmation.  Even leaving aside the formalities, I confirmed with Miss Wong that she was not able to provide any documents to support the matters alleged in D4’s Fax.  Ds’ decision to change legal representation or to act in person is not a good reason for adjourning today’s hearing given this hearing was set down in December 2024 so that Ds knew long ago that there would be a hearing today.   If they wished to act in person in these proceedings they should have taken steps to do so and made any application in that respect including any application to adjourn today’s hearing in advance and not at the eve of this hearing.  I accordingly dismissed the application to adjourn and proceeded with today’s hearing.

9.Given Miss Wong had no instructions and submissions to make in support of the Summons (which is Ds’ application), the Summons should be dismissed.

Discussion and Disposition re: the OS

10.As for the OS, the applicable principles in relation to an application under O.88 are well-established.  See 21 Finance Limited v Gan Lei & Anor [2023] HKCFI 1600 at §§21-22:

“ 21. It is trite and not disputed that, under RHC O.28 r.4, at the hearing of an originating summons, the action may be disposed of summarily where the court is satisfied that there are no triable issues.

22. The approach and applicable test have been succinctly summarized by Fok J (as he then was) in Billion Wealth Group Ltd V Strategic Media International Ltd [HCMP 2586/2009 (unrep) 3 May 2010]:

‘ 3. As Ma J (as he then was) held in Wing Hang Bank Ltd v Liu Kam Ying & Ors [2002] 2 HKC 57 at §10:

‘…The burden in summary judgment applications under the originating summons procedure is on the Plaintiff to justify its entitlement to summary judgment. However, once this is prima facie demonstrated on the evidence, it is then up to the defendant to show that he does have a defence or defences to the claim. In this way, there may in practice be little difference between an application for summary judgment in originating summonses and an application for summary judgment under RHC, Order 14.’

4. And it is trite that on a summary judgment application, the court simply has to determine two questions: firstly, whether what the defendant says is believable as opposed to whether its version of events is to be believed; and secondly, if it is, whether what the defendant says amounts to an arguable defence in law.

5. Whether a party’s assertions are believable is a question to be answered not by taking the assertions in isolation but by taking them in the context of so much of the background as is either undisputed or beyond reasonable dispute: per Deputy Judge To (as he then was) in Ip Kam Wah v Fair City Group Ltd [2005] 4 HKLRD 168 at §8.’”

11.It was not disputed that Ds executed a number of documents (“the Loan Documents”) for the purposes of facilitating D1’s borrowing from P:

(1)  On 7 July 2017, D1 entered into a General Customer Agreement with P (“General Customer Agreement”);

(2)  Between July 2017 and September 2021, four facility letters were entered into between P as lender and D1 as borrower;

(3)  In August 2017, the Legal Charge was created over the Property owned by D2 and D3; and

(4)  D2 and D4 entered into the following Guarantees:

(a)  The Guarantee of D4 dated 7 July 2017 up to the sum of HK$26.3M and US$250,000;

(b)  The Guarantee of D2 dated 10 August 2017 up to the sum of HK$26.3M and US$250,000;

(c)  The Guarantee of D2 and D4 dated 18 September 2019 up to the sum of HK$26,478,000; and

(d)  The Guarantee of D2 and D4 dated 18 October 2021 up to the limit of HK$8M.

12.I am satisfied from the evidence before me that as at the date of the OS, D1, D2 and D4 were jointly and severally liable to P in the sums of HK$15,586,864.05 and US$1,640,450.74 together with interest accrued thereon.

13.Ds have opposed the OS. Their principal grounds of opposition were set out in the 2^nd Affirmation of D2.  Essentially, Ds have put forward the following defences.

14.Firstly, it is alleged that a Mr Raymond Leung of P has on behalf of P allowed time for the Company to negotiate and discuss with other banks to take over D1’s credit facilities with P.

15.However as submitted by Mr Lau, any promissory estoppel defence cannot get off the ground because there are “no waiver” clauses in the Loan Documents: see clause 17 of the Legal Charge, clause 10.6 of the Guarantees and clause 24(e) of the General Customer Agreement.  They make it clear that no waiver or estoppel shall arise from the mere fact that P did not exercise a remedy.  On the other hand, Ds’ case is not supported by any contemporaneous document.  If in fact there was any promise of a grace period, D2 would not have stated in his email to Raymond Leung on 13 April 2023 that, “we are further requesting you to kindly bear with us by giving us grace period…”.  In any event, given the lack of particulars of the alleged promise, it is plainly unsustainable by failing short of being “clear and unequivocal”: see 21 Finance Ltd at §31.

16.Secondly, it is alleged that D1 has a counterclaim against P.  However, there are clear provisions in the Loan Documents which prohibit Ds from raising any defence of set off or counterclaim: see clause 2.2 of the Legal Charge, clause 9 of the Guarantees and clause 15(a) of the General Customer Agreement.

17.Thirdly, Ds seek to dispute the quantum of indebtedness.  I am satisfied from the documents shown to me that the sums are due and owing.  P has stated on oath as to the value of the indebtedness.  Any argument to dispute the sums stated to be owing from Ds is precluded by the “conclusive evidence” provisions in the Loan Documents: see clause 15 of the Legal Charge, clause 24.3 of the Guarantees and clauses 15(d) and (e) of the General Customer Agreement.

18.For the above reasons, I am satisfied that no credible arguable defence is shown by Ds and it is appropriate to dispose of these proceedings summarily under O. 28, r.4 of RHC.

19.The original of the Legal Charge has been produced and shown to me.  I am satisfied that the requirements under O.88, r.5 of RHC have been complied with.

20.Accordingly, I will make an order in terms of the draft Order submitted to me.

[Discussion on costs]

21.Mr Lau sought costs on an indemnity basis and summary assessment of P’s costs.  I am satisfied that under the Loan Documents, P is entitled to costs on an indemnity basis.

22.Having considered the Statement of Costs submitted to me, adopting a broadbrush approach, I have summarily assessed P’s costs of these proceedings at HK$285,000.00.

23.I am grateful for Mr Lau’s assistance.

Mr Martin Lau, instructed by Wilkinson & Grist for the Plaintiff

Miss Claudia Wong, of Oldham, Li & Nie for the 1^st to 4^th Defendants