Bank of Communications (Hong Kong) Ltd v. China Fortune Enterprises Ltd and Others
Read the full judgment text of CAMP 115/2025 on BabelCite. This Court of Appeal judgment was delivered on 22 October 2025.
1. This is a renewed application by the 4 th defendant for leave to appeal against the decision of Deputy District Judge Alfred Cheng dated 6 December 2024 (‘Decision’) refusing his appeal to set aside the summary judgment granted by Master Matthew Ho against him pursuant to the application by the plaintiff. The 4 th defendant’s application for leave to appeal against the Decision was refused by the Judge on 30 May 2025 (‘Leave Decision’).
Cites 5 cases
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CAMP 115/2025, [2025] HKCA 945 On An Intended Appeal From [2024] HKDC 2015 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL MISCELLANEOUS PROCEEDINGS NO. 115 OF 2025 (ON AN INTENDED APPEAL FROM DCCJ NO. 116 OF 2023) ________________________ BETWEEN
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________________________ DECISION ________________________ Hon Cheung JA (giving the Decision of the Court) : I. Application for leave to appeal 1.This is a renewed application by the 4th defendant for leave to appeal against the decision of Deputy District Judge Alfred Cheng dated 6 December 2024 (‘Decision’) refusing his appeal to set aside the summary judgment granted by Master Matthew Ho against him pursuant to the application by the plaintiff. The 4th defendant’s application for leave to appeal against the Decision was refused by the Judge on 30 May 2025 (‘Leave Decision’). 2.Under Order 59, rule 2A(5)(a) of the Rules of the High Court, Cap. 4A (‘RHC’), this Court may determine an interlocutory application without an oral hearing. Having considered the summons, written submissions and the accompanying documents by the parties, we are of the view that it is appropriate to determine the present application on paper without a hearing. II. Background 3.The plaintiff is a licensed bank in Hong Kong.[1] 4.The 4th defendant is an 18% shareholder of a BVI company named Year Fortune Holdings Limited (‘Year Fortune’), which, along with another Hong Kong company, owns the 1st defendant.[2] 5.By a facility letter dated 17 November 2017 (‘the Facility Letter’), the plaintiff granted an installment loan of $8,000,000 (‘the Loan’) to the 1st defendant. In consideration of the Loan, each of the 2nd to 5th defendants executed a Deed of Guarantee dated 22 November 2017 (‘the Guarantee’), by which they jointly and severally agreed to pay the plaintiff, on demand in writing, all sums of money owed to the plaintiff by the 1st defendant.[3] 6.The 1st defendant defaulted on the repayment of the Loan. Notwithstanding the plaintiff’s written demands, none of the 2nd to 5th defendants repaid the plaintiff the 1st defendant’s indebtedness.[4] 7.By an action commenced on 10 January 2023, the plaintiff sought to recover the 1st defendant’s indebtedness of $2,352,797.93 from the 2nd to 5th defendants. The plaintiff’s claim was denied by the 4th defendant.[5] 8.The 4th defendant’s pleaded case in the Defence and Counterclaim may be summarised as follows[6] :
III. The Judge’s decision 9.By his Decision, the Judge found that the plaintiff was entitled to summary judgment.[12] The Judge held that the 4th defendant failed to show why the plaintiff ought to be fixed with any constructive notice of the fraud allegedly practised on him by Tsui. 10.The Judge rejected the 4th defendant’s evidence on the alleged misrepresentation or undue influence by Tsui for being unbelievable and implausible.[13] The Judge did not accept that the plaintiff knew, or ought to have known, the relationship between the 1st and 4th defendants was non - commercial, such that it was put on constructive notice that the Facility Letter and the Guarantee were manifestly disadvantageous to the 4th defendant’s interest.[14] The Judge found no evidence of Tsui having either actual or ostensible authority from the plaintiff to support the 4th defendant’s argument that Tsui acted, or should be seen as having acted, as the plaintiff’s agent in obtaining his signatures at the carpark.[15] 11.The Judge rejected the 4th defendant’s submissions on non est factum and unconscionable bargain, as he failed to overcome the heavy burden on him for invoking the doctrine and to show that his bargaining position was so weak that the law should offer him protection against any alleged unfairness in enforcing the Guarantee against him.[16] In relation to non est factum,the signing page of the Guarantee stated in English and Chinese that it was a deed of guarantee to be signed, sealed and delivered by the persons signing on that page. It was inherently implausible that the 4th defendant did not raise an eyebrow despite how overtly Mr Tsui allegedly hindered him from seeing the full signing page. 12.The Judge concluded that the 4th defendant’s counterclaim was frivolous and an abuse of the court process,[17] and dismissed his appeal accordingly.[18] IV. Principles 13.The principles for granting leave to appeal are well established. Under section 63A(2) of the District Court Ordinance, Cap. 336, leave shall not be granted unless the appeal has a reasonable prospect of success, or there is some other reason in the interests of justice that the appeal should be heard. Reasonable prospect involves the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’.[19] V. The 4th defendant’s intended grounds of appeal 14.The 4th defendant advances six grounds of appeal in the draft notice of appeal as follows (respectively ‘Ground 1’ to ‘Ground 6’) :
VI. Our view 1) Ground 1 15.This ground in essence seeks to challenge the Judge’s holding that the defendant’s evidence does not have a realistic prospect of being accepted at trial. 16.It is trite that to obtain unconditional leave to defend in summary judgment application, the defendant must show that there are triable issues and satisfy the Court that he has a ‘real or bona fide defence’ or ‘a fair probability or reasonable grounds that a bona fide defence exists’. Whilst the Court must not embark on a mini - trial on affidavit, the Court can assess the assertions raised by the defendant to see whether they are reasonably capable of belief. In so doing, the Court must not take them in isolation but rather in the context of so much of the background as is either undisputed or beyond reasonable dispute : Hong Kong Civil Procedure 2025 at [14/4/9] and [14/4/9A]. 17.Simply put, the Court is obliged to critically assess whether the defendant’s defence is credible in light of the entirety of evidence in place : if so, he must have leave to defend; if not, the plaintiff is entitled to summary judgment. The question is not whether the defendant’s assertions are to be believed; it is whether those assertions are believable.[20] 18.The present case is fact-sensitive. Having accepted the 4th defendant’s submissions that by the nature of his case, there was necessarily a lack of contemporaneous documents corroborating his assertions,[21] the Judge, when assessing the inherent plausibility of his defence, tested his assertions in relation to the alleged undue influence or misrepresentation practised on him by Tsui against the factual context of the case, including, inter alia, 1) the circumstances giving rise to his signatures on the Facility Letter and the Guarantee; 2) the chronology of events concerning the land search of the property in Ka Shin Street in Kowloon as well as the relevant mortgage and other written agreements; and (3) his withdrawal of investment in Hei Wo Restaurant of his own volition.[22] 19.The Judge was entitled, on the basis of the entirety of evidence before him, to come to his conclusion in [19] of Decision that the 4th defendant’s case was ‘plainly unbelievable’ and ‘implausible in light of the surrounding circumstances’. 20.In our opinion, the Judge was simply evaluating whether the 4th defendant’s evidence is credible. It is clear that the evaluation was limited to ascertaining the inherent plausibility of the 4th defendant’s defence, and did not extend to resolving all factual disputes in the present case. Thus, the Judge did not conduct a mini - trial on affidavit. His view of the matter is not tainted with any error of law, principle or approach. 2) Ground 2 21.The plaintiff’s case is entirely based on the Facility Letter and the Guarantee. There is no dispute by the 4th defendant as to the authenticity of his signatures on these two documents.[23] As such, the Judge was correct to say in [22] of Leave Decision that the plaintiff did not require Ng’s evidence to complete its cause of action against the 4th defendant, nor to demonstrate that it was prima facie entitled to judgment. 22.By saying that Ng flouted the plaintiff's guidelines in witnessing his signature on the Facility Letter and the Guarantee, the 4th defendant is effectively seeking to re - argue the case afresh in the hope that this Court may come to a different view than the Judge’s evaluation of his bare assertions that the plaintiff’s case has to be suspicious when Ng’s evidence is absent. The Judge specifically considered the allegations raised by the 4th defendant, and rejected it for the following reasons :
23.The Judge was entitled to the above views and to conclude that the inference that he was invited to draw by the 4th defendant was ‘practical[ly] moonshine’ as in [15.3] of the Decision. 3) Ground 3 24.The 4th defendant is essentially challenging the Judge’s reliance on the following factors in [15.1] – [15.2] of the Decision that :
25.In our view, these factors are relevant considerations in determining whether the plaintiff ought to have known that the 4th defendant’s signatures were procured by misrepresentation as claimed. It cannot be said that the Judge erred in his view that, given the aforesaid matters, it was practically moonshine for the 4th defendant to say that Ng must have been asked not to go to the carpark to witness the 4th defendant’s signature, and therefore the plaintiff ought to be taken as knowing that the 4th defendant’s signature was procured by equitable wrongs practiced by Tsui on the 4th defendant. 26.The 4th defendant also argues that the Judge erred in opining that the plaintiff was not put on enquiry about Tsui’s misrepresentation simply because the 4th defendant is a shareholder of Year Fortune (an owner of the 1st defendant), given that the 1st defendant and Year Fortune are two separate legal entities. 27.The 4th defendant, being a shareholder of Year Fortune, has an indirect interest in the 1st defendant. On the face of it, the Facility Letter and the Guarantee were not manifestly disadvantageous to the 4th defendant’s interest. The Judge cannot be faulted for taking into account the relationship between the 1st and 4th defendants in coming to the view that it is not arguable that the plaintiff ought to have known that the 4th defendant had been taken advantage of in agreeing to the Facility Letter and the Guarantee.[25] 28.Furthermore, unlike the circumstances giving rise to the wife’s signature on the mortgage document in Royal Bank of Scotland plc v Etridge (No 2) [2002] 2 AC 773 (which the 4th defendant relies on), nothing here suggests that there was a special relationship of any kind between the 4th defendant and Tsui such that the plaintiff might be put on enquiry about the possible existence of misrepresentation or undue influence. The Judge cannot be faulted for considering that nothing in the 4th defendant’s evidence could challenge an otherwise unexceptionable transaction that occurred in his commercial relationship with the 1st defendant. The Judge correctly distinguished Etridge (No 2) from the present case. 4) Ground 4 29.This complaint has no merits. The 4th defendant’s argument under this ground involves a misreading or misunderstanding of the Decision. The Judge did not find that Ng flouted the plaintiff’s guidelines. What the Judge said at [15.3] of the Decision was that if the 4th defendant’s assertions on how he signed the Facility Letter and the Guarantee were believable, then Ng might have flouted the plaintiff’s guidelines; but even if Ng had flouted those guidelines, this could not be equated to Ng being complicit in Tsui’s scam. 30.Obviously, the Judge was only making a passing comment, which was based on the assumption that the 4th defendant’s assertions were believable for the sake of argument. The paragraph cannot be construed as the Judge having made two contradictory findings. The Judge did not commit any error of law, principle or approach. 5) Ground 5 31.This complaint can be dealt with briefly. It was the 4th defendant’s own account that the documents that he signed were purportedly for opening Asia Catering’s bank account, and Tsui did not seek to act as a witness to his signatures.[26] It follows that Tsui could not possibly have made any representation in the capacity of the plaintiff’s agent to the 4th defendant for the purpose of the Facility Letter and the Guarantee. Nor was the 4th defendant told by the plaintiff that Tsui was its authorised agent for the matter in relation to the Facility Letter and the Guarantee. As such, the Judge was right to find that Tsui had neither actual nor ostensible authority to act as agent of the plaintiff in procuring the 4th defendant’s signatures.[27] 32.We agree with the Judge in his observation in [36] of the Leave Decision that in the apparently arms’ length relationship between the 4th defendant and Tsui/1st defendant in the present case, the mere fact that Tsui is required by the plaintiff to obtain security for facilities afforded to him or the 1st defendant whether by way of guarantee or otherwise and Tsui then approaches the 4th defendant to be a surety, does not mean Tsui is acting as the plaintiff’s agent; he may well just be acting for himself in such circumstances.[28] 6) Ground 6 33.As we see it, this ground of appeal is premised on the rulings in China Citic Bank International Limited where the judge there found the evidence of the 2nd defendant (the 10th defendant in that case) with respect to the alleged fraud perpetrated by Tsui (‘Leo’ in that case) in cohort with the 3rd defendant (the 2nd defendant in that case) against the 4th defendant and the 5th defendant (the 12th and 11th defendants respectively in that case) and another defendant in that case over an extended period to be believable.[29] The 4th defendant argues that China Citic Bank ought to have been taken into consideration by the Judge for the fact that Tsui has used the same scam to defraud the same group of people in both China Citic Bank and the present case over the same period, which is relevant to his defence ‘as similar fact evidence to be raised and determined at trial’.[30] 34.In Capital Century Textile Company Limited v Li Dianxiao & Cong Bo Wai [2018] HKCFI 729, Lisa Wong J (as she then was) articulated the principle on the admissibility of findings of an earlier court in subsequent proceedings that :
35.Insofar as the 4th defendant seeks to rely on any findings in China Citic Bank itself, there were in fact no factual findings of fraud. It was a decision on an application to set aside a default judgment entered against the 2nd defendant, and DHCJ Jonathan Wong merely found that his defence was believable. There were therefore no findings which could have been relied on in the present case. 36.Insofar as the 4th defendant seeks to rely on evidence referred to in China Citic Bank (which is permissible : Capital Century Textile Co Ltd v Li Danxiao and anor [2018] HKCFI 729 at [29]), the Judge did in fact consider it, but he found that the features of that case different from those of the present case.[31] Further, the Judge found that the 4th defendant’s defence was plainly unarguable in other respects. 37.Insofar as the 4th defendant says that there was any evidence in China Citic Bank which could be ‘considered as similar fact evidence to be raised and determined at trial’,[32] the 4th defendant did not adduce such evidence in the present case to resist the application for summary judgment. The 4th defendant cannot say that he will wait until trial to adduce the evidence. 38.We are satisfied that the Judge did not commit any error of law, principle or approach. He was correct to exclude the factual findings and conclusions in China Citic Bank from the present case. Contrary to the 4th defendant’s complaint, the Judge did examine and compare the evidence in China Citic Bank with that of the present case before coming to his own findings and conclusions. VII. Conclusion 39.In light of the above, we are not satisfied that there is any reasonable prospect of success in the intended grounds of appeal. Nor are we satisfied that there is any other reason in the interests of justice to grant leave to appeal. The application for leave to appeal is refused. 40.As this application is totally without merit, we further make an order pursuant to Order 59, rule 2A(8) of the RHC that no party may under rule 2A(7) request the determination of this Court to be reconsidered at an oral hearing inter partes. VIII. Costs 41.The 4th defendant shall pay the plaintiff’s costs of this application. The plaintiff asked for costs on an indemnity basis, which we grant, given that Clause B(d) of the Guarantee provides that the plaintiff’s costs in relation to the Guarantee are to be paid by the guarantors on a full indemnity basis. 42.The plaintiff asked for $80,700. Having considered the plaintiff’s statement of costs, and taking a broad-brush approach, we will summarily assess the plaintiff’s costs at $70,000.
Mr Lincoln Cheung and Mr Kin Lau, instructed by Gallant, for the plaintiff Mr Dicky Cheung and Miss Teresa Yu, instructed by Heung Massie & Clement, for the 4th defendant [1] Decision, [2]. [2] Decision, [5.2] and [15.1]. [3] Decision, [2.12]-[2.2]. [4] Decision, [3]. [5] Decision, [3]-[4]. [6] Decision, [5]. [7] Decision, [5.3]. [8] Decision, [5.3] and [15.4]. [9] Decision, [5.5]. [10] Decision, [5.6]. [11] Decision, [5.8]-[5.10]. The Judge mentioned ‘November 2017’ in [14]. [12] Decision, [12]. [13] Decision, [19]. [14] Decision, [18]. [15] Decision, [16]-[17]. [16] Decision, [25]. [17] Decision, [27]. [18] Decision, [28]. [19] SMSE v KL [2009] 4 HKILRD 125, [17]. [20] Ng Shou Chun v Hung Chun San CACV 182/1993, [16]. [21] Decision, [19]. [22] Decision, [19.1]-[19.6], and [25]. [23] Leave Decision, [8]. [24] Decision, [15.1]-[15.3]. [25] Decision, [18.3]. [26] Decision, [17.1]-[17.2]. [27] Decision, [17]. [28] Bank of China (Hong Kong) Ltd v Wong Yuk Ping & Anr [2003] 1 HKLRD 1, [60]. [29] China Citic Bank, [4.18]. [30] Defendant’s written statement, [12]. [31] Decision, [22]-[23]. [32] Defendant’s written statement, [12]. |
Cases cited in this judgment