China Minsheng Banking Corp., Ltd., Hong Kong Branch v. Top Power Enterprises Ltd and Others
Read the full judgment text of HCA 265/2020 on BabelCite. This High Court CFI judgment was delivered on 11 May 2026.
1. In this action, the plaintiff claims against the 1 st and 2 nd defendants for the outstanding principal in excess of US$169 million plus fees, interest and default interest pursuant to a facility agreement, and against the 3 rd defendant under a guarantee.
Cited by 1 case · Cites 7 cases
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HCA 265/2020 [2026] HKCFI 2698 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 265 OF 2020 ________________________ BETWEEN
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________________________ J U D G M E N T ________________________ A. INTRODUCTION 1.In this action, the plaintiff claims against the 1st and 2nd defendants for the outstanding principal in excess of US$169 million plus fees, interest and default interest pursuant to a facility agreement, and against the 3rd defendant under a guarantee. 2.It is undisputed by the parties that the outstanding principal claimed had been advanced and unpaid (together with the relevant interest and fees). However, the defendants contend that the plaintiff is not entitled to enforce any written agreements between the parties, since, pursuant to an oral agreement, the plaintiff had promised that it would not enforce any loan unless it had advanced a total of US$300 million to the 3rd defendant in full (“the US$300 Million Loan”). It is said that this took effect as a condition precedent to the defendants’ obligation to repay the debt and the plaintiff’s right of enforcement. (“the Alleged Oral Agreement”) 3.Hence, the central issue of the trial is whether the Alleged Oral Agreement had been reached between the parties. B. UNDISPUTED BACKGROUND[1] B1. The original facility agreement 4.Pursuant to a facility agreement dated 18 November 2013 (“the Original Facility Agreement”), a US$160 million term loan facility (“Facility A”) and a US$90 million term loan facility (“Facility B”) were made available by the plaintiff (as original lender, arranger, agent and security agent) to the 1st and 2nd defendants (as borrowers). 5.On the same day, the 1st and 2nd defendants drew down US$160 million and US$90 million under Facility A and Facility B respectively pursuant to the Original Facility Agreement. 6.The said loans were for acquiring shares in an Australian company known as Victorian Iron Pty Ltd (“Victorian Iron Ltd”), which owned some iron mines in Australia (“the Mines”). 7.Under Clause 6.1 of the Original Facility Agreement, all the loans were to be repaid on the “Final Maturity Date”, which was defined in Clause 1.1 thereof to mean 24 months after the first date on which the facility was utilized, i.e. 18 November 2015. 8.At this time, the 1st and 2nd defendants had no relationship with the 3rd defendant. B2. Taking Over of the 1st and 2nd defendants’ loans by the 3rd defendant 9.On 31 December 2014:
10.After restructuring of the loan granted under the Original Facility Agreement, the plaintiff waived the requirement for:
11.On around 20 January 2015, the 3rd defendant procured two companies controlled by him to acquire all the issued shares in the 1st and 2nd defendants. By these transactions, the 3rd defendant effectively took over the 1st and 2nd defendants’ liability of the loans granted under the Original Facility Agreement. 12.On 23 January 2015, there was around US$35,540,361.23 in the 1st and 2nd defendants’ accounts with the plaintiff. The 1st and 2nd defendants made a payment of US$35 million to the plaintiff in partial settlement of the debt under the Facility Agreement. B3. The plaintiff’s loans to the 3rd defendant’s property investment projects in Singapore 13.In early 2015, the first series of the 3rd defendant’s property investment projects in Singapore commenced. It involved the following parcels of land in Singapore:
14.Shortly after the 3rd defendant took over the said loan, the plaintiff made a series of loan facilities (totalling US$141,103,290.58) to companies associated with the 3rd defendant in support of his property investment projects in Singapore:
15.However, as the 3rd defendant’s biddings of Land 2 and Land 3 were unsuccessful, the Jingdian 1st and 2nd Loans were repaid very shortly afterwards (on 23 March 2015 and 29 June 2015 respectively). Only the World Modern Loan and the Global Inv Loan were actually used for investment. B4. Further amendments 16.In around August/September 2015, Mr Lin Zhihong (“Mr Lin”), the then CEO of the plaintiff, left the plaintiff’s employment. 17.In around December 2015, Mr Wang Chunning (“Mr Wang”), a then project manager of the plaintiff, also left the plaintiff. 18.In around March 2016, the 3rd defendant and Ms Du Xiuying (the 3rd defendant’s sister) (“Ms Du”) had a meeting with, inter alia, Mr Huang Minghui (“Mr Huang”), the plaintiff’s then Deputy CEO, in Shenzhen. 19.On 29 July 2016, Mr Du Yunfei (“Mr Du”) was appointed as the plaintiff’s new CEO. 20.In around September 2016, the 3rd defendant met with Mr Du in Beijing. 21.Subsequently, between 2017 and 2018, there were multiple rounds of discussion between Mr Du and the 3rd defendant. However, the plaintiff had provided no further funding for the 3rd defendant’s other Singapore property investment projects. 22.On around 12 November 2017, the extended final maturity date (18 November 2017) was approaching (see [9(1)] above). At around that time, the 3rd defendant and Ms Du met Mr Du in Beijing. Shortly after the meeting, in around late 2017 / early 2018, the plaintiff agreed to extend the final maturity date for the loans under the Facility Agreement. 23.The parties then entered into an amendment deed dated 28 December 2017 (“the 2017 Amendment Deed”), which, inter alia, provided the followings:
24.On 21 March 2018, a waiver letter (“the 2018 Waiver Letter”) was executed, in which the plaintiff waived the 2017 Prepayment Amount as one of the conditions precedent. The 1st and 2nd defendants in turn agreed to pay the 2017 Prepayment Amount by 5 April 2018. 25.On the same day, an amendment letter was entered into (“the 2018 Amendment Letter”), which, inter alia, provided for a revised repayment schedule as follows:
26.On 17 August 2018, the 1st and 2nd defendants were supposed to repay US$80 million, but did not do so. 27.The plaintiff issued a demand letter on 24 August 2018. 28.On 17 February 2019, the 1st and 2nd defendants were supposed to repay another US$80 million, but again they did not do so. 29.In around September 2019, the 3rd defendant met with Mr Du again. 30.In September 2019, the 3rd defendant and his partner MCC Land (Singapore) Pte Ltd (中冶置業新加坡有限公司) successfully bid for his latest Singapore property investment project (“the Bernam Street Project”). But the plaintiff ultimately refused to extend any loan to the 3rd defendant for this project. 31.In November 2019, the 3rd defendant met with Mr Du in Beijing again. 32.On 15 November 2019 (i.e. the Final Maturity Date), the 1st and 2nd defendants were supposed to repay the outstanding loan, but they did not do so. B5. The 1st and 2nd defendants’ repayment 33.The 1st and/or the 2nd defendants had made various repayments under the Facility Agreement as follows:
34.On 9 January 2020, the plaintiff issued a default notice to the defendants, stating that the 1st and 2nd defendants had defaulted in payment under the Facility Agreement, and demanded repayment of the outstanding loan. 35.On 11 March 2020, the plaintiff commenced the present proceedings against the defendants. C. THE DEFENDANTS’ CASE 36.As aforesaid, the outcome of the action hinges on this Court’s finding on the existence of the Alleged Oral Agreement. 37.As for the circumstances under which the Alleged Oral Agreement came into being and the effect thereof, the defendants pleaded in their Re-Amended Defence that:
38.In support of his pleaded case, the 3rd defendant explained in his witness statement that:
D. CREDIBILITY OF WITNESSES D1. General principles 39.The approaches for assessing the credibility of witnesses are well established, and are summarised as follows[3]:
40.Since this trial concerns the question of existence of the Alleged Oral Agreement, and turns on the Court’s assessment of the credibility of witnesses, what DHCJ Jin Pao SC remarked in Leung Chin Sing, Rabo & Another v Ko Chun Hay, Kelvin [2021] HKCFI 2242 (a case in which the plaintiffs were suing for breach of an alleged oral finder’s fee agreement) is relevant:
41.The observations in [43] of Leung Chin Sing, Rabo & Another (supra) are particularly important in the present case in which the witnesses have been asked to recall events which took place a long time ago. D2. The plaintiff’s witnesses 42.The plaintiff has called a total of 4 witnesses, namely, Mr Huang, Ms Lei Jiamei (“Ms Lei”), Mr Tang Hongyang (“Mr Tang”) and Mr Du. 43.As pointed out by Mr Ng and Mr Chan for the defendants, none of these witnesses had first hand knowledge of the negotiations between Mr Lin and the 3rd defendant, when the Alleged Oral Agreement was allegedly made. Therefore, in the circumstances of the present case, the oral evidence of the plaintiff’s witnesses is of much less importance. 44.Be that as it may, insofar as it is necessary, I find that all the plaintiff’s witnesses are credible witnesses. They are all forthcoming in their evidence, and are apparently very fair witnesses. D3. The defendants’ witnesses 45.The same cannot be said in relation to the witnesses called by the defendants, namely, the 3rd defendant himself, Ms Du and Mr Chi Haidong (“Mr Chi”). I will give my view on their credibility generally below. D3.1 The 3rd defendant 46.With greatest respect, I find that the 3rd defendant is an unreliable and incredible witness. It is adequate to refer to the following examples for the purpose of demonstrating why I make this finding.
47.As far as the new evidence given by the 3rd defendant is concerned, his counsel argued that the plaintiff’s criticism of such evidence is unjustified because the 3rd defendant was only “topping up” the evidence given in his witness statement, and that the 3rd defendant could not anticipate all the questions which would be covered in cross-examination, and as a result, it is unfair to comment adversely on the 3rd defendant’s failure to include certain matters in his witness statement, and allege that he had fabricated certain evidence while he was in the witness box. 48.In my view, the court of course should not jump immediately to the conclusion that certain evidence is a recent fabrication solely because such evidence is given for the first time by the witness at the witness box. Whether the court should come to that conclusion depends on the circumstances. For example, if the “top-up” evidence is important and obviously relevant in the case, then it would raise a big question mark as to why it was only mentioned at the witness box but not in the witness statement. In the present case, one of the obvious questions which the defendants have to address must be why the Alleged Oral Agreement, given its importance to the 3rd defendant, was not reduced into writing. If it were the 3rd defendant’s evidence that a request had been made by him to reduce the agreement into writing but rejected by the plaintiff, it would only be natural if the factual matters relating to such a request were included in the witness statement, particularly when he in fact had explained why the Alleged Oral Agreement was not included as one of the terms in the written agreement (see paragraph 24 of his witness statement quoted in [38] above). The fact that he did not do so, and then “added” such evidence only when he was cross-examined, is highly suspicious to say the least. Coupled with the other features of his evidence, in respect of which I have quoted a number of examples above, the plaintiff’s counsel are totally justified to criticize the quality of the 3rd defendant’s evidence. D3.2 Ms Du 49.In my view, Ms Du is an unreliable, if not incredible, witness. 50.Firstly, she admitted that before she prepared her own witness statement, she had read the 3rd defendant’s witness statement, and worse still, she said that she and the 3rd defendant had put their heads together to “collectively recall” what happened at the material time. That means her evidence is not her independent recollection of what happened back then. That apparently affects the reliability of her evidence. 51.Secondly, as pointed out by the plaintiff’s counsel, her witness statement is very short, and merely confirmed specific paragraphs of the 3rd defendant’s witness statement regarding matters within her supposed personal knowledge. 52.In Ho Sin Ying v. Chan Yui Ling (HCA 90/2010, unreported, 13 July 2012), DHCJ Saunders had made the following observations[6]:
53.In my view, the above comments are equally applicable to the situation where a witness merely confirms the correctness of the statement of another witness, like what Ms Du did. This is because in effect Ms Du is doing the same thing, as if she had copied part of the 3rd defendant’s witness statement and treated it as her own. 54.Thirdly, while Ms Du initially confirmed in court unequivocally that she was the manager of the 1st and 2nd defendants (she also stated without reservation in her witness statement that she assumed that post), she changed her evidence at the trial and alleged that she was not formally appointed as such, and that this was a title which she gave herself and the 3rd defendant did not know about that. 55.When she was cross-examined on whether she was aware that the 3rd defendant had testified in the witness box that she was not the manager of the 1st and 2nd defendants, she confirmed twice that she knew about that, but only to change her testimony subsequently, alleging that she in fact was unaware of the 3rd defendant’s evidence on this matter. 56.The defendants’ counsel submitted that whether Ms Du was the manager of the 1st and 2nd defendants is a trivial matter. With respect, that misses the point. The crux of the matter is that the 3rd defendant had told Ms Du what he had testified in court[7], and Ms Du had tried to corroborate his evidence. In my view, that must adversely affect the weight which the Court should place on her evidence. 57.Fourthly, Ms Du alleged for the first time while she was in the witness box that she had asked the 3rd defendant if the Alleged Oral Agreement could be reduced into writing. I accept the plaintiff’s argument that it is clear that the 3rd defendant and Ms Du had coordinated this improvised explanation for the absence of written documentation, and the fact is that they had never talked about this matter at the material time back in 2014. 58.Fifthly, Ms Du alleged that she did not know the issue of the present case when she prepared her witness statement. Given she is the 3rd defendant’s sister, and since she had been assisting the 3rd defendant in his business, the alleged ignorance on her part is simply incredible. That, in my view, also casts great doubt on her evidence generally. D3.3 Mr Chi 59.At all material times, Mr Chi was an executive director of KMG Resources Pty Ltd, a company beneficially owned by the 3rd defendant. 60.I also find that Mr Chi is an unreliable and incredible witness for the following reasons:
E. DISCUSSION E1. Credibility of the defendants’ witnesses 61.It cannot be disputed that the defendants bear the burden to prove the Alleged Oral Agreement. As aforesaid, this turns on the Court’s assessment of the credibility of the defendants’ witnesses. 62.I have found above that none of the defendants’ witnesses is credible or reliable. 63.It follows that this Court does not accept their evidence on the existence of the Alleged Oral Agreement. 64.That would be the end of the defence case. 65.Be that as it may, it should be pointed out that the defence case is in fact not credible for many other reasons, which are explained further below. E2. No mention of the Alleged Oral Agreement in the 2014 Amendment Deed 66.It is undisputed that the Alleged Oral Agreement is nowhere to be found in the 2014 Amendment Deed. 67.In my view, if the Alleged Oral Agreement ever existed, given its importance to the defendants, the 3rd defendant would have insisted that it be inserted into the 2014 Amendment Deed. However, the fact is that it was nowhere to be found in the 2014 Amendment Deed. It is thus simply incredible that there was any Alleged Oral Agreement. 68.In this regard, the 3rd defendant had given a number of explanations as to why the Alleged Oral Agreement could not find its way into the 2014 Amendment Deed. 69.He explained in paragraph 24 of his witness statement that:
70.In my view, given the amount at stake, it is incredible for the 3rd defendant not to insist on including the Alleged Oral Agreement in the 2014 Amendment Deed because it was “troublesome” and “time-consuming”. 71.As far as the time factor is concerned, it should be borne in mind that the 3rd defendant was not in a hurry in concluding the deal by the end of December 2014. In other words, the time factor did not concern him. 72.Even if the 3rd defendant’s evidence (that Mr Lin really wanted to complete the deal by the end of December 2014 so as to make the overall business performance of the plaintiff for the year 2014 looked better (“林行長告訴我因為每年12月都是民生銀行香港分行年底的業績結算，希望我儘快在12月底解決力信和景順的這筆逾期貸款，這樣民生銀行香港分行在當年的業績便會比較理想”)) is accepted, it is also his evidence that Mr Lin had promised that he would mobilize all departments, staff, and lawyers of the plaintiff to do everything in facilitating the process of preparing the relevant documents and completing all legal procedures (“為了加快進度，林行長表示民生銀行香港分行的各部門及律師全面協助辦理我承接力信和景順的貸款所需的一切法律手續及所需的文件”[8]). In other words, “troublesome” and “time-consuming” simply cannot be the reasons for not including the Alleged Oral Agreement in the legal documents. After all, the terms of the Alleged Oral Agreement are not complicated. 73.The 3rd defendant also alleged that he trusted Mr Lin and the plaintiff. He had this to say in paragraph 26 of his witness statement:
74.In my view, it is incredible that an experienced businessman like the 3rd defendant would, based on the so-called trust, agree to abandon all protections given to him by way of the Alleged Oral Agreement. 75.In relation to the “trust” which he allegedly had for Mr Lin, it should be borne in mind that the 3rd defendant only met Mr Lin for the first time in August 2014, and had only had a few meetings with Mr Lin since then until December 2014. The 3rd defendant also accepted that he was not old friend or business partner with Mr Lin, and that they did not have any long-standing relationship as of December 2014. It is thus inconceivable that the 3rd defendant would act upon such a “trust” in such a way. 76.At the trial, the 3rd defendant further explained that he had in fact requested Mr Lin to include the Alleged Oral Agreement in the 2014 Amendment Deed, but Mr Lin refused because of the urgency of the matter. 77.As explained in Section D3.1 above, I find that this new allegation is incredible, for it would have been included in the 3rd defendant’s witness statement if it were the truth. 78.Furthermore, even if the agreement had to be signed by the end of 2014, there was no urgency as such: the first draft of the 2014 Amendment Deed was sent by the plaintiff to Ms Du on 19 December 2014 for comment, and the finalised version was only executed on 31 December 2014. That means there were 12 days for the parties to revise the drafts. That would be enough even if the public holidays in between are taken into account. E3. No mention of the Alleged Oral Agreement in the subsequent transaction documents 79.Even if there were any urgency in the matter in December 2014, such urgency would no longer exist after the 2014 Amendment Deed had been executed. However, the fact is that the Alleged Oral Agreement was not found in any subsequent documents executed by the parties, for example, the 2017 Amendment Deed, and the 2018 Amendment Letter. 80.In fact, if the Alleged Oral Agreement existed, none of those documents would have been necessary because the defendants were not required to make any repayment yet at the material time, before the satisfaction of the alleged condition precedent. 81.But the fact is that, by virtue of the 2017 Amendment Deed, the 1st and 2nd defendants were obliged to repay the plaintiff according to the following schedule:
82.Further, pursuant to the 2018 Amendment Letter, the 1st and 2nd defendants’ obligations to repay were revised as follows:
83.The aforesaid payment obligations are plainly inconsistent with the Alleged Oral Agreement. E4. Repeated repayment of principal and interest 84.It is undisputed that the 1st and 2nd defendants had repeatedly made payments for principal and interesttotalling around US$96 millionsince early 2015 up to June 2019 (see Section B5 above). 85.The 3rd defendant had given a number of explanations as to why these repayments were made despite the plaintiff’s failure to satisfy the alleged condition precedent. 86.Firstly, he stated that he made these repayments in order to maintain a good relationship with the plaintiff, so as to foster the smooth processing of the US$300 Million Loan as promised. He said it was particularly necessary after Mr Lin had left the plaintiff on 31 August 2015, and after Mr Du became its new CEO in July 2016, as he was keen to maintain a good relationship with the plaintiff’s new management. 87.The extreme weakness of such an assertion would be exposed once we take a look at the table under Section B5 above. It can be seen that the 1st and 2nd defendants made repayments of interest (totalling around US$7.6 million) in February and July 2015, that is, during the time when Mr Lin was still the CEO of the plaintiff. 88.Furthermore, if the plaintiff had already promised to lend the 3rd defendant US$300 million, there was no need for the 3rd defendant to provide any “sweetener” to facilitate the further grant of the loan. 89.Attention should also be drawn to an email dated 16 June 2015 sent by Mr King Tsao, who visited Singapore and conducted site visits in relation to the Jingdian 2nd Loan and the Global Inv Loan in around June 2015. In the said email which was his internal report, he stated that he had informed the 3rd defendant that the plaintiff would “not increase the current exposures without solid ground and justifications”. Although the 3rd defendant denied that Mr Tsao had ever said this to him, I do not accept his evidence. I accept that it is more likely than not that what was stated in the email, which was a contemporaneous document, represents the truth. The point here is that, if the 3rd defendant had been told that no further loan would be granted to him without solid justification, he would not have made the further repayments subsequently if there was indeed any Alleged Oral Agreement. 90.Secondly, the 3rd defendant claimed that the payments were made to relieve the plaintiff from internal half-yearly or annual assessment of business performance. With respect, this explanation does not make sense. First of all, this is an internal matter which should not bother an outsider like the 3rd defendant. Furthermore, on the defendants’ own case, the plaintiff must be taken to have agreed that no repayment shall be made under the Facility Agreement until the US$300 Million Loan was fully advanced. On this basis, there ought to have been no internal assessment pressure requiring the plaintiff to chase for any repayment in the interim. E5. Negotiations in July 2017 91.It is common ground that the plaintiff had sent demand letters to the defendants in March 2017 by reason of the defendants’ failure to pay interest pursuant to Clause 8.2 of the 2014 Amendment Deed. 92.After that, parties engaged in negotiations in July 2017. 93.On 18 July 2017, the plaintiff’s Ms Wang Yunjia (“Ms Wang”) sent a repayment proposal to Ms Du for her consideration. 94.By an email sent by Ms Du to Ms Wang dated 20 July 2017, Ms Du wrote:
95.On 27 July 2017, Ms Du sent another email to Ms Wang, with the following content:
96.Ms Du initially said in court that it was she who came up with the above proposed terms as contained in the emails dated 20 July 2017 and 27 July 2017 respectively. 97.However, she changed her evidence subsequently, and alleged that those terms were in fact suggested to her by Ms Wang (who allegedly drafted the emails), and such terms were arrived at after some internal discussions within the plaintiff. 98.Ms Du’s evidence in this aspect is totally incredible and I reject the same. 99.The lie is exposed by the undisputed fact that, on 3 August 2017, Ms Wang sent a final proposal to Ms Du, which is different from the proposals made by Ms Du in the above emails. If Ms Du was telling the truth, then that means the plaintiff had asked the defendants to put forward proposals just to reject them one after another. This is absurd. 100.Further, as the emails show, Ms Du was “applying” to the plaintiff for certain concessions, which she “sincerely hoped the plaintiff would accept” (“望贵行予以批准为盼”). If the defendants were not obliged to repay the loans in the first place by reason of the Alleged Oral Agreement, she would not have worded the emails in such a way. Indeed, she did not have to ask for mercy at all. 101.The 3rd defendant gave a different story. He alleged that the wordings of the emails were provided by Mr Du (the plaintiff’s CEO). This is equally incredible for the same reasons explained above. E6. Tender for the 1st and 2nd defendants’ loans in 2019 102.In October 2019, the plaintiff sought to sell the 1st and 2nd defendants’ loans by tender. Jingdian Ltd (which was the 3rd defendant’s company) was invited to submit a tender. There is no dispute that Jingdian Ltd did in fact participate in the auction. 103.I accept the plaintiff’s argument that the 3rd defendant’s willing participation in the auction – with no apparent objection or mention of the Alleged Oral Agreement – is inexplicable if the Alleged Oral Agreement existed. This is because the 3rd defendant knowingly exposed himself to immediate enforcement by third-party distressed debt investors, which are not privy to or bound by the Alleged Oral Agreement. If the debt were assigned to any of these investors, the debt would be immediately enforceable against the defendants and the securities provided. Put it in another way, if the Alleged Oral Agreement existed and suspended all repayment obligations until US$300 million was advanced, he would have immediately and strenuously objected to the public auction himself. He would have protested that the debt was not yet due and therefore not assignable, and that auctioning it to third parties who could enforce it immediately would breach the Alleged Oral Agreement. The complete absence of any such objection demonstrates that no such agreement existed. 104.The 3rd defendant explained that the auction exercise was intended to reduce the principal payable. This explanation is rejected. This is because there was no guarantee that he would succeed in bidding for the debt. If he lost to someone else, the debt would become immediately enforceable with no “principal reduction” as intended. Further, if the plaintiff agreed to reduce the principal repayable, there was no need for the parties to take so much trouble. They could have just entered into a deed for this purpose. 105.The defendants’ counsel argued that, in fact, the correct legal position is that the successful bidder would have to take the debt subject to equity. Therefore, the Alleged Oral Agreement could still be raised by the defendants as a defence. 106.The problem with this argument is that, even if the defendants’ counsel are correct, there is no evidence that the 3rd defendant knew about such “correct legal position” at the material time. Therefore, his conduct of agreeing to participate in the auction may still be taken into account for the purpose of supporting the finding that there was in fact no Alleged Oral Agreement in existence. E7. Commerciality of the transaction 107.One of the matters which this Court needs to consider is the commerciality of the transaction. 108.It is undisputed that the 3rd defendant had no acquaintance with the 1st and 2nd defendants or their controllers prior to the introduction to him by Mr Lin in August 2014. The defendants’ counsel therefore submitted that there was no reason why the 3rd defendant would help the 1st and 2nd defendants shoulder their huge liability under the Original Facility Agreement, and that there must be something in return for the 3rd defendant that caused him to agree to take over their US$250 million worth of debts. It was suggested by the defendants that there were only 2 possibilities: either the Mines controlled by Victorian Iron Ltd or the Alleged Oral Agreement. 109.It was further submitted by the defendants that since the 3rd defendant firmly believed that the Mines had no economic value at the time when the 3rd defendant took over the 1st and 2nd defendants’ loans, the Mines could not have been the 3rd defendant’s reason for doing so. 110.The question here is: Did the 3rd defendant really take the view back in 2014 that the Mines did not have any economic value as alleged? 111.In my view, the answer must be “negative”. 112.In this regard, reference should be made to an internal document of the plaintiff entitled 《景順實業重組貸款問題回覆》. It was stated therein that one of the reasons why the 3rd defendant was willing to take over the subject loans was because his company was planning to invest in a “direct reduced iron” (“直接还原铁”) project in Dubai, and therefore the iron ore of Victorian Iron Ltd would serve as raw material reserve. In my view:
113.During cross-examination, the 3rd defendant claimed for the first time that he never had any plan for any “direct reduced iron” project in Dubai. This evidence is rejected. 114.In paragraph 11 of his supplemental witness statement, the 3rd defendant stated that:
115.The relevant part of part 18 of Ms Lei’s witness statement reads:
116.It is obvious that while the 3rd defendant dealt with Ms Lei’s assertion that he had a plan to use the iron ore as raw materials in his project in Dubai, he only refuted the same by saying that the Mines had no economic value. He did not dispute the fact that he had a project in Dubai at all. In my view, if there was no “project in Dubai” whatsoever as he alleged in court, he would have referred to that in the said paragraph. In my view, that new evidence is apparently a recent fabrication. 117.Insofar as it is argued by his counsel that “[the 3rd defendant] was plainly denying the existence of any projects (Dubai or anywhere) to acquire the Mines and there was no acknowledgement of any alleged Dubai project”[9], with respect, this is made to be rejected. The meaning of the paragraph quoted above is clear. 118.For the purpose of proving that the Mines had no economic value, the defendants have called Mr Chi to give evidence. In his witness statement, he purportedly explained why it was concluded after the investigation done in September/October 2014 that the Mines had no exploration value at all. He then concluded at paragraph 11:
119.I do not accept Mr Chi’s evidence for the following reasons:
120.In any event, it was the submission of the defendants’ counsel that:
121.As aforesaid, I respectfully agree that the critical point is whether the 3rd defendant held the view that the Mines had no value. I hold that he did not hold such a view. 122.That means the commerciality of the transaction can be explained by the 3rd defendant’s view that he could make use of the Mines for his other business. 123.In my view, there was another commercial rationale held by the 3rd defendant, namely, that he was eager to establish a good relationship with the plaintiff, in the hope that such a relationship would help when he applied for further fundings for his property development projects in Singapore. This rationale is in fact also mentioned in the plaintiff’s internal document 《景順實業重組貸款問題回覆》. 124.Having considered the commerciality factor from the 3rd defendant’s perspective, I should now analyse the same from the plaintiff’s angle – is it inherently probable for the plaintiff to enter into the Alleged Oral Agreement? 125.In my view, the answer must be “No”. I accept the plaintiff’s argument that the Alleged Oral Agreement is commercially absurd to the plaintiff, and that no national financial institution would accept such terms. 126.In this regard, the defendants claim that the plaintiff agreed to enter into the Alleged Oral Agreement because Mr Lin was concerned that if the plaintiff failed to recover the loans under the Original Facility Agreement (totalling US$250 million), it would be detrimental to the plaintiff’s business performance. 127.However, as pointed out by the plaintiff’s counsel, the Alleged Oral Agreement would compound the plaintiff’s risk exposure exponentially, as the plaintiff would be committing to advance an even larger loan of an additional US$300 million. By agreeing that the defendants had no repayment obligation until another sum of US$300 million was fully advanced, the plaintiff would voluntarily assume approximately half a billion US dollars in credit risk before receiving any repayment, and transform a US$250 million loan into US$550 million in aggregate exposure. 128.Furthermore, it should also be noted that there was no agreement or discussion between the parties at all material times as to:
129.Without these details, the time at which the plaintiff was entitled to recover the loan was totally uncertain. This does not make sense. I do not believe that the plaintiff or Mr Lin would have agreed to enter into such an agreement. 130.The defendants’ counsel argued that the above were not essential terms of the Alleged Oral Agreement and could be worked out as the matter progressed. With respect, this is beside the point. The point is not whether those are or are not essential. The crux of the matter is that the plaintiff would not have entered into the Alleged Oral Agreement without the confirmation of these matters. Furthermore, in any event, the undisputed fact is that while the matters had indeed “progressed” for a long time, the parties had never discussed these matters. E8. Why US$300 million? 131.It may be recalled that the purpose of the Alleged Oral Agreement was, from the 3rd defendant’s perspective, to secure the grant of the US$300 Million Loan. 132.In my view, one of the factors which would affect the Court’s assessment of the credibility of the 3rd defendant’s case is whether he could explain how he came up with the figure of US$300 million at the time of negotiation with Mr Lin in 2014. 133.However, the 3rd defendant could not give any satisfactory answer when he was asked about this in court. He initially admitted under cross-examination that there was no on-going or concrete Singapore projects which required funding in November to December 2014. 134.Pausing here, as pointed out under Section D3.1 above, according to his own evidence in witness statement, his company 唐山港陸鋼鐵有限公司 was applying for a loan from the plaintiff at the material time. However, according to the plaintiff’s internal document 《景順實業重組貸款問題回覆》, the funding required was only US$260 million. The amount does not match. 135.Coming back to the 3rd defendant’s evidence in court, after he had been asked to clarify his answer repeatedly, he at one stage stated that he was about to start up two companies in Hong Kong and there was a need of US$300 million in order to invest in land development project in Singapore. This evidence is incredible and I reject the same. But in any event, at the end of the day, he agreed that his evidence could be summarized by saying that but for his cooperation with the plaintiff to resolve the non-performing loan problem (i.e. the unpaid loan under the Original Facility Agreement), neither he nor his companies needed any capital in November/December 2014. That means the figure of US$300 million remained unexplained. 136.The 3rd defendant’s case is that his rationale was that if the US$300 Million Loan was granted, then he could make use of the profit generated therefrom in the Singapore property development projects to repay the plaintiff for the loans under the Original Facility Agreement. However, if he had no particular projects in mind at the material time, how could he work out the profit margin, etc. so as to come to a conclusion that he could make adequate profit to repay the plaintiff (not to mention to keep certain profit for himself)? 137.This further supports the finding that the Alleged Oral Agreement is incredible. E9. The plaintiff’s loansto the 3rd defendant’s investment projects in Singapore 138.It is undisputed that the plaintiff had advanced 4 loans to companies associated with the 3rd defendant, in support of his property development projects in Singapore. 139.It was submitted on behalf of the defendants that these loans support the existence of the Alleged Oral Agreement. They argued that:
140.I do not think these arguments assist the defendants at all. 141.Firstly, the evidence clearly shows that each loan granted for the 3rd defendant’s investment in Singapore was independently considered and approved. Extensive due diligence process had been gone through. The plaintiff’s departments apparently did not endorse the loans as a rubber stamp. 142.Secondly, if the Alleged Oral Agreement ever existed, one would expect that it would be mentioned in the internal documents created during the approval process. However, it was not referred to at all. 143.Thirdly, it can be seen from Mr King Tsao’s email dated 16 June 2015 that, during his site visit in around June 2015, he had even warned the 3rd defendant that the plaintiff would not grant him further loan “without solid ground and justifications”. This again shows that there was never any promise made by the plaintiff. Further, there is no evidence that the 3rd defendant had complained that this amounts to a breach of the Alleged Oral Agreement. In this regard, the defendants pointed out that despite Mr Tsao’s remark, the plaintiff still proceeded to discuss with the 3rd defendant over the financing of the Bernam Street Project. This submission is not understood, for it is not the plaintiff’s case that the plaintiff would not even consider any funding application made by the 3rd defendant or his companies. Moreover, it is undisputed that the plaintiff had not approved any loan for this project at the end of the day. E10. The 29 September 2016 email 144.It is undisputed that there was a meeting held in Beijing in around September 2016 between Mr Du (the plaintiff’s CEO) and the 3rd defendant. 145.After the said meeting, Ms Du sent an email dated 29 September 2016 on behalf of the 3rd defendant to Mr Tang (“the 29 September 2016 Email”). It reads:
146.The defendants relied heavily on the 29 September 2016 Email in support of their case. It was argued that the said email recorded the following matters which are fully consistent with the defendants’ case:
147.With respect, the defendants’ arguments are totally unmeritorious. 148.Firstly, as submitted by the plaintiff, none of the 4 points above remotely mentions that the plaintiff had agreed that the alleged condition precedent (the grant of the US$300 Million Loan) had to be satisfied before the plaintiff was entitled to enforce the loans under the Facility Agreement against the defendants, and the 29 September 2016 Email simply does not support the existence of the Alleged Oral Agreement. In this regard, it should be noted that the 3rd defendant admitted that he had approved the content of this email before it was sent by Ms Du. 149.Secondly, the email was apparently only an “application” made by the 3rd defendant, rather than an assertion of any contractual right as such. 150.Thirdly, if the Alleged Oral Agreement ever existed, there would have been no need for the 3rd defendant to ask for suspension of payment of interest. 151.Fourthly, the said email in fact reflects very badly on the character of both the 3rd defendant and Ms Du. Although the email seems to suggest that an agreement had already been reached with the plaintiff’s Mr Du and Mr Tang, the fact is that no such agreement had been reached – As accepted by the defendants’ counsel, the proposal contained in the said email had not been accepted by the plaintiff at the end of the day. 152.Fifthly, it is noteworthy that “earning profits out of the projects funded by the US$300 Million Loan” is simply not one of the conditions precedent for the plaintiff’s entitlement to enforce according to the defendants’ pleaded case[11]. 153.The defendants further argued that by the said email, the 3rd defendant was proposing a clean break in view of the plaintiff’s failure to grant him the remainder of the US$300 Million Loan. However, why did the 3rd defendant have to bother about repayment at all if the Alleged Oral Agreement existed? He did not need a clean break. He only needed to make it clear to the plaintiff that he and his companies were not yet obliged to make any repayment to the plaintiff at the material time. The fact that he did not make it clear is the strongest evidence to show that the Alleged Oral Agreement did not exist at all. E11. The plaintiff’s enforcement action 154.It is undisputed that the plaintiff did not take enforcement action against the defendants in 2017 and 2018. Relying on this fact, the defendants submitted that the plaintiff’s inaction in the face of the large unpaid sums strongly supports the defendants’ case on the Alleged Oral Agreement and suggests that relationship between the parties was not exhaustively governed by the terms of the Facility Agreement. 155.With respect, this argument must be rejected:
E12. Adverse inference 156.In opposition to the plaintiff’s application for summary judgment, the defendants have procured Mr Lin and Mr Wang to provide affirmations for them. 157.By an order dated 13 February 2023, Master David Chan directed that the affirmations of Mr Lin and Mr Wang might only be read at the trial on the condition that Mr Lin and Mr Wang attended court for cross-examination. 158.Consequentially, the defendants listed both Mr Lin and Mr Wang as their witnesses for the trial. 159.However, shortly before the commencement of the trial, the defendants informed the plaintiff and the Court that Mr Lin and Mr Wang had decided not to give oral evidence at the trial. 160.Upon the above background, both the plaintiff and the defendants asked the Court to draw adverse inference against the other side. 161.Without disrespect to counsel, I do not think any discussion on adverse inference is required in this Judgment, as there is sufficient evidence in the present case to allow this Court to come to a factual finding on the central issue herein. E13. Conclusion 162.For reasons of the aforesaid, I find that the Alleged Oral Agreement did not exist at all. F. ORDER 163.Judgment is therefore entered against the defendants. 164.For the avoidance of doubt, interest shall be calculated pursuant to the Facility Agreement rather than section 48 of the High Court Ordinance. G. COSTS 165.I make a costs order nisi that the defendants shall bear the costs of the action (including all costs reserved), with certificate for two counsel, to be taxed on indemnity basis[12] if not agreed. 166.The above order nisi shall become absolute in the absence of application to vary (which, if any, will be disposed of on paper) within 14 days hereof.
Ms Catrina Lam SC leading Mr Arthur Poon, instructed by Allen Overy Shearman Sterling, for the plaintiff Mr Jonathan Ng and Mr Alex Chan, instructed by Kwok Yih & Chan, for the defendants [1] Primarily adopted from the defendants’ Closing Submissions [2] Defined under Clause 1.1 thereof as “the later of the date of this Deed and the date on which the Agent confirms in writing to the Borrowers that it has received all of the documents and other evidence listed in and appearing to comply with the requirements of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent” [3] Hu Lan v David Golden [2023] HKCFI 873 at [36], Painter v Hutchison [2007] EWHC 758 (Ch) at [3] [4] See [38] above [5] Paragraph 33 of his witness statement reads: “民生銀行香港分行有關貸款承接的內部批核文件亦記載了上述的背景。文件指出我承接逾期貸款的原因是「港陸在新加坡房地產開發項目也需要銀行資金支持，基於良好的合作基礎，港陸擬在我行香港分行辦理2.6億美元融資」。這裏所指的港陸是我控制的唐山港陸鋼鐵有限公司。” [6] Appeal against the decision was allowed but on grounds which are unrelated to the quoted observations [7] This Court had given a specific direction that all witnesses who were yet to give evidence shall not enter the court room while others were giving evidence, and that witnesses were not to discuss their oral testimony with other witnesses [8] Paragraph 21 of the 3rd defendant’s witness statement [9] Paragraph 87 of the defendants’ Reply Closing Submissions [10] Paragraph 18 of the defendants’ Reply Closing Submissions [11] Paragraph 6(4) of the Re-Amended Defence reads: “Before the Plaintiff had fully provided the US$300 Million Loan to the 3rd Defendant’s property investment projects in Singapore, (i) the Defendants shall not be required to repay the debt under the Facility Agreement and (ii) the Plaintiff shall not enforce its rights under the Facility Agreement, the Guarantee and other related security. It is a condition precedent to the obligation of the Defendants to repay the debt under the Facility Agreement that the Plaintiff had fully provided the US$300 Million Loan to the 3rd Defendant (‘Condition Precedent’).” [12] Pursuant to Clause 16.3 of the 2014 Amendment Deed and Clause 8 of the Guarantee | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Further hearings and rulings under HCA 265/2020