Dmt Finance Ltd v. Ming Kee Investments Ltd and Another
Read the full judgment text of HCCL 11/1998 on BabelCite. This HCCL judgment was delivered on 2 June 1998.
1. By a summons dated 19 th February 1998, the Plaintiff herein, a finance company, seeks judgment against the 2 nd Defendant, the sole director and shareholder of the 1 st Defendant, a BVI company, against which judgment was entered earlier, on 26 th March 1998, in the sum of HK$3,974,841.00. This, therefore, is the judgment upon the Plaintiff's Order 14 application.
Cited by 6 cases · Cites 2 cases
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HCCL000011/1998
IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMMERCIAL LIST NO. 11 OF 1998 -----------------
----------------- Coram: Hon Mr Justice Stone in Chambers Dates of Hearing: 8 May and 1 June 1998 Date of Delivery of Judgment: 2 June 1998 ----------------- JUDGMENT ----------------- 1. By a summons dated 19th February 1998, the Plaintiff herein, a finance company, seeks judgment against the 2nd Defendant, the sole director and shareholder of the 1st Defendant, a BVI company, against which judgment was entered earlier, on 26th March 1998, in the sum of HK$3,974,841.00. This, therefore, is the judgment upon the Plaintiff's Order 14 application. The Background Facts 2. The facts are in relatively short compass. By a Facility Letter dated 19th December 1997, the Plaintiff accorded a credit facility of HK$8 million to the 1st Defendant for a term stated to be one month, subject to the Plaintiff's overriding right of repayment on demand. The Guarantor named on the face of the Facility Letter was the 2nd Defendant, who in fact signed the said letter for and on behalf of the 1st Defendant. This was to be expected because, as I have earlier observed, the 2nd Defendant was the sole director of the 1st Defendant, which I apprehend was his BVI corporate vehicle. 3. The evidence is that these monies were in fact advanced to the 1st Defendant on 23rd December 1997, consequent upon the receipt by the Plaintiff of a slew of signed documentation, including the Guarantee itself, a Margin Client's Agreement, a Customer Trading Agreement and a General Loan and Security Agreement. The advance to the 1st Defendant was itself secured by 80 million shares in one Billion International Holdings Limited, and the lending ratio is stated to be "20% on market value of securities". To cope with a diminution in the share price, the provision as to margin calls recites that:
4. The 2nd Defendant, qua Guarantor, did in fact deliver a cheque in that sum drawn by himself in favour of the Plaintiff, which cheque, when presented by the Plaintiff, was dishonoured. 5. The Plaintiff's twin causes of action are, therefore, based first, upon the Guarantee itself, dated 22nd December 1997, and second, upon the dishonoured cheque. I note further that proceeds realized by the Plaintiff upon the sale of the securities have diminished the sum presently claimed by the Plaintiff to be due and owing to the sum of HK$3,516,329.00. That, therefore, is the sum for which the Plaintiff presently wishes judgment to be entered. 6. There is, I think, no dispute about the figures themselves, which take into account the sale proceeds, and the argument in this application has proceeded upon two distinct bases. It is to these arguments that I now turn. The Defences Raised 7. Miss Linda Chan, who appears on behalf of the 1st Defendant, puts forward two main points which, she says, entitle her client to unconditional leave to defend. She will forgive me, I hope, if I characterise her attractive and cogent submissions in broad terms. She says first, that the consideration for the Guarantee is past consideration and second, that the Guarantee and the cheque for HK$4 million accompanying it was intended not as security for the sum of HK$8 million advanced to the 1st Defendant, but was intended and intended only to guarantee a new facility for securities trading which the Plaintiff had accorded to the 2nd Defendant. This securities trading facility remained unused, she said, and as such, no liability thereon accrued; in the circumstances, therefore, the Plaintiff was not entitled to invoke the terms of the Guarantee, nor to present the cheque against the 1st Defendant's undoubted liability for the principal sum advanced. In a nutshell, therefore, the Guarantee and the personal cheque had nothing to do with the outstanding HK$8 million, which sum, as I have observed, has been reduced by reason of the sale of the collateral securities. 8. During her submissions Miss Chan further drew my attention to the well-known principles relating to the correct approach of the Court to summary judgment applications, and in particular she pressed upon me the dictum of Godfrey JA in Ng Shou Chun v. Hung Chun San [1994] 1 HKC 155; wherein the learned Judge observed:
9. The 2nd Defendant's assertions in this regard are believable, said Miss Chan, and accordingly unconditional leave should be granted. She did not accept that conditional leave was appropriate in this case, but if and in so far as it might be ordered, she informed me, on instructions obtained at the end of the hearing, that her client was in a position to deposit HK$2 million into Court within a period of 21 days. 10. Be that as it may. Whilst naturally I accept the dictum of Godfrey JA in Ng Shou Chun, op cit, and also the equally well known observations of the Court of Appeal on the same subject in Man Earn Limited v. Wing Ting Fong [1996] 1 HKC 225, the dichotomy between "believable" and "to be believed" does not, in my view, constitute a licence to suspend disbelief when, for example, sworn assertions are tested against contrary sworn assertions, which themselves are backed by what appears to be unassailable contemporary documentation. With these preliminary observations, I turn to address the immediate arguments. 11. Miss Chan's past consideration thesis is based upon the 2nd Defendant's assertion that the Facility Letter was signed on 19th December, and not on 22nd or 23rd December 1997, which the contemporary evidence indicates in fact must have been the case. The HK$8 million advanced was not advanced until 23rd December, when the Plaintiff received all the relevant signed documentation from the 2nd Defendant, and it seems clear beyond peradventure on the face of the documents that the Facility Letter had remained in draft on 20th December, notwithstanding the date of 19th December which it bears on its face. Accordingly, I am not prepared to suspend disbelief in the face of what seems to be clear and strong evidence as to the date of execution of the Facility Letter and the date of the advance of the monies, pursuant to the execution of that document together with the other required documentation. 12. However, if I be wrong about this, I am not prepared to accept that the terms of the Guarantee itself affords the mounting of a valid past consideration argument. As Mr Hart, for the Plaintiff, pointed out, not only does that document specifically referred to "continuing" credit, but in any event on the evidence, the Plaintiff forebore to withdraw the credit facility granted to the 1st Defendant, as it was at all times entitled to do. So in my judgment this point fails, both upon the facts and upon the wording of the Guarantee. 13. Turning now to the second string to Miss Chan's bow, she asserts a triable issue on the fundamental purpose of the Guarantee and the cheque, an issue which she says is believable in terms of the establishment (albeit unused) of the securities trading facility. 14. Mr Hart responds by pointing to the objective facts. To say that the cheque and the personal guarantee have nothing to do with the HK$8 million advanced is simply unrealistic, commercially and factually, he maintained. The cheque is expressly stated to be part and parcel of the margin facility, and is an integral part of the 20% lending ratio, and to assert that the cheque, after being specifically referred to in the Facility Letter, was deposited for some unspecified margin trading which might never (and indeed did not) occur, was risible, and flew in the face of the objective evidence. In fact, said Mr Hart, the Plaintiff had had the luxury of three different categories of security against the monies advanced : first, the personal guarantee; second, the HK$4 million personal cheque and third, the completion of the standard form documentation, and absent execution and compliance with all three such categories, the credit line simply would not have been advanced. Moreover, he referred me to the particular terms of the signed Customer Trading Agreement, the content of which negated any argument to the effect that the cheque had been conditionally delivered, in that it had been agreed therein by the 2nd Defendant on behalf of the 1st Defendant that any collateral held by the Plaintiff could be utilized without restraint by the Plaintiff. So that it was not open to the 2nd Defendant to maintain, as he now did, that having delivered the cheque, it could not be encashed. 15. Nor was Mr Hart impressed with Miss Chan's reliance on section 27(1)(b) of the Bills of Exchange Ordinance. Cap. 19, in terms of the assertion that there was no consideration for the cheque. Even if (which he did not accept) the words "antecedent debt or liability" were to be restrictively construed, in any event here there was a clear and obvious relationship linking the receipt of the 2nd Defendant's personal cheque to the antecedent debt or liability of the 3rd party company, the 1st Defendant, and in this context he relied on the words of Evershed, MR which were quoted with approval in the recent Court of Appeal case of Fortune Focus International Limited v. The (Holdings) Company Limited (unreported) CA 230/97. 16. In my judgment, Mr Hart is correct on all counts, notwithstanding Miss Chan's valiant efforts on what was, with respect, a testing and difficult brief. Order 17. After reviewing all the evidence before me, to the broad outlines of which I have but briefly alluded, I have come to the view that this is a case which meets the well-known requirements of Order 14 applications. I briefly considered the issue of conditional leave, but at the end of the day I formed the view that such a course would not be analytically justified. 18. It follows, therefore, that the Plaintiff herein is to have judgment against the 2nd Defendant in the claimed sum of HK$3,516,329.00. I will now hear the parties upon the consequential issues of interest and costs. [Submissions from the parties] 19. I have now heard from the parties on these twin issues. 20. As to interest, Mr Hart points out that there is a 3 ½ week gap between 8th May, which is the date as at which the figure of HK$3,516,329.00 was calculated, and today's judgment date. However, since that figure itself contains an element of interest, and since I am disinclined in principle to award interest on interest, I am not minded to make any further award of interest with reference to that 3 ½ week lacuna. It does follow, however, that the judgment sum of HK$3,516,329.00 will attract interest at the judgment rate from time to time prevailing, until payment, and I so order. 21. As to the question of costs, Mr Hart refers me to a number of cases where this particular Plaintiff has brought proceedings against various debtors, and he reminds me of the fact that the contractual documentation which is employed by this Plaintiff always refers to indemnity costs. As I have made clear in previous cases, this is not a matter which necessarily attracts judicial empathy, but that, perhaps, is not to the point; if the parties have truly entered into a contractual obligation, then the Court will take note of that obligation, notwithstanding its own view of the appropriateness thereof. In response, Miss Chan stoutly asked that the costs of and occasioned by these proceedings be on the usual party and party basis. I am in broad sympathy with that submission, but in the circumstances feel that I have to decline it in favour of the contractual obligations which her client has assumed. 22. Accordingly, the Plaintiff will have judgment in the sum stated, namely HK$3,516,329.00, with interest thereon at the judgment rate from time to time prevailing until payment, together with the costs of and occasioned by this action (including, for the avoidance of doubt, the costs reserved by this Court at the adjourned hearing on 8th May) upon an indemnity basis, to be taxed if not agreed. 23. It remains only to thank both counsel for their considerable assistance in the submissions that they have provided to the Court.
Representation: Mr Andrew Hart of M/s Stephenson, Harwood & Lo, for the Plaintiff Miss Linda C.F. Chan, inst'd by M/s Lau, Pau & Co., for the 2nd Defendant |
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