Lloyds Bank International Ltd and Another v. Victor Folch Vernet and Others

HCA009151A/1982

BETWEEN

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Coram: Hon. Liu J. (In Chambers)

Date: 29th April, 1983.

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D E C I S I O N

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1. Zamanta Investments Limited has obtained facilities up to $100,000,000 to finance its acquisition of the land, namely 19-23, Ventris Road, Hong Kong, and a similar amount is expected to be lent by way of advance for construction cost. Zamanta Investments Limited is owned, as to 20%, by Mr. Kenny Hioe and as to 80% by World Landmark Development Company Limited. World Landmark Development Company Limited is in turn owned, as to 30%, by Mr. Anthony Lo and 70% by Great Eagle Company Limited. In substance, the development or re-development venture in Ventris Road is backed as to 20% by Mr Hioe, 24% by Mr. Anthony Lo and 56% by Great Eagle Company Limited.

2. A Mareva injunction was granted in this action against, inter alia, the 7th defendant who is Mr. Anthony Lo on the 30th March 1983.

3. Under the joint venture for the re-development of 19-23, Ventris Road, periodical payments have to be made. I am told that before the granting of the Mareva injunction order on the 30th March 1983, some three payments had been effected: On the 28th December 1982 in the sum of $680,664.38, on the 28th February 1983 another $546,958.90, and just five days before the Mareva injunction on the 25th March 1983, $23,835.62. Mr. Bokhary on behalf of Mr. Anthony Lo informed the court that those payments were effected on the advice of Mr. Chang with money advanced by Great Eagle Company Limited for itself and also on behalf of Anthony Lo who in effect guaranteed Mr. Kenny Hioe's share.

4. I should mention that under the joint venture, for the repayments and also for the loans, Great Eagle Company Limited guaranteed to the extent of its investment and Mr. Anthony Lo guaranteed repayment to the extent of his involvement of 24% and also the 20% of Mr. Kenny Hioe's. Mr. Kenny Hioe himself gave an indemnity to Mr. Anthony Lo as to his 20% out of this 44% guaranteed by Mr. Lo.

5. Dispute has arisen between Mr. Hioe and Mr. Lo, and the upshot of all this is that Mr. Hioe has declined to pay his 20%. The court is also told that Zamanta Investments Limited is not in the position to pay the amount due today; nor is the World Landmark Development Company Limited able to meet the amount falling due today. The liability for payment falls or will fall on the guarantors. Great Eagle, I am told, is concerned to see that the development would not be affected by default. With the dispute between Mr. Hioe and Mr. Anthony Lo and with Mr. Hioe refusing to meet any further payment and with Mr. Lo not being himself in the position to meet the payment falling due today it is proposed that Great Eagle is to lend a sum representing 44% of the amount falling due today to Mr. Lo for meeting his share as guarantor of the amount due. The desire of as well Great Eagle Company Limited as Mr. Lo to meet the amount falling due today under the development joint venture is indicative that the project is still being considered as viable. I have been reminded by Mr. Bokhary that Mr. Lo has, on affirmation, said that income was to be expected from the development joint venture in 1985.

6. The application was made yesterday evening, and quite properly and understandably, counsel for the plaintiffs in these proceedings would like to have time to reflect on the matters and to take instructions. Time was nevertheless short, and opposition raised by Mr. Ching this morning does not seen to have much substance. However, Mr. Ching contended that the application was made on, as it were, the eleventh hour leaving the plaintiffs no time to have matter properly investigated and that if there were to be people prejudiced, it should be the 7th defendant and Great Eagle Company Limited rather than the plaintiffs in the present action. As the situation now stands, the proposed loan to Mr. Anthony Lo to meet his 44% commitment is a manoeuvre to preserve assets rather than to destroy it. If counsel is right and information correct, and I have no reason to believe, as presently advised, that they are not, the proposed manoeuvre would bring benefit to as well Mr. Anthony Lo as the plaintiffs in this action.

7. Mr. Ching further argued that there was no evidence of Zamanta Investments Limited or World Landmark Development Company Limited being unable to meet their obligations. A statement has been made by counsel, and I see no reason why on an urgent application, a statement from counsel should not be accepted. And if indeed the statement made on behalf of Mr. Lo and Great Eagle Company Limited should turn out to be inaccurate or misleading, there are proper remedies for having matters rectified. Mr. Ching further suggested that it was unclear whether a demand needed be made on Mr. Anthony Lo as a guarantor before liability accrued. It was submitted on behalf of the plaintiffs if Mr. Anthony Lo was to meet the commitments gratuitously, complication could be caused to the plaintiffs in bankruptcy proceedings. In reply, Mr. Chang submitted that any guarantor would have a general right to step in before default, and Mr. Chang must be, in my view, right as far as the general law is concerned particularly when the guarantor is himself otherwise interested.

8. This is an urgent application in which I can find no real substance in the resistence of the plaintiffs to the application of Mr. Anthony Lo in conjunction with that made by Great Eagle Company Limited. However, in acceding to the application, I propose to add certain amendments to the proposed draft order submitted by Mr. Chang and the order I propose to make is as follows: (Proposed order read).

Representation:

Mr. Charles Ching, Q.C. with Mr. Ronny Wong and Mr. Allman Brown instructed by Deacons for Plaintiffs.

Mr. Bokhary, Q.C. with Mr. Adrian Huggins instructed by Messrs. Slaughter & May for 7th Defendant/Applicant.

Mr. Denis Chang, Q.C. with Mr. Philip Lee instructed by Messrs. Kao, Lee & Yip for Zamanta Company Limited.