Waygood Investment Ltd. v. Rich Concord Investment Ltd. and Another

HCA005986/2000

HCA5986/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.5986 OF 2000

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Coram: Hon Waung J in Chambers

Date of Hearing: 2 February 2001

Date of Judgment: 2 February 2001

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J U D G M E N T

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1. This is an appeal by the plaintiff from the order of the master whereby the master granted unconditional leave to the defendants to defend.

2. The claim of the plaintiff against the defendants arose out of a loan of some US$10,000,000 which was made to the 1st defendant and guaranteed by the 2nd defendant. It is agreed and not in dispute that something over US$11,000,000 has been repaid in total by the defendants to the plaintiff. The plaintiff however claims in the summary judgment application that some $3 million odd was still outstanding pursuant to the Loan Agreement and that there should be summary judgment against the defendants for this outstanding sum.

3. A number of defences have been raised by the defendants but, I think for the purposes of today, I need to concentrate only on the primary defence that there was a representation made before the loan by the plaintiff's agent to the defendants to the effect that the cost of fund of the US dollars to the plaintiff was 12%. It is said that this representation was obviously untrue and that therefore, no summary judgment should be given because the likelihood is that the total figure that would be found to be owing by the defendants to the plaintiff at the end of the trial would be something totally different from what is now claimed by the plaintiff.

4. The allegation of misrepresentation was not even contested on affidavit by the plaintiff. The man who was alleged to have made the representation seems to have left the employment of the plaintiff. This misrepresentation, it seems to me is inherently probable and, in the surrounding circumstances, was likely to have been made. So there is substance in that allegation. The question, therefore, to be on the hearing of this appeal is what should we do with this defence.

5. Mr Chain, in his usual ability, has tried to persuade this court that even if no firm figure can be found for what is likely to be owing by the defendants to the plaintiff on the assumption that there was such a misrepresentation, nevertheless, if no summary judgment can be given, at least conditional leave to defend should be ordered. He has suggested a figure of US$1,000,000, calculated on the basis that that is likely to be even on an 8% basis to be his balance of recovery.

6. It seems to me that this is a wrong approach. If the misrepresentation is a good defence and the court is unable to say at this moment what would be the result of the misrepresentation and the result could be that it would affect different provisions in the agreement, then the court ought to grant leave to defend unconditionally in the usual way. I therefore come to the conclusion that there is nothing shadowy about the defence and that unconditional leave to defend should be given.

7. The appeal of the plaintiff is therefore dismissed with costs.

Representation:

Mr Benjamin Chain, instructed by Messrs Siao Wen & Leung, for the Plaintiff

Mr Lee Hing Nin, Clement, instructed by Messrs Fong & Ng, for the 1st and 2nd Defendants