Bank of China (Hong Kong) Ltd v. Chan Tin Chi and Others

HCA 4215/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4215 OF 2003

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BETWEEN

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Before : Hon A Cheung J in Court

Date of Hearing : 19 July 2005

Date of Judgment: 19 July 2005

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J U D G M E N T

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1.In this trial, I am only concerned with the Plaintiff’s claim based on two guarantees against the 3^rd Defendant.

2.The Plaintiff, a bank, relies on documentary evidence that has been produced before the Court.  There is no challenge to the admissibility of the documents.  The bank also relies on the oral evidence given by two bank officers.  In relation to one, the 3^rd Defendant has had no cross-examination.  In relation to the other, there was only very brief cross-examination.

3.Having considered the evidence given by the witnesses, I have no difficulty in accepting their evidence.  Based on the evidence, there can be no doubt that the 3^rd Defendant has executed the two guarantees in question.

4.On the materials before the Court, it is plain that the principal debtor under the two guarantees, i.e. Sincerity Engineering International Limited, owes the bank monies.  In fact, judgment has been entered against the company in HCMP 4995/2003.  According to the terms of the two standard form guarantees, the 3^rd Defendant is clearly responsible for repayment of the indebtedness, subject to the limits set out in the two guarantees. 

5.I have, in my ruling given this morning, dealt with a defence originally pleaded in the defence.  I will not repeat myself here.

6.During the course of trial, the 3^rd Defendant has also dropped another pleaded defence to the effect that the second guarantee has been replaced by the first.  So that defence has also been struck out.  In a nutshell, the 3^rd Defendant is left with no positive defence in the remainder of his defence.

7.In his final submission, the 3^rd Defendant sought to raise three further points by way of defence.  First, he said that he had been misled by the bank into signing the two guarantees because the bank had not interpreted or explained to him the contents of the guarantees.  This has never been pleaded, nor is there any substance in it.

8.It is clear from the thrust of the 3^rd Defendant’s original defence that he had known very well throughout that he had executed two guarantees in favour of the bank.  A main part of his case was that he had found, as it were, a replacement guarantor to replace him and the bank had agreed to discharge him on that basis.

9.As explained in my ruling this morning, that defence has since been dropped and the relevant parts in the defence have been struck out.  But the original defence clearly shows that the 3^rd Defendant has known throughout that he has executed two guarantees in favour of the bank.  There is nothing in the point.

10.Secondly, the 3^rd Defendant said, again in final submission, that because he had offered to the bank a replacement guarantor, he should be discharged from the guarantee.

11.As I have explained in my earlier ruling, that is simply no defence.  The 3^rd Defendant’s application to amend his defence to run such a defence has been dismissed by me this morning.  The repetition of his point in final submission simply does not help.

12.Lastly, the 3^rd Defendant said that the bank ought to have used the proceeds of sale of the mortgaged property in repayment of the mortgage loan instead of using the proceeds in discharge of other loans that were outstanding.

13.I can see no significance in the point, except that it is related to whether the second time loan that I referred to in my earlier ruling has been repaid or not.  This is an unpleaded point.  I would not allow it to be run, bearing in mind in particular that it is a wholly hopeless point.

14.Counsel for the Plaintiff has shown me a copy of the mortgage deed in question which is an “all-monies” mortgage.  In other words, the mortgage of the property is a security for all moneys due and owing by the company to the bank and is not restricted to the original mortgage loan.  So the bank had every right to apply the proceeds to discharge whatever loans and moneys that were outstanding at the time of discharge.

15.Bearing all these matters in mind, I simply do not allow the point to be run at this late stage.

16.In other words, there is absolutely no defence to the claim.

17.As regards the quantum of the claim, as I say, I have no difficulty in accepting the evidence given by the relevant bank officer.  Subject to the point about the use of the proceeds of sale of the mortgaged property, the 3^rd Defendant has not challenged the evidence given by the bank officer on the figures.

18.I accept those figures.  I find that as of today, the company owes to the bank a total sum of HK$2,052,062.04, as per the calculations done by the witness, Mr Lau, and as per the updating of the figure for several days from 11 July 2005 to today’s date.

19.On top of the sum of HK$2,052,062.04, which represents the up-to-date indebtedness (together with interest), there is a sum of HK$58,000 being the legal costs and expenses that are covered by the guarantees relating to the enforcement of the guarantees.  In other words, the total judgment sum is HK$2,110,062.04.

20.In those circumstances, I give judgment for the Plaintiff against the 3^rd Defendant in the sum of HK$2,110,062.04, together with interest at the judgment rate from 20 July 2005 until full payment.

21.I also order that the costs of the action by the Plaintiff against the 3^rd Defendant be paid by the 3^rd Defendant to the Plaintiff, to be taxed if not agreed.

22.I would also record the Plaintiff’s undertaking, given through counsel, to file and serve an affidavit or affirmation to be made by a bank officer to exhibit a true copy of the mortgage deed within three days from the date hereof.

Mr John E Swaine, instructed by Rowland Chow, Chan & Co., for the Plaintiff

The 3^rd Defendant, appearing in person