Read the full judgment text of HCA 001822/2004 on BabelCite. This High Court CFI judgment was delivered on 17 June 2009 before Chu J.
Banking law – overdraft facility – personal guarantee – charge of receivables – assignment of receivables – default – demand for payment – civil litigation – whether defendants' counterclaim sustainable – costs follow event – gross sum costs assessment. This is an action by Shanghai Commercial Bank Limited against Jetco Freight Limited (1st defendant) for repayment of overdraft facilities, and against Chu Sui Lan Cecilia (2nd defendant) as guarantor. By a Facility Letter dated 7 April 2001, the plaintiff bank granted the 1st defendant overdraft facilities of up to HK$3 million (subsequently reduced to HK$1,652,000), secured by a first fixed and floating Charge of Receivables over the 1st defendant's accounts receivable, and by a personal guarantee from the 2nd defendant limited to HK$3 million. A further personal guarantee was executed on 31 March 2003. The 1st defendant defaulted from July 2003, failing to deposit customer payments into the designated account. The plaintiff sent notices to 21 customers informing them of the assignment of receivables, and made formal demands for payment on 27 April 2004 and 23 June 2004. The defendants filed a Defence and Counterclaim alleging the plaintiff's letters to customers caused the 1st defendant's customers to refuse dealing with the 1st defendant. The defendants' solicitors ceased acting for them in October 2008, and the defendants were absent at trial. The court held that the 1st defendant was indebted to the plaintiff in the principal sum of HK$2,546,283.50, and the 2nd defendant was liable under the two guarantees. The court held that there was no valid defence or set-off, as the defendants raised no plea of set-off, and the complaint about the letters to customers was unrelated to the subject matter of the claim. The counterclaim was dismissed as plainly unsustainable, since the Charge was registered with the Companies Registry and the plaintiff was entitled to give notice of the assignment of receivables to protect its rights. Applying the normal rule that costs follow the event, the court ordered the 1st and 2nd defendants to pay the plaintiff's costs assessed as a gross sum of HK$300,000 (reduced from HK$317,900 sought by the plaintiff due to the relatively straightforward documentation).
Legal issues: Liability of 1st defendant for overdraft facilities · Liability of 2nd defendant as guarantor · Validity of defendants' defence and set-off · Sustainability of defendants' counterclaim · Appropriate gross sum costs order
Outcome: Judgment for the plaintiff against the 1st and 2nd defendants for the principal sum of HK$2,546,283.50 together with interest of HK$2,013,623.04 up to 15 June 2009 and thereafter at judgment rate until full payment. The defendants' counterclaim is dismissed.