Bank of China (Hong Kong) Ltd v. Ever Peace International Ltd and Others

HCMP 24 / 2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 24 OF 2008

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Coram: Before Deputy High Court Judge Au in Chambers

Dates of Hearing: 2 July & 4 September 2009

Date of Handing Down Judgment: 10 November 2009

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J U D G M E N T

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A.  Introduction 

1. By a charge (“the Charge”) dated 30 November 1994, Ever Peace (the 1^st Defendant) charged the property (“the Property”) known as 13/F, Tim Po Court, Phase II, No. 43 Caine Road, to Kwantung Provincial Bank[1] (“the Bank”) to secure an instalment loan (“the Company’s Loan”) of HK$2,700,000.   The Company’s Loan was provided to Ever Peace under a facility letter (“the Facility Letter”) dated 3 November 1994.

2. The Facility Letter provided that the Company’s Loan was to be repaid over 260 monthly instalments of HK$26,956.26 each, at an interest rate of 10.5% per annum.  The Bank however has a contractual right to change the interest rate. 

3. The 2^nd Defendant (“Mr Chiang”) and the 3^rd Defendant (“Ms Tai”) executed a deed of guarantee (“the Guarantee”) also dated 30 November 1994 to guarantee Ever Peace’s repayment of any sums owed to the Bank.  The Guarantee is limited to HK$2,700,000 together with interest accrued thereon.

4. The Bank says Ever Peace has since 30 August 2004 failed to make any repayment under the Company’s Loan.  As at 4 September 2009, it is the Bank’s case that total sum due and payable by the Defendants is HK$2,904,366.44, which includes the outstanding principal of HK$1,906,808.85, and the interest (both normal[2] and default) chargeable on the outstanding principal[3]. 

5. By way of the present Originating Summons, the Bank now seeks to enforce the Charge and the Guarantee for:

(1)  Payment of the sum still due and payable (including interest) under the Company’s Loan by Ever Peace (under the Charge), Mr Chiang and Ms Tai (under the Guarantee).

(2)  Vacant possession of the Property.

(3)  Costs.

6. The Defendants do not dispute that Ever Peace has failed to make any repayments under the Company’s Loan since 30 August 2004.  They however defend the claim principally on the basis that the Bank has not showed and proved what is actual amount due (if any) under the Company’s Loan.  They in fact say if the sum can be correctly ascertained and proved, they are ready and willing to pay that amount.

7. Briefly said, the defence (as advanced in the hearing) can be summarized as follows:

(1)  It is common ground that since January 2001, repayments under the Company’s Loan had been made through Mr Chiang’s bank account (“D2’s account”) maintained with the Bank.

(2)  It is also not disputed that Mr Chiang had between January 2001 and October 2005 deposited a total of HK$1,378,690 (“the Deposited Fund”) into D2’s account.

(3)  However, according to the Defendants’ case, the Deposited Fund was earmarked only for the instalment repayments of the Company’s Loan and that was made known to and agreed by the Bank.  

(4)  At that same time, it is uncontroversial that:

(a)  The Bank had been deducting the Deposited Fund for repayments of both D2’s personal loan (in the amount of about HK$593,000) granted by the Bank, as well as the Company’s Loan.

(b) As a result, upon the exhaustion of the Deposited Fund, and no more repayment could be made under the Company’s Loan.  The Bank then started to charge default interest on the outstanding balance of the Company’s Loan.

(5)  As such, the Defendants say the sum now alleged to be outstanding and payable under the Company’s Loan cannot be correct for the following two reasons:

(a)  The Defendants contend that if the Bank had, as agreed, deducted the Deposited Fund only for the repayment of the Company’s Loan, it would have been sufficient to meet the instalment payments until at least late 2006.  There would have been no default under the Company’s Loan on 30 August 2004, and the Bank would not have been entitled to charge default interest since then.  The outstanding balance, if any, under the Company’s Loan would have also been much reduced.

(b) Further, the Defendants say the Bank was in breach of either an express or an implied term under the Facility Letter in failing to provide regular information by way of bank statements to Ever Peace to enable it to (i) know in advance any changing interest rate chargeable under the Company’s Loan, and (i) ascertain and calculate the correct instalment payment and outstanding sum under the Company’s Loan at any one time.  As a result, until the exact outstanding sum is made known, Ever Peace is entitled to withhold any repayment, and by reason of the prevention principle, the Bank is not entitled to charge any default interest on the outstanding sum. 

8. Given the above, the principal issues arising are thus:

(1)  Whether the Bank was aware of and had agreed or consented to deducting the Deposited Fund solely for the repayments of the Company’s Loan.

(2)  Whether there is an express or implied term under the Facility Letter for the Bank to provide regular statements to Ever Peace whenever there was a change of interest rate and to enable it to ascertain the exact outstanding amount at any one time.

(3)  If so, whether the Bank was in breach of the express or implied term, and thus under the prevent principle, it was not entitled to charge default interest as it had sought to do.

(4)  Whether the Bank has proved the outstanding sum under the Company’s Loan as it now claims.

9. By consent, both parties agreed to proceed with the Originating Summons for summary determination under O. 28 of the Rules of the High Court (Cap 4). 

B.  The applicable principles and approach

10. The principles for summary determination under an Originating Summons are trite and are akin to the principles applicable under O. 14, save that unlike an O. 14 application, the plaintiff must first justify its entitlement to summary judgment.  But once the plaintiff has demonstrated a prima facie case on the evidence, the burden falls on the defendant to show that he has a triable defence to the claim, which is worthy of belief or not frivolous:  Hong Kong White Book 2010, paras 28/4/1, 14/4/8 – 14/4/12.

11. In the present case, there is no dispute that Ever Peace has been in default repaying fully the Company’s Loan, and that Mr Chiang and Ms Tai have similarly not made any repayments under the Guarantee when called upon to do so.  The Bank has also shown by way of affirmation evidence the prima facie outstanding amount under the Company’s Loan. 

12. The Defendants seek to challenge correctness of these calculations only by reasons of the various allegations made in their defences.  In the premises, I am satisfied that the Bank has shown a prima facie case, and would proceed below to determine whether there are any triable issues raised under these allegations.

C.  The issues

C1.    Whether it was agreed that the Deposited Fund was to be solely used for the purpose of repayment of the Company’s Loan

C1.1  The contentions

13. Under this issue, it is unchallenged evidence that:

(1)  On 13 May 1999, the Bank granted to Mr Chiang a personal loan (“the Old Personal Loan”) in the sum of HK$1,000,000.

(2)  Since early 2000, Ever Peace and Mr Chiang began respectively to default on the repayment of the Company’s Loan and the Old Personal Loan.

(3)  From January 2001, it was agreed that the Bank would start to deduct repayments of the Company’s Loan from D2’s Account.

(4)  In August 2001, the Bank granted Mr Chiang a new personal loan (“the New Personal Loan”) to restructure the outstanding balance under the Old Personal Loan.

(5)  Since August 2001, the Bank had been deducting funds from D2’s Account for repaying the New Personal Loan and the Company’s Loan.

(6)  The New Personal Loan was under the record fully repaid on 16 July 2005.

14. However, it is now the Defendants’ case that Mr Tin of the Bank had knowledge of and agreed to the arrangement between D1 and D2 that the Deposited Fund was ear-marked for the repayment of the Company’s Loan only, and that without their knowledge, the Bank had been deducting the funds for repayment of the New Personal Loan as well.  In other words, Defendants say it was wrongful for the Bank to deduct the Deposited Fund for repaying the New Personal Loan, as a result of which, the Deposited Fund was exhausted much earlier than expected by D1 and D2 for the purpose of meeting the Company’s Loan instalments.

15. The Bank through Mr Tin’s affirmations denies that it had any knowledge of or agreed to the alleged arrangement that the Deposited Fund was earmarked solely for the repayment of the Company’s Loan.

C1.2  Discussion

16. The evidence relied on by the Defendants to support the case that the Bank had agreed to deduce the Deposited Fund solely for the repayment of the Company’s Loan is as follows:

(1) At paragraph 2 of his 2^nd Affidavit, Mr Chiang says as follows:

“2.    As far as I know, [Ever Peace] had at all time been making the instalment repayments in respect of the mortgage loan secured by a mortgage of [the Property].  I made an arrangement with [Ever Peace] in or about September, 2001 that I would deposit money into [D2’s Account] maintained with the Bank, the predecessor of  [Bank of China], through which money would be transferred to make the relevant instalment repayments under the [Charge].  This arrangement was agreed by the Plaintiff and instalment repayments had been made from money transferred from [D2’s Account] since October 2001.”

(2) At paragraphs 4-13 of his 3^rd Affidavit, Mr Chiang further says:

“4.     I refer to paragraphs 6 to 8 of Mr Tin's affirmation at which he mentioned about the events leading up to the granting of the New Personal Loan to me.  I also refer to paragraph 14 of Mr. Tin's affirmation at which he speculated that it was inconceivable that I would have no knowledge that the sums deposited into [D2’s Account] was partly applied to repay the New Personal Loan.

5.     I disagree with the above, and especially with any suggestion by the Plaintiff that Mr. Too or I had previously adduced evidence which was misleading to the Court.

6.     I have never attempted to hide the fact that I obtained a personal loan of about HK$300,000 from the Plaintiff.  In fact, I already alluded to that fact at paragraph 14 of my first affidavit.

7.     I must stress that I do not agree with the figure stated in the 2001 Facility Letter in the sum of HK$593,000 for the New Personal Loan… The Court will note that the 2001 Facility Letter was signed by me on 13th August 2001 for the sum of HK$800,000 and a Notice of Drawing in the sum of HK$593,000 was also executed on the same date.  The background to the foregoing is as follows.

8.     As stated at paragraph 4 of my second affidavit, the Plaintiff through Mr. Tin told me that since the merger of the Plaintiff in about 2000 they had lost some of the records of my account which they could no longer locate or retrieve.  This loss of records applied to both the [Company’s Loan] and my personal loan.

9.     As a result, at the time of the restructuring of my personal loan, there was no agreement as to the extent that was outstanding and even until now there is no breakdown of how the sum of HK$593,000 was arrived at.

10.   Due to the fact that there was an uncertainty with the extent of the New Personal Loan, it was the understanding of myself and Mr. Too that any sums deposited into [D2’ Account] was to be used exclusively for repayment of the [Company’s Loan] only and any repayment on the New Personal Loan was only to commence after an ascertainment of the true amount owed.  The foregoing also explains why Mr. Too and I in our previous evidence had all treated the deposits into [D2’s Account] as being earmarked for repayment of the [Company’s Loan] only.

11.   …

12.   It therefore came as a surprise to Mr. Too and I that the sums deposited were used partially to repay completely the New Personal Loan.  That could not have been what was agreed between the parties as it was a distinct objective on my part to prevent the guarantee provided by the 3^rd Defendant be called upon.

13.   The calculations set out in Mr. Tin's affirmation assumes not only the correctness and the validity of the New Personal Loan but also the sums deposited into [D2’s Account] could be used to repay an unascertained amount.  For reasons deposed to above, the extent of outstanding sums due under the [Company’s Loan] would be very different from that set out at paragraph 24 of Mr. Tin's affirmation (adopting the interest and overdue interest calculated in Mr. Lam's affirmation) had the my deposits to [D2’s Account] been used exclusively for repayment thereof.

14.   Despite the fact that both Mr. Too and I have repeatedly stated our intention to repay what is truly outstanding, the information provided by the Plaintiff even now does not provide a clear picture and in my view it would be totally wrong and unfair if the Court were to make an order in terms of the Plaintiff's application.” (emphasis added)

17. From the above, it can be seen that the Defendants’ case that the Deposited Fund was agreed to be solely used for repayment of the Company’s Fund rests fundamentally on the allegation that because of the loss of the relevant bank records caused by the merger of the Bank with BOC in 2000, the Bank was unable to ascertain what was the then outstanding balance under the Old Personal Loan (which had been restructured to be the loan under the New Personal Loan).  As a result, the parties agreed (as now alleged by Mr Chiang) to withhold any repayment under the New Personal Loan from D2’s Account, and the funds in that account would therefore be used only for the repayment of the Company’s Loan, until the exact amount of the New Personal Loan could be ascertained.

18. I have reminded myself that this is a summary application, with only the affirmation evidence before me, and the Court should not conduct a mini-trial on affirmations.  Notwithstanding this, I find the Defendants’ evidence not worthy of belief even on a summary procedure.  My reasons are as follows.

19. First, the Defendants’ case is directly contradicted by the contemporaneous documentary evidence:

(1)  There was a drawdown notice dated 13 August 2001 signed by Mr Chiang, (a) confirming expressly and without any qualification that the amount of the loan to be drawn under the New Personal Loan was HK$593,000, and (b) authorizing the Bank to use this sum to repay the outstanding balance under the Old Personal Loan.  This is consistent with the restructuring exercise that (which is common ground between the parties), the loan to be drawn under the New Personal Loan was used only to repay the Old Personal Loan.  This document is flatly inconsistent with the Defendants’ case that, due to the alleged loss of banking records, the parties were unable at time of the grant of the New Personal Loan to ascertain the exact amount of the outstanding balance under the Old Personal Loan.

(2)  The following 2 contemporaneous documents also show that Mr Chiang had clear knowledge and had authorized that funds in his bank account would be used for the repayment of the New Personal Loan:

(a)  By a document entitled “Notice of Loan Account Repayment” dated 20 August 2001 sent to Mr Chiang, the Bank expressly stated that the repayments of New Personal Loan would be deducted from D2’s Account. 

(b) By a letter of authorization dated 12 September 2001, Mr Chiang expressly authorized the Bank to deduct money from D2’s Account for the repayments of (i) the New Personal Loan, and (ii) the interest on the Company’s Loan. 

20. Secondly, the allegation that the parties agreed to withhold repayments under the New Personal Loan because the Bank was unable to ascertain the exact outstanding balance under the Old Personal Loan, is also clearly incredible:

(1)  It is beyond any commercial common sense that, if the amount outstanding under the Old Personal Loan were unascertainable (as alleged by Mr Chiang), the Bank would have agreed to restructure it, and granted a new loan, and then to withhold any repayments under the new loan.  The obvious thing to do would have been to withhold repayments under the old loan. 

(2)  The Defendants have not provided any explanation as to why Mr Chiang was contended to accept the Bank to come up with a sum of HK$593,000 (which is an odd figure) to be set out in the drawdown notice.

21. Given the above observations, Mr Yin, for the Defendants, seek to further argue[4] that:

(1) Mr Chiang did not have any actual or ostensible authority from Ever Peace to sign the authorization letter authorizing the Bank to deduct from D2’s Account for repayment of the New Personal Loan.  This is so (as submitted by Mr Yin) since insofar as the Deposited Fund is concerned, Mr Chiang was only acting as an agent of Ever Peace, and he could not have acted in a way to the detriment of his principal (Ever Peace) in agreeing to use the money for repayment of his own debt: Bowstead & Reynolds on Agency (8^th ed), para 3-008.

(2)  The Bank was aware of this agency relationship between Mr Chiang and Ever Peace, and without knowing that there was any actual authority from Ever Peace to do so, it should have known that the authorization letter was of no effect and could not bind Ever Peace.

(3)  As a result, the Bank was wrongful in deducting from D2’s Account for repayments of the New Personal Loan.

22. With respect, I reject Mr Yin’s submissions.   There is nothing in the evidence which shows that the Defendants’ contention is even triable:

(1) Mr Chiang was the account holder of D2’s Account.  There is no evidence to remotely show that he was holding or maintaining the account on behalf of or on trust for Ever Peace or otherwise as its agent.  In fact, as rightly pointed out by Ms Tong (for the Bank), Mr Chiang throughout in his affidavits refers to this account as “my account”.

(2)  It is Mr Chiang’s own evidence that the Deposited Fund belonged to him, as he says it was he who had paid the Deposited Fund[5].

(3)  In the circumstances, in obtaining the letter of authorization from Mr Chiang, there was no legal obligation on the Bank to take instructions or seek authorization from anyone other than him in relation to the application of funds in D2’s Account.  There was also nothing to put the Bank on inquiry as to the need to seek any otherwise authorization (as now alleged by the Defendants).

23. For the above reasons, I do not think the Defendants have raised through the evidence before me a triable issue that the Bank had consented or agreed to the arrangement that the Deposited Fund was to be solely used for the repayment of the Company’s Loan.   There is therefore also no triable issue that the Bank was wrongful in deducting the Deposited Fund for the repayments of the New Personal Loan.

C2.    Whether there is an express or implied term under the Facility Letter for the Bank to provide regular statements to Ever Peace on change of interest rate, and if so, whether the Bank was in breach of these provisions

C2.1  The contentions

24. Under clause XI(2) of the Facility Letter, the Bank was entitled to change the interest rate chargeable on the Company’s Loan at its discretion.  It had in fact changed the interest rate a number of times over the years. 

25. As such, Mr Yin for the Defendants submits that:

(1)  Although the Facility Letter provided initially what the interest rate and the monthly repayment amount were, the instalment repayment amount would change whenever there was a change of interest rate.

(2)  Thus, in order to enable Ever Peace to be in at least in a position to ascertain what the exact amount of the instalment payment was whenever after there was an interest rate change, whether by reason of any express term or implied term (as a matter of necessity and/or obvious implication), the Bank must also be under a duty to supply Ever Peace notifications or bank statements to show such a change.

(3)  However, in breach of the express or implied term, the Bank had failed to provide any such notification or bank statements whether voluntarily or upon repeated requests by the Defendants. 

(4)  In the premises, by reason of the “prevention principle”, the Bank was not entitled to (a) charge any default interest even after Ever Peace has failed to make repayment, and/or (b) invoke the right to enforce the security granted by the Charge.  For the present purpose, the prevention principle can be briefly put as a legal proposition that a contractual party could not benefit from his own wrong, and thus is not entitled to take advantage of or to benefit from the provisions under a contract, where the enforcement of which is linked to his wrong^[6].

26. In relation to this argument, the Bank’s case is that:

(1)  There are express provisions in the Facility Letter which require the Bank to provide such notification on change of interest rate to Ever Peace.  There is thus no room to imply any term into the Facility Letter for that purpose.

(2)  The Bank has complied with the express provisions, and supplied Ever Peace such notices whenever there was a change of the interest rate.

(3)  The Bank has therefore committed no breach of the Facility Letter, and there is thus no question of the operation of the prevention principle.

C2.2  Discussion

27. Clauses VI(2) and XI(2) of the Facility Letter provide as follows:

“VI. REPAYMENT:

(2) The Instalment Loan shall be repaid by such number of equal consecutive monthly instalments and in such amount per instalment as hereinbefore stated with the first repayment commencing one month after the date of first advance.  Any change in the interest rate may result in a variation of the amount or number of monthly instalments at our sole discretion and we will notify you subsequently.

…

XI.   INTEREST RATE:

(2)    Interest rates described herein are subject to change at our sole discretion in accordance with any change in market and credit conditions.  Any such change in rates will be notified to you subsequently.”

28. It is clear from these clauses that the Bank is contractually obliged to provide to Ever Peace notification of any change of the interest rate chargeable on the Company’s Loan.

29. Given these clauses, there is therefore no legal basis to imply any further term to the Facility Letter to require the Bank to provide statements or notices to Ever Peace on interest rate change so as to enable it to be in a position to ascertain the exact amount of the instalment payment after the change of interest rate.

30. This takes me to the next question as to whether the Bank has complied with these express provisions[7].

31. In relation to this, I have also come to the clear view that there is no triable issue raised that the Bank has not complied with the obligation to provide such notices to Ever Peace.  My reasons are as follows.

32. It is the Bank’s evidence^[8] that it had at the material times operated an automated system to generate such notices on change of interest rate to be sent to its customers, including Ever Peace.   The notice would inform the customer (a) the current (old) applicable interest rate, (b) the revised new interest rate, (c) the effective date of application of the new interest rate, and (d) the amount of the next and each of the remaining monthly instalment repayments after the change of interest rate.

33. Although the Bank has not kept any copies of these notices which had been sent to its the customers, including Ever Peace, (in my view understandably so given the obvious huge volume of these notices), it has exhibited a copy of one such notice sent to Ever Peace and dated 3 February 2004.  The copy of this notice was in fact provided by the Defendants to the Bank, which shows beyond doubt that Ever Peace had received it.

34. The February notice therefore supports the Bank’s case on the automated system and that Ever Peace had received these notices. 

35. Moreover, the Bank’s case is consistent with the objective and unchallenged evidence that Ever Peace had deposited the exact but different amount of the instalment repayment for the 24^th, 31^st and 32^nd instalments respectively in the sums of HK$26,624.15, HK$24,540.19 and HK$24,540.19, which shows that Ever Peace must have been aware of the exact amount of instalments due and payable at the time, and the changes in the instalment amount due to a change in interest rates.

36. In response to the above evidence, Mr Too of Ever Peace in his latest affirmation says (a) although Ever Peace had received such notices before 2000, it had never received any of the notices said to have been generated by the automated system after 2000, and (b) the February notice was not sent by the Bank voluntarily under the alleged automated system, but was only provided to Ever Peace upon its repeated demands from for historical statements, which is long after February 2004.

37. In my judgment, the Defendants’ case is nothing but a bare allegation, which is not worthy of belief.  It is inconsistent and contradictory to the objective and documentary evidence:

(1)  The February notice is simply not a historical account statement said to have been provided to Ever Peace only after Ever Peace had repeatedly demanded one.  The February notice provides no historical information of the account, but only the information as to the change of interest rate, and the amount of the instalments payable following the change. 

(2)  The February notice was issued on 3 February 2004, giving notice that the interest rate had increased from 8% to 8.25%, which was the day immediately after the change in prime rate from 7.75% to 8% which took effect on the day before.  This also shows clearly that the notice was generated and sent to Ever Peace as a result of change of interest rate but not in response Ever Peace’s repeated requests for historical information of the account.

(3)  The Defendants in fact acknowledge that Ever Peace had received these notices prior to 2000, although they now allege that Ever Peace did not receive any after 2000.   This is simply incredible given that there is nothing in the evidence which would remotely show that there was any change in the circumstances or the correspondence address of Ever Peace which would have resulted in a complete cessation of the receipt of these notices by Ever Peace. 

(4)  Further, if the Defendants had never received any of the notices of changes on the interest rate and instalment amounts after 2000, the obvious and natural thing that it would and should have done was to keep making monthly payment in the amount as set out in the last notice it had received before 2000.  But this it had not done so, and Ever Peace was repeatedly in default in repayment since January 2000.  

38. For these reasons:

(1)  I am also satisfied that there is no triable defence raised by the Defendants concerning the Bank’s compliance of clauses VI(2) and XI(2) of the Facility Letter.

(2)  There is thus no question of the application of the prevention principle.  The Bank is entitled to charge default interest rate as it has sought to do, and to seek to enforce the Charge upon Ever Peace’s default in repayment.

C3.    Whether the Bank has proved the outstanding sum under the Company’s Loans as it seeks to claim

39. As I mentioned above, the Bank claims against Defendants for HK$2,904,366.44, which includes interest up to 4 September 2009.  

40. The Bank has filed through the supporting affirmations extensive schedules and historical statement of the accounts under the Company’s Loan to support these figures.

41. Other than the defences raised and discussed above, the Defendants have not provided any other material independent bases to challenge these schedules and calculations.

42. In the premises, and given that I have rejected above these defences as not triable, I am satisfied that the Bank has proved the quantum as it now claims.

D.  Conclusion

D1.    The Bank’s claim

43. I am satisfied that there are no triable defences to the Bank’s claim.  I therefore enter judgment in favour of the Bank and order that:

(1)  There be judgment in favour of the Bank against Ever Peace, Mr Chiang and Ms Tai in the sum of HK$2,904,366.44.

(2)  The Bank is further entitled to interest at prime rate plus 6% per annum on the sum of HK$1,906,808.85 from 5 September 2009 to the date of judgment, and thereafter at judgment rate until actual payment in full.

(3)  Ever Peace is to deliver vacant possession of the Property to the Bank within 28 days from today, unless the judgment sum is settled in full before then.

D2.    Costs

44. As the Bank has succeeded in its claim, it should be entitled to its costs of the action and this application on an indemnity basis (as provided in the Facility Letter).  Mr Yin has fairly and rightly not sought to contend otherwise.

45. Both parties also agree to have the costs taxed on a gross sum basis, which I will now do.

46. The Bank has provided a skeleton bill in the total sum of HK271,684.  Out of this, counsel’s fee is HK$166,000 and solicitors’ costs is HK$105,684.

47. This is a summary application, with only about one and half lever arch files of materials involved.  It was originally set down for one day (which is the hearing on 2 July 2009).  An extra half a day was required in light of the new arguments raised (as mentioned above) at the initial hearing.

48. Ms Tong, counsel for the Bank, is of 6 years’ call.  She charged HK$50,000 as her brief for the 1^st hearing, and HK$30,000 as refresher for the adjourned hearing.  She also charged a total of HK$86,000 for works involved in preparing two extra skeletons filed for the purpose of the adjourned hearing, and settling the 3^rd Affirmation of Mr Tin filed for that purpose. 

49. With the greatest respect, having regard to the seniority of Ms Tong, and the complexity and materials involved in this application, I find the HK$166,000 charged clearly too high and unreasonable. 

50. I would allow the brief in full, but I believe the refresher charged is obviously on the high side[9], and I would only allow HK$23,000. 

51. Given the substantive nature of the new issues raised for the purpose of the adjourned hearing, and that Ms Tong could not charge a new brief for that, I am prepared for this time to allow reasonable counsel’s fee to be charged for the extra skeletons filed for the adjourned hearing and settling the new affirmation.  However, I am not satisfied that the suggested sum of HK$86,000 is reasonable. This is underlined by the fact that the fee charged for the extra skeletons and the settling of one affirmation is even higher than the total sum of the brief and refresher.   Looking at it in the round and doing the best as I could, I would allow HK$10,000 for the skeletons and HK$5,000 for settling the 3^rd affirmation of Mr Tin.

52. For these reasons, I will tax down counsel’s fee to HK$88,000 (HK$50,000 + HK$23,000 + HK$10,000 + HK$5,000).

53. In relation to solicitors’ costs, again having regard to the papers involved in this application and noting the Defendants’ comments on some of the hours spent on a few items under the skeleton bill, I will tax it down to HK$80,000.

54. In the premises, I would allow the Bank’s costs in the sum of HK$168,000 (HK$88,000 + HK$80,000), which should be paid by the Defendants.

55. Finally, I thank counsel for their assistance in this matter.

Ms. Sara TONG, instructed by Messrs T.H. Koo & Associates, for Plaintiff.  

Mr. Michael YIN, instructed by Messrs Michael Li & Co., for 1^st to 3^rd Defendants.

[1] The Bank merged to become part of the Bank of China (“BOC”) in 2001.

[2] Which ceased to accrue upon the Bank’s issue of demand letter to the Defendants to terminate the loan.

[3] And after taking into account of late payment fees (which also ceased to be applicable upon the termination of the loan), and administrative fees.

[4] This is a contention raised for the first time at the hearing on 2 July 2009.  As a result of this new argument (and the matter discussed in the next issue concerning the compliance of certain provisions in the Facility Letter), another hearing date was required to enable the parties to file further submissions and put in relevant new evidence to deal with these new matters.

[5] Paragraph 6 of Mr Chiang’s 1^st Affidavit.

[6] Kensland Realty Ltd v Whale View Investment Ltd (2001) 4 HKCFAR 381 at 410-416, paras 91, 94 and 95 per Ribeiro PJ.

[7] Before the first hearing on 2 July 2009, both parties had not focussed on these express provisions, and had not raised any issue of their compliance.  When clauses VI(2) and XI(2) of the Facility Letter were looked at more closely at that hearing, and the Defendants contended that no such notices had ever been received by Ever Peace, leave was granted to the parties to file further affirmations on this issue. Together with the issue on the scope of the ostensible authority of an agent mentioned above, an adjourned hearing was necessitated.

[8] Mr Tin’s 3^rd Affirmation, paragraph 11.

[9] This could be compared with the refresher charged by Mr Yin (counsel for the Defendants) which is also HK$30,000, while Mr Yin is of 12 years’ call in Hong Kong (and 16 years if his call in England is to be included).