Golden Garden Management Ltd v. Grand T G Gold Holdings Ltd
Read the full judgment text of HCA 1685/2010 on BabelCite. This High Court CFI judgment was delivered on 30 January 2012.
1. This is the appeal by the defendant (“Defendant”) against the decision of Master R Lai made on 6 September 2011 entering summary judgment under Order 14 of the Rules of the High Court in favour of the plaintiff (“Plaintiff”) for the sum of $4,561,499 together with further interest and costs. The sum represents interest arising from a document which the parties called “Promissory Note B” (“Note”), the principal of which has already been repaid by the Defendant to the Plaintiff. The true natu
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HCA 1685/2010 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1685 OF 2010 ____________ BETWEEN
____________ Before: Hon To J in Chambers (Open to Public) Date of Hearing: 6 December 2011 Date of Decision: 30 January 2012 ______________ D E C I S I O N ______________ Introduction 1.This is the appeal by the defendant (“Defendant”) against the decision of Master R Lai made on 6 September 2011 entering summary judgment under Order 14 of the Rules of the High Court in favour of the plaintiff (“Plaintiff”) for the sum of $4,561,499 together with further interest and costs. The sum represents interest arising from a document which the parties called “Promissory Note B” (“Note”), the principal of which has already been repaid by the Defendant to the Plaintiff. The true nature of the Note is now in dispute. The legal principles governing summary judgment 2.The law applicable to summary judgment is well-known: see Hong Kong Civil Procedure 2011, Vol 1 §§14/4/8, 14/4/9 and 14/4/11 at p 238-241. 3.Very briefly, the court may grant summary judgment for the plaintiff unless the defendant satisfies the court that either:
The burden is on the defendant to satisfy the court that he has a real or bona fide defence. He has to show what he asserts credible and there is a fair or reasonable probability of the defendant having a real or bona fide defence as a matter of law: see Bhagwandas Kewalram Murjani & Others v Bank of India [1990] 1 HKLR 586 at 588-589. The test at the summary stage is whether the defendant’s assertions are believable rather than whether they are to be believed: see Ng Shou Chun v Hung Chun San [1994] 1 HKC 155 (CA) per Godfrey JA at 158. He must condescend upon particulars in his affirmation or affidavit. Whether the assertions are believable has to be assessed against the background which is undisputed or beyond reasonable dispute. Leave to defend should be given where the defendant raises any substantial question of fact or law which ought to go to trial or if the court has doubts or suspicion as to the plaintiff’s case: see Billion Silver Development Ltd v All Wide Investments Ltd [2000] 2 HKC 262 at 268C-D. Also, the court has jurisdiction to grant conditional leave to defend if it is prepared very nearly to give judgment for the plaintiff or where the defence is shadowy. This summary procedure is not suitable for cases in which there are serious material factual or legal issues in dispute: see Man Earn Ltd v Wing Ting Fong [1996] 1 HKC 225 (CA) per Godfrey JA at 228. The factual background 4.The Defendant, formerly known as Espco Technology Holdings Limited, is a company incorporated in the Caymen Islands and listed on The Stock Exchange of Hong Kong as stock code number 8299. 5.The Plaintiff is a company incorporated in the British Virgin Islands. It is wholly and beneficially owned by its director Robin Lee. Robin Lee is a also director of SSC Mandarin Holdings Limited (“SSC”), the sole shareholder of SSC Mandarin Mining Investment Limited (“MIL”), which in turn holds a controlling interest in TG Mining Asia Limited (“TG Mining”), a mining company in the People’s Republic of China. 6.The Note in the principal sum of $78,240,000 was drafted by the Defendant’s solicitors in April 2008. On 30 April 2008, the Defendant issued to the Plaintiff a portion of the Note in respect of a principal sum of $62,592,000 as part of the acquisition price of MIL from its vendor SSC. The acquisition was in fact a reverse take-over. After the acquisition, Robin Lee was invited by the former chairman of the Defendant, Chan Hing Yin, to join the Defendant as its vice-chairman, executive director and chief executive officer on 5 June 2008. Chan Hing Yin has since passed away. 7.Since the take-over, the Defendant held three fund-raising exercises and Robin Lee caused to be paid to himself a total amount of $29,600,520 from the proceeds of two of the fund-raising exercises. On 3 July 2008, Chow Tai Fook Nominee Limited subscribed for 58,000,000 new shares at a subscription price of $0.27 per share (“First Subscription”). The Defendant raised $15,660,000 in subscription proceeds. On 7 July 2008, the Defendant’s board of directors resolved to transfer the proceeds to TG Mining, which had become an indirect subsidiary of the Defendant as a result of the take-over, expressly for use as general working capital. On the same day, a sum of $15,659,990 was transferred from the Defendant to the bank account of TG Mining from which Robin Lee withdrew a sum of $15,600,000 purportedly to repay short term director’s loans due to himself. In a public announcement dated 10 July 2008, Robin Lee in his capacity as the vice-chairman and chief executive officer of the Defendant declared that the board still intended to apply the net proceeds of the First Subscription as general working capital of the group and/or for the development of the Defendant’s new business venture in gold industry. 8.On 1 September 2008, a group of investors subscribed for 214,256,000 new shares at the subscription price of $0.07 per shares (“Second Subscription”). The Defendant raised $14,997,880 in subscription proceeds. On the same day, Robin Lee declared in a public announcement that the Defendant intended to apply the net proceeds of the Second Subscription as general working capital and/or for the development of the Defendant’s new business venture in gold industry and/or any other new investment project which may be identified by the Defendant from time to time. On 15 September 2008, the Defendant’s board of directors resolved to apply the proceeds as general working capital of the Defendant and its subsidiaries. However, between 5 and 29 September 2008, Robin Lee caused $14,000,520 to be withdrawn purportedly to repay short term director’s loans due to himself. Thus, a total sum of $29,600,520 was paid to Robin Lee. 9.On 7 July 2009, Lee Shing joined the Defendant as a director, who has conduct of this litigation. 10.In February 2010, the Defendant redeemed the principal sum of the Note, which was $62,592,000, by issuing shares in the Defendant to the Plaintiff. However, the interest which accrued as at 24 February 2010 amounting to $4,561,499 remains unpaid. 11.On 16 August 2010, Robin Lee left the Defendant. On 24 September 2010, the Plaintiff’s solicitors issued a letter to the Defendant demanding payment, but to no avail. On 10 November 2010, the Plaintiff filed a Writ of Summons against the Defendant claiming the outstanding interest and further interest thereon. On 11 May 2011, the Plaintiff took out an Order 14 summons to apply for summary judgment. On 6 September 2011, Master R Lai entered summary judgment for the Plaintiff. The defence and the issue 12.The crux of the Defendant’s defence is that the Note was not a promissory note. Mr Manzoni, leading counsel for the Defendant, submits that the Note was given to the Plaintiff as agent for and on behalf of Robin Lee who misappropriated $29,600,520 from the Defendant. Hence, the Defendant has a legal set-off with respect to a liquidated sum of $29,600,520 against the Plaintiff’s claim, which entitled it to unconditional leave to defend: see Axel Johnson Petroleum AB v MG Mineral Group AG [1992] 1 WLR 270 (CA) at 274E-275B. 13.Mr Oderberg, leading counsel for the Plaintiff, rightly concedes that if I am satisfied that the Defendant has shown an arguable case that the Note was not a promissory note, it is entitled to unconditional leave to defend. But if I am not so satisfied, whether the Plaintiff was an agent for and on behalf of Robin Lee and whether Robin Lee misappropriated funds from the Defendant are irrelevant. This is because the defence of set-off is not available to a claim under a promissory note unless the promissory note was obtained by fraud or there was a total failure of consideration. If I am so satisfied, those issues must go to trial and the Defendant is entitled to unconditional leave to defend. Thus, for the purpose of this appeal, there is only one issue: whether the Defendant has shown that it is arguable that the Note was not a promissory note. I do not find it necessary to form any views whatever on those other issues. Whether it is arguable that the Note was not a promissory note 14.Mr Manzoni submits that the Note was not a promissory note as it fell short of the requirement of section 89(1) of the Bills of Exchange Ordinance, which provides:
The thrust of his argument is that the Note was not repayable on demand or at a fixed or determinable future time by reason of the option available to the Defendant to redeem the Note by giving not less than seven days’ notice to the Plaintiff under condition 4.2 of the Terms and Conditions of the Note. 15.The relevant parts of conditions 1 to 4 of the Terms and Conditions of the Note provide as follows:
Under the definition section, “Maturity Date” was defined as 30 April 2011. The address of the Defendant as stated in condition 8 was Rooms 3 & 4, 9/F, Vanta Industrial Centre, 21-33 Tai Lin Pai Road, Kwai Chung. 16.In support of his argument, Mr Manzoni referred to Williamson v Rider [1962] 3 WLR 119 in which the majority of the English Court of Appeal held that a document providing for repayment of a loan “on or before” 31 December 1956 did not come within the meaning of a promissory note under section 83(1) of the Bills of Exchange Act 1882 which was equivalent to our section 89(1) of the Bills of Exchange Ordinance. Williamson v Rider was followed by the English Court of Appeal in Claydon & Anor v Bradley & Anor [1987] 1 WLR 521. Mr Manzoni also fairly drew my attention to the local authority of Chevalier (E&M Contracting) Ltd v Rotegear Development Ltd & Ors [1994] 3 HKC 457, in which Barnett J preferred the dissenting view of Ormerod LJ in Williamson v Rider. He submits that given the conflicting authorities on this point, the only safe course would be to let the matter go to trial. He further submits, referring to Barrett v Enfield London Borough Council [1999] 3 All ER 193 at 197-198 per Lord Browne Wilkinson, that where the law is developing summary determination is inappropriate. In my view, where the legal issue is not a simple one, permitting the matter to proceed to trial for full argument is the preferred course. However, where, the legal issue is simple, as that involved in the present case, which could be fully argued in a summary proceeding, justice would be better served for the matter to be speedily disposed of by way of summary judgment and any uncertainty in the law to be settled on appeal, if either party entertains any doubt in the correctness of the summary judgment. 17.By way of initial observation, the issue raised by this appeal is one of construction of the Note. It is very largely a matter of first impression whether the Note, particularly in the light of conditions 1 to 4 of the Terms and Conditions, came within the definition of section 89 of the Bills of Exchange Ordinance, that is, whether it was a promise to pay on demand or at a fixed or determinable future time. Construction of a document is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of making of the document. It is not the same as interpretation of the meaning of the words used in the document: see Investor’s Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 897 at 912 to 913 per Lord Hoffmann. While the effect of conditions 1 to 4 of the Note is that the principal sum stated in the Note was payable on or before 30 April 2011, I doubt if Mr Manzoni is correct in construing the Note by importing the construction of the phrase “on or before” from the authorities in which that phrase was actually used in the document to be construed by the court into the Note in which that phrase was not actually used. But, be that as it may, I now turn to the authorities relied on by Mr Manzoni before construing the Note. 18.Williamson v Rider was the first English Court of Appeal authority in which the majority, comprising of Danckwerts and Willmer LJJ, decided that the phrase “on or before” a stipulated date of payment destroyed the fixed time for payment and disqualified a document from being a promissory note. Danckwerts LJ was referred to an earlier English Court of Appeal decision in Dagger v Shepherd [1946] KB 215, in which that phrase as used in a notice to quit was construed by Evershed J to mean some fixed date in future. While not doubting the correctness of that construction in the context of a notice to quit, Danckwerts LJ refused to adopt that construction in the context of a promissory note. He preferred the view expressed by the Court of Queen’s Bench in Crouch v Credit Foncier of England Ltd (1873) LR8 QB 374 that an option to redeem at an earlier date was a contingency. Adopting that construction, Danckwerts LJ held that the phrase “on or before” created a contingency and an uncertainty in the time for payment. Willmer LJ agreed and relying in addition to Alexander v Thomas (1851) 16 QB 333, adopted a similar construction. I do not find it necessary to quote the judgments of Danckwerts and Willmer LJJ as their judgments were analysed and explained by Ormerod LJ in his dissenting judgment, to which I now turn. 19.Basically, Ormerod LJ construed the phrase in the same way as did Evershed J in Dagger v Shepherd, as meaning a fixed date for payment in which the promisor binds himself to pay on that date and if he fails can be sued under the promissory note; but if he chooses to pay earlier, the holder of the note is under an obligation to accept that payment. Ormerod LJ was of the view that that was the ordinary meaning of the phrase and the phrase had the same construction whether used in the context of a notice to quit or a promissory note. He then examined Crouch v Credit Foncier of England Ltd which Danckwerts LJ heavily relied upon. In that case, the Court of Queen’s Bench held that a debenture under which a company promised to pay on a certain date “or upon any earlier day upon which this bond shall be entitled to be paid off according to the conditions” and so on created a contingency. He examined the conditions in that case which were not to be found in Dagger v Shepherd or in Williamson v Rider and certainly not in the present case as well. He agreed with that decision, but on the basis of those conditions, distinguished it from Williamson v Rider. Ormerod LJ said at 128 to 130:
Ormerod LJ regarded the periodical draws which the company was contractually obliged to make under the debenture an important and distinguishing feature. Once drawn, the fortunate holder was entitled to immediate payment without having to wait until the fixed date. That was a contingency. If that contingency occurred, the fortunate holder was entitled to demand payment and sue the company if the company refused to pay. There was no such contingency in Dagger v Shepherd or in Williamson v Rider. Ormerod LJ held that in those two cases, it was all a matter for the promisor if he chose to pay at an earlier date. He could not be sued or compelled to pay for not choosing to pay any earlier. In my view, that was a valid distinguishing feature which Danckwerts and Willmer LJJ obviously had not considered at all. 20.Ormerod LJ also had a critical review of Alexander v Thomas relied on by Willmer LJ. That was a case of a bill of exchange and not promissory note. In that case the bill was “payable 90 days after sight or when realised”. The phrase “on or before” was not actually used. Lord Campbell found that the phrase “when realised” was an archaic expression used 111 years before meaning when the drawee of the bill had funds to pay. It must be based on that understanding of the phrase that Lord Campbell held that constituted a contingency which rendered the date of payment uncertain. Ormerod LJ also agreed with that construction but distinguished Alexander v Thomas on the basis that that phrase created an uncertainty and a duty on the holder of the bill to watch for the day of payment in order that the bill could be properly presented, whereas the phrase “on or before” was unambiguous. He further distinguished Alexander v Thomas from Williamson v Rider in that it was a case of a bill of exchange such that the uncertainty may result in the holder of the bill loosing his rights as a holder in due course and in the drawee being discharged. Ormerod LJ said at 130:
Having distinguished Alexander v Thomas and having regard to the facts of Williamson v Rider, Ormerod LJ came to the view that the phrase “on or before,” created no uncertainty as to the date of payment under the document in issue and reached the conclusion that it was a promissory note within the meaning of section 83 of the Bills of Exchange Act. 21.Williamson v Rider was followed by the English Court of Appeal in Claydon v Bradley. It appeared from the judgment that the Court of Appeal did so reluctantly as a matter of precedent. Dillon LJ referred sympathetically to the dissenting judgment of Ormerod LJ and said at 525:
22.The majority decision in Williamson v Rider was criticised by Byles on Bills of Exchange and Cheques (28th Ed) at §2-019 and by Chalmers and Guest on Bills of Exchange, Cheques and Promissory Notes (17th Ed) at §2-085. The learned authors submitted that the dissenting view of Ormerod LJ was to be preferred. Indeed the dissenting judgment of Ormerod LJ has been followed by courts in both Canada and Ireland. 23.In Hong Kong, Barnett J also preferred the dissenting judgment of Ormerod LJ in Chevalier (E&M Contracting) Ltd v Rotegear Development Ltd & Ors. In that case, the first defendant failed to make several monthly payments to the plaintiff subcontractor. The parties then entered into a settlement agreement under which the first defendant would pay the outstanding sum by six instalments. In addition, the second to fifth defendants, who were directors of the first defendant, entered into a guarantee under which they undertook to pay any sum under the settlement agreement should the first defendant default in payment. The first defendant defaulted under the settlement agreement. The plaintiffs obtained summary judgment from a master against the fifth defendant under the then Order 14 of the Rules of the Supreme Court. On appeal before Barnett J, one of the defences relied on by the fifth defendant was a claim of set-off. In answer to that defence, the plaintiff argued that the settlement agreement, being an unconditional promise in writing to pay on demand or at a fixed or determinable future time a sum certain in money to the order of a specified person or the bearer, was a promissory note, such that the defence of set-off was not available. In construing the meaning of the phrase “on or before”, Barnett J preferred the dissenting judgment of Ormerod LJ and found that it meant a fixed or determinable future time. He said at 462:
However, for other reasons, Barnett J held that the fifth defendant had shown an arguable case that the settlement agreement was not a promissory note and allowed the appeal. Thus, the above dictum was obiter. 24.I am not aware of any Hong Kong Court of Appeal decisions on the construction of this phase. Decisions of the English Court of Appeal are highly persuasive authorities, but are not binding on me. I shall, of course, take its decisions seriously and shall follow it unless a departure is fully justified on well established legal principles. 25.For my part, on a plain reading of the documents in which that phrase appeared in the three authorities referred to above, I find it difficult to give that phrase any meaning other than that ascribed to it by Evershed J in Dagger v Shepherd at 228:
In my view, the meaning which this phrase conveys to a reasonable reader is that the date of payment is fixed but the covenantor has an option to pay before that day. The covenantor is free but not obligated to pay or not to pay earlier. He cannot be compelled to pay earlier or sued for not doing so. If he chooses to pay, the holder of the bill is obliged to accept payment. But, it is all a matter of the covenantor’s choice until the fixed date when his obligation to pay crystallises if he has not yet paid. That has always been the way the phrase was used and understood by the commercial community and by the ordinary public. Nowhere in the judgment in Williamson v Rider, did Danckwerts or Willmer LJJ ever say that the holder of the bill was entitled to present the bill and demand payment on any earlier date which could have created an uncertainty. If, on established legal principles, the bill holder was so entitled, I would respectively agree with that decision. The bill holder could only do so on the fixed date. Any payment made before that date was but a fortuitous event and not a payment which the bill holder could demand or enforce as of right. This demonstrates clearly that the bill in which such a phrase is used is payable only on a fixed date in future, though if the covenantor so chooses, he is entitled to pay earlier. But that entitlement is besides the point. If the bill is payable on any earlier date, meaning a legally enforceable obligation to pay earlier, it would become payable on demand and would therefore qualify as a promissory note. This demonstrates the fallacy of construction adopted by the majority in Williamson v Rider. The construction given by Evershed J and adopted by Ormerod LJ is the only reasonable construction that could be given to the phrase whether in the context of a notice to quit or demand for payment. It creates no uncertainty. I respectfully agree with that construction. 26.It is true, as Danckwerts LJ said, that the construction in Dagger v Shepherd arose out of a notice to quit which is a very different subject matter from a promissory note; but the phrases in the two documents are identical. There is no reason to give the phrase any other meaning if used in a promissory note. This is particularly so from a genesis point of view because what Evershed J did was to import the meaning of that phrase as used in documents relating to demands for payment of money into a notice to quit. That phrase could not have lost its ordinary meaning once it was used in a notice to quit. Why the phrase could not retain its original meaning upon being repatriated to the type of document in which it was originally used is beyond me. I find myself in respectful disagreement with Danckwerts and Willmer LJJ. 27.I respectfully agree with the distinctions drawn by Ormerod LJ between Williamson v Rider on the one hand and Crouch v Credit Foncier of England Ltd and Alexander v Thomas on the other. In Crouch v Credit Foncier of England Ltd, the drawee of the bill of exchange was contractually obliged to make periodical draws. Once the holder was drawn, the legal obligation to pay arose. The payment was not made at will. The fixed date and the obligation to pay were advanced. Under such circumstances, the promise to pay could not be said to be on a fixed date. The fact that the holder would be drawn is a contingency which may or may not happen. This contingency rendered the date of payment uncertain. In Williamson v Rider, there is only one fixed date of payment. The fact that the covenantor was free, but not obligated, to pay earlier does not change that fixed date of payment, except that if he had chosen to pay, there would be nothing to pay on the fixed date of payment and the obligation to pay had been discharged. 28.The distinction in Alexander v Thomas is even more blatant. In that case, the phrase “on or before” a fixed date was not used. The bill was payable on the fixed date or when the drawee was in funds. That phrase was capable of two constructions as suggested by Lord Campbell. Firstly, it could mean the bill was payable on the fixed date or sooner if the drawee was sooner in funds. As Lord Campbell observed, this would not be a good bill for the holder would have to watch and ascertain the precise time when the bill should become payable, and if he failed in doing this and in duly presenting it, the drawer would be discharged. That rendered the date of payment uncertain. Secondly, the phrase could mean the bill was payable on the fixed date if the drawee should be then in funds, if not, it was payable thereafter when the drawee was in funds. That date might never arise. That contingency also rendered the date of payment uncertain. On either construction, the contingency would render the bill bad for uncertainty: see Lord Campbell’s dicta as quoted by Ormerod LJ in paragraph 20 above. That was the result of construction of an entirely different phrase. Another important distinction is that that was a case on bill of exchange to which special rules for the protection of the holder in due course and the drawer apply. As Ormerod LJ said, there was no uncertainty about the date of payment in the phrase “on or before”. The bill was payable on the date fixed. There was no obligation to pay until that date, although, if the covenantor wished, he was entitled to pay it earlier. Even if the covenantor wished to pay earlier, if he could not actually effect payment to the holder of the bill, the bill remained payable on the date fixed. The problem of uncertainty as raised by Lord Campbell in Alexander v Thomas would never arise if the phrase “on or before” was used. In my view, Dagger v Shepherd rather than Crouch v Credit Foncier of England Ltd is the relevant authority to refer to for the construction of the phrase “on or before”. 29.Williamson v Rider was criticised by academics. It was not followed in Canada and Ireland. Like Barnett J, I would follow the dissenting judgment of Ormerod LJ in Williamson v Rider in the construction of the phrase “on or before”. 30.Turning to the construction of the Note, condition 1 provided that the outstanding principal amount of the Note shall be redeemed, subject to and in accordance with the Terms and Conditions of the Note, on Maturity Date which was defined to be 30 April 2011. On the face, the Note was payable on a date certain in future. Condition 4.1 provided for the manner of redemption on the Maturity Date, which was by presenting the original of the Note to the Defendant at its address specified in condition 8. Condition 4.2 provided that the Defendant shall have the right to redeem all or any part of the outstanding principal amount of the Note by giving written notice of not less than seven banking days to the Plaintiff. It is this condition which Mr Manzoni relied on for his argument that the Note was not payable on a fixed date, but on or before the fixed date. 31.With respect, there is a world of difference between conditions 4.1 and 4.2 put together and a simple phrase that money is payable on or before a fixed date. Even if the phrase “on or before the Maturity Date” were actually used in the Note, for reasons as explained above. I would hold that it could only have the meaning ascribed to it by Evershed J in Dagger v Shepherd, that is, the Note was payable on the Maturity Date and if the Defendant so chose he was entitled pay at an earlier date but was under no legal obligation to do so. There was no uncertainty that the date of payment was the Maturity Date. 32.On the construction of the Note, condition 4.1 made it clear that the Note was payable at a fixed time in future, ie, the Maturity Date. Condition 4.2 only gave the Defendant the option to pay earlier by giving not less than seven days’ notice. It did nothing to improve the Plaintiff’s right under the Note and did not give the Plaintiff any entitlement to be paid earlier. Nor did it create any obligation on the part of the Defendant to make earlier payment. The Defendant could not be compelled to exercise the option under condition 4.2. It was all a matter for the Defendant if it should choose to pay at an earlier date. Notwithstanding condition 4.2, the date of payment was fixed. There was no uncertainty. This is the construction I would give to the Note. I conclude that on the true condition of conditions 1 to 4 there was no uncertainly as to the date of payment which was the Maturity Date as defined in the Terms and Conditions of the Note and the Note qualified as a promissory note 33.Mr Manzoni advances some other arguments which I consider have no bearing on the issue. He argues that the term due date is distinguishable from the Maturity Date but was not defined in the Note. He is certainly right. That term is found in condition 3.1. It referred to payment of the principal and interest. Insofar payment of principal was concerned, it must mean presentation on the Maturity Date in accordance with conditions 3 and 4. Insofar as payment of interest was concerned, the due dates were stated in condition 2.1 which provided that interest shall be payable in arrears quarterly on 31 March, 30 June, 30 September and 31 December of each year. Nothing really arises out of the definition of due date. 34.Next, Mr Manzoni argues that the demand for payment of interest was not made in accordance with condition 3 by presenting the Note to the Defendant at its address specified in condition 8, which was an address at Vanta Industrial Centre in Kwai Chung. The demand was instead served on the Defendant’s business address at Convention Centre in Hong Kong. Again, this departure has no bearing on the Plaintiff’s application for summary judgment. Condition 8 applied to presentation of the Note for payment of the outstanding principal amount only, ie, for redemption purpose, and not to demand for payment of interest. Had the Defendant not been in default, the interest would have been paid to the Plaintiff’s bank account notified under condition 3.1. As for the Plaintiff’s failure to present the Note for payment of interest, the Note had already been surrendered to the Defendant in accordance with condition 4 upon redemption of the principal amount. In any event, presentation of the Note was not a requirement for demanding payment of interest. The Plaintiff’s inability to present the Note and failure in making a demand for payment of interest at the Defendant’s specified address is neither here nor there. 35.Accordingly, I conclude that the Note was a valid promissory note within the meaning of section 89(1) of the Bills of Exchange Ordinance. Conclusion 36.Having found the Note was a valid promissory note, it must necessarily follow that the defence raised by the Defendant does not constitute arguable defence. Master R Lai was right in entering summary judgment against the Defendant. Accordingly, the Defendant’s appeal is dismissed with costs to the Plaintiff with certificate for two counsel. Such costs are to be taxed, if not agreed.
Mr Keith Oderberg leading Mr Victor Luk, instructed by Messrs Patrick Mak & Tse, for the Plaintiff Mr Charles Manzoni leading Mr Jose Antonio Maurellet and Mr David Chen, instructed by M/s Joseph S.C. Chan & Co, for the Defendant | ||||||||||||||
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