NATIONAL HOLDINGS GROUP LTD v. LAM SIU YU PHILIP

HCA 41/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 41 OF 2007

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J U D G M E N T

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1.  This Order 14 appeal brought by the plaintiff can be disposed of rather quickly.  Although quite a number of matters and arguments have been raised in the pleadings and submissions, I need only focus on two matters.

2.  First, it is plainly arguable, from the relevant solicitors correspondence, that the plaintiff has represented to the defendant and indeed the parties have proceeded on the basis that the second interest payment need not be made on 5 December but only on 18 December 2006, given the intended early repayment of the entire loan together with the accrued interest thereon on 18 December 2006.  The interest was to be paid together with the principal and interest for 6 to 18 December in one go on 18 December 2006.

3.  This is supported by the way the plaintiff’s solicitors calculated the total amount payable on 18 December in their letters dated 21 November, 23 November and 15 December 2006.  The total amount was calculated on the basis that the interest covered by the second interest payment was to be paid on 18 December.

4.  This view is reinforced by the fact that there was no mention at all in the correspondence that the defendant had to pay the second interest payment on 5 December.  Prior to 19 December 2006 (by which time it was plain that the parties’ solicitors could not reach any agreement on the suggested setting off of a sum of $277,849 in partial repayment of the outstanding loan and interest and thus how the intended early repayment was to be effected), there was simply no mention or demand for payment of the second interest payment as such.

5.  It is therefore arguable that the plaintiff cannot rely on the non-payment of the second interest payment on 5 December as an event of default to justify its demand for full payment of the entire loan and interest on 19 December, after the intended early repayment fell through on 18 December.  Whether one could or should clothe the argument in terms of waiver, forbearance, estoppel and so forth is really a matter for trial.

6.  Secondly, on the question (which was raised only for the first time at the hearing before the Master) of whether, independent of the second interest payment, the defendant was obliged to make early repayment of the entire loan and interest by reason of his 30 days’ notice of his intention to do so served under clause 4 of the loan agreement, I take the view that arguably, clause 4, on its true construction, does not create an obligation on the part of the defendant to make early repayment after expiry of his notice.  It only gives him an option to pay – it is still up to him whether to do so.  After all, what he has served is a “notice of intention” to make early repayment.  It is arguable – and I put it no higher than that – that he is free to change his intention after serving his notice.  The proper construction of the clause depends, to some extent, on the factual matrix of the loan agreement, which is really a matter for trial.

7.  As I say, there are other arguments raised.  In light of my views on the above matters and therefore the fact that there will be a trial, I do not find it necessary or particularly appropriate to go into these other arguments.

8.  The appeal is dismissed.

[Submissions on costs]

9.  The appeal is dismissed with costs payable forthwith by the plaintiff to the defendant, to be taxed if not agreed.