HWANG YIU HWA v. ELTONES PROFITS LTD AND OTHERS

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 14261 OF 1998

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JUDGMENT

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1. This is an appeal by all the Defendants from an order of the Master granting summary judgment to the Plaintiff in the amount claimed in the Statement of Claim. The case is very simple. But unnecessary and wholly meritless defences had been raised by the Defendants to resist an order for summary judgment. In the course of the argument before me, much had been abandoned by Counsel for the Defendants. Only two points were raised. I will deal with them very shortly.

2. The first point that was raised was the question of the accrual of the cause of action against the 1st Defendant by the Plaintiff under the Note. Clause 1 of the Note provides very clearly that:

"The principal amount of the Note shall be repaid subject to and in accordance with the terms of the Note on the date falling 10 calendar months after the date of issue of the Note (the "Maturity Date")."

There is no doubt and it is agreed that the date for the Maturity Date is the 31st July 1998.

3. Reliance was placed by the Defendant on Clause 7.1 of the Note. That reads:

"Unless previously converted and cancelled as provided herein, the Company shall redeem the Note on the Maturity Date, or upon the occurrence of an Event of Default (as defined in Condition 9.1) if requested by the Noteholder, and the amount payable by the Company to the Noteholder upon redemption shall be the aggregate of ........"

To my mind, all this is as clear as daylight. Having regard to Clause 1 and Clause 7.1, it is the absolute obligation of the 1st Defendant to repay the amount of the Note and to redeem the Note on the Maturity Date, namely on the 31st July 1998. Of course, there is a provision for a redemption on an Event of Default. But that is to provide for situation where there might be an earlier redemption and thereby it gives the right of the Noteholder, that is the Plaintiff, to seek an early redemption if there is an Event of Default occurring before the Maturity Date. But the absolute obligation of the 1^st Defendant is to pay on the Maturity Date. The 1^st Defendant did not pay but instead the Defendants raised all kind of excuses to avoid payment. So, that is the first question raised by Mr. Szeto for the Defendants, which has no merit.

4. The second point raised by Mr. Szeto is that the obligation of the guarantors did not arise because of the lack of the appropriate demand. Clause 8.11 of the Agreement at p.41 of the bundle provides that the guarantors shall forthwith on demand pay the amount to the Subscriber. The demand was certainly made as can be seen at p.101 of the bundle. Yes, it is true of course that in that letter and in the other letter to the 1^st Defendant at p.99, five days were given by the Plaintiff to both the guarantors as well as to the 1st Defendant to make payment otherwise legal proceedings will be issued. But that does not, in any way, take away from the Plaintiff any of its right to payment. The five days is only an indulgence in relation to the start of proceedings. I have no doubt that there is a perfectly good cause of action by the Plaintiff against the guarantors for payment of the obligation which had not been complied with by the 1st Defendant and that the guarantors under the Agreement have the obligations to pay the Plaintiff.

5. I therefore conclude that there is no substance whatsoever in the various defences raised by the Defendants. The appeal therefore must be dismissed with costs which I would now assess by way of a gross sum assessment under Order 62, r. 9(4)(b) of the Rules of the High Court.