TREASURE CHAIN (HK) HOLDINGS LTD v. TREASURE HOUSE VENTURES LTD AND OTHERS

HCA 1789/2018 & HCA 1790/2018

[2020] HKCFI 2432

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1789 OF 2018

____________

BETWEEN

AND

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1790 OF 2018

____________

____________

BETWEEN

(HEARD TOGETHER)

____________________

___________________________________

REASONS FOR DECISION

___________________________________

Introduction

1.  These are appeals from decisions of a Master dated 10 June 2020 who determined applications for summary judgment.

2.  The Master granted conditional leave to defend to (i) the 2nd Defendant in HCA 1789/2018; and (ii) the 1st to 4th Defendants in HCA 1790/2018.

3.  The conditions imposed were that:

(1) in HCA 1789/2018, the 2^nd Defendant make a payment into court of HK$5m within 42 days; and

(2) in HCA 1790/2018, the sum of HK$1,238,224.47 paid into court in HCA 1814/2018 by Tsoi Yu Yu (the 4^th Defendant in HCA 1790/2018) on 18 October 2019 shall not be paid out until the final determination of the present action or until further order of the court.

4.  In these appeals, the relevant defendants seek the dismissal of the summary judgment applications, or alternatively, unconditional leave to defend. The 2nd Defendant in HCA 1789/2018 also applied by a summons dated 17 July 2020 for a stay of execution pending appeal.

5.  I heard submissions from the parties at the hearing on 8 September 2020.  Mr Tim Wong appeared on behalf of the Plaintiffs, and Mr Bernard Mak and Mr Lok Ho appeared on behalf of the relevant defendants.

6.  At the conclusion of the hearing, I ordered that the summary judgment applications in both actions be dismissed with reasons to be handed down later. I made no order on the stay application because it was rendered academic because of the outcome of the appeal. These are my reasons.

The Background

7.  Mr Kwok Wai Pan (“Mr Kwok”) is the Plaintiff in HCA 1790/2018, and his BVI company, Treasure Chain (HK) Holdings (“Treasure Chain”) is the Plaintiff in HCA 1789/2018.

8.  Mr Chan Tung Yeung Andrew (“Mr Chan”) is the 1st Defendant in HCA 1790/2018.  The 2nd to 4th Defendants in that action are members of his family. Mr Chan is also the 2nd Defendant in HCA 1789/2018.

9.  Mr Chan had an interest in Grand Tour Bus Holdings Limited (“Grand Tour”). Grand Tour is a company incorporated in Hong Kong carrying on business of light bus services in Hong Kong. Mr Chan’s interest in Grand Tour was held through Bus Management Group Limited (“BMGL”) which is incorporated in the Cayman Islands.

10.  It appears that the parties had engaged in discussions regarding the potential listing of Mr Chan’s business on the Hong Kong Stock Exchange, and that Mr Kwok was interested in becoming an investor in the listed company.  

11.  On 24 April 2017, there were two separate loan agreements executed by Mr Kwok as lender and Mr Chan as borrower. Each of them was for the principal sum of HK$5m. According to the agreements, the loans were required to be repaid by 31 September 2017.

12.  Under Clause 6 of the First Schedule, the date of the making of each loan was stated as 27 April 2017. 

13.  The two agreements are similar in content, except for the applicable interest rate. The first specified an interest rate of 12% pa (“12% Agreement”), while the second provided for 54% pa (“54% Agreement”). 

14.  Under Clause 8 of the First Schedule, the security to be provided under loan agreements were:

(1) 3 personal guarantees to be provided by Mr Chan, and the 3rd and 4th Defendants in HCA 1790/2018; and

(2) second legal charges over 5 properties in Hong Kong.

15.  It is unclear why Mr Chan was required to provide a personal guarantee given that he was the borrower under the 12% and 54% Agreements.

16.  On 24 April 2017, the 3 personal guarantees were executed together with 5 legal charges executed by the 2nd to 4th Defendants in HCA 1790/2018 over the properties referred to in the loan agreements.

17.  After these documents were executed, there was a cheque drawn on the client account of Jan Fung & Co. dated 26 April 2017 for HK$5m payable to Mr Chan.  Jan Fung & Co. were the former solicitors of Mr Kwok.  The receipt of this sum by Mr Chan is not disputed. According to Mr Chan, this sum was advanced under the 12% Loan Agreement.

18.  As at 27 April 2017, which was the specified date of the making of the loans under the 12% and 54% Agreements, Mr Kwok had only advanced HK$5m but not the entire HK$10m which was the combined principal sum stated in both loan agreements.

19.  Following this, there was an invoice dated 15 May 2017 issued by Viva Charm Limited to Mr Chan for HK$900,000 for “advice on corporate rescue and restructuring in respect of Grand Tour Bus Holdings Limited”.

20.  The contact person of Viva Charm was stated to be Mr Jan Fung, the solicitor who was acting for Mr Kwok at the time.  There is no dispute that the sum of HK$900,000 was in fact paid by Mr Chan. There are also other invoices issued by Viva Charm which, on their face, suggest (oddly) that car beauty, renovation and repair services were provided by it.

21.  There were 2 further cheques dated 31 May 2017 and 7 June 2017 drawn on the Jan & Fung client account for HK$6m and HK$4m respectively. On the direction of Mr Chan, these two cheques were payable to Golden Champion Travel Company Limited (“Golden Champion”).

22.  The receipt of these sums by Golden Champion is also not disputed. Importantly, there is no contemporaneous documentary evidence stating the purpose of these payments, and whether those payments were referable to any particular loan agreement entered into by the parties.

23.  Accordingly, by 7 June 2017 or shortly thereafter, a total of HK$15m had been paid by Mr Kwok via the client account of Jan Fung & Co. to Mr Chan or to companies at his direction.

24.  There is an undated loan agreement executed by Mr Chan, as borrower, and Treasure Chain as lender (“Undated Loan Agreement”). This agreement provides for a loan facility of up to HK$25m to be provided to Mr Chan at an interest rate of 54% pa. The Amended Statement of Claim in HCA 1789/2018 does not plead the date of execution of this agreement.

25.  The Undated Loan Agreement states, in its recitals, that BMGL was in the course of preparing an application to the Stock Exchange for the listing of its shares on the GEM Board. It is not disputed that the contemplated listing never took place.

26.  The Undated Loan Agreement is a comprehensive document, but it is incomplete. The majority of the schedules to the agreement (Schedules 3 to 16, 18 to 19) were left blank. There is no evidence from Treasure Chain to explain why that was the case.

27.  There are also a number of conditions precedent in Clause 4 before Treasure Chain was obliged to make the loan of HK$25m available to Mr Chan. These included completion of a due diligence exercise and the reorganisation of the corporate structure of the group. There is no evidence that any of those conditions precedent were fulfilled.

28.  Clause 5 also provides for an obligation by Mr Chan to draw down the loan by serving a Notice of Drawing as set out in Schedule 1. There is no evidence that this was ever served by Mr Chan with respect to any sum under the Undated Loan Agreement.

29.  There is also an undated guarantee executed by Mr Chan in favour of Treasure Chain (“the Undated Guarantee”). The Undated Guarantee refers to an issuance of convertible bonds by Treasure House Ventures Limited (“Treasure House”), and states at Clause 2.1 that Mr Chan agreed to provide the guarantee in consideration of Treasure Chain agreeing to enter into the convertible bonds. Again, there is no evidence that those convertible bonds were ever issued.

30.  There is also a further set of undated documents executed by Mr Chan, Treasure Chain and Treasure House. It appears that these documents, although undated, were executed after the Undated Loan Agreement and the Undated Guarantee. These were a Supplemental Deed of Loan Agreement, Deed of Novation and Deed of Subscription (“Undated Composite Instrument”).

31.  The Supplemental Deed of Loan Agreement was prepared on the basis that the entire HK$25m had already been drawn down under the Undated Loan Agreement. This does not accord with the actual facts because HK$25m was never advanced under the Undated Loan Agreement.

32.  These documents contemplated that the loan of HK$25m by Treasure Chain to Mr Chan under the Undated Loan Agreement would be transformed into the subscription of convertible bonds to be issued by Treasure House. There would also be a novation of the debt owed by Mr Chan such that it would be Treasure House assuming the obligations under the Undated Loan Agreement.

33.  Clause 2.2 of the Supplemental Loan Agreement provides:

“By this Deed, the Guarantor novates to the Company all of its liabilities and obligations in relation to the Debt. Subject to the terms of this Deed, the Company hereby expressly confirms that the Company has duly received an aggregate sum of HK$25,000,000 transferred from the Guarantor and immediately following the execution of this Deed, the Company is indebted to the Subscriber in the full amount of the Debt as if the Company had ab initio been indebted to the Subscriber for the full amount of the Debt, without any need for further action by the parties.”

34.  Clause 2.3 of the Supplemental Loan Agreement provides:

“… the Subscriber hereby confirms and acknowledges the novation of the Debt contemplated in this Deed and further agree that the Debt transferred from the Guarantor to the Company shall be applied to the subscription to be issued by the Company subject to the terms of this Deed.”

35.  Between 29 December 2017 and 6 March 2018, Mr Chan made 3 payments of HK$250,000, HK$200,000 and HK$100,000 to Mr Kwok. Mr Chan’s case is that these were interest payments made under the 12% Agreement.

36.  On 7 May 2018, a demand letter was sent by Messrs. Lo & Fung (Mr Jan Fung’s new law firm) on behalf of Treasure Chain to Mr Chan. The letter demanded repayment of HK$10m by Mr Chan. Unfortunately, this letter is muddled and does not clearly set out the precise basis of the demand. What is clear, however, is that it suggested that the two later cheque payments of HK$6m and HK$4m comprised a single sum owing to Treasure Chain of HK$10m.

37.  There was also another demand letter issued on the same day on behalf of Mr Kwok against Mr Chan demanding for repayment of HK$5m.  This letter refers to one loan agreement dated 24 April 2017, but it does not state whether this was the 12% or the 54% Agreement. Neither of the letters dated 7 May 2018 actually refer to the fact that there were two loan agreements entered into on 24 April 2017.

38.  On 25 June 2018, a further demand letter was sent by Lo & Fung. This purported to clarify that there were 3 agreements reached between the parties. The first and second were the 12% and 54% Agreements, and the third agreement comprising of the Undated Loan Agreement, the Undated Guarantee and the Undated Composite Instrument. In this letter, it was alleged for the first time, that a total of $5m was advanced in accordance each of the 3 different agreements.

39.  On 3 August 2018, the 1st to 4th Defendants in HCA 1790/2018 commenced a separate action in HCA 1814/2018 against Mr Kwok seeking an order that, among other things, that the legal charges shall be released on the full payment of the outstanding indebtedness of HK$5,129,904.

40.  Consent orders were made in those proceedings to discharge 3 of the 5 legal charges upon completion of the sale and purchase of the relevant properties.  There is a sum of HK$1,238,224.47 paid into court by Tsoi Yu Yu in HCA 1814/2018, the 4th Defendant in HCA 1790/2018.

41.  On 21 August 2018, Mr Chan paid Mr Kwok the sum of HK$5,242,328.96. Mr Chan’s case is that this payment, taken together with his previous interest payments, has completely discharged the amounts which were due and owing under the 12% Agreement.

The Relevant Legal Principles

42.  The applicable legal principles on a summary judgment application are not in dispute. In essence, a summary judgment application is not a platform for a mini-trial on the affidavit evidence. It is incumbent upon a defendant to raise a viable defence or triable issue, and in doing so, to condescend on particulars. The issue is not whether the defendant is to be believed, but whether the assertions are believable tested against contemporaneous documents and conduct: Mohan Selvaraj v Grace Ka Man O’Brien [2020] HKCA 698 at §16 per Lam VP.

43.  Although the burden is on the defendant to raise an arguable defence, it is also necessary to consider whether the plaintiff has put forward a case which merits summary judgment in the first place. If there are genuine weaknesses exposed in the plaintiff’s case, these may detract from the right to obtain summary judgment under RHC Order 14.

44.  This was highlighted by Ribeiro J in Billion Silver Development Ltd v All Wide Investments Ltd [2000] 2 HKC 262 at 268C-D: 

“ The importance of there being doubts or suspicion as to the validity of the plaintiff’s case is that such doubts detract from the plaintiff’s right to summary judgment. It was not to the point to dismiss them on the basis that they did not improve the quality of the defence and ‘raise it’ beyond the category of ‘shadowy’. If possibly genuine weaknesses were exposed in the plaintiff’s case, this casts doubt on the plaintiff’s right to invoke the summary procedure in the first place.”

45.  I also remind myself that an appeal from a Master is in the nature of a fresh hearing: White Book 2020 at §58/1/2. Although I am not fettered by the reasons of the Master, they may often provide the court with valuable assistance. In this instance, it was unfortunate that I was not provided with a transcript of the oral reasons by the Master. 

HCA 1789/2018

46.  In these proceedings, Treasure Chain applied for summary judgment of HK$5m together with interest at 54% pa against Mr Chan. The precise agreement relied by Treasure Chain to support this cause of action is unclear from the pleadings. 

47.  Mr Chan’s defence in this action is that no monies were ever lent under the Undated Loan Agreement, and that it was not intended to be a genuine loan agreement. Mr Kwok agreed to provide HK$25m as an investment in return for an interest in BMGL upon its successful listing. It was alleged that none of the relevant agreements were intended to be binding or enforceable until there was a successful listing of BMGL.

48.  Before turning to the defence, it is necessary to carefully examine the Amended Statement of Claim (“ASOC”) to determine whether there is any proper basis for the Plaintiff to invoke RHC Order 14 to obtain summary judgment.

49.  In summary, ASOC §3 pleads the Undated Loan Agreement. ASOC §5 pleads that this this was “replaced” by a Supplemental Deed of Loan Agreement, Deed of Novation and Deed of Novation together with a Convertible Bond Instrument.  ASOC §7 pleads that HK$5m was paid “pursuant to the said agreements” which comprised (i) HK$1m out of the HK$6m cheque dated 31 May 2017; and (ii) the cheque dated 7 June 2017 for HK$4m.  ASOC §10 then alleges that there is an outstanding sum of HK$5m “under the said agreements” together with outstanding interest.

50.  At the outset, the ASOC does not clearly plead what agreements were meant by the term the “said agreements”. This is not a technical pleading point. The identification of the actual agreement relied upon is essential to understand the claim.  The ASOC uses this phrase loosely. This is unhelpful since various different agreements were identified. The ASOC does not even identify which particular clause or provision of any such agreement was breached by Mr Chan.

51.  At the hearing, I inquired what exactly was Treasure Chain’s cause of action relied upon in these proceedings. After deliberation, Mr Wong confirmed that his client was suing on the Supplemental Deed of Loan Agreement. I further asked what provision of the Supplemental Deed of Loan Agreement provided for a repayment obligation on the part of Mr Chan, but I was not referred to any. 

52.  In my judgment, the pleaded claim in HCA 1789/2018 is based on a basic misconception and ignores the actual contents of the agreements executed by the parties, which are said to be binding upon them. I do not express a view on whether a viable claim could be pleaded on a different basis since I am dealing with the case as set out in the ASOC.

53.  The Plaintiff relies on the Supplemental Deed of Loan Agreement as a binding agreement to seek recovery against Mr Chan personally. However, its very purpose and effect is to cancel and novate any debt owed by Mr Chan such that any monies owed by him under the Undated Loan Agreement would be assumed by Treasure House.

54.  This is evident from Clauses 2.2 & 2.3 of the Supplemental Deed of Loan Agreement set out above. In view of those provisions, it is difficult to see on what basis Treasure Chain could validly maintain a personal action against Mr Chan for recovery of an outstanding loan. At the very least, I consider that there is at least a triable issue in this regard. 

55.  The Supplemental Deed of Loan Agreement intended that any monies owed by Mr Chan would be transformed into a subscription for convertible bonds.

56.  In other words, the obligation to pay interest at 54% pa would be assumed by the issuer of the convertible bonds, Treasure House. This had nothing to do with Mr Chan in his personal capacity. It is difficult, in my view, to reconcile the pleaded claim in this action with the actual contents of the documents executed by the parties. The only loan agreement which provided for an obligation to repay on the part of Mr Chan was the Undated Loan Agreement, but as accepted by Mr Wong, this was later replaced by the Supplemental Deed of Loan Agreement. For that reason, Mr Wong’s reliance on the entire agreement clause in Clause 18.2 of the Undated Loan Agreement does not assist either.

57.  This alone would have been sufficient to dismiss the summary judgment application, but I also take the view that there are features of the dealings between the parties which merit examination at trial in any event.

58.  The Undated Loan Agreement is undated and it is an incomplete document with the majority of the schedules left blank. In addition, it is predicated on a loan advance of HK$25m to Mr Chan which never happened even on the Plaintiff’s case. The Undated Loan Agreement also contemplated the completion of a number of conditions precedent before the loan advance which were never fulfilled, and also a provided for service of a notice of drawing by Mr Chan which also never happened. None of these matters were explained by the Plaintiff in its supporting evidence. The notion that the parties were governed by, and proceeded on the basis of, what was stated in these documents is divorced from reality.

59.  On the whole, I am not satisfied that the Court has been given the complete picture of what actually transpired between the parties. It is impossible to ascertain the true facts relating to the signing of these agreements and what was actually intended by the parties without a trial. Given these matters, and also the defence pleaded by Mr Chan, I do not consider this to be a straightforward case of a failure to repay a loan under a loan agreement.

60.  I also agree with Mr Mak that Mr Jan Fung is a relevant witness because of his extensive involvement with the transactions, and his testimony would likely be relevant at trial to understand what actually transpired between the parties. He has not given any evidence so far.

61.  Moreover, for reasons which I shall explain in the context of HCA 1790/2018, I also take the view that the allegation in ASOC §7 that the funds advanced were “split” in the manner pleaded is also a matter which merits investigation at trial. At the very least, I agree with Mr Mak that there is a triable issue in this regard.

62.  In oral submissions, Mr Wong referred to the fact that there is potentially also a cause of action for monies had and received. However, this is not a cause of action pleaded in the ASOC against Mr Chan and cannot form the basis for a summary judgment application.

63.  In relation to the Undated Guarantee, Mr Wong relies on the fact that this is an “all monies” guarantee and the liabilities of Mr Chan as guarantor are as a principal obligor. Yet there is no proper pleading of a cause of action based on the Undated Guarantee in the ASOC. It is not for the court to speculate how such a case would be framed. Moreover, since I have decided that the underlying claims should be a matter for trial, I do not think it is appropriate for summary judgment to be entered on the Undated Guarantee.

64.  In summary, I consider that are genuine weaknesses in the Plaintiff’s case which detract from its entitlement to summary judgment. On the case as pleaded in the ASOC, it is highly questionable whether the Plaintiff was entitled to apply for summary judgment in the first place. There are also factual issues which merit examination at trial. For these reasons, I dismissed the summary judgment application with costs.

HCA 1790/2018

65.  In this action, Mr Kwok seeks to recover HK$10m under the 12% and 54% Loan Agreements. Mr Kwok also seeks to recover HK$10m under the personal guarantees against the guarantors, being Mr Chan and the 3rd and 4th Defendants, and to enforce the various legal charges.

66.  The main dispute in this action was whether Mr Kwok could demonstrate that HK$10m was actually advanced pursuant to the 12% and 54% Loan Agreements, and not otherwise. His case was that HK$10m was, as a matter of fact, advanced under the 12% and 54% Agreements.

67.  Mr Kwok’s case was that HK$10m was advanced in the following way:

(1) HK$5m paid under the cheque dated 27 April 2017; and

(2) HK$5m paid out of the HK$6m cheque dated 31 May 2017.

68.  Mr Chan, on the other hand, accepts that HK$5m was advanced under the 12% Agreement through the cheque dated 27 April 2017, but he denies that any monies were advanced under the 54% Agreement. He contends that his liability under the 12% Agreement has been fully discharged by virtue of his payments of interest for HK$550,000 together with the payment of HK$5,242,328.96 paid on 21 August 2018.

69.  In examining the Mr. Kwok’s claim, the first point is that is no explanation from Mr Kwok as to why there was a need to have two separate loan agreements with similar contents for HK$5m each, with one with an interest rate at 12% pa, with the other at 54% pa. 

70.  Moreover, there was also no explanation as to the timing of the alleged advancement of the HK$5m loan proceeds under the 54% Agreement. Under that agreement, the date of the making of the loan was specified to be on or before 27 April 2017. Viewed together with the 12% Agreement, and in the ordinary course of events, a total HK$10m should have been advanced on or about 27 April 2017.

71.  However, as a matter of fact, only HK$5m was advanced by a cheque dated 27 April 2017. On Mr Kwok’s case, the remaining HK$5m was only subsequently advanced by a cheque dated 31 May 2017 for HK$6m. There is no explanation for the timing of this, or for that matter, why the HK$5m loan proceeds had to be mixed with an additional HK$1m. I agree with Mr Mak’s submission that the “mixing” of funds in the HK$6m cheque is difficult to understand. 

72.  In my view, it is also important that there was no contemporaneous evidence to demonstrate the purpose of the HK$6m payment under the cheque dated 31 May 2017. Nor is there any documentary evidence to show that the purpose of that HK$6m cheque was intended to actually to be “split” in the manner suggested in Mr Kwok’s claim.  

73.  The lack of such evidence is important since the cheque was drawn on a solicitor’s client account, the amount involved is not insignificant, and it would impact on the extent of indebtedness secured by the legal charges. In this context, one would naturally expect there to be documentation evidencing the purpose of payment, and confirmation of receipt of the money on that basis. There was also no explanation from Mr Kwok or Mr Jan Fung in relation to the lack of such evidence.

74.  In the absence of primary documentation or explanation, whether HK$5m was advanced under the 12% and 54% Agreements under the cheque for HK$6m dated 31 May 2017 would turn on the purpose of that payment and the mutual understanding of the parties. In my view, this is a fact-sensitive question and not a matter which I can resolve at the summary judgment stage on limited evidence.

75.  I also observe that the claim that the claim that the HK$6m cheque dated 31 May 2017 was “split” in the manner suggested is contradicted by the Plaintiff’s solicitor’s letter dated 7 May 2018. Although there was a latter clarification on 25 June 2018, the fact that the initial demand is inconsistent with Mr Kwok’s pleaded case is another matter which merits examination at trial.

76.  There is also the fact that the various interest repayments were made by Mr Chan at a monthly rate of HK$50,000. These payments amounted to HK$550,000 and were made between 29 December 2017 and 6 March 2018. On the face of it, these payments appear to be referable to interest payable on the 12% Agreement. However, there is no contemporaneous evidence of any interest payments by Mr Chan or any demands for interest made by Mr Kwok under the 54% Agreement. On the contrary, the conduct of Mr Chan in making interest payments only under the 12% Agreement is a matter which is consistent with his case.

77.  Against these matters, there is still the fact that a total of HK$15m was paid under the 3 cheques. But the mere fact of payment is not, by itself, conclusive of a loan having been made between the parties.  The bare fact that monies have been paid by one party to another is, by itself, insufficient to support the conclusion that there is a loan to the receiving party: Cheong Shing Ltd v Yu Kwan [2008] 11 HKCFAR 594 at §44 per Litton NPJ.  The burden of proving the existence of a loan rests on the plaintiff, and there is no presumption that monies advanced are in the nature of a loan. The making of a payment to another may in the nature of things be explicable by reference to a wide variety of possibilities: Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd (2015) 18 HKCFAR 364 at §§101-108 per Mason NPJ.

78.  In my view, there must be a proper evidential basis upon which the court can conclude, either by way of direct evidence or inference, that the monies paid are referable to an underlying loan agreement.

79.  Each case will depend on its own facts. In cases where there is direct contemporaneous evidence, this will pose little difficulty. Certain cases may involve situations where a payment to another can only be sensibly be explained by a pre-existing loan agreement. But in other situations where the parties are engaged in ongoing commercial transactions which involve payments to another, or where there are multiple loan agreements which have been drafted, the question may not be that straightforward.

80.  In the present case, it is genuinely arguable that the parties were engaged in dealings which may not have been fully reflected in the primary documents. The issue as to the purpose of the HK$10m paid under the cheques dated 31 May 2017 and 7 June 2017, and on what basis that money was advanced is a matter for trial.

81.  On the 3 personal guarantees dated 24 April 2017, under Clause 1(i) these guaranteed all monies due to Mr Kwok, as lender, under a single loan agreement executed on 24 April 2017. The guarantees do not say that there were two loan agreements executed, and it is unclear whether they would cover the 54% Agreement. In any event, since I have decided that there is a triable issue in relation to the claim on the 12% and 54% Agreements, I do not consider that the guarantees take the case any further.

82.  Since the defence of Mr Chan was known to Mr Kwok before he applied for summary judgment, and in view of the unexplained features of Mr Kwok’s case, I dismissed the application for summary judgment.

Other Matters Relied Upon by the Plaintiffs

83.  In reaching this conclusion, I have taken into account the fact that:

(1) there were WhatsApp communications from Mr Chan in November 2017 which suggested that he intended to repay HK$15m by instalments; and

(2) there was a draft repayment agreement in Chinese which also showed that Mr Chan intended to repay HK$15m in principal. 

84.  In the broad sense, I agree that this evidence supports the fact HK$15m was paid to Mr Chan which, at the time, remained unpaid. To a certain extent, these documents also tend to undermine Mr Chan’s case that HK$10m out of the HK$15m was merely an investment. These are matters which can certainly be put to Mr Chan in cross-examination.

85.  However, I do not agree that these documents provide a conclusive or unequivocal answer to the logically prior question which needs to be addressed in these proceedings as to whether the Plaintiffs have a case, as pleaded, which merits summary judgment. They do not explain why the Plaintiff in HCA 1789/2018 is entitled to recovery against Mr Chan on the basis of the Supplemental Deed of Loan Agreement. Nor do the documents unequivocally show that HK$5m was advanced under the 54% Agreement, which is the point of contention in HCA 1790/2018.

Conclusion

86.  For the above reasons, I dismissed the summary judgment applications. 

87.  Since I dismissed the summary judgment applications, I made an order that costs here and below be payable forthwith by the Plaintiff in each action to be taxed if not agreed. 

88.  The stay application was rendered academic as a result. I considered that it was reasonable for the application to have been issued, and that costs should be determined on the same footing as the summary judgment applications. Therefore, I ordered that costs of the stay application be payable forthwith by the Plaintiff to be taxed if not agreed.