STANDARD CHATERED BANK (HONG KONG) LTD v. MA LIT KIN, CARY

HCA 62/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 62 OF 2006

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D E C I S I O N

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Application

1. The Plaintiff applied against the Defendant for summary judgment and/or judgment on admission.

Preliminary matter

2. A few days before the scheduled hearing for the substantive hearing of the said Plaintiff’s application, the Defendant issued a summons seeking leave to amend his Defence and to further rely on his second affidavit.  Ms. Janine Cheung of Counsel, representing  the Plaintiff, did not seriously oppose the matter.  With no objection from the Counsel for the Defendant, Mr. Alexandar Stock, I allowed the Defendant’s summons without prejudice to any of the rights of the Plaintiff, including adducing further evidence in reply and filing/serving its Reply, if necessary, in future.  The Amended Defence was required to be filed within 7 days but service of the same was dispensed with.

Background

3. The Plaintiff was and is a banking corporation carrying on business in Hong Kong.  The Defendant was the CEO of a company called Moulin Global Eyecare Holdings Ltd (“Moulin”) listed in the Stock Exchange of Hong Kong.

4. By a Facility Letter and a General Customer Agreement dated 29 December 1999 and 4 January 2000 respectively, the Plaintiff granted facilities to the Defendant for the sum of $1m.  The facilities was thereafter renewed and revised in both 20 April 2002 and 19 September 2002.  Subsequently, by a further Facility Letter dated 19 November 2003, they were increased to $3.5m overdraft facilities and $0.5m guarantee facilities.

5. It is the Plaintiff’s case that the Defendant, despite repeated requests and demands, has failed to repay it the outstanding overdraft facilities.  As on 8 January 2006, when the present proceedings were commenced, the Defendant owed the Plaintiff the sum of $3,384,259.58 and interest thereon until full payment.

The Defence

6. The Defendant filed his Defence on 7 March 2006.  In short, it was a defence containing non-admissions and denials.  Nonetheless, before me, for the purpose of this present Order 14 application, the Defendant’s case is to be founded on:

(a) the said Amended Defence;

(b) the 1^st Affidavit of the Defendant filed herein on 10 June 2006; and

(c) the 2^nd Affidavit of the Defendant filed herein on 30 August 2006.

7. Ms. Cheung and Mr. Stock took a different view as to how one should describe the Defence.  In the words of Ms. Cheung, it was non est factum only.

8. On the other hand, Mr. Stock described the Defendant’s case in the followings:

“ 8. If D’s version of events were to be accepted, the following legal consequences/defences would arise:

(a) Collateral agreement.  On D’s version of events, there was a collateral agreement to the effect that the overdraft facility created operated between P and Moulin rather than between P and D personally.  Of course, if this is correct, then there is no contract upon which P can sue D, and there is no doubt and owing from D to P ……

(b) Estoppel by Convention.  A closely related argument is that by virtue of the “common understanding” upon which D relied, P is estopped from denying that the Agreement and the Facility Letter and the debts which were created thereunder operated as between P and Moulin rather than as between P and D ……

(c) Misrepresentation.  On D’s version of events P may have misrepresented to D the terms and legal effect of the Agreement and the 2003 Facility Letter, which would entitle P to rescind the same …… Even if there was no express misrepresentation, it is well established that a misrepresentation may be implied or by conduct ……

(d) Non est factum.  Where a party has been misled into executing a deed or signing a document essentially different from that which he intended to execute or sign, that party can plead non est factum, which plea would render the instrument in question void ……

(paragraph 8 of the skeleton of Mr. Stock)

Mr. Stock further told me that the strongest Defence would be (b) Estoppel by Convention while the weakest, (d) Non est factum.

9. In my view, it does not matter how one would like to describe the case of the Defence according to the textbook.  The crux of the Defendant’s case can be located in his first affidavit:

“5. I told Ms. Cheung that I did not need any financial assistance from the Bank.  I had the impression that she was under some pressure for meeting the threshold for creating new business opportunities for the Bank imposed upon her by the Bank.  In view of this, I accepted her offer but I had very clearly made known to her that personally, I did not need financial assistance from the Bank and I would not use the monies for my personal purpose.  If monies were drawn down from the OD account, they would have been for Moulin’s use, and would be repaid by Moulin, instead of myself.  That was the understanding upon which the OD account was opened and operated.

6.      In or about late December 1999, I signed the document as Ms. Cheung requested.  A few days later, Ms. Cheung showed me another document and I signed this document upon her request.  As usual, I had not read the document before I signed it.  It was only after I have been shown (by my solicitor Messrs. F. Zimmern & Co (“FZC”)) Ms. Leung Yee Chun’s 2^nd Affidavit (the ‘Plaintiff’s Affidavit’) in this Application that I realized that I had signed a facility letter and a standard form agreement of the Bank known as the General Customer Agreement.

7.      A few years later, in or about September 2002, Ms. Cheung approached me again and advised me that the Bank was ready to increase the OD limit to HK$1,500,000.  A new facility letter was signed by me upon Ms. Cheung’s request.  The OD limit was further increased to HK$3,500,000 in or about November 2003.  I did not ask for these increases.  Instead, they were prompted and offered by the Bank.  It seems to me that there were the Bank’s commercial strategy to create more business with Moulin as it was known to the bank that Moulin was actually using the OD.”

Summary Judgment

10. I now turn to the legal principles in relation to application for summary judgment.  They are clear by now.  For our purpose, it suffices to summarize that the underlying policy of summary procedure is to prevent the defendant delaying the plaintiff from obtaining judgment in a case whereby the defendant clearly has no defence.  Two questions are to be dealt with.  First, factually, is what the defendant says believable in light of undisputed or indisputable circumstances?  In this respect, the Court is entitled to take into account of the commercial reality as well as of the contemporaneous documents.  However, mini-trial on affidavit evidence shall not be embarked.  Bare assertion is insufficient and the defendant must condescend upon particulars.  Second, legally, if what the defendant says is believable, does it amount to an arguable defence in law?  After all, the burden lies on the defendant to show triable issue or some other reason to be a trial.

11. Applying the above principles to the present case, the Defendant fails me because, upon consideration, in my view, the Defence is unbelievable in the circumstances.  In so doing, I warn myself that I should never conduct a trial on affidavit evidence.  However, at the same time, I also remind myself that the Plaintiff’s right to summary judgment should not be delayed by the tactful skill of legal advisers in framing the Defendant’s case so that it looks as if there were disputed facts.

12. The Defendant is unbelievable because:

(a) It is not disputed that he was the CEO of a listed company.

(b) He did sign all the Facilities Letters and the General Customer Agreement.

(c) All monies were drawn from his bank account through cheques signed by him in his personal capacity throughout the years.

(d) It is against commercial sense that the facilities would be granted to Moulin when each and every document was issued in the personal capacity of the Defendant for years without any queries.  Quite to the contrary, directors are usually required to execute personal guarantees when facilities are extended to limited companies.

(e) It is also against common sense that the Defendant does not read the documents prior to the signing of them, especially in light of the following contemporaneous documents.

(i) General Customer Agreement dated 4 January 2000 :

“ Individual Signatory

Signed Sealed and Delivered by:

MA LIT KIN, CARY	(Signed)
(Name of Signatory in Block Letters)	___________________
	(Signature)

I/D Card No.
(or equivalent)> of Signatory:  G275171(1)

in the presence:
Name of Witness:  …”

(ii) Facility Letters dated 29 December 1999, 19 September 2002 as well as 19 November 2003 :

“Agreed.  I have read and understood the terms set out above (in English) and hereby agree to be bound by them.

_____(Signed)____________
MA LIT KIN, CARY”

As the CEO of a listed company, it is incredible that he would not pay attention in executing legal documents, especially when the same were done in his personal capacity as distinguished from “for and on behalf of” Moulin.

(f) The case of the Defendant is a bare allegation with no particulars provided.  The plaintiff can adduce evidence to point to the fact that some of the facilities could only be used for the personal benefit of the Defendant.  However, the Defendant has not satisfied this Court with any evidence or particulars that the facilities were for the benefit and use of Moulin only.

(g) Finally, the Defendant also disputed as to whether the amounts claimed including interest thereon were correctly calculated.  However, he did not attempt to show this Court his own figures or how the Plaintiff was wrong.  On balance, I see no reason why I should not accept the Plaintiff’s calculation as per its Certificates of Indebtedness produced.

Judgment on Admission

13. Having ruled that the Plaintiff is entitled to the summary judgment as aforesaid, I need not go further to deal with the other application by the Plaintiff upon judgment on admission, namely, an oral admission by the Defendant during a telephone conversation with the solicitor of the Plaintiff on 3 February 2006.  Nonetheless, if I had to decide on the same, in my view, judgment could also be entered against the Defendant on such alternative basis.

14. Both learned Counsel have addressed me on the applicable principles but I do not consider them differ much from each other.  It suffices to recap the submissions of Mr. Stock as follows:

“ 14.    The relevant law is summarized in Hong Kong Civil Procedure 2006, at §§27/3/1 to 27/3/10.  Key points include the following:

(a) The admission in question must be clear and unambiguous;

(b) Although it seems that admissions for the purposes of O.27 r.3 are usually made on the pleadings or by letter, an oral admission may suffice if it is proved;

(c) The jurisdiction to enter judgment on admission is discretionary.”

(paragraph 4 of Mr. Stock’s skeleton)

15. Judgment on admission is to be entered against the Defendant because I find the answers to the 3 points identified above have been satisfied.

(a) The only challenge by the Defendant is that:

“20. When I made the concessions and offers during the telephone conversation with Mr. Stephen Wong, I was desperate about reaching a settlement as soon as possible.  In my mind, I did not differentiate between the debts owed by Moulin and those allegedly by me.  As a result, I did not explain clearly to him that it was Moulin who had used the OD facilities, and that the concessions and offers made during our telephone conversation were not made on my own behalf.”

(1^st affidavit of the Defendant)

However, there was indeed clear and unambiguous admissions from the perspective of Mr. Stephen Wong as well as any bystander to the conversation, i.e. the Defendant asked to pay the debt by instalments.  With respect, the Defendant cannot escape the liability simply by trying to create a doubt by his subjective intent at this stage.

(b) The oral admission has been proved on balance before me.

(i) Uncontradicted contemporaneous document is produced to record the admission:

“Your client, Mr. Ma Lit Kin, Cary called us on telephone last Friday.  He admitted to our Mr. Stephen Wong on telephone that:-

(a) he does owe our client the debt as claimed in the subject proceedings;

(b) he has been paying Hang Seng Bank Limited, another creditor of his and how has also sued him, a monthly sum of HK$30,000.00 since 3 or 4 months ago in settlement of the debt due to Hang Seng Bank Limited in the sum of about HK$700,000.00;

(c) the said monthly sum of HK$30,000.00 is the maximum amount that the could afford each month to repay our client and Hang Seng Bank Limited;

(d) he would like to pay our client and Hang Seng Bank Limited a monthly sum of HK$30,000.00 in settlement of the two banks’ claims against him but we should discuss with Hang Seng Bank Limited as to the proportion that the two banks should be entitled to the said monthly repayment.”

(letter of the Plaintiff’s solicitors dated 6 February 2006)

(ii) The content of the above conversation and admission has not been denied and further confirmed by the said paragraph 20 of the 1^st Affidavit of the Defendant.

(c) Given my ruling on the unbelievable version of facts as advanced by the Defendant in defending the Order 14 application, I see no reason why discretion should be exercised in not granting the Plaintiff judgment on the monies advanced to the Defendant.

Conclusion

16. In the circumstances, I order that judgment is to be entered for the Plaintiff against the Defendant for payment of the sum of HK$3,396,128.06 together with interest thereof at the rate of 8% per annum over the Plaintiff’s Hong Kong prime rate (subject to fluctuation) from 9 January 2006 until full payment.  There is also an order nisi that costs of the proceedings and application, including all costs reserved and certificate for counsel on 4 September 2006, be to the Plaintiff and borne by the Defendant, on indemnity basis, to be taxed, if not agreed.