GRAND VICTORY DEVELOPMENT LTD v. KE JUNXIANG

HCA 2120/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2120 OF 2008

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J U D G M E N T

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INTRODUCTION

1. The Plaintiff, Grand Victory (“GV”), applies for summary judgment pursuant to Order14 of the Rules of High Court against Mr. Ke.

2. GV claims against Mr. Ke for the principal amount of HK$9.2 million (“the Loan”) together with accrued interests under a facility agreement dated 8 August 2007 written in English signed between the parties (“the Loan Agreement”).  The principal amount was to be repaid within 6 months, which would have been on 8 February 2008.

DEFENCE/DISPUTES

3. In resisting the claim, Mr. Ke had filed a Defence while he was still acting in person; and an affirmation in opposition to the application, filed by his legal representatives.  Both these documents were prepared in simplified Chinese.

4. According to the Defence and the Affirmation in opposition, Mr. Ke’s defence can be summarised as follows:

(i)    The repayment of the Loan was subject to a Co-operation Agreement (“the Co-operation Agreement”) entered on the same day of the Loan Agreement between the same parties;

(ii)   As GV has been in breach of the Co-operation Agreement, he has no obligation to repay the Loan;

(iii)  The Loan Agreement is in English. Mr. Ke alleged that he was neither advised to obtain independent legal advice nor explained the content of the documents in English before he was asked to sign them.  He did not understand the nature of the documents;

(iv)  The representative of GV had misrepresented to him that the two English documents he was asked to sign on 8 August 2007 were in connection with a security in respect of a Hong Kong incorporated company called Sino Bridge in which Mr. Ke owned 60% shareholding.

(v)   The two cheques in the sums of HK$300,000 and HK$180,000 pleaded in paragraph 7 of the Amended Statement of Claim (“ASOC”) were for payment of the introduction fees to a Mr. Suen for the execution of the Co-operation Agreement.

(vi)  The handwritten note in Chinese containing proposed repayment schedule (“QR-3”) pleaded in paragraph 10 of the ASOC was neither written nor signed by him.

DISCUSSION

(i)  Whether the Loan Agreement was subject to the terms of the Co-operation Agreement?

5. On 8 August 2007, the following documents were executed:

(a)  The Loan Agreement;

(b) The Co-operation Agreement;

(c)  Mr. Ke’s handwritten instructions in Chinese to GV to drawdown the Loan.  He drew down the Loan by instructing GV to apply the Loan by effecting payments in the following manner:

i.   HK$7.2 million to a Hong Kong incorporated company called Lolliman;

ii. HK$1.4 million to the account of a Mr. Ngai, who introduced Mr. Ke to GV;

iii.   Cash HK$600,000 to Mr. Ke himself.

(d)   Notice of Drawing (in English) signed by Mr. Ke confirming the payments in the manner stated in (c) above.

6. After having read all the above documents, I am unable to accept, for the following reasons, the submission by Mr. Ke’s solicitors that the repayment of the Loan was subject to the Co-operation Agreement:

(1)   The terms of the Co-operation Agreement only impose separation obligations on the parties in respect of the development of some land in PRC, which land was purported to be beneficially owned by Mr. Ke through corporate entities.  The purpose of this agreement was signed with a view to obtain profits for both parties from the land development.

(2)   Clause 1 of the Co-operation Agreement is in fact a confirmation of clause 8.1 of the Loan Agreement, which obliged Mr. Ke to provide security for the Loan by, inter alia, executing charges on the shares of Sino Bridge;

(3)   Clause 4 of the Co-operation Agreement provided that the profit derived from the land development was to be paid in satisfaction of the Loan and its interest. This term actually reinforces GV’s assertion stated in the Affirmation of Li Hiu Ming in support of the application that the Co-operation Agreement has the additional benefit of providing further security for the Loan.

(4)   There is overwhelming evidence that the Loan was drawn down.  The instructions for the payment of $7.2 million to Lolliman further corroborates GV’s case that the purpose of the Loan Agreement was to enable Mr. Ke to get rid of the bankruptcy petition presented by Lolliman.  Mr. Ke’s assertion that he did not draw down the loan cannot be accepted.

(5)   In any event, Mr. Ke’s defence that GV’s has failed its obligations under the Co-operation Agreement is not valid because as there is abundance of evidence showing that Mr. Ke (or to be more precise, his corporate vehicle) no longer, well before the Co-operation Agreement, owned the subject PRC land.  The performance of the Co-operation Agreement was impossible.

(ii)  The Defence of Non Est Facturm and Misrepresentation

7. A plea of Non Est Facturm cannot be available to anyone who was content to sign without taking the trouble to find out at least the general effect of the document.  (See Saunders v Anglia Building Society [1971] AC1004, HL at 1016B-d)  Further, such plea requires clear and positive evidence before it can be established (Saunders at p.1019B).

8. Mr. Ke has adduced no evidence to advance such plea apart from the bare assertion stated above.

9. As Mr. Ke has been the chairman of a listed company in Hong Kong, I think his assertion of being misled looks highly improbable, and the intended plea appears to be hollow.

10. As to his other allegations of misrepresentation, I agree with counsel that Mr. Ke has failed to condescend on any particulars.  Similarly, I am not satisfied that Mr. Ke has an arguable defence.

(iii)  The Cheques and the Settlement Note

11. The Cheques and the Settlement Note in my view are contemporaneous documents clearly confirming Mr. Ke’s liability under the Loan Agreement.  Mr. Ke’s allegations that the said payments by cheques was for paying the middle-man appear to be fanciful as the middle-man is Mr. Ngai, not Mr. Suen, who being the director of Lolliman had an direct interest to see Mr. Ke obtaining sufficient funds to repay Lolliman.

12. Further, Mr. Ke’ denial of being the author of the handwritten note, being a bare assertion, looks bad and does not appear to be truthful.

CONCLUSION & ORDER

13. I am satisfied on the evidence and the Defence having been filed that Mr. Ke’s defence is frivolous and practically moonshine.  I therefore grant the application in favour of GV.

14. As there is no dispute in the loan amount and the outstanding interests, I enter final judgment and grant the following orders:

(a)  Judgment in the sum of HK$9.2 million;

(b) Interest in the total sum of HK$2,138,104.56; and interest on HK$9.2 million at 2% from the date of writ until judgment, thereafter a judgment rate until full payment;

(c) Costs order nisi in favour of the Plaintiff, together with a certificate for counsel, which costs shall be, in the event of a dispute, summarily assessed in lieu of taxation.

15. In this case, the Plaintiff has failed to lodge a statement of costs together with the skeleton submission in accordance with Practice Direction 5.4.  In the future, should a receiving party fail to adhere to this practice, the court may impose sanctions by, for example, disallowing costs for attending the hearing for summary assessment, or globally reducing costs of the receiving party.

16. Upon the nisi costs order becoming absolute, the parties shall fix a ½ hour hearing before me for summary assessment of costs.  A receiving party shall lodge and serve a statement of costs 7 days before the hearing, and a statement of objections shall be similarly lodged and served 3 days before the hearing.