DBS BANK (HONG KONG) LTD v. CHEONG BUN KWAN AND ANOTHER

HCA2146/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2146 OF 2007

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(HEARD TOGETHER)

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J U D G M E N T

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1.  Before this court are two actions.  The first is HCA2146/2007 and the second action is HCA2226/2007.  These actions had been ordered to be tried one after another because the claims in both actions arose from the same factual background. 

2.  In HCA2226/2007, the plaintiff, DBS Bank (Hong Kong) Limited, claims against the defendant, Long Label Limited (“Long Label”), the sum of USD634,090 under a Facility Letter dated 1 November 2005.  In addition to the Facility Letter, the plaintiff relied on a General Commercial Agreement dated 8 November 2005.  Both of them were signed by or on behalf of Long Label. 

3.  Under this banking arrangement, the plaintiff has agreed to grant general banking facilities to Long Label up to the extent of 7.5 million on the basis that the money to be advanced under these banking facilities would be repayable on demand and that the facilities were subject to the other terms set out in the Facility Letter and the General Commercial Agreement.

4.  Long Label had drawn down on the banking facilities (as a result of the issue of two Letters of Credit).  This gave rise to the plaintiff’s claim for the principal amount claimed together with interest. 

5.  In HCA2146/2007, the same bank claims against the 1^st defendant Cheong Bun Kwan (“Cheong”) and the 2^nd defendant Yeung Che Lim (“Yeung”) for the same amount in their capacity as guarantors.  The plaintiff relies on a Guarantee and Indemnity dated 8 November 2005.  It is in the standard terms, as one would expect from other similar guarantees issued in favour of a bank. For the present purpose, it is not necessary to set out the terms of this Guarantee and Indemnity. There is no challenge to either the terms or their validity.

6.  Judgment had previously been entered against Yeung.  This trial is thus only concerned with Cheong.

7.  Notwithstanding previous directions by the court, the defendants in these two actions, i.e. Long Label in HCA2226/2007 and Cheong in HCA2146/2007, have not filed any witness statements.  Today neither of them attends this trial.  There is also no previous application for any director to represent Long Label in HCA2226/2007.  

8.  Prior to the commencement of this trial, my attention was drawn to a letter dated 3 February 2009 sent by Cheong to the Registrar shortly before the checklist hearing on 11 February 2009.  In short, the letter suggested that Cheong was subject to detention by the Public Security Bureau in Mainland China during the period from 4 August 2008 to 8 September 2008 and thereafter bail was granted.  The letter suggested that one of the bail conditions was that Cheong should not leave Mainland China and for that reason he could not attend court on 11 February 2009 to deal with the checklist hearing.  On that basis, he invited the Registrar to stay these proceedings.  The plaintiff was notified of this letter, but no order of stay was made by Master Lung at the checklist hearing (and, in my view, rightly so).

9.  Attached to this letter from Cheong are two documents in Chinese.  One is called “拘留通知书” (translation: “detention notice”) which is dated 4 August 2008.  The second document is dated 8 September 2008 and is headed “取保候审决定书”(effectively a notice of bail).

10.  The second document confirmed Cheong has been granted bail.  It then said as follows :

「在取保候审期间，被取保候审人应当遵守下列规定：

一、未经执行机关批准不得离开所居住的巿、县；……」

11.  Although copies of these document have been provided by Cheong to the court back in February 2009, I do not think the matters stated therein provide a good reason for not proceeding with the present trial.  As I quoted above, the notice of bail stated that Cheong cannot leave the place where he lives without approval of the relevant enforcement authorities.  This would suggest that at least an application can be made by Cheong to the relevant enforcement authorities to vary the bail condition so as to allow him to come to Hong Kong to attend this trial.

12.  After the letter in February 2009 to the court, there is no update nor any further information from Cheong as to whether such application has been made and if yes, whether such application has been declined.  If no such application has been made, it does not lie in the mouth of Cheong to say this trial should be adjourned when the trial date has been fixed long time ago.  This court has to consider both the interest of Cheong and Long Label as well as that of the plaintiff.  The plaintiff cannot be made to wait indefinitely, especially when there is no indication as to when Cheong will no longer be subject to the above-mentioned bail condition.

13.  Further at the beginning of this trial, Mr Gary Lam, counsel for the plaintiff in both actions, has produced and shown to this court various affirmations of service filed by Mr Lai Chung Hung showing that the notice of appointment of hearing, the bundles for this trial and also the skeleton submissions and authorities prepared by counsel for the plaintiff has been sent to the address in Mainland China which is the same address in Guangzhou given by Cheong in the above-mentioned letter dated 3 February 2009.  I am satisfied that Cheong and Long Label have sufficient notice of this trial.

14.  In the circumstances, although Cheong and Long Label do not attend today’s trial, I allow this trial to proceed.

15.  The plaintiff called one witness, i.e. Mr Churchill Chan.  He confirmed the contents of his two witness statements filed in these actions.  Mr Chan has also helpfully submitted an updated table (exhibit P1) dealing with the principal and also the updated calculation of interests in relation to the claim made by the bank, i.e. in relation to the Letters of Credit with deal no. 029011237170 and also deal no. 029011237161.  The current amount of the debt owed by Cheong to the bank inclusive of both principal and interest is USD774,138.42.

16.  There is no evidence to contradict the plaintiff’s case.  In the circumstances, I accept the evidence of Mr Chan, which is also supported by the documents included in the bundles.  The quantum of the plaintiff’s claim is supported by the table (exhibit P1) handed up by Mr Chan in the course of his evidence.  For these reasons, I rule that the plaintiff has proved its claims in these actions and I will give judgment in favour of the plaintiff in both actions.  The formal orders would be based on the prayer contained in the two Statements of Claim. 

17.  First of all, in HCA2226/2007, the prayer appears on page 4 of the relevant hearing bundle.  The changes would be the figure.  Instead of USD640,553.42, it will be changed to USD774,138.42.  The date from which interest is to run, i.e. the date of 27 June 2007 as pleaded in the Statement of Claim, will be changed to the date of today.  I will also award costs of this action in favour of the plaintiff.  So there will be an order in terms of paragraphs (a), (b) and (c) of the prayer set out in the Statement of Claim in HCA2226/2007 as amended above.

18.  In relation to HCA2146/2007, the amount of the judgment will be the same.  So in relation to the prayer set out at the end of the Statement of Claim filed in that action, which starts from page 4 of the relevant bundle, the figure in paragraph (a) will also be changed to USD774,138.42.  As to paragraph (b) that is the claim for interest, again the principal sum will be changed and then the date from which interest is to run will also be changed from 27 June 2007 to the date of today.  In paragraph (c) of the prayer, the plaintiff asks for costs of this action on a full indemnity basis.  Upon the explanation by counsel for the plaintiff, I am satisfied that this higher scale of costs can and should be awarded pursuant to the proviso in clause 1 of the Guarantee and Indemnity relied on by the plaintiff in this action.  The formal order should be drawn up by those instructing Mr Lam.