DBS BANK (HONG KONG) LTD v. HONOUR ELITE CORPORATION LTD AND ANOTHER

HCMP 69/2025 &
HCMP 70/2025 &
HCMP 71/2025 &
HCMP 72/2025
(Heard Together)

[2026] HKCFI 401

HCMP 69/2025

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLEANOUS PROCEEDINGS NO 69 OF 2025

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AND

HCMP 70/2025

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLEANOUS PROCEEDINGS NO 70 OF 2025

________________________

___________

________________________

AND

HCMP 71/2025

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLEANOUS PROCEEDINGS NO 71 OF 2025

________________________

___________

________________________

AND

HCMP 72/2025

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLEANOUS PROCEEDINGS NO 72 OF 2025

________________________

___________

________________________

(Heard Together)

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J U D G M E N T

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A.  INTRODUCTION

1.  Before the Court are mortgagee actions commenced by 4 originating summonses filed by the Plaintiff (“DBS Bank”) on 14 February 2025, in respect of 4 properties against 4 defendant (“Mortgagors”) and a common guarantor (“Mr Yuen” or “Guarantor”), (collectively “the Defendants”). DBS Bank seeks summary judgment for payment of all outstanding sums of money secured by the 4 mortgages against the Defendants; and delivery of vacant possession of the 4 mortgaged properties.

2.  The Defendants submit that DBS Bank was not entitled to call in the loans under the Mortgages because the borrowers have always repaid the loans on time. It was DBS Bank who had breached the “prevention principle” (defined below) in preventing the Defendants from performing their end of the obligations. The Defendants also allege that DBS Bank had denied access to their accounts and unreasonably refused to issue consent letters to allow the Mortgagors to lease out the mortgaged properties (“the Consent Letters”).

3.  The Defendants issued summonses in each action on 27 March 2025 for an order that the originating summonses be consolidated and continued as if the matter has been begun by writ (“Conversion Summonses”).

4.  DBS Bank does not oppose the hearing of the originating summonses together because of the substantial overlap of facts and common issues. However, its position is that the originating summonses are simple mortgage actions which can be disposed of summarily. The issue concerning breach of confidentiality involves an unsubstantiated claim by an entity irrelevant to the present proceedings. There is also no basis to suggest that DBS Bank was under any duty to issue Consent Letters “reasonably”. DBS Bank submits that none of the issues are triable.

5.  There is also a summons dated 23 July 2025 whereby the Defendants apply to file and serve the 2^nd affirmation of Yuen Kwok Hei. There is no opposition from DBS Bank and I allow the application.

B.  BACKGROUND

6.  The Mortgagors in these 4 sets of proceedings are Honour Elite, Legend World, Happy Global and Universal Talent. They each hold an office at Billion Plaza 2.

7.  The Borrowers are (a) the Mortgagors and (b) CNA Metals China Limited (“CNAM”) and Mr Yuen trading as Zen Recycling. Mr Yuen is the sole director and shareholder of CNAM and the Guarantor of liabilities under the Mortgages.

8.  The Mortgagors each entered into a mortgage (collectively the “Mortgages”) and a set of banking facilities (the “Banking Facilities”) secured by the Mortgages with DBS Bank as the lender, tabulated as follows:

Mortgagor	Mortgage Date and Property	Banking Facilities Date and Amount
Honour Elite	23 March 2016; Office 18A of Billion Plaza 2	29 December 2015 for an instalment loan of HK$11,500,000
Legend World	6 January 2016; Office 18B of Billion Plaza 2	15 September 2015 and 16 April 2019 for an instalment loan of HK$6,900,000
Happy Global	3 February 2016; Office 18D of Billion Plaza 2	29 December 2015 and 16 April 2019 for an instalment loan of HK$7,000,000
Universal Talent	10 November 2015; Office 18E of Billion Plaza 2	15 September 2015 and 16 April 2019 for an instalment loan of HK$8,900,000

9.  Each set of Banking Facilities provides that:

(1)  Repayments are to be made by 180 monthly instalments at an interest rate of 3% below prime rate per annum on the outstanding amount.

(2)  The Banking Facilities are repayable on demand by DBS Bank. DBS Bank has the overriding right at any time to require immediate payment of all principal, interest, fees and other amounts outstanding under the Banking Facilities (“Overriding Right Clause”).

(3)  All payments by the Mortgagors to DBS Bank shall be made without any set-off, counterclaim, deduction, withholding or condition of any kind (Term 3.2 of the Terms and Conditions of the Banking Facilities).

(4)  Overdue sums will be subject to the DBS Bank’s then prevailing overdue or over limit interest rate (Term 11.4 of the Terms and Conditions of the Banking Facilities).

10.  Each of the Mortgages contains, amongst others, the following express terms.

11.  The term “Obligations” is defined in Clause 1 as:

“all principal, interest and other amounts (whether present, future, actual and/or contingent) from time to time owing by the Borrower to the Lender on any current and/or other account and all other liabilities and obligations whatsoever (whether present, future, actual and/or contingent) of the Borrower to the Lender whether as principal or guarantor” (emphasis added)

12.  Clause 6.1(a) provides that the Mortgagor covenants not to make any Disposal (defined in Clause 1 to include any sale, assignment, transfer, lease, tenancy, licence, etc.) over the whole or any part or parts of the Mortgaged Property except with the prior consent in writing of DBS Bank;

13.  Clause 7.1(a) provides that:

“The Lender shall be entitled to declare all or any part of this security hereby constituted immediately enforceable at any time if: (a) the Mortgagor and/or the Borrower shall have failed to comply with a demand for repayment of the Obligations or any part thereof” (emphasis added)

14.  Clause 7.3 provides that:

“Notwithstanding anything to the contrary contained in any facility letter, instrument, or other agreement or document to which the Mortgagor and/or the Borrower (if applicable) and the Lender are parties, the Lender shall be under no liability at any time after the occurrence of an Event of Default to honour any further obligations to provide or to continue to make available the Facilities or any other banking facilities under any arrangements relating to them and all term Ioans and other moneys, obligations and liabilities hereby secured not otherwise so repayable, shall become repayable immediately on demand, together with interest accrued thereon to the date of repayment in full, and cash cover shall be provided on demand for all contingent liabilities notwithstanding that the maturity thereof shall not have arrived or that the Borrower shall not have been called upon to pay thereunder.” (emphases added)

15.  Clause 8.1(a) provides that:

“If any Event of Default shall have occurred, then it shall be lawful for the Lender at any time thereafter without any consent of the Mortgagor or the Borrower or of any person: (a) to enter into and take possession of the Property and for that purpose to take any legal proceedings and thenceforth to hold, possess and enjoy the Property and to take and receive the rents and profits thereof without any lawful interruption or disturbance by the Mortgagor or any other person”.

16.  The Guarantor entered into 4 guarantees dated 1 March 2016, 14 December 2015, 19 January 2016 and 19 October 2015 respectively (“the Guarantees”). He undertook to pay to DBS Bank on demand all sums of money and liabilities owing to DBS Bank by the Mortgagors, as primary debtor and not merely as guarantor or surety and as if it had indemnified DBS Bank in full in respect of all sums of money and liabilities (Clauses 1 and 2).

17.  At all material times, the Guarantor was the sole guarantor in respect of the liabilities of the Mortgagors. Notwithstanding Section D Item (6) of the Banking Facilities, DBS Bank released the Mortgagors from the condition precedent to provide a guarantee from CNAM and CNAM did not execute any guarantee in favour of DBS Bank.

18.  By letters dated 30 September 2024, DBS Bank demanded that each of the Mortgagors and the Guarantor do repay the following outstanding indebtedness under its respective Banking Facilities (the “Outstanding Sums”) within 7 days of the letters (“the Demand Letters”):

The Mortgagors	Outstanding Sums as Demanded
Honour Elite	HK$6,365,939.17 (as of 11 September 2024)
Legend World	HK$3,476,833.27 (as of 11 September 2024)
Happy Global	HK$3,632,967.32 (as of 11 September 2024)
Universal Talent	HK$4,381,658.51 (as of 11 September 2024)

19.  The Mortgagors and the Guarantor did not pay and continues not to pay the Outstanding Sums to DBS Bank.

20.  DBS Bank thus issued the present mortgagee actions to recover the Outstanding Sums and vacant possession of the Mortgaged Properties.

C.  DEFENDANTS’ CASE

26.  The Defendants allege that DBS Bank has deliberately failed to present the full context leading up to the issue of the Demand Letters, which was directly caused by DBS Bank’s breach of confidentiality owed to CNAM. In gist, the defences are as follows:

27.  Firstly, DBS Bank had no right to call in the loans as the Mortgagors have never defaulted in mortgage repayments (“No Right to Call in the Loans Defence”).

28.  Secondly, DBS Bank was in breach of the prevention principle by breaching its duty of confidentiality to CNAM and disclosed confidential information on CNAM’s fund flow (“Information Leak”) to a major client of CNAM called Realord Group Holdings Limited (“Realord”), without CNAM’s authorization. It caused CNAM to lose Realord as a client. The Defendants alleged that DBS Bank’s breach of duty to CNAM directly led to a drastic drop in CNAM’s revenue, it main income stream and the loss was not one off. It in turn led to CNAM’s inability to meets its monthly mortgage repayments. The breach of DBS Bank would give rise to a defence and counterclaim of CNAM which may avail the Defendants. (“Breach of Prevention Principle Defence”).

29.  Mr Yuen demanded DBS Bank to conduct an investigation into the Information Leak. DBS Bank claimed to have handled all enquiries “in accordance with [its] procedures”. It was revealed from the video recording of DBS Bank, that one of the callers who had asked for information about the CNAM Account was a Ms Li who was a native Mandarin speaker. DBS Bank’s service operator asked 2 questions. Ms Li did not directly answer the first. She gave a vague response to the second, but the service operator voluntarily divulged further details of the relevant transaction. Having dealt with Ms Cheng of CNAM (a native Cantonese speaker) for years, DBS Bank had not verified Ms Li’s identity, capacity and authority for making the enquiry.

30.  On 26 June 2024, through its solicitors, CNAM demanded compensation of over US$18 million from DBS Bank, as full and final settlement of the loss and damage caused by the breach.  DBS Bank continued to deny the breach.

31.  Since CNAM demanded DBS Bank to compensate it for the Information Leak and escalated the matter, DBS Bank took the following measures which caused loss to the Mortgagors and CNAM (“Miscellaneous Measures”):

(1)  In around July 2024, the accounts of the Mortgagors had been blocked by DBS Bank, such that the Mortgagors’ tenants were unable to deposit their rent into the respective accounts. The tenant of Happy Global paid rent to DBS Bank directly.

(2)  In around August 2024, DBS Bank unreasonably withheld the issuance of the Consent Letters to the Mortgagors concerning their respectively Properties. This led to tenants delay or refusal to pay rent. Without the rental income and access to funds in the bank accounts, it was impossible for the Mortgagors to pay the mortgage repayments.

(3)  On around 30 September 2024, DBS Bank had helped itself and purportedly notified the tenants to pay the rent to DBS Bank directly.

32.  The Defendants therefore submit that DBS Bank’s series of acts following the Breach ultimately induced the alleged Event of Default. They were deliberate attempts to interfere with CNAM’s business and relationships with the tenants, which caused significant loss to CNAM. There is an arguable defence and counterclaim against DBS Bank and there exists substantial dispute of facts which warrants conversion of the present proceedings into a writ action.

D.  DBS BANK’S CASE

33.  DBS Bank submits that none of the Defences are arguable.

(1)  CNAM is not a party to the present proceedings and not a borrower under the relevant Banking Facilities. DBS Bank is only enforcing the Mortgages and Guarantees. The alleged breach of duty did not relate to any Defendant but only CNAM. Mr Yuen’s complaint letter to DBS Bank did not mention any loss or damage suffered by the Defendants. The breach is thus irrelevant to these proceedings and is merely an attempt to delay DBS Bank’s enforcement of the Mortgages and Guarantees.

(2)  The Defendants have jointly and severally covenanted to pay on demand all Obligations to DBS Bank under the respective Mortgage and Guarantee and the alleged breach of duty and counterclaim do not affect DBS Bank’s present claim.   

(3)  DBS Bank did not unreasonably withhold the issuance of the Consent Letters.

(a)  It would not issue Consent Letters where there was any default of repayment of loans secured by the mortgage.

(b)  In respect of Honour Elite, Legend World and Universal Talent, they had never obtained any Consent Letters from DBS Bank to the existing tenancies. DBS Bank only discovered the tenancies when it requested those Mortgagors to provide the tenancy agreements for assessment of those Mortgagors’ repayment ability during annual reviews.

(c)  Honour Elite, Legend World and Univeral Talent have kept all he rental proceeds in respect of their Mortgaged Properties and yet, one by one, they started to default in payment since August or September 2024.

(4)  DBS Bank had not blocked the CNAM Account nor the Mortgagors’ accounts; deposits could still be made to those accounts.

34.  DBS Bank maintains that it had conducted proper verification before disclosing the confidential information to Ms Li. Even if there was breach of duty, CNAM’s alleged loss was only an estimate, without documentary evidence. In any event, there could be multiple reasons why Realord would no longer conduct business with CNAM, including the conduct and performance of CNAM.

E.  LEGAL PRINCIPLES

E1.  O. 88 Applications

35.  Even though the matter is litigated by way of O. 88 procedure, the Court can give judgment summarily in favour of the plaintiff if there is no triable issue on the evidence. Unlike O. 14 applications where the defendant is obliged to provide sufficient grounds to justify the action continuing to trial, the burden in summary judgment applications under the O. 88 procedure is on the plaintiff to justify its entitlement to summary judgment. However, once this is prima facie demonstrated on the evidence, it is then up to the defendant to show that he does have a defence to the claim. In this way, there may in practice be little difference between an application for summary judgment in originating summonses and an application for summary judgment. See Dah Sing Bank Ltd v Sun Create Richly Holdings (Asia) Ltd [2024] HKCFI 1512 at §13, DHCJ Le Pichon.

36.  Summary judgment is only for clear cases. It should not be applied in cases where there are serious material factual disputes or a difficult point of law not fit for summary determination unless it is obvious that the defence put forward in frivolous and practically moonshine. The question is whether the Defendants’ assertions are believable, not whether they are to be believed. It is not appropriate to embark on a mini-trial on affidavits: Elegant Mark Investment Ltd v Dai Yumin [2021] HKCFI 3168 at §23, DHCJ Winnie Tsui.

E2.  Conversion to Writ

37.  The principles have been set out in, e.g. HSBC v King Wai Piece Goods Company Ltd [2025] HKCFI 1371 in §58, Au-Yeung J.

(1)  There is no hard and fast rule as to what cases can properly be dealt with by the originating summons procedure.

(2)  It is not the case that the existence of factual disputes will invariably render the originating summons procedure inappropriate, although it is a factor to be taken into account when exercising the discretion.

(3)  Other relevant considerations include whether the procedural advantages of an action begun by writ, such as delivery of pleadings and discovery, justify the exercise of the power under O. 28, r. 8 and whether in so ordering the ultimate resolution of the dispute would be significantly delayed.

(4)  If the issues of fact have been identified and can be properly resolved or the disputes of fact are not central to the court’s determination, the court is entitled to proceed to determine the action without converting it into a writ action.

(5)  With regard to whether to hear the summons on oral evidence, what the court has to consider, as stipulated in O. 28, r. 4(3), is what is required for the just, expeditious or economical disposal of the proceedings.

F.  NO RIGHT CALL IN THE LOANS DEFENCE

F1.  No reasons given by DBS Bank for demanding immediate repayment

38.  Firstly, there is no dispute that the Mortgagors had been up to date in terms of monthly repayments before the Demand Letters were issued.  And those Mortgages have been in existence for 8-9 years by the time the Demand Letters were issued.

39.  Secondly, the Demand Letters did not state that there was a default or identify an Event of Default. All that the Demand Letters stated was that DBS Bank demanded immediate repayment “pursuant to the Mortgage” or “the Guarantee and Indemnity”. Neither the Demand Letters nor Lau-1^st[1] have explained the reasons for calling in the loans. They did not even assert that CNAM was in default.

40.  In fact, in the Demand Letters dated 11 September 2024, there was a general allegation that the Defendants and their group of companies had defaulted on the repayment of the loans. There was also a reference to a demand letter dated 24 June 2024, which is not in the hearing bundles for this hearing, nor is it mentioned in Lau 1^st. Mr John Chan, confirms that he is not relying on the 24 June 2024 letter.

41.  Thirdly, at this hearing, Mr John Chan, counsel for DBS Bank, confirms that he does not rely on the unauthorized tenancies (raised only in Lau-2^nd) in support of these claims.

42.  Fourthly, aside from a fleeting reference to the Banking Facilities in §5 of Lau-1^st, DBS Bank has never purported to exercise its rights against the Mortgagors under the Banking Facilities Letter. DBS Bank itself confirms that “while CNAM is a party to the Mortgages, the subject Banking Facilities in default are only between the Plaintiff and the 1^st Defendant in all 4 actions. CNAM is not a borrower under these Banking Facilities.

43.  Lau-2^nd once again confirmed that DBS Bank was “only seeking enforcement of (i) the Mortgages against the 1^st Defendants in all 4 actions; and (ii) the Guarantees against Mr Yuen as 2^nd Defendant in all 4 actions. Mr John Cham also confirms that DBS Bank is not relying on CNMA’s default.

44.  Neither Lau-1^st nor Lau-2^nd mentioned anything about termination of the Banking Facilities.

45.  As pointed out by Mr Tam, when the originating summonses were first heard before Master Jocelyn Leung, the skeleton submissions of DBS Bank dated 31 March 2025 did not based its claims on the Banking Facilities Letter or the Overriding Right Clause thereunder.

46.  Fifthly, the present case is distinguishable on the facts with 2 authorities that appear to have similar facts:

(1)  HSBC v King Wai Piece Goods Co Ltd [2025] HKCFI 1371. Au-Yeung J. In that case, the mortgagor did not default in monthly repayments either (§16). The bank nevertheless issued a demand letter with express reference to the Overriding Right Clause under the facility letter to terminate the facilities and right of repayment on demand under its facility letter to call in the loans (§2, 23). The bank in fact required the mortgagor to propose a plan for refinancing the loans due to the falling property market of which the subject properties formed part. The mortgagor defaulted in meeting the refinancing deadline (§§18(4)-22). The Court upheld the bank’s right to rely on the Overriding Right Clause. In the present case, DBS Bank never purported to terminate the Banking Facilities or imposed another time timetable for mortgage repayments which the Defendants had failed to meet.

(2)  Habib Bank Zurich (Hong Kong) Ltd v Tee Vee Brands International Ltd [2025] HKCFI 2100, DHCJ Grace Chow. There, the 2^nd defendant had repeatedly failed to make timely repayments, eventually prompting the plaintiff to terminate the facilities pursuant to the facility letter (§11). That was distinguishable from the Mortgagors in the present case who had never been in default.

47.  I find that it is arguable that DBS Bank has not given reasons for demanding immediate repayment.

F2.  No Event of Default under the Mortgages

48.  To say that DBS Bank was entitled to issue a letter for repayment on demand by the Mortgagors without showing breach of the Mortgage terms is unsustainable.

49.  Firstly, Clause 2.1 of the Mortgages expressly stipulated that the power to make such demand is subject to “such terms and subject to such conditions”.  What are the terms and conditions?

50.  Under Clause 7 of the Mortgages, there should be an Event of Default which would entitle DBS Bank to “declare all or any part of this security hereby constituted immediately enforceable at any time”. An Event of Default was not identified in the Demand Letters or Lau’s affirmations. To issue a demand letter without reasons and say that non-compliance with the demand letter is an Event of Default is putting the cart before the horse.

51.  Secondly, the Mortgages were to be security for the loans granted to the Mortgagors, which were and are business entities. The loans were agreed to be instalment loans. To say that such loans could be called in at any time even though the Mortgagors have not been default would be in breach of the Mortgages, against commercial sense and is not conducive to commercial operations.

52.  I find that it is arguable that there was no event of Default under the Mortgages.

G.  BREACH OF THE PREVENTION PRINCIPLE DEFENCE

G1.  The prevention principle

53.  Under the prevention principle, a person is not permitted to take advantage of his own wrong. A contractual party who is in breach of an obligation owed to the other party will be prevented from asserting rights which arise in consequence of his breach: Kensland Realty Ltd v Whale View Investment Ltd (2001) 4 HKCFAR 381, §§91, 96.

54.  Two things need to be established:

(1)  Breach, ie the relevant party’s “wrong” involves his breach of contract in respect of an obligation owed to the other party; and

(2)  Causation, ie that the contractual rights which the relevant party is seeking to assert or claim arise as a direct consequence of that prior breach.

See Hong Jing Co Ltd v Zhuhai Kwok Yuen Investment Co Ltd [2013] 1 HKLRD 441 (CA), §47.3; Kensland Realty, at §94-95.

G2.  Breach by DBS Bank

55.  There are 2 arguable breaches by DBS Bank: (i) calling in the loans without reason; and (ii) breach of duty of confidentiality in the customer-banker relationship between DBS Bank and CNAM.

G3.  First breach: calling in the loans without reason

56.  The duty of good faith between a mortgagor and mortgagee does not arise by contractual implication but by virtue of the creation of a mortgage: UBS v Rose Capital Ventures Ltd [2018] EWHC 3137 (Ch), §36. Chitty on Contracts, 35^th ed, §17-032.

57.  The correct test for whether a mortgagee’s exercise of powers was for the predominant purpose of recovery of the loan or whether a power would only be improperly exercised if it is no part of a chargee’s purpose to recover the debt secured or protect his security has been left open by the Court of Appeal: CCMD Overseas Ltd v Sinom Investments Ltd [2025] HKCA 678, §24, on appeal from [2024] 3 HKRD 579, §§39-41, DHCJ Maria Yuen (CFI).

58.  The question at this stage is whether the defendant’s evidence raises a sufficiently credible foundation on which the inference may (not must) be drawn at trial: CCMD Overseas (CFI), §50.

59.  The Defendants point out that after the purported investigation by DBS Bank on the Information Leakage, when the Defendants started escalating the complaints with DBS Bank, DBS Bank responded by the Miscellaneous Measures. Then the Demand Letters were issued without any Event of Default.

60.  With respect, I do not find the Miscellaneous Measures to be of assistance to the Defendants. Blocking of accounts in DBS Bank would not prevent the Defendants from using other bank accounts for their purposes and the Defendants are not saying that they did not have other accounts. When tenants could not deposit into the blocked accounts, they could and did pay the Defendants in other manner. The Mortgagors did receive the rents and kept them.

61.  I do not find withholding issue of Consent Letters and issuing rental assignments to the tenant to be of assistance to the Defendants either. I agree with DBS Bank that it had no duty to issue Consent Letters to the Mortgagors or to act reasonably in terms of issuing Consent Letters. The assignment of rents was to rightfully protect DBS Bank’s security.

62.  However, when one sees the whole factual matrix, this act of DBS Bank in not granting the Consent Letters to the Mortgagors who, to the knowledge of DBS Bank, had been leasing out the Properties even in the absence of prior consent of DBS Bank, had been faithfully honouring their obligations under the Mortgagors until DBS Bank created an Event of Default for them, the Banks’ refusal to grant Consent Letters was wholly irrational.

63.  Such conduct, taken together with the act of calling in the loans without reasons as analyzed in Section F above, creates a sufficient credible foundation on which an inference may be drawn that DBS Bank’s recovery actions were not taken in good faith.

G4.  Second breach: breach of confidentiality in a customer-banker relationship

64.  It is trite that a bank owes a duty of confidentiality to its customer. It is an implied term of a banker’s contract with his customer that the banker shall not disclose the account, or transactions relating thereto, of his customer except in certain circumstances: Tournier v National Provincial and Union Bank of English [1924] 1 KB 461 (CA), 480. The duty of confidentiality “must extend at least to all the transactions that go through the account” (at 485).

65.  The exceptions to the principle are (a) where disclosure is under compulsion of law; (b) where there is a duty to the public to disclose; (c) where the interests of the bank require disclosure; and (d) where the disclosure is made by the express or implied consent of the customer: Tournier, at 473. There exceptions do not apply to the present case.

66.  DBS Bank disclosed confidential information of CNAM to Realord.  This is denied by DBS Bank.

67.  DBS Bank denied that there was a breach of confidentiality or that CNAM has a counterclaim. Moreover, CNAM is not a defendant in these proceedings. DBS Bank is entitled to choose who to sue and need not sue all persons liable: Hong Kong Civil Procedure 2025, Vol 1, §15/4/14. Even if CNAM has a right to sue DBS Bank, that right arose out of the banker customer relationship and not the Mortgage or Banking Facility Letters. The “breach” under the prevention principle should apply to breach of the contract that is enforced.

68.  It is arguable that Information Leak was in breach of the duty of confidentiality. It is also arguable that DBS Bank has not adopted a reasonable verification process before disclosing the information requested by who turned out to be a third party. Other than referring to some superficial details of the last transaction, such as the date and amount, the impersonator had provided vague or outright incorrect responses. The impersonator also spoke Mandarin Chinese which had never been a language used by the authorized callers of CNAM.

69.  The alleged “precautionary measures”, internal procedures or investigation, “comprehensive investigation and extra precautionary measures” adopted by DBS Bank were not disclosed to the Defendants despite requests. DBS Bank did not even produce the audio recordings which were plainly in its possession and despite its dispute over the contents of the recordings.

70.  The “breach” was not directly of the Mortgages or Guarantees. However, it is arguably within the reasonable contemplation of DBS Bank that breach of the duty of confidentiality may have impact on the ability of CNAM (a commercial entity) to repay under the Mortgages. This may be an arguable point of law.

G5.  Causation

71.  Two relevant consequences flowed from DBS Bank’s breach: (a) CNAM lost Realord, a major client; (b) lost tenancies; and (c) accounts were blocked.

72.  With regard to item (a), DBS Bank’s contention that the Defendants cannot prove causation is untenable. The Mortgagors and Guarantor have explained that Realord was a major client of CNAM, who has ceased conducting business with CNAM. There is nothing inherently unbelievable about this. It is supported by the draft financial statements of CNAM prepared by an accountant, which showed the gross revenue to have dropped drastically (from US$147.5 million in 2023 to US$54.4 million in 2024). This is consistent with the business losing a major client.

73.  The disputes as to breach and causation are triable issues. Even if the evidence of the Mortgagors and Guarantor is inadequate or even weak at this stage, there should be no trial on affidavits.

74.  The failure of DBS Bank to bring in CNAM as a defendant is deafening – to rely on the status of CNAM as a separate entity and avoid a counterclaim that can stop DBS Bank from getting judgment against the Mortgagors and Guarantor. It brings into question DBS Bank’s good faith.

75.  However, the fact that CNAM is not a defendant in these proceedings should not affect the overall picture. It is not difficult to see that, having taken out the same loan supported by the same Mortgages and Guarantees, the Mortgagors, Guarantor and CNAM were inter-dependent among them at a business and practical level.

76.  I accept that it was not the concern of DBS Bank how the Mortgagors and CNAM got their money to repay the loans. However, where CNAM may have a defence and a counterclaim against DBS Bank, I do not see why that defence and counterclaim should not avail the Mortgagors and Guarantor, who should be liable as primary obligors for the debts of CNAM.

77.  With regard to item (b), it may not give rise to a counterclaim because under Clause 6.1(a) of the Mortgages, there was no duty on the part of DBS Bank to consent to any leasing out of the Mortgaged Properties or to act reasonably in issuing Consent Letters.

78.  With regard to item (c), the Defendants say that the blocking of their had prevented the tenants from depositing rent. This had caused the Mortgagors to be unable to repay the mortgage instalments.

79.  I repeat my analyses in paragraph 60 above. It is difficult to see what potential loss the Defendants have suffered from in respect of item (c).

80.  I therefore hold that only item (a), the loss of a major client as a result of DBS Bank’s breach of duty towards CNAM can give rise to an arguable defence for the Defendants.

H.  CONVERSION SUMMONS

81.  I am satisfied that there are triable issues and the Defendants are entitled to unconditional leave to defend.

82.  The triable issues involve dispute as to facts. I therefore consider it appropriate to convert the proceedings as if they were commenced by writ. There shall be an order in terms of the Defendants’ Conversion Summonses.

I.  CONCLUSION AND COSTS

83.  There are triable issues under the No Right to Call in the Loans Defence and loss of a major client for DBS Bank’s breach of the prevention principle. I therefore order as follows:

(1)  There be leave to file the 2^nd affirmation of Mr Yuen Kwok Hei; service be dispensed with.

(2)  There be unconditional leave to the Defendants to defend the originating summonses.

(3)  On a nisi basis, costs of the originating summonses be in the cause;

(4)  The 4 originating summons be consolidated and continued as if begun by writ.

(5)  Upon consolidation, Honour Elite, Legend World, Happy Global and Universal Talent shall be designated as D1 to D4 (the designation can be decided by the Plaintiff when it drafts the statement of claim) and Mr Yuen shall be D5.

84.  On a nisi basis, costs of the Defendants’ summonses for consolidation be the Defendants’ costs in the cause.

85.  I thank counsel for their assistance.