MAGNIFICENT MELODY LTD v. CHAN JOHN LOONG FAI AND OTHERS

HCMP1485/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1485 OF 2012

--------------------------

---------------------

D E C I S I O N

---------------------

1.  This is an application by the plaintiff for summary judgment against the defendants. The carriage of the defence in this action has been on the shoulders of the 1^st defendant (“Chan”). Chan has been acting in person since 24 May 2013.

2.  Yesterday morning, this court received a letter (“Letter”) from Chan stating that he is unable to make himself available for this hearing.  The reason being that he is heavily engaged in resolving the financial troubles of the 3^rd defendant (“Lanco”) in the Mainland in his capacity as the Chairman of it and the Legal Representative of a joint venture company in which Lanco is interested.    

3.  The Letter also stated that Chan is unable to pay his lawyers.  He asked for this hearing to be adjourned for 3 months.

4.  Normally, the court would not be receptive to such a late application for adjournment.  There is considerable force in the submission of Mr Barlow, who appears for the plaintiff, that the history of these proceedings indicates unjustified delay attributable to the action of Chan.  However, I should say that whilst the reasons for adjournment are not entirely convincing, the evidence is that despite the fact that Lanco is in serious financial trouble (it is in receivership), Chan has been doing what he can to resuscitate it (see Bundle 1, p 71, §7).

5.  The most important consideration for the present purpose must be the interest of justice.  I must say that the circumstances of this case are such that I would not feel that the interest of justice has been served by letting this application be decided in the absence of Chan. 

6.  The crux of the dispute in this case concerns the plaintiff’s entitlement in terms of shares in Lanco and payments under 2 written agreements (“Agreements”). The plaintiff was, and is, a company owned and controlled by Mr George Chu, who is a practicing barrister.  The evidence shows that the Agreements are intricately bound to two loan transactions in favour of Lanco.  There is no dispute that the loans were procured by Chu and that he was, in accordance with the terms of the loan agreements, handsomely rewarded for his effort (Bundle 2, p 424 and 505, cl. 8.3).

7.  It is Chan’s case that shortly before the loan transactions were concluded, Chu made unwarranted demands for extra benefits in terms of shares in Lanco and payments and threatened that the transactions would go off if his demands were not met.  The defendants yielded to Chu’s demands.  Hence, the Agreements are not genuine in that the payments had been disguised as director’s remuneration payable to Chu.  In fact, Chu was not appointed a director of Lanco and did not perform any service which would have entitled him to any such remuneration.  One of the key issues raised by the defence is that there was no consideration provided by the plaintiff under the Agreements.

8.  Chan’s case is hotly disputed by Chu.  I have yet to hear oral submissions in this application and I should say no more about the merits of the same, save that it is not the function of the court to decide disputed evidence on affidavits.

9.  For these reasons, I accede to the application to adjourn this application for 3 months.  Given the lateness of the adjournment, the costs of this adjournment must be borne by Chan.