FUBON BANK (HONG KONG) LTD v. LEE HING COMPANY ASIA LTD AND OTHERS

HCMP 422/2024

[2025] HKCFI 3438

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 422 OF 2024

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J U D G M E N T

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Introduction

1.  By an Originating Summons dated 14 March 2024 (“the OS”), the Plaintiff (“P”) commenced these proceedings against the Defendants herein (“D1” to “D4” respectively, and “Ds” collectively) under Order 88 of the Rules of the High Court, seeking the following reliefs:

(1)  Payment of monies due to P under the following financial documents (“the Financial Documents”):

(a)  Legal Charge dated 20 September 2016 (“1^st Legal Charge”), in which P is the lender, D1 is the borrower, and D2 is the mortgagor;

(b)  Legal Charge dated 20 September 2016 (“2^nd Legal Charge”), in which P is the lender, D1 is the borrower, and D3 and D4 are mortgagors;

(c)  Deed of Guarantee dated 15 March 2013 (“1^st Deed of Guarantee”), by which D3 granted a guarantee to P of all monies due by D1 to P;

(d)  Deed of Guarantee dated 5 September 2016 (“2^nd Deed of Guarantee”), by which D2 granted a guarantee to P of all monies due by D1 to P;

(e)  Deed of Guarantee dated 6 September 2016 (“3^rd Deed of Guarantee”), by which D3 granted a guarantee to P of all monies due by D2 to P;

(f)  Facility Letter dated 3 February 2023 (“the 2023 Facility Letter”, which was signed by all Ds), by which P granted to D1 a term loan with an upper limit of HK$20,286,000, and a term loan with an upper limit of HK$12,435,000 (“the 1^st Term Loan” and “the 2^nd Term Loan” respectively, and “Loans” collectively);

(2)  Delivery of vacant possession to P of the following properties:

(a)  Portion B on 13/F including Unit B of Main Roof of Wah Hing Industrial Building, 2-6 Ma Kok Street, Tsuen Wan, New Territories (“the 1^st Property”) pursuant to the 1^st Legal Charge;

(b)  Flat F (including the roof thereof) on 28th Floor of Block 1 of Pokfulam Gardens and Car Parking Space No. 68 on Lower Ground Floor Carpark 4 of Pokfulam Gardens, No. 180 Pok Fu Lam Road, Hong Kong (“the 2^nd Property”) pursuant to the 2^nd Legal Charge.

2.  In this hearing, P is represented by Mr Jonathan Lee of counsel. D3 acts in person. D4 is represented by Mr Victor Cheng of counsel.

3.  In these proceedings, before 31 July 2025, D1 to D3 were represented by Messrs. David Y.W. Fong & Co (“DFC”) at all times. On 30 July 2025, DFC obtained an order allowing them to cease to act for D1 to D3 in these proceedings. However, by the time of the hearing, that order had not been served on all the other parties in this case.[1] Accordingly, DFC were still the solicitors for D1 to D3 at the time of the hearing before me.[2] At the beginning of the hearing, D3 offered an undertaking that he would file and serve a notice to act in person on 31 July 2025. Upon that undertaking, I allowed D3 to make submissions for himself in the hearing. For D1 and D2, DFC were still their solicitors at the time of the hearing. Regrettably, DFC, without seeking leave from the Court excusing their attendance, did not attend the hearing.

Background

4.  P is a licensed bank in Hong Kong. D1 and D2 are companies incorporated in Hong Kong. D3 is the sole shareholder and director of D1 and D2. D3 and D4 are husband and wife.

5.  In 2013, D1 became a customer of P. By a facility letter dated 13 March 2013, P granted a trade facility to D1 up to HK$2,000,000. Further, P granted to D1 a treasury facility of up to HK$8,000,000.

6.  On 15 March 2013, D3 executed the 1^st Deed of Guarantee in favour of P to guarantee all monies due by D1 to P.

7.  On 11 February 2016, due to losses accrued under the treasury facility, P issued demand letters to D1, D3 and others to terminate all treasury transactions and demand repayment due under the Treasury Facility.

8.  On 1 March 2016, P commenced legal proceedings against D1, D3 and others in HCA 534/2016 to recover the indebtedness due under the treasury facility.

9.  Subsequently, on 26 May 2016, P, D1 and D3 executed a settlement deed (“the 2016 Settlement”), which contained a term requiring D2 to mortgage the 1^st Property to P to secure all liabilities due by and obligations of, inter alia, D1 and D3.

10.  On 5 September 2016, D2 executed the 2^nd Deed of Guarantee in favour of P to guarantee all monies due by D1 to P.

11.  On 6 September 2016, D3 executed the 3^rd Deed of Guarantee in favour of P to guarantee all monies due by D1 to P.

12.  On 13 September 2016, the 1^st Legal Charge was executed over the 1^st Property and the 2^nd Legal Charge over the 2^nd Property. The 1^st Property is occupied by D2, and the 2^nd Property is occupied by D3 and D4.

13.  On 9 January 2023, P issued an email to D1-D3 with proposed terms for restructuring of loans. On 12 January 2023, D1-D3 accepted the loan restructuring proposed by P by email.

14.  On 3 February 2023, P issued the 2023 Facility Letter and advanced to D1 the 1^st Term Loan and the 2^nd Term Loan.

15.  According to P, on 7 February 2024, due to repeated failure to make punctual repayments, P exercised its overriding right to terminate the Loans and demanded for immediate repayment of all sums due and owing from Ds.

16.  On 14 March 2024, P issued the OS herein seeking repayment of outstanding monies and delivery of vacant possession of the 1^st Property and the 2^nd Property.

The principles

17.  As submitted by Mr Lee, the principles applicable to Order 88 proceedings are well-established. Those principles are as follows:[3]

(1)  Unlike Order 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 originating summons procedure is on the plaintiff to justify its entitlement to summary judgment.

(2)  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 or defences 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 under Order 14.

(3)  If the defendants can show that there are factual issues which cannot be resolved on the affirmations, then a trial is inevitable. But in discharge of their evidential burden is concerned, they are expected to condescend upon particulars as a defendant must do in resisting a summary judgment application.

(4)  Where oral representations are alleged, the defendant’s assertions are to be taken in the context of the background which is either undisputed or beyond reasonable dispute. This means that they should be tested against contemporaneous documents or circumstances to see if they are so incredible or contradicted that it becomes clear that the defence is a sham.

(5)  One also bears in mind that it is rare in modern commercial litigation to encounter a claim based on an agreement which is not only said to have been oral but of which there is no contemporaneous documentary record of any kind. The prevalence of emails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic imprint.

18.  Bearing these principles in mind, I now turn to consider the parties’ respective cases.

P’S CASE

19.  P is seeking the following:

(1)  payment of all monies due to P;

(2)  delivery of vacant possession to P of the 1^st Property and the 2^nd Property; and

(3)  costs on an indemnity basis.

In my view, P has demonstrated a prima facie case that it is entitled to have judgment.

20.  Payment of all monies

(1)  Having examined the evidence, I am satisfied that under the 2023 Facility Letter, as at 2 February 2024, the principals due from D1 to P under the 1^st Term Loan and the 2^nd Term Loan are HK$20,286,000 and HK$12,435,000 respectively, and the interests accrued on these loans are HK$379,956.78 and HK$239,741.91. Mr Lee has no objection that if I allow P’s claim, interest on the principals from 3 February 2024 to the date of the judgment be fixed at the prime rate plus 1%, and thereafter at the judgment rate until payment.

(2)  Mr Lee has drawn my attention to the following clauses in the Financial Documents:

(a)  Clause 2.01 of the 1^st Legal Charge, and Clause 2.01 of the 2^nd Legal Charge, which provide:

“In consideration of the Lender, at the request of the Mortgagor, agreeing to grant to the Borrower general banking facilities, the Mortgagor and the Borrower HIEREBY JOINTLY AND SEVERALLY COVENANT with the Lender that, subject as hereinafter provided, they will ON DEMAND, by notice in writing of the Lender made to the Mortgagor and/or the Borrower as hereinafter provided, PAY make good and discharge to the Lender……”

(b)  The preamble in the 1^st Deed of Guarantee, the 2^nd Deed of Guarantee and the 3^rd Deed of Guarantee:

“……I/We, the undersigned (hereinafter called “the Guarantor” which expression shall where not inapplicable include the Guarantor and his/their respective executors administrators and successors) HEREBY JOINTLY AND SEVERALLY GUARANTEE payment of AND AGREE TO PAY and SATISFY to the Financer ON DEMAND all sums or money and liabilities whether actual or contingent whether now or at any time hereafter owing or incurred lo the Financier from or by the Customer on any account of the Customer with the Financier or in any manner whatever whether as principal or surely and whether alone or jointly with any other person firm or corporation or from any firm in which the Customer may be a partner and in whatever name style or form……”

(c)  Clause 7 of the General Terms and Conditions of the 2023 Facility Letter:

“Notwithstanding anything contained herein, the Bank reserves its customary overriding right of repayment on demand in writing to the effect that it can at its sole discretion and at any time (a) suspend or terminate the Facilities and if the latter occurs, all amounts then outstanding (including accrued interest thereon) under the Facilities and. All other sums payable hereunder (if any) shall become immediately due and payable; and/or (b) demand additional security from the Borrower; and/or (c) demand immediate repayment of all outstanding sums due.”

(3)  By reason of the aforesaid clauses, I am of the view that D2 to D4 are also liable to P for the debts owed by D1 to P under the 2023 Facility Letter.

(4)  On 7 February 2024, P through its solicitors issued demand letters to Ds to require them to fully settle the indebtedness within the next 7 days, failing which legal proceedings would be instituted against them. Ds have failed to comply with the request made by P.

(5)  For the reasons above, in my view, P has demonstrated a prima facie case that it is entitled to have a judgment requiring Ds to repay the indebtedness as shown in subparagraph (1) above to P.

21.  Delivery of vacant possession of the 1^st Property and the 2^nd Property

(1)  The terms of the 1^st Legal Charge and the terms of the 2^nd Legal Charge are materially identical. Mr Lee refers me to the following clauses in the two legal charges:

(a)  Clause 6.01:

“If any Event of Default shall have occurred then it shall be lawful for the Lender at any time thereafter without any consent on the part of the Mortgagor and/or Borrower or of any person to:- (a) enter into and upon 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 receive the rents and profits thereof without any lawful interruption or disturbance by the Mortgagor or any other person”

(b)  As per Clause 5.01, “Events of Default” includes:

“(a) the Mortgagor and/or the Borrower makes default in the payment of the Secured Indebtedness or any part thereof following demand duly made”;

“(b) the the Mortgagor and/or the Borrower makes default in the payment on the due date and in accordance with the terms and conditions relating thereto of any principal or interest or instalment or other moneys outstanding and payable by the Borrower under any term loan or instalment loan account (whether demanded or not or any other loan, guarantee, indemnity or other indebtedness or obligation for borrowed moneys outstanding and payable by the Borrower).”

(2)  Mr Lee also relies on section 51(1) of the Conveyancing and Property Ordinance, which provides that there shall be implied in any legal charge or equitable mortgage by deed, the powers, exercisable by the mortgagee, mentioned in the Fourth Schedule of the CPO. Paragraph 2 of Fourth Schedule refers to the power “To take possession of the mortgaged land and, for that purpose, to take any legal proceedings”.

(3)  I agree that P has shown a prima facie case that it is entitled to have delivery of vacant possession of the 1^st Property and the 2^nd Property.

22.  Costs on an indemnity basis

(1)  P is relying upon Clause 21.01(b) of the 1^st Legal Charge and the 2^nd Legal Charge, which provides:

“The Mortgagor and/or the Borrower shall, with the object and intention of affording to the Lender or any Receiver a full indemnity for all amounts actually disbursed or incurred by the Lender or any Receiver pursuant to the terms hereof, pay or reimburse to the Lender or (as the case may be) to any Receiver, on demand…… (b) all reasonable expenses (including legal expenses on solicitors and own client basis) incurred by the Lender in connection with the preparation and thereafter the administration of this Charge and any other documents executed pursuant to the terms hereof and incurred by the Lender in suing for or recovering any sum due from the Mortgagor and/or Borrower to the Lender hereunder or in connection with the protection or enforcement of this security……” (Emphasis added)

(2)  I am satisfied that P has shown a prima facie case that it is entitled to have costs of these proceedings on an indemnity basis.

D1 to D3’s case

23.  In considering whether Ds have shown any defence to P’s claim, one must bear in mind that all the Financial Documents are documents bearing D3’s and D4’s signatures[4]. As said by the Court of Final Appeal in Ming Shiu Chung & Others v Ming Shiu Sum & Others[5], a person of full age and understanding is bound by the document signed by him, unless a recognized legal basis for concluding that his apparent consent has been in some way vitiated or that reliance on the document by some other person falls into some category of unconscionable conduct justifying relief in equity. Choosing to sign a document without knowing its contents cannot be a sufficient reason for not being bound by the document. In Ming Shiu Chung, Ribeiro PJ said:

“84. … Reliance is universally placed on signatures appended to documents by persons of full age and understanding as signifying the signatory’s assent or adherence to what that document states. Where such a person has signed a document which purports to have legal effect, the law has never regarded it as enough to show that he signed without knowing its contents for the document to be disavowed. It is an everyday occurrence that people sign documents without reading the small (or even the large) print and therefore sign without actually knowing the terms (or all the terms) of the document signed. But they are held to the documents which they have chosen to sign unless there is shown to be a recognized legal basis for concluding that their apparent consent has been in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity.

85. Thus, in Saunders v Anglia Building Society [1971] AC 1004 at 1016, Lord Reid warned against an approach, like that of the Court of Appeal, which inverts the general rule:

‘We find in many of the authorities statements that a man’s deed is not his deed if his mind does not go with his pen. But that is far too wide. It would cover cases where the man had taken no precautions at all, and there was no ground for his belief that he was signing something different from that which in fact he signed. I think that it is the wrong approach to start from that wide statement and then whittle it down by excluding cases where the remedy will not be granted. It is for the person who seeks the remedy to show that he should have it.’

86. And in Bank of China (Hong Kong) Ltd v Fung Chin Kan & Another (2002) 5 HKCFAR 515 at p.533, Litton NPJ acknowledged:

‘… the fundamental principle that, generally speaking, when a person signs a legal document, he or she is bound by the act of signature: As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood.’ ” (Emphasis added)

24.  D3 made and filed an affirmation on 16 October 2024 (“D3’s Affirmation”) in opposition to the OS. In his affirmation, he said that:

(1)  P (via Mr Jeff Wong and Mr Albert Mok, both are the Senior Vice Presidents and Team Heads of the Commercial Banking Group of P) made a promise (“the Promise”) to him in December 2021. In D3’s own words, the Promise is “賣物業換取債務重組的承諾”.[6] P said that by making the Promise, P had given an assurance to D3 that upon the sale of some properties specified by P (“the specified properties”), P would agree to a debt restructuring to facilitate D3. By breaching the Promise, P has caused loss to D1, D2 and D3.[7]

(2)  In D3’s Affirmation, D3 said at §20:

“[After the 2016 Settlement] 本人對原告及其職員的行事方式感到恐懼。但由於所有物業都已經因這次和解轉到原告， 本人已經是走投無路，其他銀行已經不會為Dl 提供貸款, D1及我只能接受原告及其職員的擺佈。”

This appears to be an allegation of economic duress against P.

25.  In my view, nothing raised by D3 in his affirmation constitutes an arguable defence to P’s claim.

(1)  Even assuming that the Promise had in fact been made by P to D3 as alleged, the Promise was honoured. According to D3, the specified properties were sold in March 2022.[8] On 3 February 2023, P issued the 2023 Facility Letter for the express purpose “to re-package the whole impaired loans HKD30,921,000.00 of the group into two new loans” i.e. to restructure D1’s loans. The allegation that P has breached the Promise is not supported by the evidence.

(2)  In The Hongkong and Shanghai Banking Corporation Ltd v King Wai Piece Goods Company Ltd Anors[9], Au-Yeung J said:

“77. For a contract to be set aside on the ground of duress the claimant must establish two essential elements. The first is a threat (or pressure exerted) by the other party that is illegitimate. The second is that that illegitimate threat (or pressure) caused the claimant to enter into the contract. In the context of economic duress there is a third element, namely that the claimant must have had no reasonable alternative but to give in to the illegitimate pressure: Duress, Undue Influence and Unconscionable Dealing, 4^th edition, §§2-002, 2-003.”

There is no allegation that P has ever exerted any illegitimate threat or pressure on D3. Any allegation against P based upon duress must fail.

26.  P has shown a prima facie case against D1 to D3, and D1 to D3 has failed to show any arguable defence to P’s claim. In these circumstances, judgment must be entered in favour of P and against D1 to D3.

D4’s case

27.  D4 made 2 affirmations (“D4-1^st” and “D4-2^nd”) and filed the same on 11 September 2024 and 18 March 2025 respectively in opposition to the OS. In the hearing before me, Mr Cheng for D4 has confirmed that D4 is not raising any defence based upon undue influence. Mr Cheng submits that D4’s case is a case based upon misrepresentation.

28.  In D4-1^st, D4 said:

“19. 大約在2016 年8 月期間, 我曾在原告職員面前簽署了一些有關D1 貸款的文件。該等貸款文件由原告職員攜至上環文咸西街D1 門市給我和D3簽署。在簽署貸款文件前，原告職員並沒有向我解釋英文文件內容，他只大致說因為家庭居所 “有我名”，故需本人簽署文件為D1貿易貸款提供按揭擔保。

20. 由於按揭是否涉及個人責任對本人來說是十分重要的。在我個人而言，除了家庭居所資產外，如果D1 未能償還債務，我根本沒有能力及任何資產償還，所以，我向原告職員詢問是否只涉及家庭居所擔保D1 貿易貸款，而不會令 “自己上身” 負上個人責任。我得到原告職員確認是不會的, “淨係間屋” 擔保。此外, 他表示只有D3 才須要作個人擔保。當時，我的認知是 “最多冇咗層樓”。

21. 由於原告職員要求我在D l 公司蓋印上的位置簽名，我問原告職員，我不是D l 董事，為什麼要我為D l 簽署文件。原告職員解釋因為文件簽署須與銀行簽名式樣記錄一致。整個會面，原告職員重來沒有提及有關外匯交易合约的虧損債務。

22. 基於原告職員向我作以上的陳述（ “原告職員的陳述” ）， 我簽署該文件。

23. 如上所述，基於原告職員的陳述，對於本人就D1貿易貸款，我的理解如下： －

l ) 本人按揭家庭物業只限於支持D1貿易融資貸款。

2) 我的責任僅限於家庭居所的價值。我不須為此限額以外貸款負上個人責任。

3) 除D3 外， 本人無須為D l 貿易融資貸款提供涸人擔保。

("2016 年的理解'')”

29.  Mr Cheng submits that in August 2016, P gave an impression to D4 that her commitment would be limited to support the financial needs of D1 arising from D1’s trading activities only (“the Understanding”).

30.  On 13 September 2016, the 2^nd Legal Charge was explained by Mr Eric Fu (“Fu”), a legal executive of Messrs. Chiu Szeto & Cheng Solicitors (“CSC”, P’s solicitors at that time), in a meeting with D3 and D4 at the office of CSC (“the Meeting”). D4 signed the 2^nd Legal Charge and some other documents in the Meeting.

31.  Mr Cheng submits that in the Meeting, there was non-compliance with §28 of the Guidelines on Solicitors in relation to Security Transactions with potentially undue influenced party (“the Guidelines”), for P has failed to provide copies of two facilities letters dated 23 August 2016 (“the Two Facilities Letters”) to CSC, which were mentioned in P’s instructions letter to CSC dated 6 September 2016 (“the Instructions Letter”). According to Mr Cheng’s submissions, the Two Facilities Letters are the documents signed by D4 at D1’s shop in August 2016. Mr Cheng submits that by failing to provide these two letters to CSC, P has failed to inform CSC that the facilities covered by the 2^nd Legal Charge would not be limited to D1’s financial needs arising from trading activities, but would include D1’s financial needs arising from some investment activities participated by D1. The latter would not be something which D4 was prepared to lend support to.

32.  With respect, there is no merit in Mr Cheng’s submissions.

(1)  Even assuming that P has not provided the Two Facilities Letters to CSC, with the information in the Instruction Letter, CSC was able to prepare the 2^nd Legal Charge. In the Instructions Letter, it is clearly states that P has agreed to extend “General Banking Facility” up to HK$66,058,000 to D1.

(2)  The Guidelines would not be relevant to the case based upon misrepresentation now being run by D4. The full name of the Guidelines is “Guidelines on Solicitors in relation to Security Transactions with potentially undue influenced party”. Since D4 is not running a case based upon undue influence, I do not see the relevance of the Guidelines.

(3)  Even if the Guidelines are relevant, §28 of the Guidelines has not been breached. §28 of the Guidelines stipulates that “the lender must provide the solicitor with the financial information he needs for this purpose. What is required must depend on the facts of the case.” (Emphasis added) There is no valid reason to say that the information provided by P to CSC in the Instructions Letter is inadequate for the purpose of enabling CSC to prepare the 2^nd Legal Charge.

(4)  In the Meeting, D4 signed, inter alia, the following documents:

(a)  Warning Notice, in which it is stated:

“6. Your liability under the Mortgage will be unlimited if you decide to go on with the transaction by signing and executing the Mortgage.” (Emphasis added)

(b)  Mortgagor’s Confirmation (English version), in which it is stated:

“…… our liability under the Charge is not limited to the amount of Mortgage Loan but is “UNLIMITED”.” (Emphasis added)

(c)  Mortgagor’s Confirmation (Chinese version), in which it is stated:

“吾等將簽署之按契據揭為 [無限額] 之抵押契據”(underline added)

(5)  There is no reason why D4 should not be bound by the documents set out in the subparagraph above, all signed by her. Pausing here, I have to mention that Mr Cheng conceded in the hearing that D4 was not misled in the Meeting.

(6)  In the circumstances, even if D4 had the Understanding in August 2016, when she signed the 2^nd Legal Charge on 13 September 2016, D4 actually knew that her commitment given in the 2^nd Legal Charge was for an unlimited amount and without any qualification. There is no causal relationship between the Understanding and D4’s execution of the 2^nd Legal Charge.

33.  As to the 2023 Facility Letter, D4 has not put forward any recognized legal basis upon which she may say that she should not be bound by the document notwithstanding that she has signed the same.

Disposition

34.  For the reasons above, judgment must be given to P. I make the following order:

(1)  Ds do pay the principals and interests as stipulated in §20(1) above to P;

(2)  Delivery of vacant possession of the 1^st Property to P by D2 within 42 days;

(3)  Delivery of vacant possession of the 2^nd Property to P by D3 and D4 within 42 days;

(4)  Liberty to apply.

35.  I also require DFC to explain to this Court why they chose not to attend the hearing in the absence of any leave excusing their attendance. The explanation shall be provided by an affidavit/affirmation made by a partner supervising the handling of this case, and the affidavit/affirmation shall be filed within 21 days.

36.  For the purpose of the order made in this judgment, time shall run during the Summer Vacation.

37.  Costs should follow the event. I agree with Mr Lee that P is entitled to have indemnity costs. Costs of these proceedings (including all costs reserved), be paid by Ds to P, summarily assessed at HK$900,000.

38.  I thank counsel for the assistance rendered to the Court.