NICE PLAN DEVELOPMENT LTD v. KE JUN XIANG

HCA 652/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 652 OF 2014

_______________

________________________

________________________

1.  This is an application for summary judgment under Order 14(1) of the Rules of the High Court.

2.  The plaintiff’s claim against the defendant is in respect of the non‑repayment of a loan made pursuant to a loan agreement dated 30 March 2011 (Loan Agreement).

3.  The amount of the loan payable under the Loan Agreement was HK$30 million. 

4.  By the terms of the Loan Agreement the defendant was required to repay HK$5 million on or before 6 April 2011 and the balance of HK$25 million on or before 30 June 2011.

5.  The defendant was required to pay interest in arrears at the rate of 36% per annum from 30 March 2011 up to the date of the repayment of the loan.

6.  Mr Ho Pui Tsun Peter (Mr Ho) was also a party to the Loan Agreement.  His role in the Loan Agreement was to act as guarantor for the repayment of the moneys.

7.  The defence which the defendant seeks to run is that the plaintiff was the nominee of Mr Ho who was the person advancing the moneys to him.

8.  The defendant who claims not to understand English says he did not “pay attention” to the name of the plaintiff. 

9.  In reality the loan was being made by Mr Ho who was a friend of his.

10.  At the end of June 2011 he concluded a settlement with Mr Ho.

11.  The terms of the settlement were that the defendant would transfer 40,000,000 shares in CIL, a publicly listed company, to Mr Ho or his nominee in full and final satisfaction of the loan.  As at the date of the settlement the said shares had a market value of HK$33,200,000.

12.  In his defence the defendant avers that Mr Ho nominated Mr Viva Chan to be the recipient of the 40,000,000 shares.

13.  He further averred that he sent share certificates for the shares together with blank executed share transfer forms to Mr Viva Chan on 29 June 2011 and that accordingly he had fully discharged his indebtedness under the Loan Agreement.

14.  The only documentary evidence produced in support of the said transfer were two receipts which were in this form:

“To: Messrs. Chong & Partners

I am Chan Wah Ha [in transliteration], the holder of Hong Kong Identity Card No.E745786(7). [I] now confirm that upon the receipt of Mr. Ke Jun Xiang’s instruction, [I] go to your firm to collect the following documents on behalf of Mr. Ke:-

(1) Share Certificate of CIL Holdings Limited (the holder of the Share Certificate being LEE BING KWONG, the number of shares being 20,000,000, the number of the Share Certificate being 142508);

(2) Bought & Sold Note signed by LEE BING KWONG;

(3) Instrument of Transfer signed by LEE BING KWONG;

(4) Standard Form of Transfer signed by LEE BING KWONG.

I acknowledge that I have received the aforesaid documents for Mr. Ke Jun Xiang on 29 June 2011 at 12:05 and [I] have acknowledged the receipt of the same on copies of those documents.

(signed)

Name: Chan Wah Ha

Date: 29 June 2011”

“ Receipt

In receipt of the original copy of this Share Certificate (number of shares being 20,000,000) and SOLD NOTE BOUGHT NOTE and INSTRUMENT OF TRANSFER signed by Mr. Lee Bing Kwong in blank and the original copy of Instrument of Transfer, one copy of each, for and on behalf of Mr. Ke Jun Xiang. This receipt acknowledged the same.

Recipient: (signed by Chan Wah Ha [in transliteration])

ID Card No.: E745786(7)

Date:   29 June 2011”

15.  It will be noted that there is nothing in these receipts to link the transactions to the subject matter of these proceedings far less any statement that the said transfers constituted a full and final settlement of the outstanding loan which was payable by the defendant.

16.  Ms Chan Wai Mee May (Ms Chan), a director of the plaintiff, denied that the plaintiff was a nominee of Mr Ho or that the plaintiff had ever received any repayment of the loan.

17.  The settlement concluded between the defendant and Mr Ho had nothing to do with the plaintiff.

18.  Mr Martin Wong who represented the defendant submitted that there were sufficient suspicious circumstances surrounding the transaction to indicate that there was more behind the transaction to provide a justification for an order being made for a trial.

19.  The principles underlying the decision whether or not to grant leave to the defendant to defend a claim are conveniently contained in the judgment of the Court of Appeal in Waygood Investment Ltd v Grand Jewellery Manufacturing Ltd, unreported, CACV 80/2002.

20.  Adopting this criteria the plaintiff’s application must succeed.  The circumstances do not indicate that the plaintiff’s case is a sham.  The defendant’s defence basically amounts to not much more than a simple denial of the claim. 

21.  It was a loan of a substantial amount and there is no documentary evidence supporting the defendant’s contention that the loan was repaid to the plaintiff.

22.  Judgment will enter for the plaintiff as claimed.

23.  I make an order nisi that the plaintiff will have its costs.