BANGKOK BANK PUBLIC CO LTD v. HUI YAN MOON AND ANOTHER

HCA 1441/2017

[2019] HKCFI 321

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1441 OF 2017

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DECISION

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1.  The plaintiff (“the Bank”) claims against the 1^st defendant (“Moon”) and the 2^nddefendant (“Sui”) on their personal guarantees given in 2011 in respect of the Bank’s credit facilities extended to their company, Swing Media Industrial Limited (“Swing Media”). The Bank obtained summary judgment against the defendants before the master. Sui appeals. For such purpose, Sui also took out various applications just prior to the hearing of the appeal.

Background

2.  Swing Media is one of two major operating subsidiaries of Swing Media Technology Group Limited (“the Parent Company”), a company listed on the Singapore Stock Exchange.

3.  The defendants are brothers.  Sui was the founder of the group’s manufacturing business.  He has been a director of the Parent Company since its incorporation in 2001.  He was also a director of Swing Media during the period between March 2002 and November 2013.

4.  The Bank started to provide general banking facilities to Swing Media in June 2002.  At the times material in this case, it was mainly Moon and Chan Hon Chung Johnny (“Chan”), chief financial officer and executive director, who dealt with the Bank on behalf of Swing Media.

5.  On 5 March 2010 and 24 September 2010, Moon entered into written personal guarantees respectively in respect of the credit facilities extended to Swing Media.  They were defined as “the 1^stGuarantee” and “the 2^ndGuarantee” in this action, which by their terms covered all moneys advanced to as well as present and future liabilities of Swing Media[1].

6.  By the time of the facility letter dated 29 December 2010 (“the 1^st Facility Letter”), the facilities extended by the Bank consisted of: (i) overdraft allowance of HK$500,000.00; (ii) revolving loan with a limit of HK$12,000,000.00 for settling documentary bills, trust receipts, shipping guarantees, and invoice financing; (iii) purchase/‌discount of export documentary bills with a limit of HK$8,000,000.00; (iv) revolving loan of HK$5,000,000.00; and (v) instalment loan for the fixed amount of US$5,000,000.00.  The facilities were also secured by various corporate guarantees provided by Swing Media and the Parent Company.

7.  By 30 September 2011, the outstanding balance of the US dollar loan (item (v) mentioned above) amounted to US$2,000,000 while the outstanding balance of the Hong Kong dollar facilities (items (i) to (iv) mentioned above) amounted to HK$25,500,000.00.

8.  Admittedly, Swing Media had failed to repay on time.  To address the Bank’s concern about the ability of Swing Media to repay the outstanding indebtedness[2], and as a condition for withholding recovery, the Bank requested personal guarantees from both Moon and Sui.  Moon and Chan relayed the request to Sui.

9.  On 30 September 2011, Moon and Sui attended the Bank’s office in Central, for the purpose of executing the written guarantees.  They are defined as “the 3^rdGuarantee” and “the 4^thGuarantee” in this action (or collectively “the Guarantees”).

10.  Again, the Guarantees were by their terms for all moneys advanced, covering both present and future liabilities of Swing Media.  By each of the Guarantees, Moon and Sui jointly and severally guarantee the repayment of Swing Media’s indebtedness subject to limit, namely, US$2,000,000 under the 3^rd Guarantee and HK$25,500,000 under the 4^th Guarantee.

11.  The banking facilities were subsequently extended, which were evidenced by a facility letter dated 27 January 2014 (“the 2^nd Facility Letter”) and a facility letter dated 2 December 2014 (“the 3^rd Facility Letter”).

12.  Due to defaults in repayment by Swing Media between 2015 and 2016, the Bank, through its solicitors, issued demand letters to Moon and Sui on 31 March 2017.  By then, the total outstanding amount (inclusive of contractual interest) in Hong Kong dollars was HK$31,793,944.26.

13.  On divers dates between 12 April and 8 June 2017, Swing Media made repayment in the total sum of HK$1,950,000.

14.  On 19 June 2017, the Bank commenced the present action against Moon and Sui on their respective guarantees.

15.  So far, Sui had not responded to the demand letters in respect of the Guarantees.  However, he filed a defence and counterclaim.  Moon acts in person, and filed a defence in similar terms as that of his brother.

16.  On 17 November 2017, the Bank filed its summons for summary judgment (or alternatively, conditional leave to defend by payment into court of the amount claimed).  By then, Swing Media’s outstanding principal indebtedness amounted to HK$28,660,027.29 plus contractual interest.

17.  In support of the application, the Bank filed the affirmation of its senior management, Lim Hau Ting (“Lim”) in support.  Sui filed his affirmation in opposition on 6 December 2017.

18.  Shortly before the hearing of the summary judgment application,on 22 January 2018, Sui filed his application to amend by substituting his defence and counterclaim in its entirety with his draft amended defence and counterclaim.  The master made no order as to that, pending the outcome of the summary judgment application.

19.  The summary judgment application came before the master on 12 March 2018.  Sui maintained his case as per the draft amended defence and counterclaim for the purpose of resisting the summary judgment application.  At the end, the master rejected the defence of both defendants and gave judgment in favour of the Bank.

20.  By notice filed on 20 March 2018, Sui appeals.

The case of Sui

21.  It is necessary to set out the case of Sui both before and after his proposed amendment of his pleading.

22.  The defence filed sets out the following case of Sui:

   (1)   When requested by Moon to provide his guarantee, Sui understood that he was going to guarantee the then indebtedness of Swing Media under the US dollar loan in the sum of US$2,000,000 and under the HK dollar facilities in the sum of HK$25,500,000 respectively.  When attending the execution of the Guarantees on 30 September 2011, this was also what Wong of the Bank represented to him and Moon to be the terms and effect of the Guarantees.

   (2)   On this basis, and since Swing Media had repaid such outstanding indebtedness under the US dollar loan by late January 2014, his liability under 3^rd Guarantee should have been discharged.

   (3)   However, the representation by Wong was in fact false in that the Guarantees, as mentioned above, were by their terms all moneys guarantees covering both present and future liabilities of Swing Media subject to their respective limits.

   (4)   Sui complained that he was not given any copy of the Guarantees or notice warning him of the nature and extent of liabilities or advising him to seek independent legal advice prior to the meeting.  Wong also did not explain to him the true meaning, nature and legal effect of the Guarantees or advise him to seek independent legal advice prior to the signing of the Guarantees.  He did not have time to peruse the terms of the Guarantees, and Wong hurried him into signing the Guarantees.  He was induced to sign the Guarantees by undue influence exercised by Wong on him.  For these reasons, the Guarantees are void and unenforceable.

   (5)   Importantly, Sui also contends that in any event, he was discharged from liability under the Guarantees when the 1^st Facility Letter was superseded by the 2^ndFacility Letter.  Apart from observing that the 2^nd Facility Letter no longer referred to the outstanding US dollar loan (which had been repaid by then) or the Guarantees, Sui essentially alleges unilateral variation of the terms of the 1^st Facility Letter by the Bank which materially affected his liabilities under the Guarantees.

   (6)   Specifically, pursuant to the 2^nd Facility Letter, the HK dollar facilities were increased from HK$25,500,000 (under the 1^st Facility Letter) to HK$30,500,000, and the total value of the corporate guarantees for the facilities was reduced[3] (from the value under the 1^st Facility Letter).  These, he says, constituted material variations of the terms of the 1^stFacility Letter, as they significantly increased the risks and liabilities undertaken by him, which was beyond his contemplation when he entered into the Guarantees.  He had no knowledge from the Bank or Moon about the variations, as he has resigned from the directorship of Swing Media in November 2013, and he did not consent to the variations.  Had he been informed of the revision of the banking facilities, he says he would have exercised his contractual power to terminate the Guarantees by notice.

23.  So in essence, the pleaded defence of Sui is that he entered into the Guarantees as a result of misrepresentation of their terms and effect by the Bank.  In any event, he has been discharged from the Guarantees as a result of the unilateral variations of the terms of the facilities by the Bank unknown to him which materially increased the liabilities that he agreed to undertake pursuant to the Guarantees.

24.  The above pleaded case was verified by the statement of truth of Sui.  Sui further deposed to the similar effect in his affirmation filed on 6 December 2017[4] in opposition of the summary judgment application.

25.  By the draft amended defence and counterclaim, Sui now put forward the following case:

   (1)   He understood from Moon and Chan that the Bank requested for personal guarantees in respect of the then outstanding amount of US$2,000,000 under the US dollar loan and HK$25,500,000 under the HK dollar facilities pursuant to the 1^stFacility Letter.

   (2)   At the office of the Bank on 30 September 2011, Wong of the Bank presented the Guarantees to him for signature,which he was able to tell were in respect of the outstanding amounts mentioned above.  He was not given time to peruse or explanation in detail the terms of the Guarantees.  He signed the Guarantees on the basis of his understanding from Moon and Chan mentioned above. Specifically, he believed he was not guaranteeing future liabilities of Swing Media.

   (3)   By January 2014, Swing Media and the Bank entered into re-negotiation of the banking facilities.  In relation to such re-negotiation, Sui specifically avers the following:

   (a) Swing Media had banking facilities with numerous other institutions, and none of them required personal guarantee from Moon or him.

   (b) He had knowledge from Chan, and exercised influence and control through Chan over Swing Media as to the conclusion of the re-negotiation with the Bank for the banking facilities.

   (c) Through Chan, the issue of personal guarantee was expressly raised with the Bank in respect of the re‑negotiated facility.  Wong of the Bank repeatedly assured Chan that any re-negotiated facility would not require security by way of personal guarantee from Moon or him.  Wong knew or ought to have known that such assurance would be, and indeed was, communicated by Chan to Moon and Sui.

   (d) In reliance of the assurance by the Bank to Chan mentioned above, Moon and Sui procured Swing Media to agree to the new facility arrangement.  Hence the 2^nd Facility Letter.  The 2^ndFacility Letter contained no mention of any personal guarantee from Moon or Sui.

   (e) But for the assurance by the Bank mentioned above, Sui would not have procured Swing Media to enter into the new facility arrangement.Instead, he would have caused Swing Media to repay its outstanding indebtedness to the Bank and to terminate the banking relationship with the Bank.  Specifically, Sui avers that Swing Media had at the time the ability to do so with the support of other bankers.

   (4)   In early December 2014, the Bank and Swing Media again entered into re-negotiation of the banking facility.  This led to the 3^rd Facility Letter.  Sui essentially raises allegations as above in respect of how he came to cause Swing Media to agree to the extension of the facility.

   (5)   In the premises, Sui contends that the Bank is estopped from resiling from its assurance or enforcing the Guarantees.

26.  Sui and Chan filed their affirmations at the same time of Sui’s summons for leave to amend the defence on 22 January 2018.  They deposed to the truth of the above case as per his draft amended pleading, but added nothing material in terms of evidence in support.

27.  Lim and Wong then filed their affirmations in reply for the summary judgment application on 22 February 2018.  Amongst others, they explained that mention of the Guarantees was kept out of the facility letters at the specific request of Moon in order not to cause the other bankers of Swing Media to request for personal guarantees from him or Sui, if they managed to see the documents.

28.  The above was the state of the parties’ pleaded cases and the evidence before the master.

29.  Both versions of the defence contain the complaint that Sui thought the Guarantees covered the then outstanding indebtedness of Swing Media under the 1^stFacility Letter, but they in fact covered future liabilities as well.  Both versions aver that such understanding of Sui’s came from the representation of Moon and Chan prior to attending the bank on 30 September 2011.  However, the alleged express misrepresentation by Wong of the Bank to Sui to the same effect prior to the signing of the Guarantees at the office of the Bank on 30 September 2011 as pleaded in the defence is apparently not maintained in the amended version.

30.  More importantly, the two versions of Sui’s defence differ in a significant respect.

31.  By the filed defence, Sui contends that his liability under the Guarantees was discharged upon the unexpected increase in the liability undertaken by him under the Guarantees as a result of the variation of the terms of the 1^st Facility Letter by the 2^nd Facility Letter.  Not only was the variation material, but the 2^nd Facility Letter was entered into without his knowledge or consent.  Had he been informed of the variation, he would have terminated the Guarantees by notice.

32.  In the amended version of his defence, not only does Sui no longer allege the lack of knowledge or consent to the variation of the facilities under the 1^st Facility Letter by the 2^nd Facility Letter, but he also positively asserts that though he did not participate directly in the negotiation with the Bank at the time, he, as a director of Swing Media, was kept informed by Chan as to the negotiation, and it was Sui who exercised indirect control and influence in procuring Swing Media to agree to the re-negotiated facility arrangements.

33.  Sui also says that it was his side which brought up the issue of personal guarantee.  He continued to say, for the first time, in his amended version that Wong repeatedly represented to and assured Chan that no personal guarantee would be required for the re-negotiated facility.  Sui allegedly did rely on such assurance, and therefore procured or caused Swing Media to agree to the new banking facility under the 2^nd Facility Letter.  The fact that the 2^nd Facility Letter made no reference to personal guarantee reflected his understanding.  But for such representation and assurance, Sui would have procured Swing Media to repay all the outstanding indebtedness to the Bank at the time and to terminate their banking relationship.  Swing Media had the ability to do so at the time.

34.  Sui says essentially the same things in respect of the 3^rd Facility Letter.

35.  In this appeal, Sui maintained his amended case.

36.  Given the state of the evidence mentioned above, it is readily apparent that apart from verifying his amended case by way of the affirmation of his and Chan last filed by them, Sui has not filed any actual evidence in support of the newly made assertions.

Before this court

37.  For the purpose of this appeal, Sui indeed took out a summons on 27 June 2018 for leave to adduce further evidence (“the Evidence Summons”).

38.  Two days prior to the hearing of the appeal, Sui took out another summons for specific discovery of documents against the Bank (“the Specific Discovery Summons”).  As the summons was taken out less than two clear days before the hearing, Sui also took out a summons for abridgement of time.

39.  After hearing counsel, I refused to entertain the Specific Discovery Summons, and directed to proceed with the hearing of the appeal,and with the further evidence sought to be adduced by Sui considered on a de bene esse basis.

The Specific Discovery Summons

40.  By the Specific Discovery Summons, Sui sought the following order:

“ 1. The Plaintiff do on or before 18 July 2018 or within such time as this court may think fit from the date of the Order to be made herein make and file and [sic] affidavit stating whether the documents and/or class of documents specified and described in the Schedule are, or have at any time been, in its possession, custody or power,and if the said documents and/or class of documents or any of them have been but are not now in its possession, custody or power stating when it parted with the same and what has become of the same;

2. The Plaintiff do produce a copy of the documents disclosed under 1 above together with the affidavit filed; and

3. Costs of this application be provided for.”

41.  The documents sought are:

“ all documents and/or correspondence and/or emails and/or reports exchanged internally between employees and/or agents of the Plaintiff (including but not limiting to the Head Office of the Plaintiff whether in Hong Kong or otherwise) leading to the issuance of the two facility letters dated 27.1.2014 and 2.12.2014 in respect of the offer from the Plaintiff to provide certain banking facilities to Swing Media Industrial Limited.”

42.  In support of the summons, Chan filed his 2^nd affirmation also on 27 June 2018.  Essentially, Chan referred to the Bank’s explanation for the lack of mention of the Guarantees in the 2^nd Facility Letter and the 3^rd Facility Letter mentioned above.  Chan believed that the documents sought would be relevant to resolving the factual dispute by ascertaining whether any guarantee by Moon and Sui was reported in those internal documents for the approval of the facilities by the senior management of the Bank or its main branch in Bangkok.  The idea effectively is that if what the Bank alleges is true, there should still be reference to the Guarantees in the internal documents of the Bank for the approval of the extension of facility under the 2^nd Facility Letter and the 3^rd Facility Letter.

43.  As to why the application was taken out only right before the hearing of the appeal, Chan explained that it was only during the preparation for the hearing and upon being asked by counsel for detailed recollection that he came to recall.

44.  As mentioned, I refused to entertain the application taken out in such manner during the hearing.  For the reasons explained below, I had no difficulty in coming to that decision.

45.  To begin with, the Bank must be afforded the opportunity to answer the application.  It was obvious that if the application was entertained for the purpose of this appeal, the hearing of the appeal would have to be adjourned. Mr Edward Chan SC, appearing with Mr Avery Chan, for Sui[5] made it clear that by taking out this application, he expected the hearing of the appeal to be adjourned.  The derailing of the substantive hearing of the appeal like that must be one reason that operates against entertaining the application.

46.  Sui is not seeking leave to adduce further evidence that is known and available at the time of the application.  The application is far from that.  Instead this is an application to compel the Bank to disclose evidence on the basis of the belief that such evidence exists and would cast light on the dispute.  This brings me to the most important of all reasons against entertaining the application.  The application seeks to effectively compel the plaintiff to disclose what the defendant believes to be evidence that may substantiate his defence.  For the purpose of these proceedings, this cannot be right.

47.  While it is the burden of the Bank as the plaintiff to prove its case,it remains the burden of Sui to condescend to particulars in his defence and to raise triable issues in a summary judgment application.  This is his evidential burden.  If Sui has any basis for arguing that the Bank is in possession of relevant evidence but withholding the same from the court, he may lay the foundation and make such submission in resisting the summary judgment application.  What he, as a defendant, may not do is to go further and seek specific discovery of evidence that he believes may damage the Bank’s case or advance his case for the purpose of a summary judgment application.  By the Specific Discovery Summons, Sui effectively reverses the evidential burden in this appeal, which is a re-hearing of the summary judgment application.

48.  Insofar as the summons on its face may still serve the purpose of this action, whether or not this remains to be the case will of course depend on the outcome of this appeal.  Therefore, whilst I directed at the end of the hearing that the parties may write to the court upon handing down of this decision in respect of the disposal of the Specific Discovery Summons, this would be necessary only if the appeal is allowed and the action proceeds.

The Evidence Summons

49.  Sui’s current case is that had it not been the alleged assurance by the Bank that no guarantee would be required of him or Moon when re-negotiating the facility in 2014, Sui would have refused to enter into the new facility arrangement, and would have caused Swing Media to discharge its outstanding indebtedness to the Bank at the time.  Swing Media, Sui avers, had the ability to do so. 

50.  By the Evidence Summons, the documents sought to be adduced consist of (i) the annual report of the Parent Company in 2014 and (ii) announcements by the Parent Company on three dates between February and July 2014.  Sui apparently intends to rely on them to demonstrate the financial ability of Swing Media to do so at the relevant time.

51.  Order 58, rule 1(5) of the Rules of the High Court (“RHC”) provides that no further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under this rule except on special grounds.  By special grounds, one refers to the three conditions laid down by Ladd v Marshall [1954] 1 WLR 1489 that the applying party needs to satisfy:

   (1)  The evidence could not have been obtained with reasonable diligence for use at the hearing below.

   (2)  The evidence must be such that, if given, would probably have an important, though not decisive, influence on the outcome of the case.

   (3)  The evidence must be such as is presumably to be believed.

52.  Regarding the documents sought to be adduced, the real argument of the parties surrounded the first two conditions rather than the third one.

53.  The documents are corporate documents, to which Moon and Chan should have access.  On the basis of Sui’s own case as per the draft amended defence, he also had indirect control and influence over Swing Media and would have been in a position to procure it to make his desired decision.  By his 5^thaffirmation, Sui explained that the relevance of the documents did not become obvious until he obtained counsel advice and sought to amend his defence on 22 January 2018 to introduce the estoppel defence.  He was under serious time constraint and therefore has omitted to adduce the documents at the hearing below.

54.  I have difficulty in accept the explanation.

55.  Sui has always been represented.  The summary judgment application was filed on 17 November 2018.  Before he sought to amend his defence, three affirmations have been filed on his behalf for resisting the summary judgment application.  In his very first affirmation[6], Sui already suggested that he was in the process of retrieving relevant company documents, and that he would consult counsel in respect of his defence after the documents have been retrieved.

56.  After extension of time, the further affirmations of Chan and Sui respectively were filed on 22 January 2018 on the basis of the draft amended defence of Sui, which he applied by summons on the same day to introduce.

57.  Sui’s amended case[7] is that in reliance of the representation and assurance by the Bank, he entered into the new facility arrangement.  But for that, he would have caused Swing Media to repay the Bank at the time and to terminate the banking relationship with the Bank.  He was in a position to do so at the time because, as alleged, he had control and influence over the company.  He knew or believed that Swing Media then had the ability to repay all the outstanding indebtedness to the Bank with the support of its other bankers.  That was his state of mind when considering whether to conclude the re-negotiation leading to the new facility arrangement back in 2014.

58.  On the above basis, the attempt of the Bank to enforce the Guarantees or, at the latest, the commencement this action wouldhave appealed to Sui as directly contradictory to his understanding when he decided to cause Swing Media to enter into the new facility arrangement.  In any event, such knowledge or belief of Sui (and Chan) must be present before he was in the position to give instruction in January 2018 to amend the pleading to assert that.  However, the basis of such knowledge was unknown, as the further affirmations of Chan and Sui remained short.

59.  Sui blamed it on the time pressure. But unlike his 1^staffirmation, the further affirmations actually alerted no reader that he was aware of the existence of further documents that he only needed time to locate in connection with the draft amended defence.  That was when there was still more than a month before the hearing before the master.  No application whatsoever was hinted or made even during the hearing before the master.

60.  No application for leave to adduce further evidence was made when this appeal was lodged on 20 March 2018.  When it was indeed taken out, 3 ½ months have elapsed since judgment was entered by the master’s order.

61.  In my view, it is not a question of awareness of the relevance of the very documents sought to be adduced, but rather that of the relevance of the kind of evidence that would substantiate Sui’s basis for the belief that Swing Media was able to discharge all the outstanding indebtedness to the Bank at the time when he was considering whether to enter into the new facility arrangement.  Sui cannot explain at all his failure to adduce the evidence of such kind, or the very document sought to be adduced now, until now.  The first condition under Ladd v Marshall is not satisfied.

62.  The further documents, on a de bene esse basis, are referred to in the consideration of the merits of Sui’s defence below.  It will be seen that upon their evaluation for the purpose of this appeal, the further documents too do not satisfy the second condition of Ladd v Marshall.

Merits of the defence

63.  The principles are trite.  The defendant resisting a summary judgment application must condescend to particulars, and state clearly and precisely the facts in support of the defence.  Mere assertions do not suffice, but must be supported by evidence that is credible so that one can say there is a fair or reasonable probability of the defence being a real or bona fide one[8]. Asserting the need to investigate alleged obscurities or a belief that something will turn up upon investigation would not be proper discharge of the defendant’s burden for the present purpose[9].

64.  Mr Wong, SC, appearing with Miss Ng, criticized Sui’s draft amended defence as constituting a sea change of case.  In connectionwith that, the consideration of whether the new defence is inconsistent with the previous one or only recently raised, despite previous opportunity, is relevant to bona fide and credibility of the defence: Paul Y Management Ltd v Eternal Unity Development Ltd & Ors CACV 16/2008 (12 August 2008) at §19.

65.  As mentioned, both versions of the defence contain the complaint that Sui thought the Guarantees covered the then outstanding indebtedness of Swing Media under the 1^stFacility Letter, but they in fact covered future liabilities.  Whilst this is the consistent defence of Sui, he was equally consistent in offering nothing more than putting the Bank to proof of the circumstances prior to the signing of the Guarantees and their validity and enforceability[10].  For the purpose of the summary judgment application, this does not help discharging his burden insofar as these circumstances, if disputed, are concerned.

66.  In his defence, Sui alleged that Wong of the Bank made representation in line with his understanding (from Moon and Chan) as to the ambit of the Guarantees just before the signing of the Guarantees on 30 September 2011[11].  This allegation is apparently not maintained in his amended case.  Instead, he alleges that according to his reading of the Guarantees, their terms appeared to him to correspond to his understanding (from Moon and Chan).  Only that he was not given time to peruse them in detail or explained to before he actually signed them[12].

67.  In respect of whether one may be excused from being bound by the terms of the contractual document signed by him on the basis of his own incorrect or incomplete understanding of the terms and their effect in the absence of recognized vitiating factors, the law, which in my view is trite, is not in favour of Sui in the circumstances.  Such circumstances include the fact that the terms of the Guarantees were substantially similar to the 1^st Guarantee and the 2^nd Guarantee entered into by Moon as well as the ability expected of Sui, as an experienced businessman and, as he claims, one who retains control and influence over the company, to apprehend the terms.

68.  As to the respect of the two versions of the defence that were verified by Sui but differ significantly, Mr Wong SC submitted that absent good explanation, such significant change of case manifests a lack of bona fide defence.

69.  As discussed in connection with the Evidence Summons above,we are owed an explanation of why the new case would have failed to surface until after the summary judgment application was taken out.  If it was the decision of Sui to cause Swing Media to enter into the new facility arrangement only upon reliance of the alleged assurance by the Bank in relation to the Guarantees and his consciousness of his alleged alternative at the time of re-negotiating the facility in 2014, one would have expected him to be surprised at the moment the Bank attempted to enforce the Guarantees.  However, nothing was said in response to the pre-action letter.

70.  The correspondence shows that in July 2017, Sui’s attention was actually brought to the facility letters and the guarantees when the solicitors for the Bank enclosed them to his solicitors.  Sui came up with his defence only 2 months later.  More than another 2 months later, and for resisting the summary judgment application, he filed his 1^st affirmation, whereby he verified the truth of his defence, which materially differs from what he now says is his true case.  Oddly, Sui somehow continues to rely on the content of his 1^st affirmation[13].

71.  The above cannot at all be explained by reference to the time or legal advice available to Sui in preparing his defence, as he suggested.

72.  Sui capitalized on the fact that the Guarantees were not mentioned in the 2^ndFacility Letter and the 3^rdFacility Letter.   Sui suggested that that reflected the consensus between the parties at the time.  Wong of the Bank explained that the reference was omitted at the request of Sui[14].

73.  Insofar as relevance is concerned, the enforceability of the Guarantees as a contract depends on their terms, and there is no basis to suggest that their enforceability woulddepend on whether the Guarantees were referred to in the facility letters.

74.  The lack of mention of the Guarantees is really relied on as circumstantial evidence that Sai says tend to support his case that no guarantee was required.  On his behalf, much was said about whether this suffices as relevant factual dispute so that his defence could not be ruled out at this stage.  However, I agree with Mr Wong SC that this must not be viewed in isolation.

75.  According to Sui’s current case, the question of whether or not personal guarantee was required for the extension of the credit facilities in 2014 intertwines with his case of estoppel.  Again, if there is any truth in his allegation, Sui would have raised that in conjunction with the estoppel defence in his filed defence, particularly when he managed to repeatedly plead the fact that there was no mention of the Guarantees in the facility letters in 2014[15].

76.  Relied on by Sui for the same kind of evidential support are various documents including confirmation letters issued by the Bank to the auditor of Swing Media for audit check.  However, it appears that not only was the Guarantees but also the corporate guarantees given by Swing Media and the Parent Company, which were undisputedly required for the 2^nd Facility Letter and the 3^rd Facility Letter, were not mentioned in those letters.  This, according to Wong[16], was also the practice of the Bank.  That the Bank had the practice of not revealing securities and guarantees in documents, be that approved or not, is not inherently improbable.

77.  It was also argued that the Bank was more keen than Swing Media at keeping their relationship.  However, the circumstances at the material time were such that the Bank essentially was considering extension of the credit facility to Swing Media against the background of its previous defaults.  In his affirmation, Wong explained that for internal reference, the Bank had classified Swing Media as not a good performing client.  Objectively, it defies common and commercial sense that the Bank would see fit to do so whilst somehow representing that the guarantees that had all along been in place in securing Swing Media’s indebtedness would be waived.

78.  Sui says Swing Media did not have to keep the banking relationship with the Bank.  He says that not only was Swing Media never required to provide personal guarantee for banking facilities from other financial institutions, but it also had the actual ability to repay all the outstanding indebtedness to the Bank at the time when the banking facilities were re-negotiated in January and December 2014.  Clearly, no particular or evidence has been provided in this connection, and further affirmations of Chan and Sui merely confirmed such assertions raised in the draft amended defence.  This brings me to consider the attempt of Sui to introduce new evidence for the hearing of this appeal.

79.  The evidence is said to demonstrate exactly the ability of Swing Media to repay the outstanding indebtedness to the Bankat the relevant time, and hence the case of Sui that he could have caused his company to do so and to terminate the banking relationship with the Bank.  The evidence was considered on a de bene esse basis.  As mentioned above, I am not satisfied that such evidence,if adduced, would have an important, though not decisive, effect on the outcome.  I shall explain.

80.  The evidence sought to be adduced consists of: (i) the 2014 annual report of the Parent Company, the parent company of Swing Media that was listed in the Singapore Stock Exchange; and (ii) three public announcements made by the Parent Company in February and July 2014.  It was argued that such further evidence demonstrated clearly that Swing Media was capable of discharging its outstanding indebtedness to the Bank almost exclusively by the net proceeds of certain rights issue, if it so wished[17].  The only logical conclusion, he continued, was that he agreed to enter into the facility arrangement in January and December 2014 because of his reliance on what the Bank assured him of, with a view to keeping Swing Media as its customer.  He argued that there was no other reason for him to give a personal guarantee when he could have terminated the relationship with the Bank and borrowed from other banks without personal guarantee[18].

81.  On behalf of the Bank, the following aspects of the further evidence were highlighted:

   (1)  According to the annual report, the cash and cash equivalents aswell as banking facilities were preserved by the Parent Companyto manage its liquidity risk.  Nothing further mentioned per sesuggested that such cash and banking facilities would be readilyavailable for application towards repayment of Swing Media’soutstanding indebtedness.

   (2)  The Chairman’s Message in the report projected an optimistic outlook of the Parent Company’s expected expansion of its manufacturing and trading business in Mainland China.  One inference to draw would be that credit facilities had to be maintained for meeting the expanding business and operating expenses.

   (3)  The rights shares issuance referred to by Sui was apparently approved in February 2014, and the proceeds became available only in March 2014.  However, the re-negotiation with the Bank and Sui’s decision to enter into the arrangement under the 2^nd Facility Letter happened before and in January 2014.

   (4)  Only half of the proceeds from the issuance of rights shares (about HK$80 million) were to be applied towards repaying bank loans.  By the end of July 2014, over HK$34 million had been utilized to repay the group’s bank loans, leaving less than HK$6 million for the group.  That would not suffice for repayment the outstanding indebtedness to the Bank accrued by December 2014, when the re-negotiation was conducted that eventually led to the 3^rd Facility Letter.

82.  The re-negotiation, and thus the 2^ndFacility Letter for increased revolving trade facility, in January 2014 was precipitated by Swing Media’s want of ready liquidity.  That was fact, even without referring to the eventuality that by July 2017, the company had accumulated enormous indebtedness to its other bankers[19].

83.  The above problem leads to another, namely the alleged reliance on the alleged representation and assurance.  Even assuming that Swing Media truly possessed the ability to discharge the outstanding indebtedness to the Bank at the time, I do not see how Sui could say “the only logical conclusion” from that must be that he did not do so “only because” the alleged assurance by the Bank.  I also do not see how he could say there was no other reason for him to saddle himself with a personal guarantee, when he could instead have turned to other banks.  Swing Media’s financial ability to meet its liabilities at the time, even if true as alleged, affords a no less logical inference that Sui would not consider the Guarantees to be saddling in terms of the risk that he expect to have to honour them.

84.  Sui fails to satisfy me that the further evidence sought to be adduced would have an important impact on the outcome of the case.

85.  As mentioned, Moon as a director, together with Chan, managed the business of Swing Media, while Sui, albeit not a director of Swing Media at the material time, remained a director of the (listed) Parent Company who,as he himself claimed, still exercised indirect influence and control over Swing Media at least as to the conclusion of any facility arrangement with the Bank. One must consider their assertions in the light of them being expected to be conscious and act like experienced businessmen expected of them in the ordinary course of business.

86.  I need say no more in respect of a number of other peripheral points taken in the argument in support of the defence, though considered.

87.  All considered, the defence is simply incredible and does not afford any bona fide basis to resist judgment on the Guarantees.  Even if I am wrong, the defence is clearly shadowy that would have warranted the payment by Sui into court of the full amount claimed as condition precedent to leave to defend, which is the alternative relief sought by the Bank’s summons.

Conclusion

88.  The Evidence Summons is dismissed.  So is the appeal.  It follows that the Specific Discovery Summons and the incidental abridgement summons must also be dismissed.  TheBank shall have the costs of and occasioned by this appeal and the summonses. It was contractually agreed under the Guarantees that costs shall be taxed on an indemnity basis.  There will be certificate for two counsel.