YOUFENG (HK) TRADING CORPORATION LTD v. SHELL DEVELOPMENT (HK) LTD

Intended Action 90/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INTENDED ACTION NO. 90 OF 2000

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D E C I S I O N

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1. This is an application made on ex parte basis for an injunction against the 2nd Defendant Bank to restrain the 2nd Defendant Bank from honouring a guarantee given by the Plaintiff in favour of the 1st Defendant Company. I have no hesitation in rejecting this application.

2. The affirmation of Mr Stan Wei filed on behalf of the Plaintiff discloses that a company called Orient International Holding Shanghai Foreign Trade Company Ltd had business dealings with the 1st Defendant. The 1st Defendant supplied goods on credit to Orient which in turn supplied goods on credit to another company called Shanghai Youfeng Trading Corporation Ltd. Both Orient and Shanghai Youfeng are PRC companies.

3. According to Mr Wei's affirmation, he says that the 1st Defendant required Orient to furnish security for the goods by way of a guarantee provided by a Hong Kong company. Mr Wei says that he was urged by Shanghai Youfeng to provide the funding of this guarantee and in the event, a Letter of Guarantee was provided by the Plaintiff in favour of the 1st Defendant however using the name of a company called Millstart Fast Development Ltd which was a Hong Kong company. According to Mr Wei's affirmation, Millstart was "loosely related" to Orient.

4. It would therefore appear from the Plaintiff's own evidence that the reason for the guarantee was because the 1st Defendant required the guarantee in order to supply goods on credit to Orient. There has been no explanation on the evidence as to why the 1st Defendant supplied a Letter of Guarantee in favour of Millstart other than that Millstart was a nominee for Orient.

5. The application for an ex parte injunction is now made on the basis that the statement of account which was issued by the 1st Defendant to Millstart must be "forged" because Millstart was not a customer of the 1st Defendant. It has also been shown that the statement of account issued by the 1st Defendant to Orient is in exactly the same terms relating to the number and the figures as the statement of account issued to Millstart. It would appear to be clear from the evidence disclosed to me that Millstart was obviously a nominee for Orient.

6. In those circumstances, I fail to see how it could be said that the Plaintiff should not be held to its agreement to provide a Letter of Guarantee to secure any indebtedness of Orient to the 1st Defendant, and Mr Lee has, in fact, asserted that the Plaintiff accepts that the statement of account issued by the 1st Defendant to Orient is genuine.

7. I am afraid on the evidence disclosed to me on this ex parte application that I do not see any grounds for issuing an ex parte injunction against either Defendant and accordingly I would dismiss this application.