HANG LUNG BANK LIMITED v. YIP CHUNG LING t/a CHUNG HWA ENTERPRISE CO. AND ANOTHER

1984, No. 5518

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. By this action the plaintiff who is called hereafter 'the bank' sues the 2nd defendant, Mr. Yap, to recover the sum of $4,000,000 together with interest allegedly due under a continuing guarantee dated the 18th April 1977. The bank alleges that the guarantee, which is Exhibit P1, was given to secure a loan to the 1st defendant, Mr. Yip Chung Ling, who is a brother of Mr. Yap by a different mother. Mr. Yip's indebtedness to the bank now exceeds some $20,000,000. Indeed, judgment in these proceedings was entered against him for some $24,000,000 on the 3rd December 1984. I am satisfied on the evidence and it is now formally admitted by Mr. Yap that at the material time, Mr. Yip's liability to the bank exceeded $4,000,000. The bank completes its claim by a Letter of Demand sent to Mr. Yap on the 10th July 1984. The defence, which was filed on the 13th February 1985, puts in issues two matters. First of all, it denied that the guarantee had been signed by Mr. Yap but went on to allege that if, which was not admitted, the signature on the guarantee was that of Mr. Yap, he had no knowledge of the nature and content of the document on which he put his signature. That is commonly known as a plea of non est factum. From the point of view of pleading, that is not a particularly strange bedfellow but a somewhat uncomfortable on from the point of view of evidence and practical conduct of the case. In due course, that particular plea was abandoned because the evidence adduced by and on behalf of Mr. Yap certainly didn't support it. Instead, at a late stage after the conclusion of the evidence, leave was sought to amend the defence to plead that, if signed Mr Yap, the document in question did not constitute a binding contract for guarantee between the bank and Mr. Yap, the argument being that since it was incomplete when signed, because the name of the prinipal debtor was not inserted, there was an incomplete offer, which could not be turned into a binding contract by any form of acceptance or any kind of reliance thereon by the bank. I will deal with that aspect of the case at a later stage.

2. The bank relies, among other things, on the following types or forms of evidence to support its case. First of all, it relies upon various documents produced from its custody. There are documents relating to Chung Hwa Enterprise Co. which in effect was the style used by the lst defendant to carry on his business and there are documents taken from the bank's records which consist of various documents signed by Mr. Yap and others in connection with similar dealings for loans and guarantees with the bank in respect of other customers, notably the Oriental Palace Night Club and a company whose name I think was Mercantile Overseas Development Co. Ltd. There is then the evidence of Mr. Tang Chee-sum who is now the Deputy General Manager. He gave evidence as to the usual or normal practices of the bank when dealing with loans way back in 1977. I've also heard evidence from Mr. Ong Oi-ming, who is in charge of the security department of the bank, as to the handling of original documents in connection with loan and similar transactions. A most important piece of evidence on which the bank relies is that of Mr. Radley, an expert in handwriting. He gave evidence in addition to supplying a written report of his opinion as to the authorship of the signature on Exhibit P1. And generally, I must not overlook the fact that, of course, the conduct of Mr. Yap at various stages of this particular matter has a bearing upon the principal question before me, namely whether his signature was placed upon Exhibit P1.

3. Mr. Yap, who also gave evidence before me, similarly relies upon the expert evidence of Mr. Cheng Hoi-hing, who also has given a report and given evidence before me, and expressed the opinion that the signature which appears to be that of Mr. Yap on Exhibit P1 is in fact not his signature but a forgery. Mr. Yap gave evidence of course in which he, first of all, said that he did not remember signing Exhibit P1 but later asserted more confidently that it was not his signature, nor did he recall being asked to supply a guarantee for Chung Hwa's liabilities to the bank or indeed to guarantee his brother's liability to the bank. Other matters which are relevant to this question, and to some extent may assist Mr. Yap in his defence to this claim, is the fact that there are certain unexplained and unsatisfactory features regarding the bank's conduct and custody of material documents at various stages in the past. I think it is fair to say that there is an air of suspicion surrounding some, if not all, of the material documents, because of markings on the documents because certain gaps have been filled in after they were executed, and certain other features which distinguish some of those documents from others. I mention, for example, that it is a feature of the documents that, whereas the principal debtor, Mr. Yip, has signed in the presence of a bank officer - it seems to be person who is the Assistant General Manager, Mr. C. K. Wang - the document allegedly signed by Mr. Yap is not so witnessed, but purports to be witnessed by a person by the name of Tony Ling, who was in fact Mr. Yap's secretary until, I think, about 1978. That briefly is an introduction to the evidence and issues in this case, let me now indicate some of the findings of fact which I have been able to reach upon that evidence with the assistance of submissions from Counsel.

4. Let me say, first of all, that the evidence of Mr. Ong Oi-ming is, in my respectful view, largely unreliable. He produced as Exhibit P7, a document headed Registration of Securities, and he testified that this was a record kept principally by him of all documents received in his department for safe keeping, indicating the date when a particular document is received, description of the document and the date when it passes out of his custody for some other purpose. It also gives the name of the borrower and the account number of the borrower. It is, in my view, obvious from the nature of the document and the account number appearing thereon, and was eventually conceded by Mr. Ong, that this document is not a contemporaneous record. It is clear that it has been made up at some later date on the basis of entries in some other record which I am told has been destroyed., It is therefore of very little help in this particular case. The only evidence of Mr. Ong which is in any way materials is that he admitted that he had added certain numbers to pencil entries made upon some of the original documents, to reflect the fact that the account number of the principal debtor, Chung Hwa, had changed or been enlarged after the bank turned over it's accounts to computerisation.

5. Mr. Tang Chee-sum is the witness who told me about the normal practice of the bank in 1977 when processing applications for loans and handling securities. In general, I accept his evidence and the question really is whether it is right and proper to infer that this particular transaction, involving a loan to Chung Hwa and alleged guarantee by Mr. Yap, conformed to what might be called the usual or normal practices of the bank at that time. I find as a fact that Exhibit P1, the continuing guarantee, was blank in one respect and one respect only when it was first received by the bank. The name or the space for the name of the principal debtor, in this case Chung Hwa Enterprise Co., was left blank. The name of Chung Hwa has been typed in clearly on a different typewriter and at some later date. I am satisfied that the spaces in para. 2 of Exhibit P1 were completed at the time the document was received into the bank and do not accept the opinion of Mr. Yap that the figure '4' in that paragraph for the sum of $4,000,000 was typed on a different typewriter. Of course, I have not had expert evidences as to which typewriter or typewriters have been used to prepare this document but it is, in my view, apparent from simple observation of the document that, with the exception of the name of the principal debtor, the rest of the typing must have been done at the same time, and on the same typewriter. It is apparent that the figure '4' is perhaps one centimetre or so larger than the other figures on the document, if one looks at the '2' in the address of Mr. Yap as well as the noughts in the $4,000,000. I think this is explained by the fact that the tail on the '4', if I can use that expression, makes the number a little bit longer than other numbers.

6. It is apparent and I so find that this document was not signed in the presence of any officer of the bank and I also find as a fact that in all probability it had been signed, by whoever put the signature there, before the document was received into the bank. As I have already mentioned it is odd that the other documents which were signed by the borrower, Chung Hwa, where apparently executed on the same day, 18th April, 1977 in the presence of a bank officer. The explanation for this seems to be that it is the practice of the bank that, if you borrowed a small sum, the transaction had to be processed by the loans department and all signatures witnessed by a bank officer. If, however, you were borrowing a large sum of money, and for this purpose Mr. Tang told me $4,000,000 would be regarded as a big loan, then you didn't have to go through that process. Instead, the matter would be dealt with by the senior management of the bank, apparently on the basis that the borrower and any guarantor would be well-known to the senior management of the bank. It is, therefore, somewhat odd that in this particular action nobody from the senior management familiar with Mr. Yip or Mr. Yap has been called to give evidence to say quite simply: "That is the signature of Mr. Yap; I know him well, I am familiar with his writing and his signature. " Mr. Wang who appears to have witnessed the signature of Mr. Yip of Chung Hwa in 1977 was apparently, according to a little note at p. 173 of the Agreed Bundle of documents the Senior Assistant General Manager as recently as 1983. But, as I say, neither he nor any other senior member of the management has been called in this action as a witness and no evidence explains the reason for their absence. I have considered the evidence very carefully and I have come to the conclusion that Exhibit P1, the continuing guarantee, was received by the bank at the same time as other documents connected with the loan to Chung Hwa. In particular, the application for a loan, which is Exhibit P4, the undertaking to repay, which is Exhibit P3A, and a Letter of Hypothecation, which is Exhibit P3B. I am satisfied that they came into the bank together and this is why they each bear in pencil the figure"761". "761" was the number of Chung Hwa's account in 1977 and I accept Mr. Tang's evidence and I find as a fact that Exhibit P1 and these other documents were handled in accordance with the usual practice in 1977, which was to write on the account number of the borrower on all documents received in connection with that proposed loan. This was done to prevent documents going astray because in the normal course of a business day, as one would expect, the bank, and that particular section of the bank, would be dealing with a large number of documents. Some of them, of course, are important originals.

7. On the other hand, I must, of course, take account, as I do, of other documentary evidence which perhaps suggests that Exhibit P1 was not in that set of documents in April 1977 when some of them were received by the bank. For example, the appliction for loan dated the 18th April 1977 (Exhibit P4) sets out next to the heading, 'particulars of securities offer, a number of shares of Rose Knitting Company Limited and a number of shares of the Benefit Corporation. Indeed, those shares were in fact deposited with the bank as security for this loan by the borrower, Chung Hwa. There is no reference to any guarantee allegedly given by Mr. Yap. Furthermore, on the 20th April 1977, which appears to be the date when some form of approval was given to this application, there is a credit to the borrower's account by the bank coupled with the document, which appears at p. 130 of the bundle, which refers to an unsecured loan for $4,000,000. It has been contended that this suggests that if a guarantee was given in support of that loan, it must have been done at some later date and not in April 1977. I do not accept that in the circumstances the present case for the following reasons. Firstly, the information which is put on the application for a loan, it is really up to the borrower to decide what to insert in that form. It is not a statement or indication of what the bank required as a pre-condition to granting the facility in question. Secondly, I think it is reasonable to infer from this and other documents before me that what is contemplated by "securities" in this context is what one might call hard realisable securities and not personal securities such as a guarantee. Indeed, when things did get bad and the account of the 1st defendant was, so to speak, transferred to the category of bad and doubtful accounts, it is quite clear at that time, sometime in October 1983, the bank treated the guarantee which it believed that it had from Mr. Yap as of unknown value, whereas other securities in its possession were valued at particular figures. This is gleaned by me from p.177 of the Agreed Bundle of documents. In all the circumstances and drawing inferences from the documents themselves, and my finding that the bank followed usual practices in respect to those documents, I am satisfied and so find that Exhibit P1 was received at the same time as Exhibits P3A & B and Exhibit P4 and that they were processed by the bank more or less at the same time. Perhaps just to complete the picture I should say that there is a document at p. 147 of the Agreed Bundle which appears to show that ultimate approval for this big loan, which I am told and accept, had to be done by executive directors of the bank, was given on the 24th June 1977 and, according to that document, one of the securities given with respect to this loan was a guarantee in the name of Mr. Yap. It seems to me clear that not only did Exhibit P1 go into the bank in April 1977 but was processed at about the same time as the other documents connected with that loan and I am satisfied remained in the bank's custody until produced in Court.

8. What is not clear is when the name Chung Hwa Enterprise was inserted-in Exhibit P1? Clearly, it was inserted sometime prior to the 31st July 1984 because on that day a copy was supplied to Mr. Yap's solicitors upon his and their request. Interestingly the solicitors for Mr. Yap had written on the 24th July 1984 saying, among other things: ".... our client is interested to have a sight of the said guarantee and shall be grateful if you would furnish with us a copy thereof. " I say it is interesting because it was Mr. Yap's evidence that he had received a copy directly from the Assistant General Manager, Mr. C.K. Wang, the previous year in September 1983, in circumstances which I will mention in a little while. The bank supplied a photocopy of the guarantee to Mr. Yap's solicitors under cover of a letter of the 31st July 1984 which is at p. 184 of the Agreed Bundle. Assuming for the moment that the document at p. 185 of the Agreed Bundle is a photocopy of the document sent by the bank in 1984, it is I think noticeable that it appears to be a photocopy of the document or the copy produced by Mr. Yap which is Exhibit D3. I say it appears to be a precise copy because the pencil entries at the top of the document, the account number and the name Chung Hwa Enterprise Co., appeared to be in the same position as on p.185. The document which is now labelled Exhibit D3 is, as far as I can tell, the only original which has been produced before me. As I say, Mr Yap's evidence was that this was received under cover of a compliments slip from Mr. Wang Cho-ki in September 1983. In any event, it is in my view clear, and I so hold, that if Mr. Yap did sign Exhibit Pl, leaving as I am satisfied it was the name of the principal debtor in blank, then he, in my view, must be taken to have impliedly authorised the bank to complete that document by inserting Chung Hwa Enterprise Co. as the principal debtor. In my view, no other conclusion can be drawn from submitting that together with other documents which only related to a proposed loan by the bank to Chung Hwa Enterprise Co. It is clear, in my view, that if it was signed by Mr. Yap, it was signed with the intention that it should serve as a guarantee of Chung Hwa's liabilities towards the bank. Before I turn to the question whether Mr. Yap's signature is on that document, it is, I think, pertinent to point out that so far as the evidence before me is concerned, no copy of that guarantee was sent to Mr. Yap at or around the time of its execution and acceptance by the bank. That is perhaps unfortunate since if it had been done at least part of these proceedings would probably have been unnecessary.

9. Mr. Yap gave evidence before me as I have already indicated. He told me and I accept that he founded and is now the operator and the major shareholder of a garment factory or garment business, known as Rose Knitting Co. Ltd. and indeed it seems clear from other documents which are not in dispute and have been placed before me and before the handwriting experts for their examination, that the address in the disputed guarantee, namely-'2, Tai Yip Street, Kwun Tong, Kowloon' is the place of business or registered address of Rose Knitting Co. Ltd. Perhaps that is to be expected since, if this is a genuine document, it appears to have been witnessed by Tony Ling who was at that time Mr. Yap's secretary at Rose Knitting Co. Ltd. Rose Knitting is a public company having gone public in 1972 and is in my view clearly a company of some substance. Apart from having substantial annual turn over, it owns properties including a residential property of, I understand, high class quality. In 1977, Mr. Yap owned two of the six million shares in that company. He agrees that he has given several guarantees in the past in respect of Rose Knitting and indeed it is apparent from other documents before me that he has done so with regard to other companies in which he has some interests. He appeared to be somewhat vague or purported to be unable to remember whether he had any interests alone or with his younger brother, Mr. Yip, in a number of other companies which were mentioned to him in cross-examination. For example, he could not remember if his younger brother was a co-director and shareholder of Mercantile Overseas Development Ltd., although an annual return, Exhibit P10, purported to show that both were substantial shareholders as well as directors. He said that he did not remember and later denied that it was his signature on the continuing guarantee and that he first came to know of its existence in 1983 when, quite by accident, according to him, he met the Assistant General Manager of the bank Mr. C. K. Wang at the airport in Taipei, when they were both returning to Hong Kong. According to Mr. Yap, at this meeting Mr. Wang stated and volunteered the information that Mr. Yap's younger brother, the 1st defendant owed the bank more than $20,000,000 and that $4,000,000 of that was covered by Mr. Yap's guarantee to which Mr. Yap says he expressed surprise and said that there must be some mistake and asked Mr. Wang to send him a copy of this document upon their return to Hong Kong. Mr. Wang didn't do so until Mr. Yap telephoned him and asked him about it. Whether in the same telephone conversation or another, is not entirely clear from Mr. Yap's evidence, but he said that he was assured by Mr. Wang that there would be no problem for him, Mr. Yap, because the borrower, his younger brother, had undertaken to repay moneys due to the bank at the rate of $300,000 per month. It is, in my view, odd, that although in an affidavit sworn in November 1984 in connection with Order 14 proceedings in this case, reference was made to becoming aware of this guarantee in 1983 and that he was made aware of that by Mr. Wang Cho-ki on or about September 1983, no mention is then made that this was in Taipei. Indeed, if the compliments slip, presently attached to Exhibit D3, did accompany that document in 1983 as Mr. Yap has testified, then it would seem that he was first made aware of this sometime in August 1983. But nowhere in that affidavit is there any reference to a telephone conversation with Mr. Wang, in the course of which Mr. Yap denied that he had signed the document and that he had been given assurance that there would be no problem because of the repayments being made by his younger brother. But bearing in mind that sometimes brevity is a commendable quality in an affidavit, even to resist summary judgment, it is surprising that in the defence filed in February 1985 after the Order 14 proceedings had ended, it is simply alleged that it was not signed by the defendant but if it was he had no knowledge of the nature and content of the document. That defence was followed by a request for further and better particulars and they were supplied after an order in December of 1985 when it was alleged that the document was not brought to Mr. Yap's attention until the Letter of Demand by the plaintiff on the 10th July 1984. The reference to his first discovery of this document being made at Chung Ching Airport in Taipei in August 1983, first was made in an amended further and better particulars given at the outset of this trial. This is, I think, a noticeable feature of Mr. Yap's evidence in this case that he really accepted Mr. Wang's word that he would not be troubled because of the repayments being made by the younger brother. He did not write any letter to the bank protesting that his name had been used without his authority and his signature forged on this document. There was no letter even asking for an assurance in writing that he would not be called upon to pay any part of the $4,000,000 supposedly secured to the bank by this document. Although his brother had apparently been using his name on other occasions and other transactions, and he was unable to contact his brother who refused to answer his calls or to see him, no complaint or report was made to the police. It seems that, with the exception of some clerks in the firm of his present solicitors, Peter Mo & Co., the only persons who saw this document and to whom he spoke about it, were his wife and other relatives.

10. Before I consider Mr. Yap's evidence, I will consider briefly the handwriting evidence because in my view it is not possible to view these two sources of evidence in isolation and arrive at a satisfactory finding in this case. I have been taken by both experts not only through their reports but through further matters which they produced. In the case of Mr. Radley they are in the form of sheets (Exhibit P9) giving details of aspects of the known and disputed signatures of Mr. Yap. There are also photographs produced by Mr. Cheng to elaborate upon and support his opinion as expressed in the evidence and in his written report. I do not propose to summarise the content and nature of the expert evidence except to say that it seems to be agreed between the experts that certain matters are significant when considering disputed signatures. It is, for example, accepted that to produce the disputed signature, one which is alleged to be that of Mr. Yap, is easier for a reasonably skilled penman than the signature appearing next to the disputed signature, which is allegedly that of Tony Ling. Mr. Radley was unable to offer any opinion as to whether the signature of the witness, Tony Ling, was a genuine signature. This is because he did not have sufficient comparable materials to form any conclusions. Mr. Cheung did not put forward any opinions on that particular signature. I should perhaps say that Mr. Yap told me that he had contacted Tony Ling who now lives in North America and who apparently in a telephone call merely expressed the view that he had no recollection of signing or witnessing such a document. Unfortunately, Mr. Ling has not been called as a witness and indeed Mr. Yap in answer to a question from Mr Yu said no attempts have been made to get him to come as a witness.

11. Much was said in the course of the experts' evidence about the arrangement of the signature having regard to the basic structure of Mr. Yap's known signature and this has turned upon, largely in my view, the question of where between the dotted or printed lines, the signature is normally placed. Mr. Cheng placed considerable emphasis upon that arrangement, pointing out that in many of the signatures or indeed, in most of the signatures of Mr. Yap, the signature begins on the base line, and ends slightly above, on, or below the baseline, and he describes the disputed signature as not fitting in with that general pattern, and one signature which does appear to depart from that general pattern as an "accidental”. Mr. Radley, on the other hand, did not treat that exception in that way. He thought it was simply an example of catural variation and that there really was no consistent pattern of arrangement in Mr. Yap's known signatures to support Mr. Cheng's conclusions in this respect. The charts together with the stencil produced by Mr. Radley in order to understand those charts are in my view helpful. They indicate that whilst there are variations in various aspects of the signature, not only where the signature begins and where it ends, but also in the degree of the slope of the horizontal line and the angle of curvature of the hook which is a distinctive feature of the signature, they are within fully reasonable limits, and Mr. Radley's charts serve to demonstrate that the disputed signature, in various respects,is well within the parameters or limits of variation in the known signatures. I have considered the experts' evidence extremely carefully because it is important evidence, though I must bear in mind it is not anywhere near a perfect science and I think that both experts did to varying extent acknowledge that much depends upon question of personal choice and style. Indeed Mr. Radley put forward a proposition which seems to me, with respect, a sensible and fairly obvious proposition that a person's signature, although perhaps more permanent in its formation, etc. than other forms of handwriting sometimes varies according to the nature of the document being signed, perhaps more care have been taken over an important or formal document, such as a will, or in this case, a guarantee, a document involving financial obligations, than one would find, for example, in an ordinary social letter.

12. It is never a pleasant or indeed an easy task for a judge to decide what to do with expert evidence, where the experts are in complete disagreement with their conclusion, as they are in this case, Mr. Radley expressing the opinion somewhat cautiously, perhaps not over strongly, that the signature on Exhibit P1 is that of Mr. Yap, whereas Mr. Cheng is more firmly of the opinion that it was not his signature and was a forgery. Inevitably, unless one is to reject the evidence as totally useless, one must make a choice. I certainly cannot say, and do not say, that the evidence is totally useless; but having considered very carefully, not only their written reports, but also their oral evidence, I come to the conclusion that the evidence of Mr. Radley is to be preferred. That doesn't mean that that decides the issue in this case. I prefer his evidence because, in my respectful view, it was given in a generally less dogmatic fashion than that of Mr. Cheng. Mr. Cheng, in my view, seemed to fasten onto certain features, such as the arrangement of the signature and the fact that the end of the signature crossed or touched the base line as almost being determining factors. He did not seem to me to be prepared to accept variations as natural. Instead, as I say, in one case he regarded what Mr. Radley described as a variation as what is known technically as an "accidental". He was not prepared to attach any real significance to where on a piece of paper the writer began the signature. It seems to me, looking at the specimens which have been supplied to me and to the experts, that where the signature starts would often determine where the end of the loop finishes.

13. In my respectful view, a criticism of Mr. Cheng is that he perhaps fails to heed the advice given by Harrison in the well-known book known as "Suspect Documents", which he was the first to appeal to as an authoritative of work, and indeed it is. It seems to me, with respect, that in dismissing one of Mr. Yap's known signatures as an "accidental" he was falling into the situation which Harrison expressly refers to at p. 379 of his book. There, it is stated, under the heading 'Letter Design and Range of Variation', a section of the chapter dealing with characteristics of genuine signatures, that, occasionally as with other handwriting, accidentals may occur in genuine signatures, but it is fortunate that this is a comparatively rare occurrence, because their presence is often wrongly regarded as a definite indication that any signature so modified cannot be considered genuine. In my view, I do not think that Mr. Cheng gave sufficient consideration to those words of warning when classifying one of Mr. Yap's known signature's in this case. Furthermore, the fundamental rule, which he appealed to when putting forward the proposition that finding one dissimilarity in the signature was enough to treat it as not genuine, was in fact a borrowing from the so-called fundamental rule which relates to handwriting and not to signatures. Indeed, the fundamental rule which Mr. Cheng was able to quote more or less parrot fashion appears at p. 343 of Harrison's work which is a section dealing with the comparison of handwriting. In other respects, Mr. Cheng, in my view, got himself into positions where he adopted positions or stances which were difficult to sustain even in the light of his own arguments, and in some respects, to use a phrase, painted himself into a corner. Accordingly, so far as the experts' evidence goes, I think that of Mr. Radley is to be preferred. But if the evidence consisted solely of the experts' evidence, I think it would probably be insufficient to enable the plaintiff to discharge the burden which lies upon it of showing that this particular document, Exhibit P1, was signed by Mr. Yap.

14. As I said before, I have approached the question before me on the basis that I should look at it in the light of all the evidence and not just parts of it in isolation. That brings me back to Mr. Yap's evidence. He has presented a picture of himself as a person who, first of all, is unlikely to give a guarantee, or to be accepted as a guarantor, for somebody else to the tune of $4,000,000 because he doesn't have those sorts of assets. He has portrayed himself as a person who has no clear recollection of what happened in 1977 nor of what sort of business interest he and his brother had at that time. But he clearly is not a babe-in-arms or a novice in business matters. As he says, he founded Rose Knitting in 1959. It is a substantial and important company which went public in November 1984. It is clear from the documents produced before me alone that he has substantial interests in other enterprises. It may be that he has never been involved in substantial loans of the order of $4,000,000. That I cannot tell. It merely appears to be so on the evidence in this particular case. But it is a well-known fact that people, particularly directors of companies, not infrequently sign and give guarantees for sums beyond their own then or known or potential means, because in all honesty they do not expect that they will be called upon to honour those guarantees. It is perhaps fair to say that it is usually only when such guarantees are given, so to speak, to help a borrower who is in extremis, or being pressed by his bank or other lenders, that the prospects of not being called upon to honour those guarantees are somewhat remote. But, having listened to Mr. Yap and having observed him in the witness box, I am not impressed by his apparent poor memory of his business interests, or his ignorance of his younger brother's business interests, at least so far as they may be interests in common. As I have already indicated it is distinctly odd that, if indeed he first learned of the existence of this guarantee from Mr. Wang during a casual meeting at the airport in Taipei, he would merely accept Mr. Wang's word that there would be no problem, because his Younger brother was trying to repay it. But, I do not think that any such meeting took place in or about the late summer of 1983. I do not think that faced with a sudden disclosure that one's name is on a document, which commits you to repaying $4,000,000 to a bank for somebody else's borrowing, that one would simply sit back and do little or nothing, which appears to be so in the case of Mr. Yap. There is no letter of protest or otherwise to the bank when this is first discovered, according to him, in 1983. Although he says he showed it to a lawyer's clerk in 1983 and was told that there should be no problem if the bank says that the money is being repaid, he was not apparently satisfied with that advice. It is not for me to say whether it was probable or improbable that he was given such advice by a clerk in that solicitor's firm. But, it seems to me that if he didn't accept that as satisfactory, and if, as Mr. Yap says, he was worried about his possible liability to the bank, it is very odd that he did not then write and get some kind of assurance from the bank that he would not be pressed for payment, and certainly more odd that he did not seek advice of a solicitor or perhaps some other firm of solicitors. Mr. Yap's conduct, in my view, when, upon his own evidence, he first became aware of this guarantee, is hardly the conduct of a businessman of his maturity, when learning that someone has been using his name and forging his signature to important documents such as this guarantee. It is, however, in my view, more probably consistent with a man who has given a guarantee at a time when things are going well for everybody, as indeed appears to have been the case of Mr. Yip, his younger brother, in 1977; and at the time when it is unlikely that the guarantor will be called upon to honour his undertakings. His conduct, if one accepts everything he says, is also in my view, perhaps, consistent with some body who, having given such a document at a time of high hope, is still hopeful that something will be rescued or salvaged from the wreckage, as indeed it appears to have been the case in 1983 when Mr. Yip's empire appeared to be crumbling, if not upon the point of collapse. It is, I think noticeable that, although it appears that same concern was being shown by the bank at the beginning of 1983, from the little I can glean from some of the documents, some of which have not been translated, it was not until October 1983 that the bank cancelled Mr. Yip's credit facilities, and discussions took place with a view to rescheduling repayments, which began in October with substantial monthly payments by Mr Yip. That being the time of the year when, so to speak, things really did move from the bank's point of view, I think it is unlikely, that there was a meeting in Taipei in August or September 1983 when Mr. Wang, according to Mr. Yap, revealed the extent of Mr. Yip's indebtedness and Mr. Yap's liabilities. It is an additional reason for disbelieving Mr. Yap's evidence of that alleged meeting and the details of their conversation.

15. For all these reaons, I am satisfied, on the balance of probabilities, that Exhibit P1 was signed by Mr. Yap; and at the time he signed it he knew perfectly well that it was a guarantee; and that it was intended by him to be a guarantee of loan facilities to be extended by the bank to Chung Hwa Enterprise Co., the firm under which his younger brother operated at that time, and that, having signed it, he impliedly authorised the bank to fill in the name of Chung Hwa Enterprise in the blank portion of that document. Accordingly, when that name was inserted sometime while the document was in the bank's possession, either not later than 1983 when the bank took steps to cancel Mr. Yip's loan, but certainly by July 1984, they did so with the full authority of Mr. Yap as a signatory. I therefore reject the principal defence, as well as the alternatives pleaded, namely of non est factum and that, even if signed by Mr. Yap with full knowledge of its contents, it was not in a form which constituted an offer capable of resulting in a binding contract. On the contrary, in my view, it clearly was binding upon Mr. Yap and was not in any way deficient or void for uncertainty or incompleteness. Accordingly, there will be judgment for the plaintiff in this action against the 2nd defendant.