MULTIFOR ENTERPRISE DEVELOPMENT LTD v. HO CHOW PING DANNY t/a BILLION SUCCESS CONSULTANT CO

HCA 234/2020

[2022] HKCFI 737

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 234 OF 2020

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DECISION

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INTRODUCTION

1.  This was the hearing of an appeal by the Defendant against Master Sabrina Ho’s (“the Master”)  decision dated 16 July 2021, whereby summary judgment was entered against the Defendant for the sums of HK$797,480.60 and HK$3,127,488.00 (“the Sums”), with interest at commercial rate of Prime plus 1%, from the date of the Writ to the date of Judgment and at Judgment rate until full payment.

2.  At the hearing before this Court, the Plaintiff was represented by Counsel Mr Lau Ka Kin and the Defendant was represented by Counsel Mr Richie Lai.

BACKGROUND

3.  The background has been succinctly summarized by the Master in her Reasons for Judgment dated 16 July 2021. I gratefully adopt the broad points therein, summarized below:

(1)  The Plaintiff’s case is based on a financial services agreement entered into between the Plaintiff and the Defendant dated 12 December 2019 (“the December Agreement”).

(2)  Under the December Agreement, the Defendant was obliged to arrange two documentary letters of credit (“DLCs”, or in the singular “DLC”)  for the Plaintiff. The first DLC was for a sum of US$1 million-odd for the beneficiary EIFS (Belt and Road)  Limited in the form of Annex 1 to the said Agreement (“1^st DLC”); the second DLC was for the sum of US$5 million-odd for the beneficiary Season Hong International Trading Limited (“Season Hong”)  in the form of Annex 2 to the said Agreement (“2^nd DLC”).

(3)  By Clause 2 of the said agreement, the issuing bank was specified as DBS Bank (Hong Kong)  Ltd. Hong Kong, SWIFT DHBKHKHH (“DBS”).

(4)  In return for the issuances of the DLCs, the Plaintiff would pay 8% of the total value of the DLCs as service charge, in other words, a total sum of HK$3,814,137,60 for the above-mentioned DLCs (comprised of the Sums, being the respective service charges).

(5)  Clause 4(b)  of the December Agreement provided as follows:

“甲方收到开證費用后的5个銀行工作日內開出附件1 & 附件2，用銀行電文MT700盜到收证銀行。銀行副本立即用EMAIL發到乙方以便查詢。”

(6)  Clause 4(c)  of the December Agreement provides as follows:

“在上述第B項乙方若不能完成任務，需退回乙方所附之款項，立刻退回。”

(7)  As evidenced by the transfer advices, on 13 December 2019, the Plaintiff paid the total sum of HK$3,814,137,60 to the Defendant.

(8)  There is no dispute that the 1^st DLC specified under the December Agreement was never issued.

(9)  In respect of the 2^nd DLC, the Defendant’s case is that in lieu of the DLC agreed, four separate DLCs were instead arranged to be issued to Season Hong. There is no dispute that three of the said DLCs as arranged were beyond the originally agreed time and not in the agreed form per Annex 2 of the December Agreement. There is further a dispute as to whether the fourth of the lot was in fact ever issued at all.

(10)  The December Agreement on its face bears the chop of the Defendant as 乙方and the chop and signature of the authorized signatory of the Plaintiff’s company as 甲方.

PARTIES’ RESPECTIVE CASES

4.  Based on the above, the Plaintiff’s case is essentially that the Defendant has failed to deliver on the contractually agreed items (or had not “完成任務” per Clause 4(c)), and thus the Plaintiff says it is entitled to a refund of the Sums in question.

5.  The Defendant’s Defence dated 4 May 2020 pleads in essence that:

(1)  The parties had originally entered into a financial services agreement dated 28 November 2019 (“November Agreement”).

(2)  There were subsequent series of agreements in December 2019 whereby the form of the DLCs and various terms were altered; and

(3)  In mid-January 2020, some final extensions of time and amendment to the original terms were agreed such that the DLCs were to be issued by 25 January 2020.

6.  As to the affirmation evidence in opposition:

(1)  The Defendant and her business partner Mr Tommy Wu reiterate similar allegations regarding the Defendant’s reliance on the November Agreement, and the subsequent process of discussions and amendments thereto up to mid-January 2020.

(2)  In addition, the Defendant raises an allegation that the stamp found on the December Agreement was not applied by her and that the said agreement appeared to be a “false and fabricated document”. Her allegation is that she would normally apply the stamp of the Defendant via a digital photo onto agreements and that it had a square shaded background on top of which one finds the round chop image, whereas in the December Agreement, there is no such square shading. In further support of this allegation of forgery, there is reference to a police report made by the Defendant wherein she also mentions the issue with the stamp / chop and a formatting difference between the December Agreement and the November Agreement (viz. the former does not have the letters “DH” in the bottom left corner, whereas the latter does).

7.  Before this Court, Mr. Lai (who was not the counsel who prepared the Defence nor the evidence in opposition, and who did not attend before the Master)  endeavoured to run the case essentially along the following lines:

(1)  Applying an objective test in determining whether an agreement has been made (citing Yu Man Fung Alice v Chiau Sing Chi Stephen [2020] HKCFI 2923 at §20), there are essentially two options before the Court as to how to view the evidence.

(2)  First, the November Agreement was a framework agreement, with the parties continuing to negotiate and only finally agreeing to the concluded terms in respect of the 1^st and 2^nd DLCs in mid-January 2020.

(3)  Second and alternatively, even if the Court is with the Plaintiff that the December Agreement was the operative agreement, the parties had agreed to variation of the same, such that by mid-January 2020:

(a)  The Plaintiff had unreasonably rejected the proposed alternate issuing bank for the 1^st DLC (being a bank in Brazil as opposed to either DBS or Standard Chartered Bank); and

(b)  The parties had in fact agreed to the later issuance of the four separate DLCs (not from DBS)  in lieu of the 2^nd DLC.

(4)  In addition in to the above, in dealing with the December Agreement, the allegation of forgery was maintained. Mr Lai fairly admitted that the allegation of fraud was not pleaded, and thus addressed in his skeleton argument the question of whether the defence could be amended at this stage.

RELEVANT LEGAL PRINCIPLES

8.  The relevant legal principles for summary judgment are well settled. In short (Hong Kong Civil Procedure 2022, §§14/4/1, 14/4/4, 14/4/9 – 14/4/9B):

(1)  It is incumbent on the defendant to raise a defence or triable issue, and in so doing to condescend upon particulars. The issue is not whether the defendant is believed, but whether the assertions are believable (Ng Shou Chun v Hung Chun San [1994] 1 HKC 155 at 158; Toy Major Trading Co Ltd v Plastic Toys Ltd [2007] 3 HKLRD 345 at §12).

(2)  Unless it is obvious that the defence is frivolous and practically moonshine, Order 14 ought not be applied.

(3)  Where there are doubts or suspicion as to the validity of the plaintiff’s case or if possibly genuine weaknesses were exposed in the plaintiff’s case, then summary judgment ought not be granted (Billion Silver Development Ltd v All Wide Investments Ltd [2000] 2 HKC 262 at 268C-D).

(4)  The Court will not embark on a mini trial on affidavits.

9.  An appeal from a master to a judge proceeds by way of rehearing. Fresh points may be taken upon such hearing (Hong Kong Civil Procedure 2022, §§58/1/1 & 58/1/5).

10.  Reference may also be made to the trite principles set out in the judgment of DHCJ Lisa Wong (as she then was)  in Menfond Electronic Art & Computer Design Co Ltd v Wong Wang Tat Victor [2013] 2 HKC 259 at §61:

“The principles governing the grant or refusal of summary judgment under Order 14 are well established. It is for the defendant to show that there is an arguable defence or triable issue. In doing so, the defendant must condescend to particulars. The mere assertion in an affidavit of a given situation by the defendant does not, ipso facto, ground leave to defend. The defendant must satisfy the court that his evidence is capable of being believed and that on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence. In deciding whether there is a fair or reasonable probability of the defendant having a real or bona fide defence, the court does not isolate each factual issue and consider whether it is possible that the defendant’s story on that issue is credible. Rather, the court must look at the whole situation. In assessing the credibility of the defendant’s factual case, while the court will not embark on a mini-trial on affidavit evidence, the court is not obliged to suspend its critical faculties and assume that the defendant’s evidence is accurate. If having regard to inherent plausibility, inconsistency with contemporaneous documents and other compelling evidence, the defence is not credible, the court must say so. If the defendant’s defence is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence.”

DISCUSSION

11.  I have borne in mind the principles above whilst considering the Defendant’s contentions. After having considered the pleadings, the evidence filed as before the Court, and the parties’ respective arguments, I do not consider there to be any credible defences or triable issues raised.

12.  The Plaintiff’s claim is straightforward and consistent with inter alia the following contemporaneous evidence:

(1)  The December Agreement, which on its face is in final (and not draft)  form – whereas the November Agreement did not even enclose the Annex referred to therein.

(2)  The payments made on 13 December 2019, which were made one day after the entering into of the December Agreement.

(3)  When it transpired that the agreed upon DLCs would not be issued, various written demands for return of the Sums made by the Plaintiff themselves or via their lawyers in January 2020.

(4)  Also tellingly, there was a lack of contemporaneous response to the above demands from the Defendant. One would have expected vehement protest from the Defendant that the Plaintiff’s reliance on the terms of the December Agreement was either misplaced because the parties were still negotiating the terms of the DLCs or that it was not what had been agreed. This was not done; there was simply no response.

13.  On the other hand, none of the Defendant’s asserted grounds find any credible support when the evidence is considered in its totality.

14.  First, insofar as the allegation that the November Agreement was the operative one rather than the December Agreement:

(1)  I agree with the observations of the Master that there is no triable issue raised.

(2)  The November Agreement is incomplete (as above, it did not enclose the annex referred to). The contemporaneous WeChat records show that the parties understood it to be a draft.

(3)  In contrast, the December Agreement has the relevant annexures, is consistent with the contemporaneous WeChat records, and is in complete and coherent terms.

(4)  The payments took place right after the December Agreement was signed.

15.  Second, I do not consider there to be sufficient basis to support the very serious allegations of forgery or fraud of the December Agreement:

(1)  One must bear in mind the trite principle in Re H & Ors (Minors) [1996] AC 563 that the more serious the allegation, the more cogent the evidence required to prove it.

(2)  In the present case, the only two items referred to in the evidence were (a)  the possible issues with the stamp and (b) the presence (or absence)  of the “DH” initials in the bottom left hand corner of the contract document. For the latter, the Defendant did not go on oath to attest to the same, but produced a police report which referenced it. For the former, there was scant supporting evidence produced by the Defendant, and in essence her assertion rests largely on her own unsupported evidence.

(3)  The above falls far short of the cogent evidence required to assert fraud or forgery. Coupled with consideration of the surrounding contemporaneous evidence as summarized above, I do not consider there is any merit in the fraud argument. Even if it had been pleaded, this would not add anything further to the point.

(4)  In relation to this point, I note the Plaintiff’s submission that allegations of fraud should only be advanced by legal representatives when there is sufficient evidence to do so. To Mr Lai’s credit, he did not press the point strongly whether in his submissions or at the oral hearing, and it was only at the invitation of the Court that he helpfully highlighted whatever scant items of evidence there was in the bundles.

16.  Third, the Defendant refers to the changes in the verbiages of the DLCs and argues that viewed objectively these constitute either (i)  ongoing negotiations, only finally concluded in mid-January; OR (ii)  that they were variations on the terms of the original agreement. I do not consider the references to the subsequent communications and changes to the verbiages in the DLCs is anywhere near sufficient to support such contentions:

(1)  Both the Plaintiff and Defendant claim to be sophisticated commercial parties, with much experience in this field. One would expect that if they had the good sense to draft and endeavour to embody their original agreement by way of a Financial Services Agreement (whether one is looking at the November version or the December version), then any subsequent alteration to the terms of such agreement would have been embodied in an updated document. There is none.

(2)  In her own evidence, the Defendant had acknowledged that in mid-January 2020, she had attempted to arrange for the refund of the service charge in relation to the 1^st DLC, because it could not be arranged. This acknowledgment by way of her own contemporaneous actions at the time amounts to an admission that the 1^st DLC had not been issued per the agreement between the parties.

(3)  As to the 2^nd DLC, the ‘negotiations’ in question in mid-January 2020 were not, even on the Defendant’s own evidence, with known representatives of the Plaintiff. Instead, they were with a person named Margaret Chiu; the Defendant herself is unable to identify any agency relationship between Margaret Chiu and the Plaintiff. 

(4)  Seen in the round, the WeChats and other contemporaneous documentation do not point to there being any meeting of minds on the proposed changes. The evidence does not fit either of the Defendant’s proposed “objective” scenarios (viz. concluded agreement in mid-January OR original agreement in November with variations in mid-January). Rather, the objective bystander would clearly see that the parties had concluded the December Agreement, and the subsequent communications did not amount to any variation thereof.

17.  I consider the above matters to be the dispositive factors in considering the Defendant’s contentions. Whilst the Defendant attempted to raise various other “issues” by way of the written submissions, these fall by the wayside in view of the above analysis. I have also considered the detailed submissions on the documents by both parties, which is not necessary to repeat in this judgment.

18.  For the above reasons, I consider that the appeal should be dismissed with costs. 

19.  Costs shall be assessed by way of gross sum assessment in writing. The Plaintiff shall lodge and serve its statement of costs within 7 days of this Decision, and the Defendant shall provide comments thereon within 7 days thereafter.

20.  I thank counsel for their assistance.