HAVE RESULT FINANCE LTD v. CHAN HOW CHUNG VICTOR

HCMP 1382/2023

[2025] HKCFI 2611

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1382 OF 2023

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J U D G M E N T

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1.  Introduction

1.1  The Plaintiff (“P”) is a registered money lender under the Money Lenders Ordinance Cap 163 (“MLO”) and a subsidiary of a Hong Kong-listed company EPI (Holdings) Ltd (“EPI”). By an Originating Summons (“OS”) issued on 24 August 2023 pursuant to RHC Orders 83A and 88, P seeks a monetary judgment for outstanding sums due to it under the covenants contained in a mortgage dated 13 August 2018 (“Mortgage”) and an order for vacant possession of Flat A, 17/F of Ko Fung Court, Harbour Heights, 5 Fook Yum Road, Hong Kong (“Mortgaged Property”).

1.2  By the Mortgage, the Defendant (“D”) charged the Mortgaged Property to secure the P’s repayment obligations to P under 2 loan agreements:

(1)  By a loan agreement dated 13 August 2018, P advanced to D a principal sum of HK$24,000,000 (“1^st Loan”) for a term of 12 months from drawdown at the interest rate of 11% per annum (“1^st Loan Agreement”);

(2)  By another loan agreement dated 3 December 2018, P advanced to D a principal sum of HK$9,000,000 (“2^nd Loan”) for a term of 1 month from drawdown at the interest rate of 18% per annum (“2^nd Loan Agreement”);

(3)  At the time of its execution, the Mortgage by its terms was to secure D’s repayment obligations under the 1^st Loan Agreement. By the terms of the 2^nd Loan Agreement, it was agreed that D’s repayment obligations under it would also be secured by the Mortgage.

1.3  The 1^st Loan and the 2^nd Loan (collectively “Have Result Loans”) were drawn down on the respective dates of the execution of the 1^st Loan Agreement and the 2^nd Loan Agreement (collectively “Loan Agreements”). The parties had in writing agreed to extend the terms of the Loans on a number of occasions, such that the maturity dates were in writing extended to 13 August and 3 July 2022 respectively for the 1^st Loan and the 2^nd Loan.

1.4  D alleges that, shortly before the extended maturity dates of the Have Result Loans, between May and June 2022, he and a number of his lenders including P reached an agreement on the restructuring of what he termed in his evidence as the consolidated loan (“Alleged 2022 Restructuring Agreement”) which included the Have Result Loans. On D’s own case, the Alleged 2022 Restructuring Agreement was not made in writing. D contends that the Alleged 2022 Restructuring Agreement has the effect of prohibiting P from commencing any legal proceedings to recovery the Have Result Loans until the end of 2025. The existence of the Alleged 2022 Restructuring Agreement is disputed by P.

1.5  D says that the existence of the Alleged 2022 Restructuring Agreement gives rise to disputes which cannot be resolved summarily in the originating summons process. By his summons issued on 22 February 2024, D seeks an order that the present proceedings be continued as if the cause or matter had been begun by writ (“Conversion Summons”).

1.6  The OS and the Conversion Summons were heard together on 13 November 2024. At the hearing, P was represented by Mr Vincent Chiu and D by Mr Patrick Chong (together with Mr Martin Kok).

1.7  A plethora of legal and factual issues were advanced by D to contest the OS and in support of the Conversion Summons. Attempts are made by D to capitalize on the apparently unusual manner in which the Have Result Loans were administered, in that there is evidence to show that they were dealt with together with other loans advanced to D (and his related parties) by other finance companies. Having reflected upon the evidence and the arguments, I have concluded that such unusual features are peripheral to the core factual issue, namely whether the Alleged 2022 Restructuring Argument was made. I am satisfied that no triable issue has been raised on the foregoing core factual issue, and all other peripheral factual and legal issues (including those relating to quantum) either fall away or do not by themselves deter me from disposing the OS summarily.

2.  Background

(i)  Relevant Dramatis Personae

2.1  A pertinent feature in the present case is what D has termed in his evidence as the consolidated loan. Relevant to the present deliberation is that, at the material time, D’s other lenders were U Credit (HK) Limited (“U Credit”) and Reliance Credit Limited (“Reliance Credit”):

(1)  U Credit is a wholly-owned subsidiary of CSC Holdings Limited (“CSC”), a company listed on the Main Board of the Hong Kong Stock Exchange;

(2)  Reliance Credit is a wholly-owned subsidiary of Reliance Global Holdings Limited (“Reliance Global”), another Hong Kong-listed company.

2.2  It is D’s evidence that, at the material time:

(1)  Mr Suen Cho Hung Paul (“Mr Suen”) was a substantial shareholder of EPI and CSC and controlled a few finance companies including U Credit, Reliance Credit and P (collectively “Lenders”);

(2)  Mr Sue Ka Lok Daniel (“Mr Sue”) was the executive director of EPI and CSC and assisted Mr Suen in managing his money-lending business;

(3)  Mr Chow Kam Wah (“Mr Chow”) was a director of U Credit and CSC and D believed that Mr Chow acted as agents for Mr Suen and the Lenders.

2.3  D holds a LLB degree and is a professionally qualified accountant. He was the executive director and substantial shareholder of a formerly listed company, REXLot Holdings Ltd (“REXLot”). REXLot was wound up on 20 August 2020 and delisted on 10 May 2021.

2.4  Madam Lau Man Chi Nancy is D’s wife (“Madam Lau”) and the owner of a company called Radia International Ltd (“Radia”).

2.5  In these proceedings, the substantive evidence is set out in (1) the affirmations filed by Mr Chan Shui Yuen (“Mr Chan”), a director of P and (2) the affirmations filed by D himself. Madam Lau’s evidence only consists of exhibiting the documentary evidence commented upon in D’s evidence.

2.6  P has not adduced any evidence from Mr Suen, Mr Sue and Mr Chow. Mr Chong says that they are all material witnesses whose evidence should be tested in cross-examination.

(ii)  Loans obtained by D (and his related parties) from the Lenders and their securities

2.7  The evidence shows that, between December 2015 and December 2018, D and his related parties entered a number of loan agreements with the Lenders. It is D’s evidence that in 2015, D needed financing for a commercial project. According to D, he was introduced by a friend to Mr Suen and was told that loans secured by mortgages could be provided. Mr Suen further told D that Mr Chow would liaise with D on this matter. Consistent with the matters set out at §2.3 above, on D’s own case, his financial situation deteriorated in late 2018 (D 4^th §33)[1] and continued to deteriorate as a result of various factors including the unprecedented pandemic in the beginning of 2020 (D 4^th §6).

2.8  The evidence shows that the following landed properties were charged to the Lenders to secure repayment (unless otherwise stated, the properties enumerated below were at the material time owned by D):

(1)  The Mortgaged Property;

(2)  House No 9, Palm Drive (also known as House A5), the Redhill Peninsula Site D, No 18 Pak Pat Shan Road, Hong Kong (“Redhill”) owned by Madam Lau;

(3)  Office E on 23^rd Floor, YHC Tower, No 1 Sheung Yuet Road, Kowloon (“23E YHC Tower”);

(4)  Office E on 33^rd Floor. YHC Tower, No 1 Sheung Yuet Road, Kowloon (“33E YHC Tower”) owned by Madam Lau;

(5)  Flat C on 58^th Floor of Tower 3, Sky Tower, No 38 Sung Wong Toi Road, Kowloon (“58C Sky Tower”);

(6)  Flat C on 57^th Floor of Tower 3, Sky Tower, No 38 Sung Wong Toi Road, Kowloon (“57C Sky Tower”) owned by Achieve One Limited of which D was a director;

(7)  Flat B on 48^th Floor of Block 3, The Merton, No 8 Davis Street, Hong Kong (“Merton”) owned by Madam Lau;

(8)  28^th Floor of Tower 3, Marinella, No 9 Welfare Road, Hong Kong (“Marinella”) owned by D’s family member.

2.9  The loans obtained by D and his related parties were chronologically as follows (D 4^th §17 to 27):

(1)  On 14 December 2015, U Credit granted a loan in the sum of HK$60,000,000 to Madam Lau and D (“U Credit HK$60m Loan”) which, at the time of execution of the relevant loan documentation, was secured by (a) a second mortgage over 23E YHC Tower, (b) a second mortgage over 33E YHC Tower, (c) a second mortgage over Redhill, (d) a second mortgage over the Mortgaged Property, (e) a second mortgage over 58C Sky Tower, and (f) a mortgage over 57C Sky Tower. Subsequently, a third legal charge over Marinella was provided on 13 January 2022;

(2)  On 20 June 2016, U Credit granted a loan in the sum of HK$80 million to D (“U Credit HK$80m Loan”) which was secured by a second mortgage over Merton;

(3)  On 14 December 2017, U Credit granted a loan in the sum of HK$45 million to D and Madam Lau (“U Credit HK$45m Loan”) which was secured by (a) a third mortgage over 23E YHC Tower and (b) a third mortgage over 33E YHC Tower;

(4)  On 27 July 2018, Reliance Credit granted a loan in the sum of HK$8.5 million to Radia (“Reliance Credit Loan”) secured by a 1^st legal charge over 57C Sky Tower. The second mortgage over 57C Sky Tower in favour of U Credit was discharged on 23 July 2018;

(5)  On 13 August 2018, U Credit granted a loan in the sum of HK$52 million to D (“U Credit HK$52m Loan”) which was secured by (a) a third mortgage over Redhill, (b) a fourth mortgage over 33E YHC Tower, (c) a fourth mortgage over 23E YHC Tower. Subsequently a third legal charge over Marinella was provided on 13 January 2022 and (d) a charge over securities account;

(6)  Also on 13 August 2018, the 1^st Loan was granted by P to D which was secured by the Mortgaged Property and a mortgage over 58C Sky Tower. The second mortgage over 58C Sky Tower and the second mortgage over the Mortgaged Property in favour of U Credit was discharged on 9 August 2018;

(7)  Also on 13 August 2018, a mortgage over Merton was provided to Reliance Credit and which was made possible the discharge of the mortgage granted in favour of U Credit on 9 August 2018;

(8)  On 3 December 2018, the 2^nd Loan was granted by P to D.

2.10  It is D’s evidence that the above loans were all arranged by Mr Chow. In particular:

(1)  The Reliance Credit Loan was obtained at Mr Chow’s suggestion, on the basis that the parent company Reliance Global was in need of business. According to Reliance Global's announcement, on 9 February 2018, the Hong Kong Stock Exchange wrote to Reliance Global stating that it would be placed into the first delisting stage on the ground that its principal businesses had been deteriorating and were in a low level of operations which was insufficient to justify the group's continued listing;

(2)  In late July 2018, D further liaised with Mr Chow on the possibility of further financing. Following discussions, the transactions enumerated at §§2.9(5)-(7) above were put in place, involving all three of the Lenders.

2.11  Mr Chong submits that D’s evidence reveals a number of unusual features on how the Have Result Loans were administered together with other loans advanced by the other Lenders, including (a) Mr Chow at the material time was only a director of U Credit and its parent company CSC and did not have any apparent reason to arrange loans to be advanced to D by Reliance Credit on the basis that Reliance Global needed to generate business and (b) securities held by U Credit were “shifted over” to P.

(iii)  Repayments of the various loans

2.12  It is D’s case that (1) the U Credit HK$80m Loan, (2) the U Credit HK$45m Loan and (3) the Reliance Credit Loan have been fully repaid.

2.13  It is D’s further evidence that:

(1)  The loans granted by the Lenders were in essence one consolidated loan and managed as such. On each repayment occasion, Mr Chow agreed with D in the amount of repayment and Mr Chow would arrange and advise D which of the Lenders should be repaid and by how much;

(2)  Apart from the repayments, D liaised with Mr Chow on the renewal and extension of the maturity of the loans extended by the Lenders, and since they were managed as one consolidated loan instead of individual loans, D discussed mainly only with Mr Chow on renewal and extension. Once agreement was reached, Mr Chow would at times at the request of the individual Lenders for compliance purpose arrange for underlying loan extension letters to be issued, but this was not a prerequisite for such extensions;

(3)  Since around 2018, there were restructuring arrangements between the Lenders and D (and his related parties) whereby D would repay part of the loans (including by selling some of the properties identified at §2.8 above), and in return, the Lenders would extend the maturity dates of the remaining total outstanding balance of the loans and agree not to initiate any legal proceedings for the outstanding amounts;

(4)  In early 2019, Merton was sold at HK$13,000,000 with Reliance Credit’s agreement. The sale proceeds were used to partially repay the Reliance Credit Loan, the U Credit HK$52m Loan and the Have Result Loans. D pointed out that, at the time, Merton was only mortgaged to Reliance Credit, but given the understanding that the loans granted by the Lenders constituted a consolidated loan, Mr Chow advised that some of the sale proceeds were to be applied to settle the loans granted by the other Lenders in addition to the Reliance Credit Loan;

(5)  Also in early 2019, 23E YHC Tower and 33E YHC Tower were successively sold and the sale proceeds were used to repay the U Credit HK$45m Loan;

(6)  In July 2019, 58C Sky Tower was sold. D pointed out that 58C Sky Tower was only mortgaged to P, but for the same reason set out at subparagraph (4) above, the sale proceeds were used to make partial repayment towards not only the 1^st Loan but also the U Credit HK$52m Loan;

(7)  In May 2020, 57C Sky Tower was sold with the agreement of Reliance Credit to enable D to “repay unrelated loans” (D 4^th §37);

(8)  In late 2020, Mr Chow informed D that given the social unrest and the general economic downturn as well as the worsening pandemic situation in Hong Kong, the Lenders would like to see more repayment of the outstanding loan amounts before the end of 2020. D made a number of repayments towards the U Credit HK$52m Loan and the 1^st Loan between October 2020 and December 2021[2].

2.14  As at the end of 2021, the Have Result Loans had been extended in writing a number of times.

2.15  It is D’s evidence that towards the end of 2021, an alleged restructuring agreement was reached (“Alleged 2021 Restructuring Agreement”). At D 4^th §39, it is stated:

“Towards the end of 2021, Mr. Chow informed me that they would like me to arrange additional security to be provided to U Credit for their audit purposes. He suggested that this take the form of a 3^rd mortgage over Marinella which was owned by my family member. This is despite the fact that the mortgage loan was taken out by my family member, and I am not a borrower for that loan. Mr. Chow asked me to help arrange that 3^rd mortgage to support me and my wife's loans with U Credit and make a payment of HK$1 million on the date of execution of the 3^rd mortgage. I agreed to such an arrangement on the basis that after execution of such 3^rd mortgage the Lenders agreed not to initiate any recovery action on the Loans and to hold off all recovery actions for all the outstanding Loans (if initiated) until end of 2022, where I would arrange for partial repayments for the Loans of at least HK$30 million by the end of 2022, with the remaining balance of the Loans to be repaid over 2023 to 2025 (the "2021 Restructuring Agreement"). Furthermore, Mr. Chow advised me that during this period there may be needs for me to help make small partial repayments in order to satisfy their internal requirements, but the amounts would not be substantial and would be counted as repayments of the Loans. Mr. Chow confirmed that arrangement with me. Therefore, my family member provided the said 3^rd mortgage to U Credit on 13 January 2022 and Mr. Chow used a pre-signed cheque that I left with him to make a payment of HK$ I million to U Credit. I am unsure how this HK$ I million was applied.” (emphasis added)

2.16  In early 2022, by letters dated 3 January and 13 February 2022 (collectively “Last Extension Letters”), P agreed to extend the maturity dates of the 1^st Loan and the 2^nd Loan to respectively 13 August and 3 July 2022 (§1.3 above).

2.17  Following the Alleged 2021 Restructuring Agreement, it is D’s case that, to his surprise, the Lenders did not act in accordance with it, for example, by intimating that there were needs to issue demand letters to satisfy the auditors, requesting the disposal of Redhill and Marinella and issuing statutory demands against him and Madam Lau in respect of the U Credit HK$60m Loan.

(iv)  The Alleged 2022 Restructuring Agreement

2.18  The contemporaneous Whatsapp conversations between D and Mr Chow show as follows.

2.19  On 15 June 2022, Mr Chow sent the following message to D (“Mr Sue’s Idea”):

“Just discussed with Daniel [Mr Sue] regarding issued SD against you and Nancy. His idea is:

1. You and Nancy acknowledge receipt of SD to show off our attitude in handling the delinquent account to auditor and other board members;

2. You selling Redhill or other properties for debt repayment proactively;

3. Repay some money to us from time to time.

4. Then we will wait further.

What do you think?

Is it workable?”

2.20  D did not immediately agree to Mr Sue’s Idea. He replied as follows:

“Let me think a bit on this. Main question is he changed his mind quite often.”

2.21  Mr Chow then said:

“I know. Please think think.”

2.22  6 days later, on 21 June 2022, Mr Chow chased D for a response. The contemporaneous records do not shed light on the discussions between D and Mr Chow.

2.23  At D 4^th §§48-49, D sets out his evidence on the Alleged 2022 Restructuring Agreement as follows:

“[48] Between May 2022 and June 2022, I had extensive discussions with the Lenders through Mr. Chow. On behalf of the Lenders, Mr. Chow and I reached further agreement on restructuring the consolidated loan (the "2022 Restructuring Agreement"), which is of most relevance to this Action.

[49] Pursuant to the 2022 Restructuring Agreement, I agreed to the Lenders' request to arrange to dispose of Redhill and to cause my family member to dispose of Marinella before the end of 2022 at a good price so that the some of the sale proceeds could be used to repay the consolidated loan, as they knew too well that a disposal by the Lenders or through customers introduced by the Lenders would likely result in substantial discounts on the going market price for the sale of the properties. In return, they agreed to extend the time for repayment of some outstanding amounts under the Loans until the end of 2024 (at which time there would be part payment of at least 30- 40% of the remaining loans after the disposal of the properties) and the remainder of all the Loans until end of 2025. In the interim, they agreed that only small amount of payments would be needed to be paid by me (if that was needed to satisfy their internal purposes which I understood would be from the auditors). They further agreed not to initiate any legal proceedings for any of the Loans and to hold off all legal action already taken until the end of 2025 pending the repayment. In order to facilitate the disposal of Redhill, they also promised to provide moving expenses of HK$500,000. This was because Redhill was occupied by my wife at the time. Selling Redhill would mean that she had to rent and move to an alternative accommodation, which would result in material costs and cause considerable inconvenience. On the basis that the matter would be resolved amicably, I also agreed to waive my rights under the 2021Restructuring Agreement (in essence forbearing my right to enforce that agreement and sue for breaches thereunder).” (emphasis added)

2.24  Thereafter, Marinella was sold in September 2022 and Redhill in October 2022. At the hearing, it was confirmed by counsel that the sale proceeds of the 2 properties were used only to make repayment to U Credit and the overall indebtedness owed to U Credit and P was reduced by around 30%. According to a table provided by Mr Chong at the hearing, prior to the application of the sale proceeds, the total outstanding indebtedness was in the region of HK$195 million. The sale proceeds reduced that indebtedness by around HK$60 million (ie by around 30%).

2.25  D further says that in compliance with the Alleged 2022 Restructuring Agreement, various repayments in smaller sums (ranging from HK$150,000 to HK$415,000) were made between November 2022 and August 2023.

2.26  P commenced the present proceedings on 24 August 2023 which (D says) amounts to a breach of the Alleged 2022 Restructuring Agreement. On 4 September 2023, there were the following Whatsapp exchanges between D and Mr Chow:

“D: 但說回來，這次你們真的不對呀。沒事搞事。嗨…我盡量找個買家。但只能說拍檔大概率聽我的。不敢說必定。錢還是人家的…

Mr Chow: 明白的。但老闆決財要收返D現錢，阻不到呢… 謀事在人，成事在天。一齊努力啲…

D: 理解。各有難處。但不守信用的始終不對。我盡力吧。希望不用打起來。”

3.  Issues for determination

3.1  First, at the outset of the hearing, Mr Chong at my request identified 13 issues which are said to require at least cross-examination for their proper determination, namely (1) whether Mr Suen was introduced to D, (2) whether Mr Suen advised that D should approach Mr Chow, (3) whether the Lenders were controlled by Mr Suen, (4) whether the Lenders were acting in concert in relation to the Loans, (5) whether Mr Sue assisted in the management of Mr Suen’s money-lending business, (6) whether the loans advanced by the Lenders to D and his related parties were one consolidated loan, (7) whether Mr Chow represented the Lenders, (8) what was the scope of Mr Chow’s authority for the Lenders, (9) whether the parties had acted informally before the Alleged 2022 Restructuring Agreement, (10) whether the Alleged 2021 Restructuring Agreement existed, (11) whether the Alleged 2022 Agreement was reached, (12) whether the parties intended to act informally in relation to the Alleged 2022 Restructuring Agreement and (13) whether the Alleged 2022 Restructuring Agreement was breached (collectively “D’s Issues”).

3.2  As observed at §1.7 above, many of D’s Issues appear to be attempts made by D to capitalize on the apparently unusual manner in how the Have Results Loans were being administered together with the loans advanced by U Credit and Reliance Credit. In my view, such unusual features are at best peripheral as they by themselves do not amount to a defence and it has not been suggested by Mr Chong that they do. I agree with Mr Chiu that the only matter which is capable of amounting to a defence is the existence of the Alleged 2022 Restructuring Agreement.

3.3  Secondly, in the course of the hearing, emphasis was placed by Mr Chong on the potential dispute on quantum which D says requires discovery.

3.4  Thirdly, and for completeness, although a number of complaints are raised in D’s evidence on alleged breaches of the MLO, except for a passing reference at §131 of his Skeleton Submissions, no substantive submissions (whether in writing or orally) were advanced by Mr Chong to address the arguments advanced by Mr Chiu at his Skeleton Submissions Section C.3. In so far as necessary, I agree with Mr Chiu’s submissions that the allegations of breach of the MLO do not give rise to any triable issues.

4.  The applicable principles

4.1  RHC Order 28, rule 4(1) provides:

“The Court by whom an originating summons is heard may, if the liability of the defendant to the plaintiff in respect of any claim made by the plaintiff is established, make such order in favour of the plaintiff as the nature of the case may require, but where the Court makes an order under this paragraph against a defendant who does not appear at the hearing, the order may be varied or revoked by a subsequent order of the Court on such terms as it thinks just.”

4.2  There is no dispute between counsel that under RHC Order 28, rule 4(1), the court has a wide discretion to dispose of the originating summons summarily where it is satisfied that there are no triable issues: ICBC v Tse Ching [2022] 5 HKLRD 284 §26.

4.3  As to what constitutes a triable issue and the difference between an application for summary judgment on the one hand and a summary determination in the originating summons process on the other, Ip Kam Wah v Fair City Group Ltd [2005] 4 HKLRD 168 §8 observes as follows:

“I accept that, unlike the plaintiff in an O.14 application, the plaintiff in an originating summons procedure bears the burden of proof. When faced with conflicting affidavits from both parties, the court will be failing in its duty if it should take the assertions in the affidavits on their face value in isolation and jump to the conclusion that there is a triable issue without first considering whether the assertions in the affidavits are believable. I bear in mind the test laid down by Bokhary JA (as he then was) in Re Safe Rich Industries Ltd (unrep., Civ App No 81 of 1994, [1994] HKLY 183) that whether the assertions are believable is a question to be answered not by taking the assertions in isolation but by taking them in the context of so much of the background as was either undisputed or beyond reasonable dispute. In an originating summons procedure, it is only when the court is satisfied after having undertaken that exercise that factual disputes could not be resolved on affidavit evidence that oral evidence or trial should be considered.” (emphasis added)

4.4  Mr Chong has referred to a number of cases in support of the Conversion Summons. In gist:

(1)  If a genuine or substantial issue of fact requiring adjudication can be shown on the available evidence, a conversion is appropriate as there should be pleadings so that the precise issues between the parties may be properly identified, and cross-examination of the witness and discovery may be necessary for resolving such disputes of fact: Shum Wah Ming v The Estate of Chen King Ngo, CACV 21 of 1996, 10 July 1996 at §§8 and 12-14;

(2)  The fact that not all of the potentially relevant documents have been presently placed before the court is also a reason for ordering that the proceedings continue as if begun by writ, so that the parties would be required to disclose relevant documents pursuant to the normal rules on discovery: Wealth Link Credit v Yeung Kuk Lam [2022] HKCFI 2909 §19;

(3)  It is inappropriate in a case where an emergent legal principle is at stake to entertain any summary determination which would have the effect of negating full argument on the point when advanced in face of the facts as established on the evidence led at trial: Tadjudin v Bank of America National Association [2010] 3 HKLRD 417 §7.

4.5  Whilst each case depends on its own facts, the following observations made at United Overseas Bank Ltd v Gracewood International Limited [2021] HKCFI 2950 are pertinent:

“[25] The present case involves the banker-customer relationship built on substantial credit facilities in a purely commercial and business context. It is in such context that the allegations in respect of any promise, representation and understanding of the parties are to be assessed objectively. In such context, any suggestion that the Bank somehow promised or represented not to enforce its rights under the loan and the securities at all is inherently difficult to take root.”

5.  The existence of Alleged 2022 Restructuring Agreement

5.1  Mr Chong relies principally on the following evidence to argue that the existence of the Alleged 2022 Restructuring Agreement presents triable issues on the facts:

(1)  Mr Sue’s Idea is a piece of contemporaneous record evidencing the Alleged 2022 Restructuring Agreement (§§2.19 above);

(2)  The facts that Redhill and Marinella were sold and that the resulting sale proceeds had reduced the then overall indebtedness by 30% show that D and his related parties had acted in accordance with the Alleged 2022 Restructuring Agreement (§2.24 above);

(3)  The fact that further repayments of lesser amounts were made is also evidence that D and his related parties had acted in accordance with the Alleged 2022 Restructuring Agreement (§2.25 above);

(4)  The fact that there were no further extensions beyond the Last Extension Letters does not contradict the existence of the Alleged 2022 Restructuring Agreement (§2.16 above) as there is a triable issue on the believability of D’s assertion that the same was not a requisite (§2.13(2) above);

(5)  As U Credit and P were subsidiaries of listed companies, it was not surprising that the Alleged 2022 Restructuring Agreement was only reached orally due to concerns relating to those entities being seen as acting in concert;

(6)  D had contemporaneously complained about P’s breach of the Alleged 2022 Restructuring Agreement (§2.26 above).

5.2  It is part of Mr Chiu’s argument that the Alleged 2022 Restructuring Agreement, even if believable factually, is unarguable as it is caught by the “no oral modification” clauses[3] in the contractual arrangement between the parties. Mr Chong says that what is the effect of a “no oral modification” clause is an area of involving emergent legal principles.

5.3  For the following reasons, I disagree with Mr Chong. I must emphasize one matter at the outset of my analysis. As will be seen below, the analysis involves setting out my reasons for concluding that D’s evidence on the existence of the Alleged 2022 Restructuring Agreement is not believable. In doing so, I have borne in mind the distinction between an application for summary judgment and a summary determination under an originating summons set out at §4.3 above. As the Alleged 2022 Restructuring Agreement is an allegation raised by D, the attendant analytical exercise involves a critical examination of the evidence adduced by D. That exercise does not have the effect of shifting the burden.

(i)  No triable issues on the facts

5.4  Mr Chong has analyzed the evidence in detail to show that the loans advanced by the Lenders were being administered as a composite loan and that Mr Chow was predominantly the main, if not the only, contact between D and the Lenders. For example, in addition to the fact that mortgages were being “shifted” from one of the Lenders to the other (§2.9 above), Mr Chong has also referred to the facts that (1) a number of P’s transactional documents (eg extension letters and audit confirmations) were sent by Mr Chow through Whatsapp to D and (2) repayment information sent by Mr Chow to D was compiled on a consolidated basis and contained information from all the Lenders.

5.5  However, even proceeding for present purpose on the bases that the Lenders were acting in concert and that Mr Chow had authority to bind the Lenders (specifically only U Credit and P at the time of the Alleged 2022 Restructuring Agreement as the Reliance Credit Loan had already been paid off), it has not been suggested by D that U Credit and P were acting otherwise than on an arm’s length and commercial basis viz D and his related parties.

5.6  The Alleged 2022 Restructuring Agreement advanced by D has the following features (§2.23 above):

(1)  Redhill and Marinella would be sold before the end of 2022;

(2)  Repayment of “some outstanding amounts” would be extended to the end of 2024 and repayment of the remainder would be extended to the end of 2025;

(3)  After the disposal of the 2 properties, the outstanding indebtedness would be reduced by 30-40% by the end of 2024;

(4)  Repayment of the remaining 60-70% of the outstanding would be extended to the end of 2025;

(5)  Unspecified “small amount of payments” would have to be made in the meantime if needed to satisfy the Lenders’ internal purpose which D understood would emanate from the auditors;

(6)  No legal proceedings would be commenced before the end of 2025 pending repayment;

(7)  In order to facilitate the disposal of Redhill, the Lenders agreed to provide moving expenses of HK$500,000 as Redhill was occupied by Madam Lau.

5.7  In my view, the existence of the Alleged 2022 Restructuring Agreement raises no triable issues for the following reasons.

5.8  First, the Alleged 2022 Restructuring Agreement does not make commercial sense:

(1)  At the time of the Alleged 2022 Restructuring Agreement, many of the properties identified at §2.8 above had already been sold. The only unsold properties were Redhill, Marinella and the Mortgaged Property. Although no valuation evidence is placed before me, it appears that the Mortgaged Property was the least valuable. The Mortgaged Property is a residential unit in North Point whilst Redhill was sold for HK$85 million and Marinella for HK$44.28 million. According to the Alleged 2022 Restructuring Agreement, the disposal of Redhill and Marinella was contemplated to reduce the outstanding indebtedness by at most 40%, leaving 60% of the remaining outstanding indebtedness (as it turned out in excess of HK$130 million as stated at §2.24 above) secured only by the Mortgaged Property whilst a moratorium (subject to the unspecified “small amount of payments”) was effectively in place until the end of 2025;

(2)  No provision was made in the Alleged 2022 Restructuring Agreement on how the outstanding indebtedness respectively owed to U Credit and P was to be reduced. Redhill and Marinella were properties charged or mortgaged to secure the repayment obligations owed to U Credit only and, as it turned out, P did not receive any of the sale proceeds generated from their disposal;

(3)  As such, it was entirely possible under the terms of the Alleged 2022 Restructuring Agreement that no benefit would accrue to P in terms of any reduction of the outstanding indebtedness owed to it (and as a matter of fact the indebtedness owed to it was not reduced by the sale of the 2 properties) and, except for the unspecified “small amount of payments”, P was subject to what was effectively a moratorium;

(4)  Even if the loans granted by U Credit and P were treated as a consolidated loan, given that P is a subsidiary of a listed company, I do not find it credible that P would enter into the Alleged 2022 Restructuring Agreement without having any regard to its own interest;

(5)  Importantly, D’s evidence is silent on what was the incentive for either P and/or U Credit to enter into Alleged 2022 Restructuring Agreement, as both the unspecified “small amount of payments” and the orderly disposal of Redhill and Marinella (instead of a forced sale) conversely were objectively beneficial to D and his related parties;

(6)  Bearing in mind, on his own evidence, D’s financial predicament already surfaced in 2018, there is no suggestion by D that he had offered to provide additional security to secure the indebtedness or provided any viable business plan which would improve D’s financial position during the effective moratorium.

5.9  Secondly and relatedly, I agree with Mr Chiu that the vagueness and lack of particulars of the Alleged 2022 Restructuring Agreement demonstrates its inherent improbability and incredibility: The Kwangtung Provincial Bank v Keen Lloyd Resources Ltd, HCMP 4696 of 2000, 3 July 2001 at §46.

5.10  Thirdly, there is a dearth of evidence to support the existence of the Alleged 2022 Restructuring Agreement:

(1)  It is D’s own case that he had “extensive discussions” with the Lenders through Mr Chow, and yet D (being a trained accountant and a sophisticated borrower) has not adduced any documentary record in support of such discussions;

(2)  The Whatsapp message dated 15 June 2022 from Mr Chow relaying Mr Sue’s Idea to D does not support the making of the Alleged 2022 Restructuring Agreement, in particular on the assertion that P cannot commence legal proceedings until late 2025;

(3)  In any event, D did not agree with Mr Sue’s Idea (§§2.19-2.21 above);

(4)  Insofar as Mr Chong relies on D’s conduct in disposing Redhill and Marinella and making “small amount of payments” such conduct is equally consistent with (a) the non-existence of the Alleged 2022 Restructuring Agreement and (b) P and U Credit granting indulgence to D and his related parties;

(5)  D’s complaint (§2.26 above) makes no any reference to the existence of the Alleged 2022 Restructuring Agreement.

5.11  Fourthly, on D’s evidence, the Alleged 2022 Restructuring Agreement was entered into at the latest in June 2022, shortly before the extended maturity dates of the Have Result Loans (§2.16 above). The extensions of the maturity dates of the Have Result Loans were consistently documented in writing until the Last Extension Letters. Mr Chong’s argument that the Alleged 2022 Restructuring Agreement remained undocumented because of concerns of P and U Credit being seen to be acting in concert does not explain why no extension letters were issued by P, had the Alleged 2022 Restructuring Agreement been concluded. On the evidence, the Last Extension Letters were issued after the Alleged 2021 Restructuring Agreement (§§2.15 and 2.16 above)[4].

5.12  For all the above reasons, I am of the view that the existence of the Alleged 2022 Restructuring Agreement does not raise a triable issue on the facts. In my view, the observations made in United Overseas Bank are apposite to the present case (§4.5 above).

5.13  For completeness, I should add that counsel also made submissions on estoppel. As I understand Mr Chong, his argument is that even were P to argue that the Alleged 2022 Restructuring Agreement did not constitute a binding contract, P is nevertheless estopped from seeking to enforce the Have Result Loans and the Mortgage by virtue of the terms of the Alleged 2022 Restructuring Agreement. As I have formed the view that no triable issues have been raised on the existence of the Alleged 2022 Restructuring Agreement (in particular on the existence of any discussion or representation made by Mr Chow and/or P that there would be an effective moratorium until the end of 2025), it is unnecessary to deal with counsel’s submissions on the issue of estoppel.

6.  The effect of the “no oral modification” clauses

6.1  The arguments on the “no oral modification” clauses only arise if there is a triable issue on the existence of the Alleged 2022 Restructuring Agreement. The disagreement between counsel is whether MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2019] AC 119 should be applied in Hong Kong. Rock Advertising has been applied in a number of Court of First Instance decisions, for example Chow Tai Fook Nominees v Diamond City Ltd [2021] HKCFI 3019 at §48:

“Furthermore, DW’s reliance upon the Alleged CTFN/DC Variations (which is based on the Alleged 2^nd Offer/Representation) is obviously unarguable. The Alleged CTFN/DC Variations, even if they were believable, are plainly ineffective as clause 9.8 of the Gateway Asia Loan Agreement and clause 10.8 of the Diamond City Facility Agreement expressly provide that any amendment thereof shall only be effective if made in writing and signed by all of CTFN, DW and Gateway Asia/Diamond City (as the case may be). As the Alleged 2^nd Offer/Representation was, even on DW’s own case, “orally relayed” to DW by Mr Chong, and the Alleged CTFN/DC Variations were not agreed in writing and signed by the relevant parties, they are invalid by reason of the “no oral modification” clauses which are legally effective: MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] 2 WLR 1603 at §§10-16 per Lord Sumption JSC; and Hansom Finance Ltd v Lai Leong [2021] HKCFI 409 at §29 per Linda Chan J. Accordingly, DW’s claim that CTFN acted in breach of the Alleged CTFN/DC Variations is completely unarguable.” (emphasis added)

6.2  Mr Chong relies on a number of cases from other commonwealth jurisdictions which disagree with Lord Sumption’s propositions in Rock Advertising. For example, in Charles Lim Teng Siang v Hong Choon Hau [2021] SGCA 43, the Singapore Court of Appeal observed as follows:

“[40] We begin our analysis by expressing our reservations regarding the Sumption approach. In reversing Rock Advertising CA, Lord Sumption’s starting point was to treat the rule as applied in Rock Advertising CA as having the effect of “overrid[ing] the parties’ intention” (Rock Advertising UKSC at [11]). We disagree. We note that Lord Briggs expressed a similar disagreement (Rock Advertising UKSC at [25]). In our view, there is no question of any overriding of the parties’ intention. That proposition assumes that the parties’ intention should be fixed at the time when the contract was entered into and overlooks the fact that the parties to any contract are ultimately the master of their own contract and if they decide to orally agree to do away with or depart from a NOM clause, the court should uphold their autonomy to do so.

[43] With respect, it appears that by his approach, Lord Sumption had conflated the parties’ individual autonomy with the parties’ collective autonomy. This led him to suggest, in our view erroneously, that once parties have agreed to a certain set of rules, they cannot together agree to change those rules. His proposition that “[t]he real offence against party autonomy is the suggestion that they cannot bind themselves as to the form of any variation, even if that is what they have agreed” (Rock Advertising UKSC at [11]) fails to recognise that even if parties had initially agreed to certain rules, they can subsequently agree to jointly amend those rules (see eg James C Fisher, “Contract variation in the common law: A critical response to Rock Advertising v MWB Business Exchange” (2018) 47(3) CLWR 196 (“Fisher”) at pp 198 to 199; see also J W Carter, John Eldrige and Elisabeth Peden, “Agreed Writing Requirements for Contract Variation” (2020) 36 JCL 107 (“Carter”) at p 115).”

6.3  Even proceeding on the basis of Mr Chong’s submission that the effect of “no oral modification” clauses is an area involving an emergent legal principle, the interesting arguments do not arise in the present case by reason of my conclusion that no trial issue has been raised on the factual case.

7.  Disputes on quantum

7.1  D’s submissions on this topic were advanced by Mr Chong at the hearing and by Mr Kok in further written submissions lodged after the hearing.

7.2  First, D seeks to take advantage of the fact that certain corrections have been made by Mr Chan. In exhibit CSY-9 the position was as follows:

	Outstanding Amount as at date of OS	Daily Interest
1st Loan	$17,978,740.40	$4,784.40
2nd Loan	$12,279,056.25	$4,974.37

7.3  In exhibit CSY-21, the position was corrected to be as follows:

	Outstanding Amount as at date of OS	Daily Interest
1st Loan	$17,978,740.40	$4,784.70
2nd Loan	$12,277,453.50	$4,973.50

7.4  Secondly, D says that P has not produced in underlying documents in relation to D’s repayments, and since it is D’s evidence that he is no longer in possession of the repayment records, he is entitled to discovery of such documents.

7.5  I do not accept D’s submissions. First, as may be seen from the above, only very minor changes have been made in CSY-21 and those changes are only in respect of the 2^nd Loan. The reasons for the amendments are set out in Chan 6^th. Secondly, I accept Mr Chiu’s submissions that no triable issue has been raised on D’s query as to whether all the repayments made have been taken into account on the evidence. All of the repayments identified by D towards the Have Result Loans were included in CSY-9 and CSY-21.

7.6  As observed by the Court of Appeal at China Citic Bank International Ltd v Durrant Simon Patrick Michael, CACV 127 of 2014, 23 June 2016:

“[23] The defendant submitted that in Tse’s 1^st affidavit, no bank or account statements had been exhibited to support the state of accounts of the two mortgage loans deposed to by Tse in paragraphs 14 and 15 or the total amount asserted in paragraph 16 as remaining due under the mortgage as at the date of the affidavit, being a sum of $3,413,056.42. He claimed it is impossible to verify the accuracy of the plaintiff’s claim when no bank or account statements had been exhibited. The plaintiff had failed to prove that the money claimed is due and payable, as required by Order 88 rules 5(3) and (6) and Master Leong should have thrown out the originating summons.

[24] We reject the defendant’s submission. Rule 5(6) requires the supporting affidavit to prove that the money is due and payable and give the particulars mentioned in rule 5(3). Tse had given the particulars mentioned in rule 5(3) in paragraphs 14 and 15 of his 1^st affidavit, having deposed that he made the affidavit from the facts within his own knowledge as an officer of the plaintiff and from information obtained by investigation of the books, accounts and documents of the plaintiff. Rule 5(6) does not specify that proof is to be furnished only by exhibiting a bank or account statement. And there is no prohibition that the evidence provided in the first affidavit may not be supplemented by subsequent affidavits.”

7.7  I therefore do not regard that any triable issues arise in respect of quantum.

8.  Conclusion

8.1  For the above reasons, I grant money judgment in favour of P based on the figures set out at CSY-21 and an order for vacant possession of the Mortgaged Property. I agree with Mr Chiu that the Conversion Summons is but a continuation of D’s unjustified attempts to delay the inevitable, as was his earlier attempt to raise (and then withdraw) disputes in relation to the validity of the service of the OS. I dismiss the Conversion Summons.

8.2  The parties have not addressed me on the time within which vacant possession is to be given. I expect parties to be able to agree on a draft order which is to be submitted within 7 days hereof for approval. In the event of disagreement, their respective drafts should be submitted within the stated period for my determination.

8.3  I also make a costs order nisi that the costs of the OS and the Conversion Summons (including any reserved costs) be paid by D to P to be taxed if not agreed.