XCHRX THE CHINA AND SOUTH SEA BANK LTD. v. DAVID RESOURCES CO. LTD. AND ANOTHER

HCA 2636/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2636 OF 2001

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J U D G M E N T

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1. This is an application for summary judgment under Order 14 rule 1 of the Rules of High Court.

2. The plaintiff is a bank licensed to carry on the business of banking in Hong Kong. By virtue of facility letters written on 13 January 1998 the plaintiff agreed with its customer the 1st defendant to make advances to it, subject to the 2nd defendant, its chairman, giving to it his personal guarantee in prescribed form as part of the security. The guarantee was executed by the 2nd defendant on 15 January 1998.

3. The 1st defendant having defaulted in terms of its commitments the plaintiff called up the advances by letters to the first and second defendants of 3 February 2001. There being no response it issued a writ on 12 June 2001 against both defendants.

4. The amount outstanding as at 17 May 2001 was $13,498,396.15 with interest accruing thereafter at $4,614.28 per day.

5. By acknowledgement of service filed on 20 June 2001 both 1st and 2nd defendants gave notice of their intention to defend. The plaintiff filed this summons on 30 June 2001.

6. By affirmation in opposition to the application for summary judgment, the 2nd defendant contested the accuracy of the indebtedness putting the plaintiff to proof. He further stated at paragraph 3:

"3. Further I do not remember the existence of the guarantee alleged to have been signed by me. The plaintiff is put to strict proof of the existence and execution thereof."

7. Stating that he believed he, as second defendant, has a good defence to this action he applies for leave to file a defence.

8. No such application was made by him or by any one else on behalf of the first defendant.

9. A bank officer of the plaintiff having conduct of this account called Tse Yun Fu (Mr Tse) filed an affidavit in reply. In it he recorded the history exhibiting, inter alia, copies of the facility letters of 13 January 1998, a copy of the deed of guarantee of 15 January 1998, a copy of the minutes of a Director's meeting of 15 January 1998 authorising acceptance of the plaintiff's loan offer and noting the 2nd defendant's declared interest as guarantor, and a certificate of indebtedness recording the amount of indebtedness. That figure matches the amount being sued for.

10. Against that background and evidence, I now come to consider the plaintiff's application for summary judgment.

11. It is for the defendants to show that summary judgment should not be ordered because there are triable issues; that they have evidence to put forward in defence which is reasonably capable of belief; see Banque de Paris et des Pays-Bars (Swiss) SA v. Costa de Naray [1984] 1 Lloyds Rep. 21.

12. In this case neither defendant has raised any triable issue. The 2nd defendant contests the amount due but has provided no evidence to support his contention that the amount claimed may be wrongly calculated and what the correct amount should be. He states that he does not remember the existence and execution of the deed of guarantee. This is not evidence it was not, at the relevant time, in existence and executed by him. In any event, Mr Tse's affidavit is conclusive as to the amount due and accruing and to the existence and execution of the guarantee.

13. In the circumstances, I find there are no triable issues; there is no defence.

14. It follows that there shall be and I now order final judgment against the 1st and 2nd defendants for the amount set out in the prayer.

15. Costs have not been argued; thus the following order will be nisi at first instance.

16. The plaintiff sued for indemnity costs. It has done so because the parties contracted to give this entitlement on default. Subject to argument to the contrary this is not a contractual provision with which I am prepared to interfere. Costs are thus to the plaintiff, taxed if not agreed on an indemnity basis.