JOINT SUCCESS (HK) LTD v. KAMSH (PTC) LTD

HCMP 2/2022

[2023] HKCFI 1660

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2 OF 2022

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Judgment

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A.  INTRODUCTION

1.  By an Originating Summons of 3rd January 2022 (“the Originating Summons”), the Plaintiff seeks judgement against the Defendant under a mortgage dated 10th June 2021 made between the Defendant as Mortgagor and the Plaintiff as Security Agent (“the Mortgage”), for all amounts outstanding under the Mortgage and for vacant possession of the property charged under the Mortgage (“the Property”).

B.  THE BACKGROUND

2.  The following is not in dispute.

B1.  The Facility Agreement and its relationship to the Mortgage

3.  Pursuant to a facility agreement dated 8th June 2021 made between (inter alia) the Defendant as Borrower, Madam Hiranand Kamla Lal (“Madam Hiranand”) and Mr Ravine Lal Hiranand (“Mr Hiranand”) as Guarantors, the Plaintiff as Security Agent, and four Lenders (“the Facility Agreement”), the Defendant borrowed $420 million (“the Loan”).  The terms provided, inter alia, that:

3.1  it was a condition precedent to the loan facility becoming available that the Defendant should enter into the Mortgage (cl.4.01(ii));

3.2  the Defendant was to repay the principal of $420m within a year, and interest in accordance with the Repayment Schedule in the Facility Agreement (cl.6.01);

3.3  the Defendant would also pay an “Arrangement Fee”, 50% of which was to be paid when the loan was drawn down, and 50% at the second Interest Period (cl.16.02);

3.4  a failure to pay any amount payable under the Facility Agreement constituted an event of default (cl.10.01).

4.  Under cl.7.1 of the Mortgage, the security thereunder became enforceable upon the occurrence of an Event of Default (defined with the same meaning as under the Facility Agreement) which was continuing.

B2.  The negotiations leading up to the Facility Agreement and the Mortgage

5.  The parties started negotiations for the Loan in early 2021.  The proposed terms of the Loan were set out in various successive term sheets.

5.1  The term sheet of 8th February 2021 provided for a proposed mortgage loan of up to $450m, with interest to be payable semi-annually in advance, security for the loan to include a first legal charge over the Property, and guarantors for the loan to be Madam Hiranand (the sole director of the Defendant) and Mr Hiranand (the son of Madam Hiranand).

5.2  The term sheet of 9th February 2021 also provided for a proposed mortgage loan of up to $450 million, with interest to be payable semi-annually in advance, security for the loan to include a first legal charge over the Property, and guarantors for the loan to be Madam Hiranand and Mr Hiranand.  The interest rate proposed was slightly higher.

5.3  The term sheet of 1st April 2021 similarly provided for a proposed mortgage loan of up to $450 million, with interest to be payable semi-annually in advance, security for the loan to primarily be a first legal charge over the Property (a number of other items of security having been deleted), and guarantors for the loan to be Madam Hiranand and Mr Hiranand.  The interest rate was reduced.

6.  At the end of the term sheet of 1st April 2021, the words “If you agree to the above terms and conditions, please signing [sic] and returning [sic] to us the duplicate of this letter at your earliest convenience.”  The term sheet was signed by Madam Hiranand for and on behalf of the Defendant, and by Madam Hiranand and Mr Hiranand in their own right.

7.  On 8th June 2021, Madam Hiranand went to the offices of the Plaintiff’s solicitors, accompanied by her legal adviser, for the purpose of negotiating and finalising the terms of the Loan.  She was provided with a hardcopy of the draft Facility Agreement. She took around three hours to go through the document.  She considered that the term for interest payment in the draft Facility Agreement was unsatisfactory as it required interest to be paid semi-annually in advance.  She says that she did not want to put the Defendant at risk of defaulting in payment under the Loan (whether principal, interest or Arrangement Fee), and suffering the undesirable consequences following on from a breach of the Facility Agreement.  She therefore informed the Plaintiff that she could not agree to the term regarding interest payment, and sought to renegotiate the term.  Upon further negotiations it was agreed that the relevant term would be amended so that the Defendant would be afforded a more lenient interest payment timetable, with interest for the first six months being payable in a single lump sum in advance on drawdown, and then for each of the months thereafter, interest would be payable on a monthly basis in advance.

8.  Before the execution of the Mortgage, Mr Lau Ho Yin, a director of the Plaintiff (“Mr Lau”), asked the Defendant for assurance that the Mortgage would be binding and enforceable under the laws of the British Virgin Islands (“BVI”), being the place of incorporation of the Defendant.  Ultimately, the Defendant provided the Plaintiff with:

8.1  a copy of the written resolutions of its sole director dated 7th June 2021, approving the terms of the Facility Agreement and the Mortgage and authorising Madam Hiranand to enter into the same;

8.2  a letter from Madam Hiranand dated 10th June 2021, the ultimate owner of the Defendant, confirming that she ratified the Mortgage;

8.3  a legal opinion from Messrs Harney Westwood & Riegel (BVI lawyers), dated 10th June 2021, confirming that the Mortgage had been duly executed by the Defendant and would be treated as enforceable by the BVI courts.

B3.    Drawdown of the Loan

9.  The Loan was drawn down by the Defendant on 10th June 2021.

B4.  Default and enforcement action

10.  According to the Repayment Schedule in the Facility Agreement, the second instalment of the Arrangement Fee ($2,100,000), and an interest payment ($4,701,666.67), were due on 10th December 2021.

11.  On 22nd and 26th November 2021, Ms Polly Chu (“Ms Chu”) of the Defendant’s solicitors asked whether the Loan could be extended or topped up.  Mr Lau turned down the request.

12.  On 7th December 2021, Mr Lau sent Ms Chu an email, setting out the Repayment Schedule, and sending her a reminder that the second interest payment date of the Loan to the Defendant would fall on 10th December 2021.  The email ended “Please ensure your actual funds [are] remit[ted] by no later than 10th December 2021.”

13.  The Defendant did not make any payment on 10th December 2021.

14.  By a letter of 13th December 2021, the Plaintiff’s solicitors wrote to the Defendant, putting on record that the Defendant had failed to pay the $2,100,000 Arrangement Fee and $4,701,666.67 interest instalment on 10th December 2021, which alone would have constituted an event of default.  The letter gave notice to the Defendant that unless the amounts and default interest were paid within seven days, the Plaintiff had no choice but to declare that the loan indebtedness had become immediately due and payable and to take enforcement action without further notice.

15.  No payment was made by 20th December 2021.

16.  On 3rd January 2022, the Plaintiff issued the Originating Summons.

17.  By a letter of 10th January 2022, the Defendant’s solicitors referred to the proceedings and asked for

“the amounts and the breakdown of all overdue mortgage instalments together with the principal, accrued interest, daily interest and your legal costs…calculated up to 10 February 2022 and 10 March 2022 respectively for our clients’ consideration before we revert to you regarding the acceptance of service of the captioned proceedings”.

18.  In a WhatsApp audio exchange between Ms Chu and Mr Lau on 20th January 2022, Ms Chu asked whether the Plaintiff’s side was interested in refinancing the Loan.  Mr Lau said the Plaintiff would not consider this, and expressed the hope that there were other people who could offer refinancing, or that Madam Hiranand might dispose of the Property.  Ms Chu indicated that Madam Hiranand was negotiating with many people but they needed time to do due diligence.  Ms Chu therefore asked whether the Plaintiff’s side could allow some indulgence in respect of the legal actions.

C.  THE APPLICABLE PRINCIPLES

19.  There is no dispute that at the hearing of an originating summons, the action may be disposed of summarily under RHC O.28 r.4(1) where the court is satisfied that there are no triable issues.  Such an application by the plaintiff is akin to an application for summary judgment under O.14, but with the difference that the burden is not cast upon the defendant, as in O.14.  The plaintiff must first justify its entitlement to summary judgment, but once this is demonstrated prima facie on the evidence, the burden falls on the defendant to show that he has a defence to the claim.  In practice there may be little difference between an application for summary judgment in originating summonses and an application for summary judgment under O.14. See Bank of China (Hong Kong) Ltd v Twin Profit Ltd [2010] 2 HKLRD 1065 at [7] to [8] (Fok J, as he then was).  See also Hong Kong Civil Procedure 2023 note 28/4/2, citing Bank of China (Hong Kong) Ltd v Keen Lloyd Resources, unreported, CACV 1787/2001, 8th February 2022 at [13] to [14], [23] (Yeung J, as he then was).

D.  THE PLAINTIFF’S CLAIM

20.  The Plaintiff has established a prima facie case to judgment.  It is not disputed that the Defendant failed to make any repayment on 10th December 2021 or indeed thereafter.

E.  THE DEFENDANT’S DEFENCES

21.  The Defendant says that:

21.1  the Originating Summons is incurably bad because it wrongly proceeds on the basis that the entire principal of $420m and default interest thereon had fallen due by the time of the issuance of the proceedings;

21.2  the Originating Summons is in breach of O.7 r.3(1) for not containing a concise statement of the relief or remedy claimed with sufficient particulars to identify the cause or causes of action in respect of which the plaintiff claims that relief or remedy;

21.3  even if the proceedings are validly constituted, the Defendant has an arguable defence as it entered into an oral collateral agreement with the Plaintiff to the effect that if the Defendant used reasonable endeavours to seek alternative financing, or to sell the Property, or if the Plaintiff did not use reasonable endeavours to assist the Defendant, the Plaintiff would refrain from taking enforcement action under (inter alia) the Mortgage (“the Collateral Agreement”);

21.4  the Defendant has a counterclaim against the Plaintiff as Mr Matthew Cheung (“Mr Cheung”), an executive director of the Plaintiff’s parent company Cheung & Sons Holdings Limited, had been actively discouraging potential purchasers of the Property and potential financiers from dealing with the Defendant and the Property, “poisoning the well” in breach of the Plaintiff’s obligations under the Collateral Agreement.

E1.  Whether Originating Summons issued on false basis and incurably bad

22.  Counsel for the Defendant, Mr Johnny Mok SC and Mr Keith Chan, submitted that the Originating Summons could not have demanded repayment of the entire principal of the Loan and default interest thereon as this had not yet fallen due.  Whilst cl.10.03 of the Facility Agreement entitled the Plaintiff to declare that the Loan Indebtedness[1] had become immediately due and payable,[2] it was said that the Plaintiff’s solicitors’ letter of 13th December 2021 could not have served as a notice pursuant to cl.10.03.

23.  Cl.10.03 of the Facility Agreement provided as follows.

“Without prejudice to other provisions herein, the Facility Agent [ie. the Plaintiff] may at any time after the happening of an Event of Default … unless and until that Event of Default and any others shall have been fully remedied to the satisfaction of the Facility Agent, by notice in writing to the Borrower [ie. the Defendant] declare that the Loan Indebtedness or any part thereof has become immediately due and payable, whereupon the same shall become immediately due and payable and all the undrawn Facility shall automatically be cancelled.”

24.  The Plaintiff’s solicitors’ letter of 13th December 2021 had referred to the amounts outstanding as at 10th December 2021, stating that these alone would have constituted an event of default, and then went on to state as follows.

“Accordingly, we have instructions from our client to serve you this written notice, which we hereby do, that unless you pay our client within 7 days from the date hereof the said sums of HK$4,701,666.67 and HK$2,100,000 together with default interest calculated at a rate of 18% per annum for the period from 11 December 2021 to the date when actual payment is made, our client shall have no alternative but to declare that the loan indebtedness has become immediately due and payable and to take enforcement action against you to recover the same together with all costs interests and loss that our client has so incurred and/or sustained without any further notice.”

25.  Mr Mok’s argument was that the letter only stated that if the default was not remedied within the period allowed, then the Plaintiff would (at that point in time) declare the Loan Indebtedness immediately due and payable.  It was said that (1) as at 13th December 2021, it was not known whether the event of default would be remedied, and that a declaration could not be made in the absence of such knowledge, (2) cl.10.03 of the Facility Agreement required any declaration made thereunder to state that the Loan Indebtedness “has” become due and payable whereas the letter did not so state, and (3) the word “whereupon” in cl.10.03 meant that the amounts were due and payable only after the declaration had been made.

26.  I agree with counsel for the Plaintiff, Mr Jat Sew-Tong SC and Mr Cristian Tsang, that the letter of 13th December 2021, properly understood, gave notice to the Defendant pursuant to cl.10.03 of the Facility Agreement that in the absence of remedial action taken by the Defendant taken within the next seven days, the Loan Indebtedness was to become due and payable without further notice to the Defendant.

26.1  Clause 10.03 does not require a two-stage notice to be given.  Nor does it prescribe the form in which the declaration should be made, or the wording to be used.

26.2  Cl.10.03 of the Facility Agreement enables the giving of notice at any time after the happening of an Event of Default, and the letter of 13th December 2021 was issued after the default of 10th December 2021.  It was not necessary to wait to see whether the Defendant would avail itself of the opportunity to remedy its default.  The letter made it clear that in the absence of such remedial action, the Loan Indebtedness automatically became due and payable without further notice.  (Whilst it might be the case that if the Defendant remedied its default, the notice would then cease to have effect, this did not affect the time at which the notice could be issued in the first place.)

26.3  Even if the word “whereupon” in cl.10.03 means that the amounts due under the Facility Agreement are due and payable only after the declaration has been made, this was satisfied in the present case, as the notice provided for the Loan Indebtedness to become due and payable upon the Defendant’s failure to remedy its default within the seven-day period granted by the Plaintiff.

27.  Since the Defendant failed to make any payment after receiving the letter, the Loan Indebtedness became due and payable pursuant to the notice.  Accordingly, the Originating Summons sought (amongst other things) the repayment of the outstanding principal and default interest thereon from 20th December 2021.

28.  I therefore do not agree that the Originating Summons was issued on a false basis and incurably bad.

E2.    Whether Originating Summons sufficiently complies with O.7 r.3(1)

29.  O.7 r.3(1) provides that every originating summons must include a statement of the questions on which the plaintiff seeks the determination or direction of the court or, as the case may be, a concise statement of the relief or remedy claimed in the proceedings, with sufficient particulars to identify the cause or causes of action in respect of which the plaintiff claims the relief or remedy.

30.  Mr Mok complained that the Originating Summons does not contain any particulars to identify the cause of action relied upon as it merely states that the Plaintiff claims vacant possession of the Property, and payment of all sums due under the Mortgage, without even giving particulars as to the amount said to be payable.  Furthermore, the supporting affirmation of Mr Lau did not refer to the Plaintiff’s reliance on the letter of 13th December 2021 as being a notice pursuant to cl.10.03 of the Facility Agreement which rendered the whole of the Loan due.  It is said that the lack of particulars causes real prejudice to the Defendant, as the Defendant is unable to properly ascertain the basis upon which the relief in the Originating Summons is being sought.[3]

31.  Mr Mok acknowledged that this complaint did not go to the validity of the Originating Summons[4] and could, if necessary, be addressed by an amendment.

32.  I agree with Mr Jat that the Originating Summons sufficiently complies with O.7 r.3(1); that the Defendant was well aware of the basis upon which the relief against it was being sought, so that it suffered no prejudice; and that no amendment is needed.

32.1  It should be borne in mind that the Originating Summons is not a pleading, and O.7 r.3(1) does not suggest that it should be pleaded as one.  The Originating Summons states that the Plaintiff claims against the Defendant the payment of all sums due under the Mortgage.  Read in a common sense manner, this means that sums are indeed due under the Mortgage and that the Plaintiff is complaining of the Defendant’s failure to pay.  It must be the case that the Defendant’s default also forms the basis of the claim to vacant possession of the Property.

32.2  As regards prejudice, this is not made out on the facts.  The Originating Summons was accompanied by the supporting affirmation of Mr Lau, which set out the particulars of the amounts said to be due from the Defendant, so that it could not be said that the Defendant did not know what the Plaintiff was seeking.  I note that Madam Hiranand’s affirmation filed on 1st June 2022 (“Hiranand 1st”) in opposition to the Originating Summons did not complain of any lack of clarity as to what the Plaintiff was seeking.  I also note that whilst the Defendant’s solicitors’ letter of 10th January 2022 asked for particulars of amounts due as calculated up to 10th February 2022 and 10th March 2022, it did not suggest that the position as at the date of the Originating Summons (3rd January 2022) was unclear.

32.3  The Plaintiff’s solicitors’ letter of 13th December 2021 was in fact referred to in Mr Lau’s affirmation as being a notice to the Defendant that the Plaintiff would take enforcement action in the event that the Defendant failed to make payment as requested.

33.  I therefore do not consider that there is any substance in this complaint.

E3.  The Collateral Agreement

34.  In Hiranand 1st, Madam Hiranand said that shortly before the parties signed the Facility Agreement and the Mortgage, she reached the (oral) Collateral Agreement with a Mr Daniel Mok on behalf of the Plaintiff and the Lenders.  Mr Mok was the Director, Capital Markets, of CBRE, and he had made the introduction leading to the making of the Loan.  Pursuant to the Collateral Agreement, the Plaintiff was to procure the Lenders to advance a one-year loan of $420m to the Defendant for a transitional period during which the Defendant would endeavour to seek longer-term financing or to sell the Property on the market.

35.  The material aspects of the Collateral Agreement were that:

35.1  the Loan would be secured by a first legal charge over the Property and two personal guarantees from Madam Hiranand and Mr Hiranand;

35.2  during the term of the Loan, the Defendant would use reasonable endeavours to seek alternative longer-term financing and/or to sell the Property at a reasonable price on the market in order to pay off the Loan principal and interest, and the Plaintiff would use reasonable endeavours to locate and introduce potential lenders who could offer longer-term financing to the Defendant;

35.3  if the Defendant had used the aforesaid reasonable endeavours, or conversely, the Plaintiff had failed to use the aforesaid reasonable endeavours on its part, and the Defendant had not successfully obtained longer-term financing or sold the Property at a reasonable price, then:

35.3.1  the Loan would continue to be extended on its existing terms until such time as the Defendant was able to obtain longer-term financing or to sell the Property at a reasonable price, and

35.3.2  the Plaintiff would refrain from taking any enforcement action (1) under the Loan agreement, including but not limited to declaring the Loan immediately due and payable, or (2) in respect of the first legal charge over the Property and/or the personal guarantees, until such time as the Defendant was able to obtain longer-term financing or to sell the Property at a reasonable price;

35.4  these terms were to bind the parties notwithstanding any terms to the contrary in any written agreements to be entered into between the parties, including terms precluding oral modification of the said written agreements.

36.  Madam Hiranand says that the Plaintiff and the Lenders did not want to record some of these terms, in particular in relation to the extension of the Loan and the non-enforcement of the Loan agreement and the first legal charge over the Property, because they were “rather unconventional” terms that the Plaintiff and the Lenders would not always offer to borrowers.  She also says that the Plaintiff and Lenders did not want to alter their “standard form written agreements” to incorporate the special terms so as to avoid setting a precedent.

37.  Madam Hiranand says that she executed the Facility Agreement and the Mortgage in consideration of, and in reliance on, the Collateral Agreement.

38.  I agree with Mr Jat that the Collateral Agreement is simply incredible.

39.  First, it is uncommercial.  The implication of the terms of the Collateral Agreement is that repayment could never be enforced.  The security for the Loan would be meaningless.  Yet on the Defendant’s own case, the Plaintiff and the Lenders were “longstanding financiers with a good market reputation”[5] – in other words, parties who would have sought to act commercially.

40.  Second, it does not make sense for the parties to have reached the oral Collateral Agreement, only to then enter into professionally-drafted formal documents to contradict it in key aspects, including (1) the term of the Loan, (2) the repayment obligations of the Defendant, (3) the enforceability of the Loan, (4) the provision of security for the Loan, (5) the prohibition against oral variation, (6) time being of the essence.

41.  Third, the Defendant’s evidence as to the making of the Collateral Agreement is self-inconsistent and inherently improbable.

41.1  Madam Hiranand says that on the day of the signing of the Facility Agreement, she sought to renegotiate the terms regarding the payment of interest as she did not want to put the Defendant at risk of defaulting on the Loan, and she successfully negotiated for a more lenient interest payment timetable.  But there would have been no cause for such concern if the Collateral Agreement had already been in place as claimed, allowing open-ended extension of the Loan.

41.2  There is no explanation as to the basis on which Mr Daniel Mok of CBRE could have had the authority to act on behalf of the Plaintiff or the Lenders in making the Collateral Agreement, or why the negotiations were being conducted by him when there were parallel negotiations regarding the terms of the Loan between the Plaintiff and the Defendant.  No affirmation from Mr Daniel Mok has been produced in this regard.

42.  Fourth, the Defendant cannot point to any contemporaneous document supporting the making of the Collateral Agreement, not even informal ones such as emails, WhatsApp messages or internal notes.

42.1  This was despite the fact that the parties conducted negotiations over a lengthy period from around December 2020 to June 2021, including via email.[6]

42.2  The lack of documentation in relation to the Collateral Agreement may be compared to the use of the term sheets setting out the key terms of the Facility Agreement being discussed by the parties.

42.3  Even if the parties had, for whatever reason, chosen not to document the Collateral Agreement formally, they would surely have made reference to it in the course of their negotiations, so that some trace of it would remain.

43.  Fifth, and on the contrary, the Collateral Agreement is contradicted by the objective contemporaneous evidence – even leaving aside the Facility Agreement and the Mortgage.

43.1  As referred to above, on 22nd and 26th November 2021, Ms Chu asked whether the Loan could be extended or topped up. There would have been no need to do so if the parties had already agreed on an extension pursuant to the Collateral Agreement.

43.2  The Plaintiff asked for assurances that the Mortgage would be enforceable, and was provided with the relevant corporate documents and BVI legal advice.  Even if no mention was made in the Facility Agreement and the Mortgage of the Collateral Agreement because the Plaintiff did not want to alter their standard form written agreements, there would have been no need for the Plaintiff to seek separate, additional reassurance regarding the enforceability of the Mortgage if the agreement was that the Plaintiff would not actually ever take enforcement action.

44.  Sixth, the Defendant was legally represented at all material times.  It is not suggested that Ms Chu or other legal representatives were not told of, or consulted about, the Collateral Agreement.  It is inconceivable that the lawyers would have allowed the Defendant to proceed without some sort of record of the Collateral Agreement (and instead, to allow the Defendant to execute the Facility Agreement and the Mortgage which contradicted the Collateral Agreement).  It is also notable that no affirmation has been filed by Ms Chu, who structured the Loan and whose firm continues to act for the Defendant, to attest to the existence of the Collateral Agreement.

45.  Seventh, the Collateral Agreement was not raised by the Defendant or its representatives when:

45.1  Mr Lau turned down Ms Chu’s requests of 22nd and 26th November 2021 to extend or top up the Loan;

45.2  Mr Lau sent an email on 7th December 2021 to Ms Chu to remind the Defendant of the payment date of 10th December 2021 and asking it to ensure that funds were remitted on time;

45.3  the Plaintiff’s solicitors sent their demand for payment and cl.10.03 notice of 13th December 2021;

45.4  the Originating Summons having been issued, the Defendant’s solicitors wrote on 10th January 2022 asking for a breakdown of the amounts due as calculated up to 10th February and 10th March 2022; or

45.5  Ms Chu asked for indulgence in respect of the legal actions in her WhatsApp audio exchange of 20th January 2022.

46.  The Collateral Agreement was referred to for the first time only in Hiranand 1st, dated 31st May 2022 and filed on 1st June 2022.

E4.  Counterclaim by the Defendant

47.  Mr Mok submitted that it has “recently” come to light that since November 2021, Mr Cheung had been actively discouraging potential purchasers of the Property and potential financiers from dealing with the Defendant and the Property, thus “poisoning the well”.[7]

48.  It is said that multiple real estate agents, as well as a former executive director at an international real estate firm, reported back to the Defendant that their clients had been approached by Mr Cheung who warned that they should not buy the Property.

49.  It is also said that Mr Cheung warned various potential financiers not to provide any financing secured by the Property as the Plaintiff intended to seize the Property.  The particular example given is that of ORIX, which is said to have abruptly withdrawn from financing negotiations with the Defendant when warned off by Mr Cheung; it is said that this is supported by contemporaneous documentary records.

50.  The allegations are relied on to support a counterclaim for breach of the Collateral Agreement, breach of an implied term of cooperation and the prevention principle, a clog on the equity of redemption, a defence of equitable set-off, a defence precluding enforcement by the Plaintiff, and a defence of unclean hands.

51.  Ultimately, however, none of these counterclaims or defences can be of substance if the underlying factual claims are incredible.  I agree with Mr Jat that this is the case.

52.  First, the Defendant’s allegations are contrary to its own earlier stated position.  The claim of “poisoning the well” first surfaced in the 2nd Affirmation of Hiranand Kamla Lal (“Hiranand 2nd”) dated 22nd July 2022.  Madam Hiranand said that by April and May 2022, Mr Hiranand had learnt that potential buyers of the Property had been approached by Mr Cheung and told that they should not buy the Property.  Furthermore, ORIX, with whom the Defendant had been negotiating, promisingly, for financing, “abruptly declined to proceed” and informed the Defendant’s consultant (a Mr Chen) that ORIX had been warned by Mr Cheung not to proceed.  A screenshot of the conversation between Mr Hiranand and Mr Chen was produced.

53.  However, Hiranand 1st, dated 31st May 2022 (after the two aforementioned instances cited in Hiranand 2nd), did not raise any complaint in respect of (what is now said to be) this important part of the Defendant’s case.  On the contrary, Hiranand 1st says that one of the Lenders introduced the Defendant to at least three potential investors, with the most recent one in May 2022.[8]

54.  Second, the allegations are based on multiple hearsay, and are vague.  For example, it is said that Mr Hiranand was told by Mr Wong, the Defendant’s financial broker, that he in turn had been told by various unnamed real estate agents that those agents’ clients had been approached by Mr Cheung and told not to buy the Property because it was overpriced, had bad luck, was the subject of ongoing legal proceedings, and the Plaintiff / Lenders intended to seize the Property.[9]

55.  There is no direct affirmation evidence from any of the (many) persons said to have been approached by Mr Cheung and warned off from buying the Property or financing the Defendant.

56.  There is no other evidence supporting the allegations, save that Defendant has produced a screenshot of a WhatsApp chat between Mr Chen and Mr Hiranand in May 2022, referring to Mr Chen having heard from “Tony from Orix” that either Mr Cheung or someone else from Cheung & Sons Holdings Limited had told him (Tony) that Mr Cheung / Cheung & Sons Holdings Limited was “planning on foreclosing”.  However, as Mr Jat pointed out, whether this was the actual term used by Mr Cheung, or Mr Chen’s choice of term in relaying the conversation, or whether the term was intended to be used (by either of them) in the loose sense of enforcement of the Mortgage, is not known, and Mr Chen has not filed any affirmation to explain.

57.  Against this, there are WhatsApp exchanges between Mr Lau and Ms Chu on 12th May and 17th May 2022 showing that Mr Lau introduced a potential financier to Ms Chu and arranged a site visit to the Property.

58.  Of course, my task is not to conduct a mini-trial on affidavits.  The question, however, is whether the evidence put forward by the Defendant can support a credible case that the Plaintiff and Lenders “poisoned the well”.

59.  Third, the allegations are inherently improbable.  The Plaintiff and Lenders seek repayment of the Loan.  No credible reason has been put forward as to why the Plaintiff and Lenders would not wish the Defendant to be put in a position to do this, either by obtaining financing or by sale of the Property.  It was said in the Defendant’s skeleton that it could be that the Plaintiff is planning on foreclosing on the Property, so that it does not have to account for the sale proceeds and return the surplus to the Defendant.[10]  However, in the Originating Summons, the Plaintiff did not claim for foreclosure or the vesting of the Property in it or the Lenders.

F.  CONCLUSION; DISPOSITION

60.  There are no triable issues in respect of the Plaintiff’s claim, and summary judgment should be entered in favour of the Plaintiff for the relief sought under paragraphs 1 and 2(a) of the Originating Summons.

61.  The parties should submit an agreed form of draft order for approval within 14 days.  In the event that the parties are unable to agree, they should submit a joint letter setting out their differences, with reasons.

62.  Given that the Facility Agreement and the Mortgage provide for the Plaintiff to be reimbursed on a full indemnity basis for the costs incurred in enforcing their rights thereunder, I make a costs order nisi that the Defendant pay to the Plaintiff the costs of and occasioned by the action on an indemnity basis, to be taxed if not agreed.