SOCIEDADE NACIONAL DE COMBUSTIVEIS DE ANGOLA - EMPRESA PUBLICA v. CSIL LTD (formerly known as CHINA SONANGOL INTERNATIONAL LTD)

HCA 1243/2024

[2025] HKCFI 3104

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1243 OF 2024

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J U D G M E N T

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I. INTRODUCTION

1.  By a Loan Agreement dated 18 October 2005 Sonangol agreed to make available to CSIL a loan facility for the principal amount of US$200 million. CSIL was to repay the principal in a lump sum by the Loan Agreement’s maturity date of 31 December 2014. Interest would accrue on the principal at 2.50% per annum.  Interest was payable every 12 months.  There would be an event of default if CSIL failed to pay any amount when due under the Loan Agreement. Upon the occurrence of an event of default, Sonangol could cancel the loan facility, declare the loan and accrued interest to be payable forthwith, or declare the loan or part of it to be payable on demand. 

2.  On 19 October 2005 Sonangol transferred the loan amount to the bank account of CSIH Limited (CSIHL)  (formerly China Sonangol International Holding Limited).  This is said to have been done on CSIL’s instruction, as CSIL did not have a bank account at the time.  CSIHL is said to have received the loan principal as agent on behalf of CSIL.  In 2013, the loan’s maturity date was extended to 31 December 2024 (alternatively, according to CSIL, 31 December 2025).

3.  On 29 September 2021, Sonangol as buyer, CS Europe Investments Pte Ltd as seller, and CSIL executed a sale and purchase agreement (the SPA)  for the sale of the yacht “MAYBE”. The Intervener (Ms Fung)  signed the SPA on CSIL’s behalf. The SPA stated that the yacht’s sale price of US$20,327,625 would be set off against interest due under the Loan Agreement. That set-off was recorded in a Deed of Settlement dated 29 September 2021 between Sonangol and CSIL, which was approved and signed by Ms Fung on CSIL’s behalf.  Ms Fung additionally signed a CSIL board resolution approving CSIL’s execution of the SPA and the Deed of Settlement. Apart from the yacht sale price set-off, CSIL has not paid any interest under the Loan Agreement.

4.  On 29 May 2024 Sonangol issued a Notice of Event of Default and Acceleration (the Notice)  under the Loan Agreement. The Notice demanded payment of US$272,795,663, comprising the principal of US$200 million and then outstanding interest of US$72,795,663.

5.  Sonangol has sought summary judgment against CSIL for the amount of US$272,795,663.  Its application was dismissed by Master Phoebe Chan on 13 February 2025.  It now appeals against that dismissal.

6.  Sonangol is Angola’s national oil company.  It is wholly owned by the Angolan government. Sonangol has been and remains a 30% shareholder of CSIL. It is represented on CSIL’s board. The remaining 70% of CSIL’s shares is owned by New Bright International Development Limited. Ms Fung is a CSIL director and holds a 70% stake in New Bright. Ms Lo Fong Hung holds the remaining 30% of New Bright and is also a CSIL director. Ms Lo signed the Loan Agreement on CSIL’s behalf.

7.  There are now ongoing disputes, including High Court actions, between Ms Fung, Ms Lo and others concerning the control of and the relations between CSIL and New Bright. As far as the present summary judgment application against CSIL is concerned, Ms Fung says that she has had to intervene because otherwise Ms Lo and Sonangol would collude to allow CSIL to concede final judgment in Sonangol’s favour.

II.  DISCUSSION

8.  Mr Laurence Li SC (appearing for Ms Fung)  contends that the summary judgment application should be dismissed for a number of reasons. I will briefly run through those alleged reasons.

A.  Allegation of no loan

9.  Mr Li submits that there never was a loan to CSIL. He notes that there is no record of any board approval for the Loan Agreement.  Despite the loan being substantial, Sonangol (Mr Li says)  cannot explain why records are unavailable.  Instead, Sonangol relies on Ms Lo’s vague recollection that the terms and documentation of the loan had been discussed with Sonangol by Sam Pa (Ms Fung’s husband)  and Ms Lo on behalf of CSIL. In any event, Mr Li argues that there could not have been a valid approval by CSIL’s board as Ms Lo had no authority under CSIL’s Articles of Association to sign the Loan Agreement.  Nor (Mr Li adds)  could there have been any ratification of Ms Lo’s signing of the Loan Agreement.

10.  I am unable to accept this as an arguable defence. As Mr Charles Manzoni SC (appearing for Sonangol)  points out, there is a long string of CSIL’s own documents attesting to the loan’s existence. For example, CSIL’s audited accounts between 2005 and 2017, record the principal amount and the interest on the loan. Before 2010, the audited accounts expressed qualified opinions on the loan. But, from 2010 onwards, the audited accounts contain unqualified opinions and confirm the loan’s validity. More pertinently, CSIL’s audited accounts from 2005 to 2017 were approved by CSIL’s board and signed by its directors, including Ms Fung.  Thus, over some two decades, CSIL (including Ms Fung)  has acknowledged in its audited accounts that the loan was made and interest on the loan has been accruing.  I do not think that it is now open for CSIL to contradict its audited accounts. I note that, in their Preambles, the SPA and the Deed of Settlement, both signed by Ms Fung, likewise acknowledge the existence of the loan by Sonangol to CSIL.

B.  Allegation of no loan monies

11.  Mr Li submits that, even if the Loan Agreement is valid and binding, no loan monies were ever remitted to CSIL. He suggests that it is suspicious that the substantial loan of US$200 million was first transferred to CSIHL. He stresses that there is no evidence that this sum was ever received by CSIL.  He claims, based on CSIL’s financial statements, that the loan monies could not have been used in investments for CSIL’s benefit. This is contrary to what the Loan Agreement says was the purpose of the loan to CSIL. He echoes Master Phoebe Chan’s observation that whether or not the loan monies were invested for CSIL’s benefit constitutes “part of the factual matrix underlying the disputes between parties and cannot be said to be irrelevant”.

12.  I do not accept that Mr Li’s submissions give rise to an arguable defence.  CSIL’s audited accounts (as approved by Ms Fung herself)  attest to the loan monies having been received by CSIL and interest having accrued on the same.  I see nothing problematic in the fact that the loan monies were remitted to CSIL through CSIHL, an associated company. The loan monies were so remitted within three weeks of CSIL’s incorporation, and it is conceivable (as Ms Lo deposes)  that this was done because CSIL had no bank account at the time. In any event, I do not see how the way in which, following remittance, the loan monies were used (or misused)  by CSIL logically alters the fact that the loan has been acknowledged in CSIL’s audited accounts.

C.  Alleged unreliability of audited accounts

13.  Mr Li submits that CSIL’s audited accounts are “riddled with inconsistencies and contradictions”. This (Mr Li argues)  casts doubt on the reliability of the audited accounts.  Mr Li notes that, according to Ms Fung, she signed financial statements under time pressures unfairly imposed by Ms Lo and her associates.  I am unable to see how errors (if any)  in CSIL’s audited accounts falsify the clear statements there acknowledging the existence of a loan of US$200 million and the interest accruing thereon.  The loan is characterised in the accounts as due to a CSIL shareholder (which Sonangol has all along been)  or a related company with a non-controlling interest (which Sonangol is in relation to CSIL).  I do not see how the fact that Ms Fung signed the accounts under time pressure somehow excuses her from the consequences of what she has approved and accepted over the years and held out to the world as CSIL director.

D.  Alleged unreliability of the SPA preamble

14.  Mr Li submits that the facts recited in the SPA and Deed of Settlement about the loan are of dubious validity. In support, Mr Li points to emails which he says evidence an intention on Sonangol’s part to loan monies to CSIHL, not CSIL.  To buttress his submission, Mr Li puts forward what he calls Ms  Fung’s “hypothesis” that, since CSIHL had a lucrative oil business at the time of the Loan Agreement, Sonangol intended to inject capital into CSIHL but mis-documented it as a loan to CSIL instead for internal reasons or tax purposes.

15.  I am unable to read the emails identified, in the way that Mr Li suggests.  Far from evidencing that the loans were all along intended for CSIHL as opposed to CIHL, the emails confirm that the loans were intended from the outset to be made to CSIL. 

16.  On 23 April 2021, Ms  Fung wrote to Mr Osvaldo Inacio of Sonangol:

“Please refer to the enclosed document which shows the loan was to CSIH and not CSIL. Given this information that was only provided to me today, I would like to enquire if Sonangol would be willing to document that the loan was in fact to CSIH and not CSIL.

For your information, our CFO (Martin)  has informed me that he is not aware of how the US$200m was used/disbursed. This is a typical response from our "senior management" of New Bright.

I have also previously instructed Martin to amend the resolution to state that CSIL authorises an officer (Martin)  to sign the SPA on behalf of CSIL instead of myself. This was also ignored as Martin appears to only take instructions from Mr Wang. This is yet another reason why I have suggested the NB management should be terminated. Mr Wang could also be authorised to sign the SPA instead of myself.

Rest assured that this resolution signing would not delay any process as the SPA is still being reviewed by Mr Wang.

Grateful for your response regarding documenting the loan to CSIH instead of CSIL.”

17.  Mr Inacio sought clarification by email dated 30 April 2021 as he did not understand why it mattered who signed the SPA.  On 3 May 2021, Ms Fung replied:

“I have not been provided with any evidence of the US$200m loan being drawn down by CSIL/CSIH or any evidence of how this money was used. While I understand that in the past, there was poor documentary evidence of such cash flows, I would like to at least correct these matters moving forward. Therefore, I have requested for the loan to be recorded under CSIH instead of CSIL as there is evidence of money flows from Sonangol to CSIH.

Regarding the issue of who will sign the SPA, if CSIH is the party that accepted the loan, then CSIH should be a party to the tripartite agreement. I am not directly a director of CSIH and only via through Beijing Tian Qiao which is an entity. Therefore, if you accept the above proposal, I will request Mr Wang sign on behalf of CSIH.”

18.  On 3 May 2023 Mr Inacio responded:

“I will defer the question to our legal team to advise who, from a Sonangol standpoint, would be the right person to be signing the SPA whether yourself or Mr Wang. From where I stand, the key is to get the SPA duly approved by the relevant CS director, following a board resolution signed by the board members authorizing the transaction. If the right director is yourself or Mr Wang, I would leave to Mr Gentil, our legal counsel to advise.”

19.  On 4 May 2021 Mr Vyasa Arun (Regional Head of CS International (S)  Pte (CSIS))  wrote back:

“Thank you for your email. If I may just summarise the issue for your legal team:

1. Our concern is that the loan agreement was signed between Sonangol and CSIL. However, the loan amount of US$200m was transferred by Sonangol to CSIH.

2. CS does not have any records of how this US$200 m was drawn down or used. Grateful if Sonangol could please share any similar records.

3. Given the above, we would like to document that the loan was in fact to CSIH and not CSIL. We propose that this could be documented via a side letter or supplemental loan agreement.

To clarify, Ms Fung has no objections to the transfer of the mega yacht and would like to see the process completed smoothly and as soon as possible given this is a priority for Sonangol. We simply would like to clarify the loan documentation and subsequently the signing party for the SPA.”

20.  On the same day, Mr Inacio replied to Mr Arun:

“1. Understood, thank you.

2. Sonangol does not have records - and would have no way of knowing -- of how the funds were used since, per my understanding, the CS group was never managed by Sonangol.

3. I do not see an issue if all the directors can agree on the proposed approach. Let me just check with our legal team internally and revert back to you. That being said, would there be a way to check whether the funds, initially received into the CSIH account, were never transferred to CSIL?”

21.  On 5 May 2021, Mr Arun reverted:

“Noted and as you will also know from the San Tome issue that CS record keeping track record in the past have not been good enough. This is also part of the reason why we would like to take this opportunity to clarify the loan issue so that moving forward the documentation tracks the money flow.

Regarding your point 3 below, I have checked internally and there are no records of a transfer of the monies from CSIH to CSIL.

Sonangol gave the loan monies to CSIH as evidenced by the enclosed document. Therefore, I hope your legal team will agree that the original loan contract (also enclosed)  should be supplemented by a side letter or addendum to clarify this issue. Grateful if we could hear back Sonangol's view on this point as it will affect the language in the SPA for the mega yacht.

From Sonangol's perspective, CSIH also owns the aircrafts and therefore it could also be a straight-forward further repayment of debt when the monies from the aircraft sales are realised.”

22.  On the same day, Mr Inacio wrote:

“With respect to a potential supplemental side letter or addendum to move the loan to CSIH, would you please send us a draft for review, in the interest of time, while we also review the Sonangol position about it.”

23.  On 6 May 2021, Mr Arun responded:

“Please find enclosed a draft deed of novation for your review. Having reviewed the original loan agreement, in my view, this was the most appropriate document to evidence the transfer of the loan.

If your legal team is of the view that a different type of document is preferred, happy to hear their suggestions.

Thank you for the consideration and we look forward to hearing from you.”

24.  On the same day, Mr Inacio replied:

“We are under a tight deadline to complete the transfer of the mega yacht. And it seems that a side letter or addendum to transfer the loan agreement requires some more time for reviews from all sides, including Sonangol, so that everyone feels comfortable with the proposed approach.”

So, in order not to confuse things even further and also accelerate the transfer of the mega yacht (we need to complete the transfer ASAP), we think we need to separate matters as follow:

1.  Move forward with the current board resolution already signed by Mr Wang (and will be signed by Sonangol as well)  authorizing Ms Fung to sign the associate SPA.

2.   After 1)  is done, then take a look at the proposed side letter/addendum with the benefit of taking the time necessary to go through it.

I would much appreciate if you could please send us the signed board resolution for the mega yacht for us to sign it as well so we can move forward with the next steps.”

25.  What emerges from the email correspondence just cited is that CSIL and Sonangol realised that the Loan Agreement was between Sonangol and CSIL and originally meant to be between them.  Due to the lax record-keeping practices of CSIL, CSIHL and Sonangol, there was no internal record evidencing the transfer of the loan monies from CSIHL to CSIL.  Nor were there internal records showing how the loan monies were used.  Ms Fung thus inquired whether it would be possible to re-characterise the loan ex post facto as a loan from Sonangol to CSIHL, instead of a loan from Sonangol to CSIL.  After discussion between Mr Inacio and Mr Arun, CSIL proposed to effect the re-characterisation by means of a supplemental side letter or addendum to the Loan Agreement or by a deed of novation.

26.  Sonangol wishing to consider the implications of CSIL’s proposal further, by way of an inducement to the proposed novation, CSIL drew Sonangol’s attention to the fact that CSIHL “owns ... aircrafts and therefore it could also be a straight-forward further repayment of debt when the monies from the aircraft sales are realised”. In other words, what has been called Ms Fung’s “hypothesis” does not support an inference that Sonangol originally intended to loan monies to CSIHL.  Instead, CSIHL’s business and the possibility that it could potentially be in a better position to pay off the loan monies was raised as a reason for Sonangol to accept the novation of the Loan Agreement to CSIHL in place of CSIL.

27.  In the event, contrary to what was discussed, no deed of novation was executed. Ms Fung signed the SPA on CSIL’s behalf instead. This reinforces Sonangol’s case that the Loan Agreement was all along intended to be between itself and CSIL, not CSIHL.

E.  Allegation that loan yet to mature

28.  Mr Li submits that there is doubt over whether the loan to CSIL has matured.  He accepts that CSIL’s audited accounts for the financial years ended 2014, 2015, 2016, and 2017 consistently record that the loan’s maturity has been extended to 31 December 2024.  But Mr Li observes that CSIL’s financial statement for 2013 states that the loan and interest are  due on 31 December 2025. On this basis, Mr Li argues that the loan principal and interest are only repayable on 31 December 2025.

29.  I am unable to infer from the 2013 financial statement that the loan and interest thereon are not yet due.  Mr Li relies on note 22 of the 2013 financial statement which reads:

“a)  The loan is unsecured, bears interest at 2.5% per annum and will mature on 31 December 2014 or such other date as mutually agreed by the Company and the non-controlling interest. Pursuant to the loan agreement, the Company shall apply the loan to finance its investments or re-investments in Hong Kong financial market. In addition, the Company is entitled to receive an amount which equals to 10% of all investments revenues received, after deduction of transaction costs, as management fee. The Company and the non-controlling interest shall share 90% and 10% of the total net profit of all the investments respectively.

b)  The Company breached certain covenants as stipulated in the loan agreements entered into between the non-controlling interest and the Company. As such, the entire outstanding amount of loan and its interests of US$241,013,698 were deemed to be a repayable on demand and were classified as current liabilities as at 31 December 2012. During the year ended 31 December 2013, the non-controlling interest agreed that the loan together with the interests are repayable on 31 December 2025.

c)  As at 31 December 2012, the amounts are unsecured, interest free and not repayable within the next twelve months. During the year ended 31 December 2013, the non-controlling interest agreed that the amounts are repayable on 31 December 2025.”

30.  The reference to 31 December 2025 appears to have been a mere error which was corrected in subsequent financial statements.  For example, the 2014 financial statement records in its note 23:

“a)  During 2005, a non-controlling interest lent USD 200,000,000 to the Company to finance its investments or re-investments in Hong Kong financial market. The Company is entitled to receive an amount which equals to 10% of all investments revenues received, after deduction of transaction costs, as management fee. The Company and the non-controlling interest shall share 90% and 10% of the total net profit of all the investments respectively. The amount is unsecured, bears interest at 2.5% per annum and will mature on 31 December 2014 or such other date as mutually agreed by the Company and the non-controlling interest. During the year of 2013, both parties mutually agreed to extend the maturity date of the loan together with the interest to 31 December 2024.

b)  The amount is unsecured, interest free and repayable on 31 December 2024.”

31.  In those premises, I am not persuaded that the loan and interest have yet to fall due.

F.  Allegation of set-offs

32.  Mr Li submits that there are three set-offs which CSIL can raise against Sonangol’s claim. 

F.1  The yacht set-off

33.  Sonangol does not dispute that the yacht’s sale price of US$20,327,625 should be set off against its claim.  Sonangol has done that in the amount that seeks to recover.

F.2  The catamarans and boats set-off

34.  Mr Li says that there should be a set-off of the price of catamarans and boats (€25.636 million)  transferred at Sonangol’s request to the Angolan government (CSPR). He suggests that correspondence shows that the debt was intended to be offset against the loan monies due to Sonangol.

35.  The sale of catamarans and boats was supposed to be between CSIHL and the Angolan government. 

36.  Among the documents before the court is an unsigned and undated draft side letter whereby Sonangol is supposed to acknowledge “agreeing to receive 21.726.510,00 euros from CSPR as partial settlement for the debt owing to Sonangol EP from China Sonangol”.  Mr Arun refers to this draft side letter in an email dated 21 July 2021 to Mr Gentil Bragança Pimenta of Sonangol:

“I refer to the enclosed side letter. There is a reference to a repayment of debt from Sonangol to China Sonangol.

If this is intended, this repayment should reference the loan agreement and refer to repayment of the approximately EUR21m by CSIL to Sonangol. CSIL would also need to be a party to this letter. This would then be consistent with the procedure we have adopted for the mega yacht.

Perhaps Gentil could please confirm if Sonangol is fine with this approach. Thanks.”

37.  Mr Pimenta responded on the same day:

“I think there might be some misunderstanding.

This order (6 catamarans and the 33 patrol boats)  was made by the Angolan Government Navy and CSPR and paid through CSIHL-BVI entity and might be on records and differently from the Mega-yacht acquisition.

It means that Sonangol is not part of this transaction although instructed to give all the support to delivery.”

38.  Still on the same day, Mr Inacio emailed Mr Pimenta:

“All, let's not add more confusion into an otherwise already complex process. Except the execution of the closing documents, which needs to happen soon, this is closed and the expectation of Sonangol and the Angolan government and army is not delve into unnecessary additional discussions about it. I ask everyone to focus on making sure the closing documentation is executed. Thanks! Osvaldo.”

39.  Mr Wang Xiangfei (Ms Lo’s husband and alternate CSIL director)  emailed Mr Pimenta on 23 July 2021:

“I think there is some misunderstanding here also.

We must clarify that CSIHL(BVI)  does not have any remittance record from the Angola Government regarding the 33 patrol boats and 6 catamarans ("Boats"). If you have any bank remittance advise, please forward to us to follow up. I understand all along that we are using the Boats in partial settlement or set off of debt with Sonangol EP.”

40.  Mr Pimenta emailed back to Mr Wang on the same day:

“Thank you for your email,

We had no access to the contract neither payment receipt, however, when we first received a letter from Angolan President Office, there was reference that payment was performed by the Angolan Government (I would not argue that). Please note that this payments eventually date probably from 2015/2016 when the order was placed and based upon CSIHL (BVI)  paid in full the shipyard.”

41.  Further correspondence ensued.  On 30 July 2021, Mr Wang emailed Ms Diana Lim (Head of Finance & Accounting at CSIS):

“I would like to reiterate our position on the speed boats and catamarans issue as follows:

a)  CS has no record of any remittance on the boats and catamarans as stated in your email.

b)  as part of the overall debts settlement with Sonangol EP, CSIH (BVI)  will continue to move forward the transfer procedure on the basis that the transfer of 33 boats and 6 catamarans will be used to set off the debts between CSIL and Sonangol.

c)  If at a later date remittance on the boats and catamarans as stated in your email are found, the debts between CSIL and Sonangol will be restored to take into account the amount of the remittances.

42.  Apart from the foregoing documents, the existence of a set-off against Sonangol is all a matter of conjecture.  No sale agreement for the catamarans and boats has been exhibited. No evidence of a payment for the catamarans and boats has been produced.  No side letter executed by Sonangol, CSIHL or CSIL acknowledging the set-off has been drawn to my attention.  Thus, while there was certainly talk of a set-off of the price for the catamarans and boats against the debt due to Sonangol, I am unable to accept that anything ever came of those discussions.

F.3  The Sinopec set-off

43.  Mr Li refers to a payment agreement dated 8 April 2021 among Sinopec Overseas Oil & Gas Limited (Sinopec), Sonangol, New Bright and CSIL.  It was thereby agreed that Sonangol would receive from Sinopec about RMB 329.9 million (equivalent to about US$50,562,796.18), representing 30% of a payment due to CSIL.  Sonangol’s receipt of such amount should be regarded (Mr Li suggests)  as a set-off against the loan monies due from CSIL to Sonangol. This inference (Mr Li argues)  is supported by (1)  the fact that the payment agreement recites that Sonangol is a creditor of CSIL and (2)  the fact that there is a CSIL journal entry recording a credit of US$50,562,796.18 to Sonangol as an off-set amount.

44.  Mr Li further submits that, if the Sinopec set-off is arguable, the invalidity of the Notice upon which Sonangol’s claim is based must likewise be arguable.  Mr Li’s argument run as follows:

(1)  According to CSIL’s 2017 audited financial statement (the latest in evidence before the court), at some point in 2013 CSIL and Sonangol “mutually agreed to extend the maturity date of the loan together with the interest to 31 December 2024”. Sonangol does not dispute such agreement. 

(2)  As noted in [28] above, Mr Li’s case is that the actual maturity date was 31 December 2025 on the basis of the 2013 financial statement. But, if one accepts the 31 December 2024 date instead, Mr Li reasons that, as a result of the parties’ extension agreement, neither the principal nor interest accrued as at the extension agreement’s date would be due until 31 December 2024. It is not known when precisely the parties agreed to extend the due date for payment. But the interest due at the extension agreement’s date would presumably have been around US$50 million.[1]

(3)  It follows that such amount of approximately US$50 million would not have been due when the Notice was issued on 29 May 2024.  At most the Notice could only have demanded the payment of interest of approximately US$22,795,663 accruing since 2013 (that is, the interest of US$72,795,663 demanded by the Notice minus the approximate amount of US$50,000,000).

(4)  If one also takes into account the Sinopec set-off of US$50,562,796.18, that would wipe out the approximate amount of US$22,795,663. No interest would then actually have been due and payable for the period between 2013 and 29 May 2024 when the Notice was issued.

(5)  On that basis, the Notice was defective and Sonangol’s claim must be premature.  The repayment date for the loan monies and interest thereon could not have been accelerated to a date before 31 December 2024. Sonangol’s writ issued on 26 June 2024 could not have raised a valid cause of action premised on an acceleration brought about by the Notice.  The summary judgment application should be dismissed in consequence.

45.  I am unable to accept Mr Li’s contentions.

46.  First, according to the Deed of Settlement, following the yacht set-off, on 29 September 2021, the revised principal amount due to Sonangol under the Loan Agreement remained at US$200 million, while the interest due thereon was reduced to US$55,686,073. These figures were accepted by Sonangol and CSIL as parties to the Deed of Settlement.  Ms Fung herself was the signatory of the document on CSIL’s behalf.  Subtracting approximately US$50 million (that is, Mr Li’s estimate of the interest accrued prior to the extension agreement of 2013), there would still be about US$5,686,073 of post-2013 interest due on the Loan Agreement at the time of the Notice.  The Notice’s numbers may conceivably have been erroneous.  But there would still have been post-2013 interest that was indisputably due when the Notice was served in May 2024. CSIL not having tendered any payment following its issue, the Notice would have had the effect of accelerating the payment due date for the entire loan and accrued interest.

47.  Second, assume in CSIL’s favour that there was a Sinopec set-off amount. On its face, the journal voucher said to evidence the Sinopec set-off also records that, as at 31 December 2020, the amount of US$50,562,796.18 represented by the Sinopec set-off was used to reduce CSIL’s current account. The offset did not go towards reducing the interest due on Sonangol’s loan to CSIL. Had it done so, the interest due on the loan would have been much less than the amount of US$55,586,073 acknowledged in the Deed of Settlement on 29 September 2021.

48.  Third, according to CSIL’s 2017 financial statement, CSIL’s current account stood at US$547,911,936 on 31 December 2017. The US$547,911,936 figure in the current account is described in the 2017 financial statement as having arisen in respect of an advance from a non-controlling interest (that is, Sonangol)  which “is unsecured, non-interest bearing and repayable on 31 December 2024”. That circumstance would not have prevented Sonangol and CSIL from treating the amount of the Sinopec set-off accounting-wise as reducing the current account debt due to Sonangol from CSIL.

49.  In short, I do not consider the invalidity of the Notice to be arguable. The Journal Voucher, read in conjunction with the Deed of Settlement, points to the Sinopec set-off having been used to reduce the amount due to Sonangol under CSIL’s current account.

G.  Allegation of other reasons for trial

50.  Finally, Mr Li submits that there are other reasons why this dispute should go to trial.   He says that there are suspicious circumstances, including:

(1)  a substantial shareholders’ loan for which the process of authorisation by CSIL is undocumented and for which no collateral was provided,

(2)  an initial routing of the loan through CSIHL instead of directly to CSIL,

(3)  a lack of clarity as to how the loan monies were used,

(4)  the fact that no repayment on the loan was sought for some twenty years, and

(5)  apparent collusion between Ms Lo and Sonangol to the detriment of CSIL and Ms Fung’s interests.

51.  The matters posited for investigation by Mr Li are essentially restatements of the arguments canvassed above.  I do not see how any of the matters mean that summary judgment should be refused. 

52.  Mr Li suggests that “further investigations are likely to yield fruit” so that “further documentation and information pertaining to the Loan are likely to surface, including as to its negotiation, approval, advancement and use”.  These investigations will “likely ... shed light on the basis upon which the Loan was recorded in the financial statements and explain the various inconsistencies observed”.  Mr Li accuses Sonangol of having acted in “a harsh and unconscionable manner, particularly by relying on the purported ‘acknowledgements’ of the Loan in the Yacht Documents”.  In all the circumstances, it would accordingly be “just and reasonable for all matters of dispute [among Ms Lo, Ms Fung, Sonangol, and CSIL] to be determined at one and the same time”.

53.  I am unable to agree.  What Mr Li is proposing is precisely what Megarry VC warned against in Lady Anne Tennant v Associated Newspapers Group Ltd [1979] FSR 298, at 303:

“A desire to investigate alleged obscurities and a hope that something will turn up on the investigation cannot, separately or together, amount to sufficient reason for refusing to enter judgment for the plaintiff. You do not get leave to defend by putting forward a case that is all surmise and Micawberism.

The court does not investigate for the sake of investigation. That is the province of the police. There are undoubtedly bitterly intense disputes among CSIL’s stakeholders in relation to the company’s governance.  But I do not see how the existence of such disputes leads to a conclusion that amounts due under the Loan Agreement should not be paid.  Nor do I see anything unconscionable in Sonangol relying on audited statements and other documents signed by Ms Fung over some twenty years, acknowledging the loan to CSIL and interest accruing thereon.”

54.  In my view, there is no arguable defence against Sonangol’s claim. There should consequently be summary judgment for (1)  the principal amount of US$200 million and (2)  accrued interest thereon of US$72,795,663. Interest will accrue on the principal amount of US$200 million at 2.5% per annum from 29 May 2024 (the date of the Notice)  until payment. 

IV.   CONCLUSION

55.  Sonangol’s appeal is allowed.

56.  There will be summary judgment in Sonangol’s favour for (1) the principal amount of US$200 million and (2)  interest of US$72,795,663. Interest will accrue on the principal amount of US$200 million at 2.5% per annum from 29 May 2024 until payment. 

57.  I shall now hear the parties on costs and consequential orders.