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Hong Kong Topkey Ltd v Wintac (Hong Kong) Ltd And Another

Judgment Cited authorities 1 Cited in 1 Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date04 July 2023
Neutral Citation[2023] HKCFI 1711
Subject MatterCivil Action
Judgement NumberHCA667/2022
Year2023
HCA667/2022 HONG KONG TOPKEY LTD v. WINTAC (HONG KONG) LTD AND ANOTHER

HCA 667/2022

[2023] HKCFI 1711

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 667 OF 2022

____________

BETWEEN
HONG KONG TOPKEY LIMITED Plaintiff
(香港天勤有限公司)

and
WINTAC (HONG KONG) LIMITED 1st Defendant
(運達 (香港) 有限公司)
QU HAIPING (曲海平) 2nd Defendant

____________

Before: Deputy High Court Judge MK Liu in Chambers (Open to Public)
Date of Hearing: 29 June 2023
Date of Decision: 4 July 2023

_____________

D E C I S I O N

_____________

1. This is the hearing of the defendants’ (“D1” and “D2” respectively, and “Ds” collectively) appeal against the summary judgment granted by Master Alexander Tang against Ds on 4 January 2023.

2. By a summons dated 23 June 2023, Ds have made an application for leave to refer to D2’s Affirmation filed on 6 April 2023 in HCB 1051/2023 (“the HCB Affirmation”) at this hearing as evidence in support of Ds’ appeal. I would also deal with this application made by Ds for admitting new evidence in the appeal (“the New Evidence Application”).

3. In the hearing, P is represented by Mr Jenkin Suen SC (leading Mr Joseph Wong), and Ds are represented by Mr Kenneth Lee (together with Mr Edward KH Ng).

The parties’ respective cases

4. P’s case, in a nutshell, is that Ds are liable to repay the outstanding principal of US$4.3 million and interest owed to P under two loan agreements (“the Loan Agreements”). Ds have filed a Defence on 22 August 2022, in which Ds have put forward various defences to P’s claim.

5. The following facts are not in dispute[1]:

(1) Under the 《借款合同》dated 13 August 2019 (“Loan Agreement 1” / “Loan 1”), P (as lender) agreed to lend US$4 million to D1, D2 and Hei Tai Industrial Limited (“Hei Tai”) (as borrowers) (collectively the “Borrowers”) from 15 August 2019 to 15 December 2019 with a monthly interest rate of 2% over the principal sum.

(2) On 15 August 2019, P advanced a loan of US$ 4 million to D1 in accordance with Loan Agreement 1.

(3) From September 2019 to April 2020, D1 made a total of 8 instalments of monthly interest payments of HK$80,000 for 8 instalments pursuant to Loan Agreement 1.

(4) The Borrowers were unable to repay the principal of Loan 1 (or any part thereof) on the repayment deadline of 15 December 2019.

(5) Under the 《借款合同》dated 6 January 2020 (“Loan Agreement 2” / “Loan 2”), P (as lender) agreed to lend a further US$3 million to the Borrowers from 7 January 2020 to 28 February 2020 with a monthly interest rate of 2% over the principal sum.

(6) On 7 and 9 January 2020, P advanced the sums of US$1.4 million and US$1.6 million to the Borrowers respectively in performance of Loan Agreement 2.

(7) From February to April 2020, D1 made a total of 3 instalments of monthly interest payments of HK$60,000 for 8 instalments pursuant to Loan Agreement 2.

(8) The Borrowers were unable to repay the principal of Loan 2 (or any part thereof) on the repayment deadline of 28 February 2020.

(9) D1 made transfers of US$1.2 million and 1.5 million to P on 11 and 15 May 2020 respectively. P’s case is that these sums are partial repayments of the outstanding principal sums under Loan 1 and Loan 2. This matter is not disputed by Ds.

(10) The principal sum of US$4.3 million and interest remain outstanding and are yet to be repaid as of the present.

6. Ds say that they are not liable to repay the outstanding principal and interest to P by reason of some representations (“the Representations”). In Ds’ written submissions dated 14 June 2023 (“DS”), Mr Lee has put forward the following as Ds’ case (footnotes omitted):

“6. …… Ds’ case is that it was subsequently agreed between one Wu Xiaobing (on behalf of himself and, inter alios, P) and D2 (on behalf of himself and some of his companies (including D1)) that in consideration for the transfer of shares in D2’s companies (which held Mainland properties) to Wu Xiaobing’s nominees, the liabilities of, inter alios, Ds under the Loan Agreements would be released.

7. It is not in dispute that on around 17.6.2020, an equity transfer agreement (“ETA”) was entered into between both sides. Unfortunately for Ds, however, although D2 was a party, P was not a party, to the ETA. ……

8. Ds’ case is that despite the apparent lack of privity in writing, P was nonetheless bound by the relevant representations made orally on P’s behalf by Wu Xiaobing (or his agents, in particular one Zhao Xianlong (“Zhao”)), viz to release, inter alia, Ds’ liabilities under the Loan Agreements in return for D2’s transfer of shares in his companies (“Representations”).

9. In performance of the ETA, the shares of D2’s relevant companies (including a BVI company called Window of Trade International Ltd (“Shares”)) were duly transferred to Wu Xiaobing’s nominees.

10. However, after the said transfer, Wu Xiaobing’s nominees breached their contractual obligations under the ETA. D2 and his companies therefore commenced arbitration against Wu Xiaobing’s nominees in the Mainland (“Arbitration”).

11. By an arbitral award dated 11.4.2022 (“Award”), Wu Xiaobing’s nominees were liable to, inter alia, return the relevant shares to D2. However, the Award remains unsatisfied, and the Shares were not returned to D2.” (Emphasis added)

7. Based upon the Representations, Mr Lee submits that Ds are not liable to repay the outstanding principal and interest to P by reason of the following:

(1) Collateral contract

(2) Variation of the Loan Agreements

(3) Promissory estoppel

(4) Estoppel by representation

(5) Estoppel by convention

8. In the DS, Mr Lee submits:

“18. The issues in this case are:-

18.1. Whether it is arguable that the Representations had been made (“Issue 1”); and

18.2. If the answer in §18.1 is yes, whether it is arguable that the Representations could support the defences of collateral contract, variation of contract, or estoppels (promissory, by representation or by convention) (“Issue 2”). These are alternative defences, and Ds only need to show one of these defences is reasonably arguable.”

9. In the hearing before me, Mr Lee submits that his position as stated in [18] of the DS is subject to a further point (“Ds’ Further Point”), ie in Wu Jixiu’s affirmations filed in support of P’s application for summary judgment, in the light of the evidence produced by Wu Jixiu in a litigation in Mainland China, Wu Jixiu has said something untrue in those affirmations. For this reason, P’s application for summary judgment cannot be allowed.

The principles

10. It is trite that an appeal from a master’s decision to a judge in chambers is a de novo hearing. Subject to the restriction in Order 58 rule 1(5), the hearing before me is an actual rehearing as if the application came before me for the first time.[2]

11. Order 58, rule 1(5) provides:

“No further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under this rule except on special grounds.”

12. The phrase “special grounds” in Order 58 rule 1(5) is the same expression as in Order 59 rule 10(2). Accordingly, in order to satisfy the “special grounds” requirement, the conditions in Ladd v Marshall[3] have to be fulfilled. Under the Ladd v Marshall requirement, further evidence is admissible on an appeal only where such evidence: -

(1) could not have been obtained at the trial or at the hearing with reasonable diligence;

(2) would or might, if believed, have a very important effect on the mind of the court; and

(3) is of a sort which inherently is not improbable.

13. The principles concerning summary judgment applications have been succinctly summarized by Au-Yeung J in Venetian Coati v Bright & Bright[4], in which the learned judge said:

“16. The principles governing summary judgment application are trite:

(a) The burden is on the defendant to show a bona fide defence or some other reason for a trial. This is normally done by affidavit and it is incumbent upon the defendant to “condescend upon particulars” in such affidavit;

(b) The mere assertion in an affidavit of a given situation by the defendant does not, ipso facto, ground leave to defend;

(c) Order 14 is only for clear cases, and ought not to be applied in cases where there are serious material factual disputes, or a difficult point of law not fit for summary determination, unless it is obvious that the defence put forward is “frivolous and practically moonshine”;and

(d) The Court should not embark on a mini trial on affidavits. Where there are factual disputes, the issue is not whether the defendant’s assertions are to be believed; it is whether those assertions are believable.

See On Loong Investment Company Ltd v IO of Wah Luen Industrial Centre, HCA 341/2014, unrep, 8 January 2016, at §20, per Au-Yeung J.

17. The proper approach to the relevant test of whether the defendant has raised credible triable issues is also well-settled. Any alleged defence will not be taken at face value but, rather, have its inherent probability considered and tested against the evidence, including contemporaneous documents, and whether there has been inconsistency in defence, or whether the defence is raised only recently despite earlier opportunity to do so: Time Rich 08 Limited v DBE (HK) Limited & ors[2018] HKCA 404, at §5.2, per Cheung JA.”

14. In resisting an application for summary judgment, the defendant is not allowed to raise and rely upon a defence which has not been pleaded in his Defence. In Kaefer AG v Winfield Marine Services Co Ltd[5], in dealing with an application for leave to appeal against the summary judgment granted against the defendant in that case, Chu...

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  • 安徽海牛進出口貿易有限公司 v Smart Star Honor Ltd And Another
    • Hong Kong
    • 8 December 2023
    ...defence based on bona fide purchaser. 34. At the hearing, I made reference to Hong Kong Topkey Limited v Wintac (Hong Kong) Ltd v Anor [2023] HKCFI 1711 at §§14 and “14. In resisting an application for summary judgment, the defendant is not allowed to raise and rely upon a defence which has......

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