Union Bank Of Hong Kong Ltd v United China International Ltd & Others

Judgment Date27 May 2004
CourtHigh Court (Hong Kong)
Judgement NumberHCMP4040/1999
Subject MatterMiscellaneous Proceedings


HCMP4040/1999 and 5017/1999

and HCA12924/1997






LO SHIU MUI 2nd Defendant
CHEN BING YAN 3rd Defendant
YEUNG YI CHING ADA 5th Defendant
TANG MAN LUNG 6th Defendant


(Consolidated by Order of Master Wong dated
3 November 2000 in respect of HCA12924/1997,
HCMP4040/1999 and HCMP5017/1999 with
HCMP4040/1999 being the leading proceedings)

Coram : Hon Tang J in Court

Dates of Hearing : 3-6 May 2004

Date of Judgment : 27 May 2004




1. By order of Master Wong made on 3 November 2000 HCMP4040/1999, HCMP5017/1999 and HCA12924/1997 were consolidated.

2. The Union Bank of Hong Kong Limited ("the Bank") is the plaintiff in the consolidated action.

3. United China International Limited ("the Company") is the 1st defendant.

4. Lo Shiu Mui ("Madam Lo") who is the registered owner of the property known as Flat H, 2/F Gallant Court, Nos.240-246 Prince Edward Road ("Gallant Court") is the 2nd defendant in the consolidated action.

5. Yeung Yi Ching Ada ("Ada Yeung") the 5th defendant who is the registered owner of Apartment A, 21/F, Regal Crest, No.9 Robinson Road ("Regal Crest") is the 5th defendant in the consolidated action.

6. Chen Bing Yan ("Mr Chen") the 3rd defendant and Wong Sui Fun Stella ("Stella Wong") the 4th defendant were directors of the Company at all material times.

7. Ada Yeung was a director of the Company until 10 April 1995.

8. On 1 August 1995, Tang Man Lung, the 6th defendant, became a director of the Company.

9. The Company was incorporated with a paid up capital of $100,000.00 on 14 December 1993. The 3rd and 4th defendants were its only shareholders and directors at the time. The 5th defendant Ada Yeung was appointed as a director on 29 December 1994. At the trial, one Tang Hoi Lam, Tony ("Tony Tang") was the principal witness on behalf of the Company. At all times material to these proceedings, Mr Tang was an undischarged bankrupt. He described himself in his witness statement as a consultant, but in evidence he called himself the agent of the Company. It seems that he ran and controlled the Company. Madam Lo is his wife. According to Madam Lo, Stella Wong and Ada Yeung had had extra-marital affairs with Tony Tang. Tang Man Lung is the son of Tony Tang. Mr Chen is a resident in the PRC and is the registered owner of 50% of the shares in the Company. Stella Wong is the registered owner of the other 50%.

10. By a facility letter dated 20 February 1995, the Bank offered to the Company, inter alia :

(1) overdraft facility to the extent of $800,000.00 for one year from the date of completion of security documentation; and

(2) an instalment loan to the extent of $2,400,000.00 payable by 60 consecutive monthly instalments of $53,083.97 each. As collateral the Bank required an all moneys first legal charge on Gallant Court, a joint and several guarantee from Mr Chen, Stella Wong and Ada Yeung for $3,200,000.00.

11. The terms and conditions of the facility letter were agreed to and accepted by Mr Chen signing on behalf of the Company. There is also a board resolution of the Company dated 15 February 1995 signed by Ada Yeung and Stella Wong confirming the above.

12. According to Tony Tang he was the person who negotiated the facilities with the Bank. However, it was his evidence that he did not know that personal guarantees were required.

13. The loan documentations were prepared on the bank's behalf by Messrs Yaddy Cheung & Co. Solicitors. Mr Yaddy Cheung gave evidence and said that he had known Tony Tang through his litigation clerk, Allan Yue Wai Ching, for a number of years and that his firm was instructed by the Bank on referral by Tony Tang.

14. At that time Gallant Court was already under mortgage to the Dao Heng Bank. The amount due upon redemption was $2,372,523.00 as at 21 February 1995. It seems that the instalment loan to be granted by the Bank was to replace the existing instalment loan in favour of the Dao Heng Bank.

15. On 23 February 1995, Mr Chen signed a written guarantee in favour of the bank for $3,200,000.00.

16. By a document dated 28 February 1995 the Company acting by Stella Wong and Ada Yeung executed an agreement of pledge in favour of the Bank. This was witnessed by Yaddy Cheung.

17. By a written guarantee dated 28 February 1995, Stella Wong and Ada Yeung guaranteed the liability of the Company up to $3,200,000.00 in favour of the Bank. This was also witnessed by Yaddy Cheung.

18. By a document of the same day, the 1st defendant again acting by Stella Wong and Ada Yeung executed a standing instruction to debit its account for repayment of principal and interest which was also witnessed by Yaddy Cheung.

19. By a first legal charge dated 1 March 1995, Madam Lo as mortgagor and the Company by Stella Wong and Ada Yeung as borrower executed a first legal charge in respect of her interest in Gallant Court in favour of the plaintiff for all monies that might be due and payable by her and the Company. This was also witnessed by Mr Yaddy Cheung.

20. The redemption of Gallant Court from the Dao Heng Bank Limited was duly effected and the property charged to the Bank.


21. The banking facilities were reviewed and extended from time to time and I can go to the 5th loan agreement which is contained in the Bank facilities letter dated 1 April 1997. The additional security required by this facility letter dated 1 April 1997 is a joint and several guarantee to be given by Mr Chen, Stella Wong and Tang Man Lung for $4,000,000.00. This was required in addition to the joint and several guarantee already given by Stella Wong and Ada Yeung for $3,200,000.00 in 1995. That joint and several guarantee was duly signed by Mr Chen, Stella Wong and Tang Man Lung. However, their signatures were not witnessed although it appears from the copy of the guarantee produced by the Bank, the signatures had been verified by a bank officer. In any event, so far as Mr Chen and Tang Man Lung are concerned their signatures are not in dispute. On the evidence before me I have no doubt that this guarantee dated 10 April 1997 was signed by Mr Chen, Stella Wong and Tang Man Lung.

22. Now on the pleadings Mr Chen, Stella Wong, Ada Yeung and Tang Man Lung have alleged that they were not aware when they signed the respective guarantees that they were signing guarantees. It is said that they signed them on representation by Tony Tang that they were merely banking documents.

23. Miss Chiu who appears on behalf of the 1st, 2nd, 3rd, 5th and 6th defendants has informed me that Mr Chen, Ada Yeung and Tang Man Lung no longer deny liability under any of the guarantees. But it is said that their evidence on the circumstances under which the guarantees were signed are relevant to credibility in relation to other live issues in the proceeding. Stella Wong was unrepresented. She was absent from the trial. Of course, Miss Chiu's concession does not cover her.

24. I have to say at once that I do not accept Tony Tang's evidence that he did not know that the Bank required guarantees to be given.

25. Moreover, I do not accept the evidence of any of the defendants that when they signed the guarantees they were not aware that they were signing guarantees. At one time, it was suggested that that was so because they were only given the last page of the guarantees to sign. However, when the original guarantees were produced, it transpired that they are printed on four sides but on only one sheet of paper which is folded in the centre. Also, on the first sheet of the guarantee the three Chinese characters擔保書appear. Therefore, the person signing guarantee must have been given the entire document and not just the last printed side.

26. As I have said Stella Wong was unrepresented and absent. In her case too, I am satisfied that when she signed the guarantees she knew what she was signing.

27. By the time Tang Man Lung gave evidence before me he admitted when he signed he knew that he was signing a guarantee. This is, however, to be compared with what he said in the witness statement which he gave on 21 May 2003. He said :

"...On some occasions, I was only given the signatory pages for me to sign instead of the entire documents. I do not remember having signed any personal guarantee."

28. So on credibility I have no difficulty in finding that the defendants knew that they were required to sign personal guarantees and they signed.

29. One of the issues which was raised was whether the 1995 documents were signed in the presence of Mr Yaddy Cheung. According to the Mr Chen, Madam Lo, Ada Yeung and Tony Tang they were not signed in the present of Yaddy Cheung. According to Tony Tang the documents might have been given to him by Allen Yue. However, it is clear from the evidence from Mr Yaddy Cheung, which I accept that on 1 October 1994 Allen Yue ceased to be a litigation clerk of its firm and that fact was notified by him to the Law Society on 23 January 1995. In any event, I have no difficulty in accepting the evidence of Mr Yaddy Cheung that those documents which appeared to be witnessed by him were indeed witnessed by him.

China Elegance shares

30. The important issue at the trial related to certain share transactions in 1997. There is a confirmation of acceptance dated 22 September 1997, address to U.B....

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