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Xu Ziming v Ruifeng Petroleum Chemical Holdings Ltd

Judgment Cited authorities 13 Cited in Precedent Map Related
Vincent
Judgment Date06 May 2015
Subject MatterCivil Action
Judgement NumberHCA450/2013
CourtHigh Court (Hong Kong)
HCA450B/2013 XU ZIMING v. RUIFENG PETROLEUM CHEMICAL HOLDINGS LTD

HCA 450/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 450 OF 2013

____________

BETWEEN

XU ZIMING (徐子明) Plaintiff
and
RUIFENG PETROLEUM CHEMICAL HOLDINGS LIMITED
(瑞豐石化控股有限公司)
 Defendant

____________
Before: Deputy High Court Judge Marlene Ng in Chambers
Date of Hearing: 25 February 2015
Date of Handing Down Judgment: 6 May 2015

__________________

JUDGMENT
__________________

I. INTRODUCTION

1. The plaintiff (“P”) is a PRC citizen. The defendant (“D”), a Cayman Islands company, is a listed company on Growth Enterprise Market (“GEM” of the Stock Exchange of Hong Kong (“SEHK”).

2. D gave P a negotiable promissory note dated 7 December 2011 for RMB140,000,000 (equivalent to HK$175,000,000) (“1st Sum”) 2011 payable after three months, ie 7 March 2012 (“Note”):

“編號: 發出日期: 最高債務額:
02 07/12/2011 [RMB140,000,000]
[D]
可轉讓承付票據
[D]，…… 其已發行股份在[SEHK][GEM]上市， 股票代號為8096。
作為債務承諾人向以下人士發出最高債務還款額為[RMB140,000,000](折合[HK$175,000,000])，票期為三個月之可轉讓承付票據:
持有人 編號 到期日 債息 最高債務還款額
[P] 02 2012年03月07日 年利率5% [RMB140,000,000]
(折合[HK$175,000,000])
[signature of D]


 於上述發出日期加蓋公司鋼印
[company seal affixed]		 [signature]
CHENG KIN PONG
Solicitor, Hong Kong SAR
ANGELA HO & ASSOCIATES
…… ……
[D](即本承諾付款票據的發出人)承諾向[P] …… (即本承諾票據的持有人)或按其指示，按以下條件支付最高還款額[RMB140,000,000](折合[HK$175,000,000])及應付未付利息。持票人轉讓本承付票據全部或部份未償還金額時必須附上本承付票據證書。
條款及細節:
1. [D](即本承諾付款票據的發出人)承諾向[P] …… (即本承諾票據的持有人)或按其指示，按以下條件及條款支付最高還款額[RMB140,000,000](折合[HK$175,000,000])及應付未付利息。[1]
2. 本承付票據利息為年利率5%。[2] [“Clause 2”]
……
5. 如果本承付票據到期，[D]未能全部或部份償還本承付票據所定之最高還款額款項及其利息，餘下未能償還的款項及利息將由[P]通過發行於[SEHK][GEM]上市的股票償還，但先決條件是必須遵守[SEHK][GEM]證券上市規則的規定及必須經過[SEHK]的批准。至於擬發行股票數目及價格將另行議定。[3] [“Clause 5”]
6. 本承付票據受中華人民共和國香港特別行政區([香港])法律管轄，並按香港法律解釋。承諾人在此同意遵守香港法院的非專屬司法官轄權。[4] [“Clause 6”] ”

There was no dispute the Note was a promissory note and bill of exchange under the Bills of Exchange Ordinance Cap 19 (“Ordinance”).[5] On 7 March 2012, it was dishonoured upon presentation for payment.

3. On/about 22 August 2012, D gave P three cheques nos 001038, 001039 and 001040 all dated 28 August 2012 and drawn on Wing Hang Bank Ltd (“WHB”) (“Three Cheques”) for HK$5,000,000 each (totalling HK$15,000,000, “2nd Sum”), and P signed three acknowledgments of receipt (collectively, “Three Receipts”) as follows:

“兹收到[D]之[WHB]支票(號碼: 001038/001039/001040)，用於支付[D]欠[P]之部份款項。
簽收:
[signature]
姓名:
日期: 2012.8.22/[blank]/[blank]”

On 28 August 2012, the Three Cheques were dishonoured upon presentation for payment for the reason of “Refer to Drawer”.

4. On 13 March 2013, P commenced the present action to claim for (a) either (i) specific performance of the Note with all necessary/ consequential accounts, directions and inquiries, and damages for breach of contract in lieu of or in addition to specific performance with interest thereon or (ii) the 1st Sum and interest thereon, and also (b) the 2nd Sum and interest thereon.

5. On 18 April 2013, P applied for summary judgment of the 2nd Sum and interest thereon (“Summons”). On 16 May 2013, D applied to stay the present action on the basis of forum non conveniens (“Stay Summons”). On 20 May 2013, the Summons was adjourned sine die pending determination of the Stay Summons. In September 2013, all proceedings were adjourned pending the outcome of a winding up petition against D. The petition was later dismissed.

6. By judgment handed down on 27 August 2014 (“Stay Decision”), DHCJ Wilson Chan dismissed the Stay Summons and extended time for D to file/serve the Defence:

“11. From its affidavit evidence, [D] admits to the following:

(1) [D] issued the [Note] and the maturity date was 7 March 2012;

(2) [D] could not repay the amount of RMB$140 million due under the [Note] by the maturity date;

(3) [D] issued the [Three Cheques]; and

(4) [D] did not have enough “cash inflow” and the [Three Cheques] were dishonoured.

12. It is noteworthy that in [D’s] affidavit evidence and skeleton submissions, there is no challenge to the validity or the enforceability of the [Note] and the [Three Cheques]. …… To put it simply, [D] has not raised or identified any defence to [P’s] claims. In short, [D] has not raised any issues to enable the court to look beyond the terms and conditions on the face of the [Note] and the [Three Cheques].

……

22. [D] is wholly unable to explain why the court should even consider the Loan Agreements and the Loan Repayment Agreement in the first place, or why the court should have to look beyond the [Note] and the [Three Cheques]. It is, of course, trite that the [Note] and the [Three Cheques], as bills of exchange, are contracts in their own rights separate from the underlying agreements.”

7. On 10 September 2014 D applied for leave to appeal, but on 29 October 2014 DHCJ Wilson Chan dismissed such application (“Leave Decision”) and said as follows:

“10. [D] has been unable to demonstrate why the Loan Repayment Agreement ought to apply to the [Note] and the [Three Cheques], which are distinct contracts in themselves. In this case, [D] has not raised any issues to enable the court to look beyond the terms and conditions on the face of the [Note] and the [Three Cheques]. It is not open to [D] to bring in the “intention of the parties” or terms under prior contracts into the picture. It is trite that when the subject matter is a promissory note or a cheque, extrinsic evidence is generally inadmissible ……”

8. On 31 October 2014, P filed an amended Summons for summary judgment of the 1st and 2nd Sums and interest thereon or (alternative to the 1st Sum) interim payment of HK$160,000,000 or such other sum as the court shall deem fit (“Amended Summons”).

9. P relied on his 1st, 2nd, 3rd and 4th affirmations filed on 18 April 2013, 19 June 2013, 21 October 2014 and 30 January 2015 respectively and the affirmation of P’s assistant Choi Sio Peng (“Choi”) filed on 30 January 2015. D relied on the 1st, 2nd and 3rd affirmations of its company secretary Pang Kin Man Edmond (“Pang”) filed on 16 May 2013, 30 May 2013 and 19 December 2014 respectively and the affirmation of its director Yue Wai Keung (“Yue”) filed on 18 December 2014. The substantive hearing of the Amended Summons came before me on 25 February 2015.

II. LEGAL PRINCIPLES – SUMMARY JUDGMENT

10. A plaintiff may invoke the procedure under Order 14 of the Rules of the High Court (“RHC”) where there is no valid defence to his claim or otherwise a triable issue. The rationale is set out in Hong Kong Civil Procedure 2015:[6]

“ …… The underlying policy of the summary procedure is to prevent a defendant from delaying the plaintiff from obtaining judgment in case in which the defendant clearly has no defence to the plaintiff's claim …… When applied for, it is for the defendant to show that there is a triable issue or an arguable defence if he is to be allowed his day in court. To deny him his day in court, if he shows a triable issue or an arguable defence, is indeed a fearful injustice. On the other hand, if he has no defence and he obtains leave to defence, equally, there is injustice to the plaintiff …… The machinery of O.14 works on the basis that if the plaintiff’s application is properly constituted, he is prima facie entitled to judgment unless the defendant shows cause to the contrary or the application is dismissed.”

11. In Ng Shou Chun v Hung Chun San,[7] Godfrey J noted it was not appropriate to embark on a mini‑trial on affidavit evidence. The court should ask itself the question whether what the defendant says is credible or believable. If so, he must have leave to defend; if not, the plaintiff is entitled to summary judgment.

12. Hong Kong Civil Procedure 2015 went on to say that:[8]

‘ “In considering whether there are triable issues the Court will, of course, not take the alleged defence on its face value but test it against the evidence disclosed in the affidavit including matters such as contemporaneous documents, whether the alleged defence is inconsistent with the defence previously put forward or whether the defence is only recently raised despite opportunity being given to the defendant to respond earlier. The Court will also consider the inherent probability of the defence. But what the Court should not do is to conduct a mini‑trial on complicated factual issues.” …….

……

On the other hand, a complete defence need not be shown. The defence set up need only show that there is a triable issue or question or that for other reason there ought to be a trial; and leave to defend ought to be given unless there is clearly no defence in law such as could have been raised on the former demurrer to the plea and no possibility of a real defence on the question of fact …… Where there are unexplained features of both the claim and the defence which are disturbing because they bear the appearance of falsity and disreputable business dealings and questionable conduct, the court should not make tentative assessments of the respective chances of success of the parties or the relative strengths of their good and bad faith, and should not on such an examination grant the defendant conditional leave...

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