A A
B HCA 1243/2024 B
[2025] HKCFI 3104
C
IN THE HIGH COURT OF THE
C
HONG KONG SPECIAL ADMINISTRATIVE REGION
D D
COURT OF FIRST INSTANCE
E ACTION NO 1243 OF 2024
E
______________
F
BETWEEN F
G SOCIEDADE NACIONAL DE COMBUSTIVEIS DE Plaintiff G
ANGOLA – EMPRESA PUBLICA
H H
and
I I
CSIL LIMITED (formerly known as CHINA Defendant
SONANGOL INTERNATIONAL LIMITED)
J J
and
K K
FUNG YUEN KWAN, VERONICA Intervener
L L
______________
M M
Before: Deputy High Court Judge Reyes SC in Chambers
N N
Date of Hearing: 2 July 2025
O Date of Judgment: 2 July 2025 O
P P
Q JUDGMENT Q
R R
S I. INTRODUCTION S
T T
1. By a Loan Agreement dated 18 October 2005 Sonangol agreed
U to make available to CSIL a loan facility for the principal amount of U
V V
-2-
A A
B US$200 million. CSIL was to repay the principal in a lump sum by the Loan B
Agreement’s maturity date of 31 December 2014. Interest would accrue on
C C
the principal at 2.50% per annum. Interest was payable every 12 months.
D There would be an event of default if CSIL failed to pay any amount when D
due under the Loan Agreement. Upon the occurrence of an event of default,
E E
Sonangol could cancel the loan facility, declare the loan and accrued interest
F to be payable forthwith, or declare the loan or part of it to be payable on F
demand.
G G
H 2. On 19 October 2005 Sonangol transferred the loan amount to H
the bank account of CSIH Limited (CSIHL) (formerly China Sonangol
I I
International Holding Limited). This is said to have been done on CSIL’s
J instruction, as CSIL did not have a bank account at the time. CSIHL is said J
to have received the loan principal as agent on behalf of CSIL. In 2013, the
K K
loan’s maturity date was extended to 31 December 2024 (alternatively,
L according to CSIL, 31 December 2025). L
M M
3. On 29 September 2021, Sonangol as buyer, CS Europe
N Investments Pte Ltd as seller, and CSIL executed a sale and purchase N
agreement (the SPA) for the sale of the yacht “MAYBE”. The Intervener
O O
(Ms Fung) signed the SPA on CSIL’s behalf. The SPA stated that the yacht’s
P sale price of US$20,327,625 would be set off against interest due under the P
Loan Agreement. That set-off was recorded in a Deed of Settlement dated
Q Q
29 September 2021 between Sonangol and CSIL, which was approved and
R signed by Ms Fung on CSIL’s behalf. Ms Fung additionally signed a CSIL R
board resolution approving CSIL’s execution of the SPA and the Deed of
S S
Settlement. Apart from the yacht sale price set-off, CSIL has not paid any
T interest under the Loan Agreement. T
U U
V V
-3-
A A
B 4. On 29 May 2024 Sonangol issued a Notice of Event of Default B
and Acceleration (the Notice) under the Loan Agreement. The Notice
C C
demanded payment of US$272,795,663, comprising the principal of
D US$200 million and then outstanding interest of US$72,795,663. D
E 5. Sonangol has sought summary judgment against CSIL for the E
amount of US$272,795,663. Its application was dismissed by Master
F F
Phoebe Chan on 13 February 2025. It now appeals against that dismissal.
G G
6. Sonangol is Angola’s national oil company. It is wholly owned
H H
by the Angolan government. Sonangol has been and remains a 30%
I shareholder of CSIL. It is represented on CSIL’s board. The remaining 70% I
of CSIL’s shares is owned by New Bright International Development
J J
Limited. Ms Fung is a CSIL director and holds a 70% stake in New Bright.
K Ms Lo Fong Hung holds the remaining 30% of New Bright and is also a K
CSIL director. Ms Lo signed the Loan Agreement on CSIL’s behalf.
L L
7. There are now ongoing disputes, including High Court actions,
M M
between Ms Fung, Ms Lo and others concerning the control of and the
N relations between CSIL and New Bright. As far as the present summary N
O
judgment application against CSIL is concerned, Ms Fung says that she has
O
had to intervene because otherwise Ms Lo and Sonangol would collude to
P
allow CSIL to concede final judgment in Sonangol’s favour. P
Q Q
II. DISCUSSION
R R
8. Mr Laurence Li SC (appearing for Ms Fung) contends that the
S S
summary judgment application should be dismissed for a number of reasons.
T I will briefly run through those alleged reasons. T
U U
V V
-4-
A A
B A. Allegation of no loan B
C 9. Mr Li submits that there never was a loan to CSIL. He notes C
that there is no record of any board approval for the Loan Agreement.
D D
Despite the loan being substantial, Sonangol (Mr Li says) cannot explain
E
why records are unavailable. Instead, Sonangol relies on Ms Lo’s vague E
F
recollection that the terms and documentation of the loan had been discussed
F
with Sonangol by Sam Pa (Ms Fung’s husband) and Ms Lo on behalf of
G G
CSIL. In any event, Mr Li argues that there could not have been a valid
H approval by CSIL’s board as Ms Lo had no authority under CSIL’s Articles
H
of Association to sign the Loan Agreement. Nor (Mr Li adds) could there
I I
have been any ratification of Ms Lo’s signing of the Loan Agreement.
J J
10. I am unable to accept this as an arguable defence. As
K K
Mr Charles Manzoni SC (appearing for Sonangol) points out, there is a long
L string of CSIL’s own documents attesting to the loan’s existence. For L
example, CSIL’s audited accounts between 2005 and 2017, record the
M M
principal amount and the interest on the loan. Before 2010, the audited
N accounts expressed qualified opinions on the loan. But, from 2010 onwards, N
the audited accounts contain unqualified opinions and confirm the loan’s
O O
validity. More pertinently, CSIL’s audited accounts from 2005 to 2017 were
P approved by CSIL’s board and signed by its directors, including Ms Fung. P
Thus, over some two decades, CSIL (including Ms Fung) has acknowledged
Q Q
in its audited accounts that the loan was made and interest on the loan has
R been accruing. I do not think that it is now open for CSIL to contradict its R
audited accounts. I note that, in their Preambles, the SPA and the Deed of
S S
Settlement, both signed by Ms Fung, likewise acknowledge the existence of
T the loan by Sonangol to CSIL. T
U U
V V
-5-
A A
B B. Allegation of no loan monies B
C 11. Mr Li submits that, even if the Loan Agreement is valid and C
binding, no loan monies were ever remitted to CSIL. He suggests that it is
D D
suspicious that the substantial loan of US$200 million was first transferred
E E
to CSIHL. He stresses that there is no evidence that this sum was ever
F
received by CSIL. He claims, based on CSIL’s financial statements, that
F
the loan monies could not have been used in investments for CSIL’s benefit.
G G
This is contrary to what the Loan Agreement says was the purpose of the
H loan to CSIL. He echoes Master Phoebe Chan’s observation that whether
H
or not the loan monies were invested for CSIL’s benefit constitutes “part of
I I
the factual matrix underlying the disputes between parties and cannot be said
J to be irrelevant”. J
K K
12. I do not accept that Mr Li’s submissions give rise to an arguable
L defence. CSIL’s audited accounts (as approved by Ms Fung herself) attest L
to the loan monies having been received by CSIL and interest having
M M
accrued on the same. I see nothing problematic in the fact that the loan
N monies were remitted to CSIL through CSIHL, an associated company. The N
loan monies were so remitted within three weeks of CSIL’s incorporation,
O O
and it is conceivable (as Ms Lo deposes) that this was done because CSIL
P had no bank account at the time. In any event, I do not see how the way in P
which, following remittance, the loan monies were used (or misused) by
Q Q
CSIL logically alters the fact that the loan has been acknowledged in CSIL’s
R audited accounts. R
S S
C. Alleged unreliability of audited accounts
T T
U U
V V
-6-
A A
B 13. Mr Li submits that CSIL’s audited accounts are “riddled with B
inconsistencies and contradictions”. This (Mr Li argues) casts doubt on the
C C
reliability of the audited accounts. Mr Li notes that, according to Ms Fung,
D she signed financial statements under time pressures unfairly imposed by D
Ms Lo and her associates. I am unable to see how errors (if any) in CSIL’s
E E
audited accounts falsify the clear statements there acknowledging the
F existence of a loan of US$200 million and the interest accruing thereon. The F
loan is characterised in the accounts as due to a CSIL shareholder (which
G G
Sonangol has all along been) or a related company with a non-controlling
H interest (which Sonangol is in relation to CSIL). I do not see how the fact H
that Ms Fung signed the accounts under time pressure somehow excuses her
I I
from the consequences of what she has approved and accepted over the years
J and held out to the world as CSIL director. J
K K
D. Alleged unreliability of the SPA preamble
L L
14. Mr Li submits that the facts recited in the SPA and Deed of
M M
Settlement about the loan are of dubious validity. In support, Mr Li points
N to emails which he says evidence an intention on Sonangol’s part to loan N
monies to CSIHL, not CSIL. To buttress his submission, Mr Li puts forward
O O
what he calls Ms Fung’s “hypothesis” that, since CSIHL had a lucrative oil
P business at the time of the Loan Agreement, Sonangol intended to inject P
capital into CSIHL but mis-documented it as a loan to CSIL instead for
Q Q
internal reasons or tax purposes.
R R
15. I am unable to read the emails identified, in the way that Mr Li
S S
suggests. Far from evidencing that the loans were all along intended for
T CSIHL as opposed to CIHL, the emails confirm that the loans were intended T
from the outset to be made to CSIL.
U U
V V
-7-
A A
B B
16. On 23 April 2021, Ms Fung wrote to Mr Osvaldo Inacio of
C C
Sonangol:
D D
“Please refer to the enclosed document which shows the loan
was to CSIH and not CSIL. Given this information that was only
E E
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
F CSIL.
F
For your information, our CFO (Martin) has informed me that
G he is not aware of how the US$200m was used/disbursed. This G
is a typical response from our "senior management" of New
H
Bright.
H
I have also previously instructed Martin to amend the resolution
I to state that CSIL authorises an officer (Martin) to sign the SPA I
on behalf of CSIL instead of myself. This was also ignored as
Martin appears to only take instructions from Mr Wang. This is
J J
yet another reason why I have suggested the NB management
should be terminated. Mr Wang could also be authorised to sign
K the SPA instead of myself. K
Rest assured that this resolution signing would not delay any
L process as the SPA is still being reviewed by Mr Wang. L
M Grateful for your response regarding documenting the loan to
M
CSIH instead of CSIL.”
N N
17. Mr Inacio sought clarification by email dated 30 April 2021 as
O he did not understand why it mattered who signed the SPA. On 3 May 2021, O
Ms Fung replied:
P P
“I have not been provided with any evidence of the US$200m
Q Q
loan being drawn down by CSIL/CSIH or any evidence of how
this money was used. While I understand that in the past, there
R was poor documentary evidence of such cash flows, I would like R
to at least correct these matters moving forward. Therefore, I
have requested for the loan to be recorded under CSIH instead
S S
of CSIL as there is evidence of money flows from Sonangol to
CSIH.
T T
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
U U
V V
-8-
A A
B tripartite agreement. I am not directly a director of CSIH and
B
only via through Beijing Tian Qiao which is an entity. Therefore,
if you accept the above proposal, I will request Mr Wang sign
C on behalf of CSIH.” C
D D
18. On 3 May 2023 Mr Inacio responded:
E E
“I will defer the question to our legal team to advise who, from
a Sonangol standpoint, would be the right person to be signing
F the SPA whether yourself or Mr Wang. From where I stand, the F
key is to get the SPA duly approved by the relevant CS director,
following a board resolution signed by the board members
G G
authorizing the transaction. If the right director is yourself or
Mr Wang, I would leave to Mr Gentil, our legal counsel to
H advise.” H
I 19. On 4 May 2021 Mr Vyasa Arun (Regional Head of I
CS International (S) Pte (CSIS)) wrote back:
J J
K “Thank you for your email. If I may just summarise the issue for K
your legal team:
L L
1. Our concern is that the loan agreement was signed between
Sonangol and CSIL. However, the loan amount of US$200m
M was transferred by Sonangol to CSIH. M
2. CS does not have any records of how this US$200 m was
N N
drawn down or used. Grateful if Sonangol could please share
any similar records.
O 3. Given the above, we would like to document that the loan O
was in fact to CSIH and not CSIL. We propose that this could
P
be documented via a side letter or supplemental loan
P
agreement.
Q To clarify, Ms Fung has no objections to the transfer of the mega Q
yacht and would like to see the process completed smoothly and
as soon as possible given this is a priority for Sonangol. We
R R
simply would like to clarify the loan documentation and
subsequently the signing party for the SPA.”
S S
20. On the same day, Mr Inacio replied to Mr Arun:
T T
“1. Understood, thank you.
U U
V V
-9-
A A
B 2. Sonangol does not have records - and would have no way
B
of knowing -- of how the funds were used since, per my
understanding, the CS group was never managed by
C Sonangol. C
3. I do not see an issue if all the directors can agree on the
D proposed approach. Let me just check with our legal team D
internally and revert back to you. That being said, would
there be a way to check whether the funds, initially received
E E
into the CSIH account, were never transferred to CSIL?”
F F
21. On 5 May 2021, Mr Arun reverted:
G G
“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
H enough. This is also part of the reason why we would like to take H
this opportunity to clarify the loan issue so that moving forward
I the documentation tracks the money flow.
I
Regarding your point 3 below, I have checked internally and
J there are no records of a transfer of the monies from CSIH to J
CSIL.
K Sonangol gave the loan monies to CSIH as evidenced by the K
enclosed document. Therefore, I hope your legal team will agree
that the original loan contract (also enclosed) should be
L L
supplemented by a side letter or addendum to clarify this issue.
Grateful if we could hear back Sonangol's view on this point as
M it will affect the language in the SPA for the mega yacht. M
From Sonangol's perspective, CSIH also owns the aircrafts and
N therefore it could also be a straight-forward further repayment N
of debt when the monies from the aircraft sales are realised.”
O O
22. On the same day, Mr Inacio wrote:
P P
“With respect to a potential supplemental side letter or
Q addendum to move the loan to CSIH, would you please send us Q
a draft for review, in the interest of time, while we also review
the Sonangol position about it.”
R R
S
23. On 6 May 2021, Mr Arun responded:
S
T “Please find enclosed a draft deed of novation for your review. T
Having reviewed the original loan agreement, in my view, this
U U
V V
- 10 -
A A
B was the most appropriate document to evidence the transfer of
B
the loan.
C If your legal team is of the view that a different type of document C
is preferred, happy to hear their suggestions.
D Thank you for the consideration and we look forward to hearing D
from you.”
E E
24. On the same day, Mr Inacio replied:
F F
“We are under a tight deadline to complete the transfer of the
G mega yacht. And it seems that a side letter or addendum to G
transfer the loan agreement requires some more time for reviews
from all sides, including Sonangol, so that everyone feels
H comfortable with the proposed approach.” H
So, in order not to confuse things even further and also
I accelerate the transfer of the mega yacht (we need to complete I
the transfer ASAP), we think we need to separate matters as
J follow:
J
1. Move forward with the current board resolution already
K signed by Mr Wang (and will be signed by Sonangol as
K
well) authorizing Ms Fung to sign the associate SPA.
L 2. After 1) is done, then take a look at the proposed side
L
letter/addendum with the benefit of taking the time
necessary to go through it.
M M
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
N we can move forward with the next steps.” N
O O
25. What emerges from the email correspondence just cited is that
P
CSIL and Sonangol realised that the Loan Agreement was between
P
Sonangol and CSIL and originally meant to be between them. Due to the
Q Q
lax record-keeping practices of CSIL, CSIHL and Sonangol, there was no
R internal record evidencing the transfer of the loan monies from CSIHL to
R
CSIL. Nor were there internal records showing how the loan monies were
S S
used. Ms Fung thus inquired whether it would be possible to re-characterise
T the loan ex post facto as a loan from Sonangol to CSIHL, instead of a loan T
from Sonangol to CSIL. After discussion between Mr Inacio and Mr Arun,
U U
V V
- 11 -
A A
B CSIL proposed to effect the re-characterisation by means of a supplemental B
side letter or addendum to the Loan Agreement or by a deed of novation.
C C
D 26. Sonangol wishing to consider the implications of CSIL’s D
proposal further, by way of an inducement to the proposed novation, CSIL
E E
drew Sonangol’s attention to the fact that CSIHL “owns ... aircrafts and
F therefore it could also be a straight-forward further repayment of debt when F
the monies from the aircraft sales are realised”. In other words, what has
G G
been called Ms Fung’s “hypothesis” does not support an inference that
H Sonangol originally intended to loan monies to CSIHL. Instead, CSIHL’s H
business and the possibility that it could potentially be in a better position to
I I
pay off the loan monies was raised as a reason for Sonangol to accept the
J novation of the Loan Agreement to CSIHL in place of CSIL. J
K K
27. In the event, contrary to what was discussed, no deed of
L novation was executed. Ms Fung signed the SPA on CSIL’s behalf instead. L
This reinforces Sonangol’s case that the Loan Agreement was all along
M M
intended to be between itself and CSIL, not CSIHL.
N N
O
E. Allegation that loan yet to mature
O
P P
28. Mr Li submits that there is doubt over whether the loan to CSIL
Q
has matured. He accepts that CSIL’s audited accounts for the financial years
Q
ended 2014, 2015, 2016, and 2017 consistently record that the loan’s
R R
maturity has been extended to 31 December 2024. But Mr Li observes that
S CSIL’s financial statement for 2013 states that the loan and interest are due
S
on 31 December 2025. On this basis, Mr Li argues that the loan principal
T T
and interest are only repayable on 31 December 2025.
U U
V V
- 12 -
A A
B 29. I am unable to infer from the 2013 financial statement that the B
loan and interest thereon are not yet due. Mr Li relies on note 22 of the 2013
C C
financial statement which reads:
D D
“a) The loan is unsecured, bears interest at 2.5% per annum and
E will mature on 31 December 2014 or such other date as E
mutually agreed by the Company and the non-controlling
interest. Pursuant to the loan agreement, the Company shall
F F
apply the loan to finance its investments or re-investments
in Hong Kong financial market. In addition, the Company
G is entitled to receive an amount which equals to 10% of all
G
investments revenues received, after deduction of
transaction costs, as management fee. The Company and
H the non-controlling interest shall share 90% and 10% of the H
total net profit of all the investments respectively.
I I
b) The Company breached certain covenants as stipulated in
the loan agreements entered into between the non-
J controlling interest and the Company. As such, the entire J
outstanding amount of loan and its interests of
US$241,013,698 were deemed to be a repayable on demand
K K
and were classified as current liabilities as at 31 December
2012. During the year ended 31 December 2013, the non-
L controlling interest agreed that the loan together with the L
interests are repayable on 31 December 2025.
M c) As at 31 December 2012, the amounts are unsecured, M
interest free and not repayable within the next twelve
N months. During the year ended 31 December 2013, the non-
N
controlling interest agreed that the amounts are repayable
on 31 December 2025.”
O O
30. The reference to 31 December 2025 appears to have been a
P P
mere error which was corrected in subsequent financial statements. For
Q example, the 2014 financial statement records in its note 23: Q
R R
“a) During 2005, a non-controlling interest lent
USD 200,000,000 to the Company to finance its
S investments or re-investments in Hong Kong financial S
market. The Company is entitled to receive an amount
which equals to 10% of all investments revenues received,
T T
after deduction of transaction costs, as management fee.
The Company and the non-controlling interest shall share
U 90% and 10% of the total net profit of all the investments
U
V V
- 13 -
A A
B respectively. The amount is unsecured, bears interest at
B
2.5% per annum and will mature on 31 December 2014 or
such other date as mutually agreed by the Company and the
C non-controlling interest. During the year of 2013, both C
parties mutually agreed to extend the maturity date of the
loan together with the interest to 31 December 2024.
D D
b) The amount is unsecured, interest free and repayable on
E 31 December 2024.” E
F 31. In those premises, I am not persuaded that the loan and interest F
have yet to fall due.
G G
H F. Allegation of set-offs H
I I
32. Mr Li submits that there are three set-offs which CSIL can raise
J
against Sonangol’s claim. J
K K
F.1 The yacht set-off
L L
M 33. Sonangol does not dispute that the yacht’s sale price of
M
US$20,327,625 should be set off against its claim. Sonangol has done that
N N
in the amount that seeks to recover.
O O
F.2 The catamarans and boats set-off
P P
Q 34. Mr Li says that there should be a set-off of the price of Q
catamarans and boats (€25.636 million) transferred at Sonangol’s request to
R R
the Angolan government (CSPR). He suggests that correspondence shows
S that the debt was intended to be offset against the loan monies due to S
Sonangol.
T T
U U
V V
- 14 -
A A
B 35. The sale of catamarans and boats was supposed to be between B
CSIHL and the Angolan government.
C C
36. Among the documents before the court is an unsigned and
D D
undated draft side letter whereby Sonangol is supposed to acknowledge
E “agreeing to receive 21.726.510,00 euros from CSPR as partial settlement E
for the debt owing to Sonangol EP from China Sonangol”. Mr Arun refers
F F
to this draft side letter in an email dated 21 July 2021 to Mr Gentil Bragança
G Pimenta of Sonangol: G
H H
“I refer to the enclosed side letter. There is a reference to a
repayment of debt from Sonangol to China Sonangol.
I I
If this is intended, this repayment should reference the loan
agreement and refer to repayment of the approximately
J J
EUR21m by CSIL to Sonangol. CSIL would also need to be a
party to this letter. This would then be consistent with the
K procedure we have adopted for the mega yacht.
K
Perhaps Gentil could please confirm if Sonangol is fine with this
L approach. Thanks.” L
M M
37. Mr Pimenta responded on the same day:
N N
“I think there might be some misunderstanding.
O This order (6 catamarans and the 33 patrol boats) was made by O
the Angolan Government Navy and CSPR and paid through
CSIHL-BVI entity and might be on records and differently from
P P
the Mega-yacht acquisition.
Q It means that Sonangol is not part of this transaction although Q
instructed to give all the support to delivery.”
R R
38. Still on the same day, Mr Inacio emailed Mr Pimenta:
S S
“All, let's not add more confusion into an otherwise already
T complex process. Except the execution of the closing documents, T
which needs to happen soon, this is closed and the expectation
of Sonangol and the Angolan government and army is not delve
U U
V V
- 15 -
A A
B into unnecessary additional discussions about it. I ask everyone
B
to focus on making sure the closing documentation is executed.
Thanks! Osvaldo.”
C C
39. Mr Wang Xiangfei (Ms Lo’s husband and alternate CSIL
D D
director) emailed Mr Pimenta on 23 July 2021:
E E
“I think there is some misunderstanding here also.
F F
We must clarify that CSIHL(BVI) does not have any remittance
record from the Angola Government regarding the 33 patrol
G boats and 6 catamarans ("Boats"). If you have any bank G
remittance advise, please forward to us to follow up. I
H
understand all along that we are using the Boats in partial
H
settlement or set off of debt with Sonangol EP.”
I I
40. Mr Pimenta emailed back to Mr Wang on the same day:
J J
“Thank you for your email,
K K
We had no access to the contract neither payment receipt,
however, when we first received a letter from Angolan President
L Office, there was reference that payment was performed by the L
Angolan Government (I would not argue that). Please note that
this payments eventually date probably from 2015/2016 when
M M
the order was placed and based upon CSIHL (BVI) paid in full
the shipyard.”
N N
41. Further correspondence ensued. On 30 July 2021, Mr Wang
O O
emailed Ms Diana Lim (Head of Finance & Accounting at CSIS):
P P
“I would like to reiterate our position on the speed boats and
catamarans issue as follows:
Q Q
a) CS has no record of any remittance on the boats and
catamarans as stated in your email.
R R
b) as part of the overall debts settlement with Sonangol EP,
CSIH (BVI) will continue to move forward the transfer
S S
procedure on the basis that the transfer of 33 boats and 6
catamarans will be used to set off the debts between CSIL
T and Sonangol. T
c) If at a later date remittance on the boats and catamarans
U as stated in your email are found, the debts between CSIL U
V V
- 16 -
A A
B and Sonangol will be restored to take into account the
B
amount of the remittances.
C C
42. Apart from the foregoing documents, the existence of a set-off
D D
against Sonangol is all a matter of conjecture. No sale agreement for the
E catamarans and boats has been exhibited. No evidence of a payment for the E
catamarans and boats has been produced. No side letter executed by
F F
Sonangol, CSIHL or CSIL acknowledging the set-off has been drawn to my
G attention. Thus, while there was certainly talk of a set-off of the price for G
the catamarans and boats against the debt due to Sonangol, I am unable to
H H
accept that anything ever came of those discussions.
I I
F.3 The Sinopec set-off
J J
K 43. Mr Li refers to a payment agreement dated 8 April 2021 among K
Sinopec Overseas Oil & Gas Limited (Sinopec), Sonangol, New Bright and
L L
CSIL. It was thereby agreed that Sonangol would receive from Sinopec
M about RMB 329.9 million (equivalent to about US$50,562,796.18), M
representing 30% of a payment due to CSIL. Sonangol’s receipt of such
N N
amount should be regarded (Mr Li suggests) as a set-off against the loan
O monies due from CSIL to Sonangol. This inference (Mr Li argues) is O
P
supported by (1) the fact that the payment agreement recites that Sonangol
P
is a creditor of CSIL and (2) the fact that there is a CSIL journal entry
Q Q
recording a credit of US$50,562,796.18 to Sonangol as an off-set amount.
R R
44. Mr Li further submits that, if the Sinopec set-off is arguable,
S
the invalidity of the Notice upon which Sonangol’s claim is based must S
T likewise be arguable. Mr Li’s argument run as follows:
T
U U
V V
- 17 -
A A
B (1) According to CSIL’s 2017 audited financial statement (the B
latest in evidence before the court), at some point in 2013 CSIL
C C
and Sonangol “mutually agreed to extend the maturity date of
D the loan together with the interest to 31 December 2024”. D
Sonangol does not dispute such agreement.
E E
F (2) As noted in [28] above, Mr Li’s case is that the actual F
maturity date was 31 December 2025 on the basis of the 2013
G G
financial statement. But, if one accepts the 31 December 2024
H date instead, Mr Li reasons that, as a result of the parties’ H
extension agreement, neither the principal nor interest accrued
I I
as at the extension agreement’s date would be due until
J 31 December 2024. It is not known when precisely the parties J
agreed to extend the due date for payment. But the interest due
K K
at the extension agreement’s date would presumably have been
L around US$50 million.1 L
M M
(3) It follows that such amount of approximately US$50 million
N would not have been due when the Notice was issued on N
O
29 May 2024. At most the Notice could only have demanded
O
the payment of interest of approximately US$22,795,663
P P
accruing since 2013 (that is, the interest of US$72,795,663
Q
demanded by the Notice minus the approximate amount of
Q
US$50,000,000).
R R
S (4) If one also takes into account the Sinopec set-off of
S
US$50,562,796.18, that would wipe out the approximate
T T
1 In fact, CSIL’s 2013 audited account covering the period up to 31 December 2013, gives the interest
U accrued on the loan as US$41,013,698. U
V V
- 18 -
A A
B amount of US$22,795,663. No interest would then actually B
have been due and payable for the period between 2013 and
C C
29 May 2024 when the Notice was issued.
D D
(5) On that basis, the Notice was defective and Sonangol’s
E E
claim must be premature. The repayment date for the loan
F monies and interest thereon could not have been accelerated to F
a date before 31 December 2024. Sonangol’s writ issued on
G G
26 June 2024 could not have raised a valid cause of action
H premised on an acceleration brought about by the Notice. The H
summary judgment application should be dismissed in
I I
consequence.
J J
45. I am unable to accept Mr Li’s contentions.
K K
L 46. First, according to the Deed of Settlement, following the yacht L
set-off, on 29 September 2021, the revised principal amount due to Sonangol
M M
under the Loan Agreement remained at US$200 million, while the interest
N due thereon was reduced to US$55,686,073. These figures were accepted N
O
by Sonangol and CSIL as parties to the Deed of Settlement. Ms Fung herself
O
was the signatory of the document on CSIL’s behalf. Subtracting
P
approximately US$50 million (that is, Mr Li’s estimate of the interest P
Q
accrued prior to the extension agreement of 2013), there would still be about
Q
US$5,686,073 of post-2013 interest due on the Loan Agreement at the time
R R
of the Notice. The Notice’s numbers may conceivably have been erroneous.
S But there would still have been post-2013 interest that was indisputably due
S
when the Notice was served in May 2024. CSIL not having tendered any
T T
payment following its issue, the Notice would have had the effect of
U accelerating the payment due date for the entire loan and accrued interest. U
V V
- 19 -
A A
B B
47. Second, assume in CSIL’s favour that there was a Sinopec set-
C off amount. On its face, the journal voucher said to evidence the Sinopec C
set-off also records that, as at 31 December 2020, the amount of
D D
US$50,562,796.18 represented by the Sinopec set-off was used to reduce
E CSIL’s current account. The offset did not go towards reducing the interest E
due on Sonangol’s loan to CSIL. Had it done so, the interest due on the loan
F F
would have been much less than the amount of US$55,586,073
G acknowledged in the Deed of Settlement on 29 September 2021. G
H H
48. Third, according to CSIL’s 2017 financial statement, CSIL’s
I I
current account stood at US$547,911,936 on 31 December 2017. The
J
US$547,911,936 figure in the current account is described in the 2017
J
financial statement as having arisen in respect of an advance from a non-
K K
controlling interest (that is, Sonangol) which “is unsecured, non-interest
L bearing and repayable on 31 December 2024”. That circumstance would not
L
have prevented Sonangol and CSIL from treating the amount of the Sinopec
M M
set-off accounting-wise as reducing the current account debt due to
N Sonangol from CSIL. N
O O
49. In short, I do not consider the invalidity of the Notice to be
P arguable. The Journal Voucher, read in conjunction with the Deed of P
Settlement, points to the Sinopec set-off having been used to reduce the
Q Q
amount due to Sonangol under CSIL’s current account.
R R
G. Allegation of other reasons for trial
S S
T T
U U
V V
- 20 -
A A
B 50. Finally, Mr Li submits that there are other reasons why this B
dispute should go to trial. He says that there are suspicious circumstances,
C C
including:
D D
(1) a substantial shareholders’ loan for which the process of
E E
authorisation by CSIL is undocumented and for which no
F collateral was provided, F
G (2) an initial routing of the loan through CSIHL instead of directly G
to CSIL,
H H
(3) a lack of clarity as to how the loan monies were used,
I I
(4) the fact that no repayment on the loan was sought for some
J J
twenty years, and
K K
(5) apparent collusion between Ms Lo and Sonangol to the
L detriment of CSIL and Ms Fung’s interests. L
M M
51. The matters posited for investigation by Mr Li are essentially
N restatements of the arguments canvassed above. I do not see how any of the N
matters mean that summary judgment should be refused.
O O
P
52. Mr Li suggests that “further investigations are likely to yield P
Q
fruit” so that “further documentation and information pertaining to the Loan
Q
are likely to surface, including as to its negotiation, approval, advancement
R
and use”. These investigations will “likely ... shed light on the basis upon R
S which the Loan was recorded in the financial statements and explain the
S
various inconsistencies observed”. Mr Li accuses Sonangol of having acted
T T
in “a harsh and unconscionable manner, particularly by relying on the
U purported ‘acknowledgements’ of the Loan in the Yacht Documents”. In all U
V V
- 21 -
A A
B the circumstances, it would accordingly be “just and reasonable for all B
matters of dispute [among Ms Lo, Ms Fung, Sonangol, and CSIL] to be
C C
determined at one and the same time”.
D D
53. I am unable to agree. What Mr Li is proposing is precisely what
E E
Megarry VC warned against in Lady Anne Tennant v Associated
F Newspapers Group Ltd [1979] FSR 298, at 303: F
G “A desire to investigate alleged obscurities and a hope that G
something will turn up on the investigation cannot, separately or
H
together, amount to sufficient reason for refusing to enter
H
judgment for the plaintiff. You do not get leave to defend by
putting forward a case that is all surmise and Micawberism.
I I
The court does not investigate for the sake of investigation. That
is the province of the police. There are undoubtedly bitterly
J J
intense disputes among CSIL’s stakeholders in relation to the
company’s governance. But I do not see how the existence of
K such disputes leads to a conclusion that amounts due under the K
Loan Agreement should not be paid. Nor do I see anything
unconscionable in Sonangol relying on audited statements and
L other documents signed by Ms Fung over some twenty years, L
acknowledging the loan to CSIL and interest accruing thereon.”
M M
54. In my view, there is no arguable defence against Sonangol’s
N N
claim. There should consequently be summary judgment for (1) the
O principal amount of US$200 million and (2) accrued interest thereon O
of US$72,795,663. Interest will accrue on the principal amount of
P P
US$200 million at 2.5% per annum from 29 May 2024 (the date of the
Q Notice) until payment. Q
R R
IV. CONCLUSION
S S
55. Sonangol’s appeal is allowed.
T T
U U
V V
- 22 -
A A
B 56. There will be summary judgment in Sonangol’s favour B
for (1) the principal amount of US$200 million and (2) interest of
C C
US$72,795,663. Interest will accrue on the principal amount of
D US$200 million at 2.5% per annum from 29 May 2024 until payment. D
E E
57. I shall now hear the parties on costs and consequential orders.
F F
G G
H (Anselmo Reyes SC) H
Deputy High Court Judge
I I
Mr Charles Manzoni SC, leading Ms Esther Mak, instructed by Latham &
J Watkins LLP, for the Plaintiff J
K Mr Laurence Li SC, leading Mr Louis Cheng, instructed by MinterEllison K
LLP, for the Intervener on behalf of the Defendant
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V V