HCMP1059/2024 HABIB BANK ZURICH (HONG KONG) LTD (formerly known as HBZ Finance Limited) v. TEE VEE BRANDS INTERNATIONAL LTD AND OTHERS - LawHero
HCMP1059/2024
高等法院（雜項）Deputy High Court Judge Grace Chow22/4/2025[2025] HKCFI 2100
HCMP1059/2024
A A
B B
HCMP 1059/2024
C [2025] HKCFI 2100 C
IN THE HIGH COURT OF THE
D D
HONG KONG SPECIAL ADMINISTRATIVE REGION
E
COURT OF FIRST INSTANCE
E
MISCELLANEOUS PROCEEDINGS NO 1059 OF 2024
F F
____________
G G
IN THE MATTER of ALL THOSE
13 equal undivided 616th parts or shares
H H
of and in ALL THOSE pieces or
parcels of ground respectively
I I
registered in the Land Registry as
THE REMAINING PORTION OF
J J
KOWLOON MARINE LOT NO. 69,
K
THE REMAINING PORTION OF
K
KOWLOON MARINE LOT NO. 86,
L THE REMAINING PORTION OF L
SECTION J OF KOWLOON
M MARINE LOT NO. 40 and SECTION M
M OF KOWLOON MARINE LOT
N NO. 40 And of and in the messuages N
erections and buildings thereon known
O as “HANG FUNG INDUSTRIAL O
BUILDING, PHASE 2” ("the
P Building") TOGETHER with the sole P
and exclusive right and privilege to
Q hold use occupy and enjoy ALL THAT Q
WORK SHOP “F2” on the THIRD
R FLOOR of the Building ("the R
Property")
S S
and
T T
U U
V V
A A
-2-
B B
IN THE MATTER of a Mortgage dated
C C
10th February 2020 and registered in
the Land Registry by Memorial No.
D D
20021900990062 (“the Mortgage”)
E E
and
F F
IN THE MATTER of an Individual
G Guarantee and Indemnity dated 7th G
February 2014 ("the PG")
H H
and
I I
IN THE MATTER of a Guarantee and
J Indemnity dated 26th November 2019 J
("the CG")
K K
and
L L
IN THE MATTER of an application
M under Order 88, Rules of the High M
Court (Cap. 4A)
N N
____________
O O
BETWEEN
P P
HABIB BANK ZURICH (HONG KONG) LIMITED Plaintiff
Q (formerly known as HBZ Finance Limited) Q
R and R
TEE VEE BRANDS INTERNATIONAL LIMITED 1st Defendant
S S
CREATIVE CONCEPTS MANUFACTURING 2nd Defendant
T LIMITED T
U U
V V
A A
-3-
B B
ADVANI GULAB MOTIRAM 3rd Defendant
C C
ADVANI KUNAL GULAB th
4 Defendant
D D
____________
E E
F Before: Deputy High Court Judge Grace Chow in Court F
G Date of Hearing: 23 April 2025 G
H
Date of Judgment: 23 April 2025
H
I
_______________
I
JUDGMENT
J J
_______________
K K
Introduction and Background
L L
M 1. This is the substantive hearing of an application by the Plaintiff M
(“P”), by Originating Summons filed on 20 June 2024 (“OS”), against the
N N
1st Defendant (“D1”), 2nd Defendant (“D2”), 3rd Defendant (“D3”) and
O 4th Defendant (“D4”) (collectively, “Ds”) pursuant to O.88 of the Rules of the O
High Court, Cap. 4A (“RHC”) for payment of monies and delivery of vacant
P P
possession of the mortgaged property (“the Property”).
Q Q
2. The following affirmations were filed in relation to the OS:
R R
S (1) Affirmation of Abedi Syed Raza Hasan (“Hasan”) on S
22 July 2024 on behalf of P in support of the OS;
T T
U U
V V
A A
-4-
B B
(2) Affirmation of Advani Gulab Motiram on 12 November 2024
C C
and Affirmation of Advani Kunal Gulab on 12 November 2024
D (“D4’s Aff”) on behalf of Ds opposing the OS (collectively, “Ds’ D
Affs”); and
E E
F (3) 2nd Affirmation of Hasan on 26 November 2024 in reply to Ds’ F
Affs.
G G
H 3. By letter dated 17 April 2025, Messrs Oldham, Li & Nie, H
solicitors for Ds (“Ds’ Solicitors”) wrote to this court to inform that their firm
I I
has taken out a summons to apply to the court for leave to cease to act for Ds
J in these proceedings and to be removed from the court record. I was informed J
that that summons is fixed for hearing on 2 May 2025. It was further
K K
mentioned therein that as their firm has no instructions to proceed with these
L proceedings, no skeleton submissions would be filed. Notwithstanding Ds’ L
Solicitors sought to be excused from attending today’s hearing, I declined to
M M
excuse them as they still remained on the record as Ds’ solicitors.
N N
4. Miss Wong, solicitors, appeared today on behalf of D1 and D2.
O O
D3 and D4 had respectively filed a Notice to Act in Person today. D4
P appeared in person and D3 is absent today. P
Q Q
5. Although Miss Wong confirmed that she had no instructions to
R make any submissions in respect of the OS (but D4 would wished to make R
submissions acting in person), her only instructions from D1 and D2 were to
S S
make an application for adjournment of today’s hearing.
T T
U U
V V
A A
-5-
B B
6. The application for adjournment was not made by Summons
C C
supported by affirmation as it should have been. From the bar table,
D Miss Wong informed me that the basis for seeking adjournment are that D3, D
the sole director of D1 and D2 wishes to make an application to represent D1
E E
and D2 in these proceedings and act in person, or they may wish to engage
F other legal representatives, and that D3 is currently not in Hong Kong. F
However, I refused the application for the reasons orally given at the
G G
beginning of today’s hearing (essentially, the lateness of the application, the
H H
fact that Ds have previously (whilst legally represented) filed evidence in
I
opposition to the OS and their position could hardly be improved by acting in
I
person, and a change of legal representation is never a good justification for
J J
an adjournment).
K K
7. Mr Chow, counsel, appeared for P. I also heard the oral
L L
submissions of D4.
M M
Applicable Principles
N N
8. The approach of the court to summarily dispose of an originating
O O
summons issued under O.88 of RHC was set out by the Court of Appeal in
P Golden Rich Finance Limited v Lam Sau Fa [2018] HKCA 952 at §2: P
Q Q
“…At the hearing of the originating summons, the matter may be disposed
of summarily where the Court is satisfied that there are no triable issues. As
R pointed out by the authorities, this is akin to an application for summary R
judgment under Order 14, namely, once the plaintiff’s entitlement to
S summary judgment is demonstrated on the face of the evidence, the burden
S
falls on the defendant to show that she has a credible defence to the claim.
This is to be tested against the evidence adduced in the case such as whether
T the defence is inconsistent with the contemporaneous documents or the T
defendant’s previous admissions and stand. The Court should also consider
U U
V V
A A
-6-
B B
the inherent probability of the defence. But what is not permitted is for the
C Court to conduct a mini-trial of the case on the affidavit evidence. If the C
Court does not deal with the originating summons summarily, it may order
D
the proceedings to continue as if the matter had begun by writ (Order 28,
D
rule 8) or give further directions for the conduct of the case (Order 28, rule
4(2)).”
E E
F 9. Accordingly, if I am satisfied that P is entitled to summary F
judgment on the face of the evidence, I then need to consider whether Ds have
G G
discharged their burden to show a credible defence.
H H
Discussion and Disposition
I I
J
10. It is not disputed that P had granted various credit facilities to D2
J
for which the following documents were executed:
K K
L
(1) The General Commercial Agreement dated 26 November 2019
L
(“GCA”) was executed by D2 in consideration of P granting or
M M
continuing various facilities or services to D2;
N N
(2) In exchange for general banking facilities to be granted to D2, a
O Mortgage dated 10 February 2020 (“the Mortgage”) was O
P
executed between D1 as mortgagor, D2 as borrower and P as
P
lender, whereby inter alia D1 and D2 covenanted to pay all sums
Q Q
of money owing to P and the Property was charged as security
R
for the due payment of all monies payable by D2 to P;
R
S S
(3) In consideration of P granting, continuing or extending facilities
T
at the request of D1 to D2, a Guarantee and Indemnity dated 26
T
U U
V V
A A
-7-
B B
November 2019 (“the CG”) was executed whereby D1 shall
C C
jointly and severally guarantee to P the payment on demand of
D all moneys and liabilities owing by D2 which shall be unlimited; D
E E
(4) The Individual Guarantee and Indemnity dated 7 February 2014
F (“the PG”) was executed by D3 and D4 in favour of P whereby F
they shall jointly and severally guarantee to P the payment of all
G G
monies due or owing by D2 which shall be unlimited; and
H H
(5) The facility letter dated 11 July 2023 (“the Facility Letter”) was
I I
executed by D2 as borrower, D1 as security provider and
J corporate guarantor, and D3 and D4 as personal guarantors, as a J
condition precedent to P considering requests by D2 to grant
K K
facilities (which include import invoice financing up to
L HK$19.7M and term loan facility up to HK$2.885M). L
M M
11. It is P’s case that D2 had repeatedly failed to make timely
N repayments over the years resulting in P’s downgrading D2’s account and N
eventually prompting P to terminate the facilities pursuant to clause 7.5 of the
O O
Facility Letter1 by letters dated 23 May 2024 and 29 May 2024.
P P
12. On 20 June 2024, P commenced these proceedings by the OS.
Q Q
According to P, as of the date of the OS, the sums of: (1) HK$2,580,774.35
R R
1
Clause 7.5 provides: “Notwithstanding any provision herein, the Facility(ies) are subject to review by the
S S
Bank at any time at its discretion and the Bank may vary, amend, suspend, cancel and/or terminate the
Facilities of any part thereof by giving notice to the Customer(s). Without limiting the generality of the
T foregoing, the Bank has the right to vary the terms and conditions of the Facility(ies), including the interest
T
rate, from time to time at the Bank’s sole discretion.”
U U
V V
A A
-8-
B B
(being outstanding balance for a term loan and overdraft in the Imprest
C C
Account (HKD) together with accrued interest); and (2) US$2,492,432.88
D (being the outstanding balance of the invoice financing and overdraft in the D
Imprest Account (USD) together with accrued interest) are outstanding. In
E E
Hasan’s Affirmation, these figures are updated up to July 2024.
F F
13. I am satisfied from the documents before me that the sums
G G
claimed by P are due and owing. Hasan, on behalf of P, has stated on oath the
H amount of outstanding indebtedness. Any argument to dispute the sums stated H
to be owing from Ds, is precluded by the “conclusive evidence” provisions in
I I
the GCA (clause 15(e)), the CG (clause 24), the PG (clause 1.03).
J J
14. Furthermore, I am satisfied from the documents before me that P
K K
has made out a prima face case that at the very least:
L L
(1) D1, under the CG and the Mortgage, is liable to make payment
M M
to P for all monies owing to P by D2;
N N
(2) D2 is liable to pay to P on demand sums indebted to P under the
O O
GCA, the CG and the Mortgage;
P P
(3) D3 and D4, as guarantors under the PG, are liable to make
Q Q
payment to P of all monies owing by D2 to P; and
R R
(4) The right to possession of the Property under the Mortgage has
S arisen by reason of D1’s and/or D2’s default. S
T T
U U
V V
A A
-9-
B B
15. In Ds’ Affs it was raised that there was no obligation to make
C C
repayment as at P’s demand in May 2024 and by the time of the OS. In
D particular, it was stated that the current balance of the invoice financing is not D
due until July and August 2024 based on the drawdown date under clause
E E
3.1.1(c) of the Facility Letter (which provides for up to 120 days from the date
F of payment).2 F
G G
16. However, it is plain that P has exercised its contractual right to
H terminate the credit facilities under clause 7.5 of the Facility Letter and is H
entitled to demand payment in respect of all liabilities due and payable at any
I I
time: see e.g. clause 7.3 of the Facility Letter3 and clause 11 of GCA4.
J J
17. Moreover, I am satisfied from the authorities cited to me by
K K
Mr Chow that any suggestion that P’s exercise of the contractual provision
L under clause 7.5 is subject to any duty of good faith and not to exercise such L
power irrationally, arbitrarily and/or capriciously is not arguable 5. See Habib
M M
Bank Zurich (Hong Kong) Limited v Creation Castle Limited & Ors [2020]
N HKCFI 1062 per DHCJ Dawes SC at §§63-70 as recently summarised and N
affirmed by Au-Yeung J in The Hongkong and Shanghai Banking
O O
P P
2
See D4’s Aff, §§29-30.
Q Q
3
Clause 7.3 provides: “Acceptance by the Bank in respect of any application made by the Customer(s) is
subject to the Bank’s overriding right of repayment on demand, amending, cancelling and/or restructuring
R any of the Facility(ies) and/or pricing at the Bank’s sole discretion.” R
4
Clause 11 provides: “All Liabilities shall become immediately due and payable … upon demand by the
S Bank at any time or in accordance with any other agreement relating to the Liabilities or any part thereof. S
Without limiting the Bank’s right to make a demand at any time, I/we acknowledge that the Bank may also
do so if any of the following events occur…”.
T T
5
See D4’s Aff, §§32-35.
U U
V V
A A
- 10 -
B B
Corporation Limited v King Wai Piece Goods Company Limited & Ors [2025]
C C
HKCFI 1371 at §90:
D D
“Having reviewed the authorities, DHCJ Dawes SC held that:
E E
(1) The bank’s contractual right to withdraw its credit facilities and
demand repayment of all outstanding sums is not subject to any implied
F limitation that it should not be exercised irrationally (§63); F
(2) Where a contract allocates only to one party a power to make
G G
decisions under the contract which may have an effect on both parties, it
is plain from the authorities that this discretion “will be limited, as a
H matter of necessary implication, by concepts of honesty, good faith, and H
genuineness, and the need for the absence of arbitrariness, capriciousness,
perversity and irrationality”: Socimer International Bank Ltd (in
I liquidation) v Standard Bank London Ltd [2008] Bus LR 1304, §66 (§64); I
(3) A clause which grants a bank the contractual right to cancel credit
J J
facilities and demand immediate repayment (under which the bank has a
discretion as to how it chooses to exercise this right) is materially
K distinguishable from one which grants a contracting party the power to K
make a discretionary assessment on behalf of both parties (as was the case
in Socimer and Braganza v BP Shipping Ltd [2015] 1 WLR 1661, §30),
L and that a Socimer-type implied term is not reasonably necessary to give L
business efficacy to the contract insofar as the former category of
M contractual terms is concerned (§67); and M
(4) It is trite that the court will not imply terms which are inconsistent
N with the express terms of the contract or the nature of the contractual N
relationship between the parties. It was fundamental to the relationship
between the lender bank and the borrower company that the credit
O O
facilities were terminable on demand, and it was part of the bargain
between the parties (§69).”
P P
18. As for the assertion that P’s reliance on clause 7.5 may render
Q Q
the clause a penalty clause6, it is based on the premise that the outstanding
R R
S S
T 6 T
See ibid, §§36-37.
U U
V V
A A
- 11 -
B B
sums are not yet due but this premise is groundless for the reasons already
C C
given.
D D
19. Besides, any argument that the underlying liabilities of D2 is
E E
invalid or enforceable is not open to Ds as they are liable as primary debtors
F and are liable to indemnify P against any costs, loss or liability it incurs as a F
result of D2 not paying any amount which would, but for the unenforceability,
G G
invalidity or illegality have been payable by D2: see clause 2 of the CG, clause
H 6 of the PG and clause 19.02 of the Mortgage. H
I I
20. For the above reasons, I am satisfied that no credible arguable
J defence has been shown by Ds and it is appropriate to dispose of these J
proceedings summarily under O. 28, r.4 of RHC.
K K
L 21. The original of the Mortgage was produced and shown to me. I L
am satisfied that the requirements under O.88, r.5 of RHC have been complied
M M
with.
N N
22. Accordingly, I will make an order in terms of the draft Order as
O amended by me (to give 28 days for vacant possession of the Property to be O
P
given).
P
Q [Discussion on costs] Q
R R
23. Mr Chow sought costs on an indemnity basis and summary assessment
S of P’s costs. I am satisfied that contractually, P is entitled to costs of these S
proceedings against Ds on an indemnity basis: see the Mortgage (clause
T T
18.01), the GCA (clause 16) and the PG (clause 1.01(c)).
U U
V V
A A
- 12 -
B B
24. Having considered P’s Statement of Costs submitted to me, and D4’s
C C
objections, adopting a broadbrush approach, I have summarily assessed P’s
D costs of these proceedings at HK$320,000. D
E E
25. I am grateful for Mr Chow’s assistance.
F F
G G
( Grace Chow )
H Deputy High Court Judge H
I I
Mr. Tony HH Chow instructed by Messrs. P.C. Woo & Co. for the Plaintiff
J Miss Claudia Wong of Messrs. Oldham, Li & Nie for the 1 st and J
2nd Defendants
K K
The 3rd Defendant, not represented and being absent
L The 4th Defendant, appeared in person L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V V
HABIB BANK ZURICH (HONG KONG) LTD (formerly known as HBZ Finance Limited) v. TEE VEE BRANDS INTERNATIONAL LTD AND OTHERS
A A
B B
HCMP 1059/2024
C [2025] HKCFI 2100 C
IN THE HIGH COURT OF THE
D D
HONG KONG SPECIAL ADMINISTRATIVE REGION
E
COURT OF FIRST INSTANCE
E
MISCELLANEOUS PROCEEDINGS NO 1059 OF 2024
F F
____________
G G
IN THE MATTER of ALL THOSE
13 equal undivided 616th parts or shares
H H
of and in ALL THOSE pieces or
parcels of ground respectively
I I
registered in the Land Registry as
THE REMAINING PORTION OF
J J
KOWLOON MARINE LOT NO. 69,
K
THE REMAINING PORTION OF
K
KOWLOON MARINE LOT NO. 86,
L THE REMAINING PORTION OF L
SECTION J OF KOWLOON
M MARINE LOT NO. 40 and SECTION M
M OF KOWLOON MARINE LOT
N NO. 40 And of and in the messuages N
erections and buildings thereon known
O as “HANG FUNG INDUSTRIAL O
BUILDING, PHASE 2” ("the
P Building") TOGETHER with the sole P
and exclusive right and privilege to
Q hold use occupy and enjoy ALL THAT Q
WORK SHOP “F2” on the THIRD
R FLOOR of the Building ("the R
Property")
S S
and
T T
U U
V V
A A
-2-
B B
IN THE MATTER of a Mortgage dated
C C
10th February 2020 and registered in
the Land Registry by Memorial No.
D D
20021900990062 (“the Mortgage”)
E E
and
F F
IN THE MATTER of an Individual
G Guarantee and Indemnity dated 7th G
February 2014 ("the PG")
H H
and
I I
IN THE MATTER of a Guarantee and
J Indemnity dated 26th November 2019 J
("the CG")
K K
and
L L
IN THE MATTER of an application
M under Order 88, Rules of the High M
Court (Cap. 4A)
N N
____________
O O
BETWEEN
P P
HABIB BANK ZURICH (HONG KONG) LIMITED Plaintiff
Q (formerly known as HBZ Finance Limited) Q
R and R
TEE VEE BRANDS INTERNATIONAL LIMITED 1st Defendant
S S
CREATIVE CONCEPTS MANUFACTURING 2nd Defendant
T LIMITED T
U U
V V
A A
-3-
B B
ADVANI GULAB MOTIRAM 3rd Defendant
C C
ADVANI KUNAL GULAB th
4 Defendant
D D
____________
E E
F Before: Deputy High Court Judge Grace Chow in Court F
G Date of Hearing: 23 April 2025 G
H
Date of Judgment: 23 April 2025
H
I
_______________
I
JUDGMENT
J J
_______________
K K
Introduction and Background
L L
M 1. This is the substantive hearing of an application by the Plaintiff M
(“P”), by Originating Summons filed on 20 June 2024 (“OS”), against the
N N
1st Defendant (“D1”), 2nd Defendant (“D2”), 3rd Defendant (“D3”) and
O 4th Defendant (“D4”) (collectively, “Ds”) pursuant to O.88 of the Rules of the O
High Court, Cap. 4A (“RHC”) for payment of monies and delivery of vacant
P P
possession of the mortgaged property (“the Property”).
Q Q
2. The following affirmations were filed in relation to the OS:
R R
S (1) Affirmation of Abedi Syed Raza Hasan (“Hasan”) on S
22 July 2024 on behalf of P in support of the OS;
T T
U U
V V
A A
-4-
B B
(2) Affirmation of Advani Gulab Motiram on 12 November 2024
C C
and Affirmation of Advani Kunal Gulab on 12 November 2024
D (“D4’s Aff”) on behalf of Ds opposing the OS (collectively, “Ds’ D
Affs”); and
E E
F (3) 2nd Affirmation of Hasan on 26 November 2024 in reply to Ds’ F
Affs.
G G
H 3. By letter dated 17 April 2025, Messrs Oldham, Li & Nie, H
solicitors for Ds (“Ds’ Solicitors”) wrote to this court to inform that their firm
I I
has taken out a summons to apply to the court for leave to cease to act for Ds
J in these proceedings and to be removed from the court record. I was informed J
that that summons is fixed for hearing on 2 May 2025. It was further
K K
mentioned therein that as their firm has no instructions to proceed with these
L proceedings, no skeleton submissions would be filed. Notwithstanding Ds’ L
Solicitors sought to be excused from attending today’s hearing, I declined to
M M
excuse them as they still remained on the record as Ds’ solicitors.
N N
4. Miss Wong, solicitors, appeared today on behalf of D1 and D2.
O O
D3 and D4 had respectively filed a Notice to Act in Person today. D4
P appeared in person and D3 is absent today. P
Q Q
5. Although Miss Wong confirmed that she had no instructions to
R make any submissions in respect of the OS (but D4 would wished to make R
submissions acting in person), her only instructions from D1 and D2 were to
S S
make an application for adjournment of today’s hearing.
T T
U U
V V
A A
-5-
B B
6. The application for adjournment was not made by Summons
C C
supported by affirmation as it should have been. From the bar table,
D Miss Wong informed me that the basis for seeking adjournment are that D3, D
the sole director of D1 and D2 wishes to make an application to represent D1
E E
and D2 in these proceedings and act in person, or they may wish to engage
F other legal representatives, and that D3 is currently not in Hong Kong. F
However, I refused the application for the reasons orally given at the
G G
beginning of today’s hearing (essentially, the lateness of the application, the
H H
fact that Ds have previously (whilst legally represented) filed evidence in
I
opposition to the OS and their position could hardly be improved by acting in
I
person, and a change of legal representation is never a good justification for
J J
an adjournment).
K K
7. Mr Chow, counsel, appeared for P. I also heard the oral
L L
submissions of D4.
M M
Applicable Principles
N N
8. The approach of the court to summarily dispose of an originating
O O
summons issued under O.88 of RHC was set out by the Court of Appeal in
P Golden Rich Finance Limited v Lam Sau Fa [2018] HKCA 952 at §2: P
Q Q
“…At the hearing of the originating summons, the matter may be disposed
of summarily where the Court is satisfied that there are no triable issues. As
R pointed out by the authorities, this is akin to an application for summary R
judgment under Order 14, namely, once the plaintiff’s entitlement to
S summary judgment is demonstrated on the face of the evidence, the burden
S
falls on the defendant to show that she has a credible defence to the claim.
This is to be tested against the evidence adduced in the case such as whether
T the defence is inconsistent with the contemporaneous documents or the T
defendant’s previous admissions and stand. The Court should also consider
U U
V V
A A
-6-
B B
the inherent probability of the defence. But what is not permitted is for the
C Court to conduct a mini-trial of the case on the affidavit evidence. If the C
Court does not deal with the originating summons summarily, it may order
D
the proceedings to continue as if the matter had begun by writ (Order 28,
D
rule 8) or give further directions for the conduct of the case (Order 28, rule
4(2)).”
E E
F 9. Accordingly, if I am satisfied that P is entitled to summary F
judgment on the face of the evidence, I then need to consider whether Ds have
G G
discharged their burden to show a credible defence.
H H
Discussion and Disposition
I I
J
10. It is not disputed that P had granted various credit facilities to D2
J
for which the following documents were executed:
K K
L
(1) The General Commercial Agreement dated 26 November 2019
L
(“GCA”) was executed by D2 in consideration of P granting or
M M
continuing various facilities or services to D2;
N N
(2) In exchange for general banking facilities to be granted to D2, a
O Mortgage dated 10 February 2020 (“the Mortgage”) was O
P
executed between D1 as mortgagor, D2 as borrower and P as
P
lender, whereby inter alia D1 and D2 covenanted to pay all sums
Q Q
of money owing to P and the Property was charged as security
R
for the due payment of all monies payable by D2 to P;
R
S S
(3) In consideration of P granting, continuing or extending facilities
T
at the request of D1 to D2, a Guarantee and Indemnity dated 26
T
U U
V V
A A
-7-
B B
November 2019 (“the CG”) was executed whereby D1 shall
C C
jointly and severally guarantee to P the payment on demand of
D all moneys and liabilities owing by D2 which shall be unlimited; D
E E
(4) The Individual Guarantee and Indemnity dated 7 February 2014
F (“the PG”) was executed by D3 and D4 in favour of P whereby F
they shall jointly and severally guarantee to P the payment of all
G G
monies due or owing by D2 which shall be unlimited; and
H H
(5) The facility letter dated 11 July 2023 (“the Facility Letter”) was
I I
executed by D2 as borrower, D1 as security provider and
J corporate guarantor, and D3 and D4 as personal guarantors, as a J
condition precedent to P considering requests by D2 to grant
K K
facilities (which include import invoice financing up to
L HK$19.7M and term loan facility up to HK$2.885M). L
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11. It is P’s case that D2 had repeatedly failed to make timely
N repayments over the years resulting in P’s downgrading D2’s account and N
eventually prompting P to terminate the facilities pursuant to clause 7.5 of the
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Facility Letter1 by letters dated 23 May 2024 and 29 May 2024.
P P
12. On 20 June 2024, P commenced these proceedings by the OS.
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According to P, as of the date of the OS, the sums of: (1) HK$2,580,774.35
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1
Clause 7.5 provides: “Notwithstanding any provision herein, the Facility(ies) are subject to review by the
S S
Bank at any time at its discretion and the Bank may vary, amend, suspend, cancel and/or terminate the
Facilities of any part thereof by giving notice to the Customer(s). Without limiting the generality of the
T foregoing, the Bank has the right to vary the terms and conditions of the Facility(ies), including the interest
T
rate, from time to time at the Bank’s sole discretion.”
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A A
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(being outstanding balance for a term loan and overdraft in the Imprest
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Account (HKD) together with accrued interest); and (2) US$2,492,432.88
D (being the outstanding balance of the invoice financing and overdraft in the D
Imprest Account (USD) together with accrued interest) are outstanding. In
E E
Hasan’s Affirmation, these figures are updated up to July 2024.
F F
13. I am satisfied from the documents before me that the sums
G G
claimed by P are due and owing. Hasan, on behalf of P, has stated on oath the
H amount of outstanding indebtedness. Any argument to dispute the sums stated H
to be owing from Ds, is precluded by the “conclusive evidence” provisions in
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the GCA (clause 15(e)), the CG (clause 24), the PG (clause 1.03).
J J
14. Furthermore, I am satisfied from the documents before me that P
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has made out a prima face case that at the very least:
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(1) D1, under the CG and the Mortgage, is liable to make payment
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to P for all monies owing to P by D2;
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(2) D2 is liable to pay to P on demand sums indebted to P under the
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GCA, the CG and the Mortgage;
P P
(3) D3 and D4, as guarantors under the PG, are liable to make
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payment to P of all monies owing by D2 to P; and
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(4) The right to possession of the Property under the Mortgage has
S arisen by reason of D1’s and/or D2’s default. S
T T
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15. In Ds’ Affs it was raised that there was no obligation to make
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repayment as at P’s demand in May 2024 and by the time of the OS. In
D particular, it was stated that the current balance of the invoice financing is not D
due until July and August 2024 based on the drawdown date under clause
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3.1.1(c) of the Facility Letter (which provides for up to 120 days from the date
F of payment).2 F
G G
16. However, it is plain that P has exercised its contractual right to
H terminate the credit facilities under clause 7.5 of the Facility Letter and is H
entitled to demand payment in respect of all liabilities due and payable at any
I I
time: see e.g. clause 7.3 of the Facility Letter3 and clause 11 of GCA4.
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17. Moreover, I am satisfied from the authorities cited to me by
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Mr Chow that any suggestion that P’s exercise of the contractual provision
L under clause 7.5 is subject to any duty of good faith and not to exercise such L
power irrationally, arbitrarily and/or capriciously is not arguable 5. See Habib
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Bank Zurich (Hong Kong) Limited v Creation Castle Limited & Ors [2020]
N HKCFI 1062 per DHCJ Dawes SC at §§63-70 as recently summarised and N
affirmed by Au-Yeung J in The Hongkong and Shanghai Banking
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P P
2
See D4’s Aff, §§29-30.
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3
Clause 7.3 provides: “Acceptance by the Bank in respect of any application made by the Customer(s) is
subject to the Bank’s overriding right of repayment on demand, amending, cancelling and/or restructuring
R any of the Facility(ies) and/or pricing at the Bank’s sole discretion.” R
4
Clause 11 provides: “All Liabilities shall become immediately due and payable … upon demand by the
S Bank at any time or in accordance with any other agreement relating to the Liabilities or any part thereof. S
Without limiting the Bank’s right to make a demand at any time, I/we acknowledge that the Bank may also
do so if any of the following events occur…”.
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5
See D4’s Aff, §§32-35.
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A A
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B B
Corporation Limited v King Wai Piece Goods Company Limited & Ors [2025]
C C
HKCFI 1371 at §90:
D D
“Having reviewed the authorities, DHCJ Dawes SC held that:
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(1) The bank’s contractual right to withdraw its credit facilities and
demand repayment of all outstanding sums is not subject to any implied
F limitation that it should not be exercised irrationally (§63); F
(2) Where a contract allocates only to one party a power to make
G G
decisions under the contract which may have an effect on both parties, it
is plain from the authorities that this discretion “will be limited, as a
H matter of necessary implication, by concepts of honesty, good faith, and H
genuineness, and the need for the absence of arbitrariness, capriciousness,
perversity and irrationality”: Socimer International Bank Ltd (in
I liquidation) v Standard Bank London Ltd [2008] Bus LR 1304, §66 (§64); I
(3) A clause which grants a bank the contractual right to cancel credit
J J
facilities and demand immediate repayment (under which the bank has a
discretion as to how it chooses to exercise this right) is materially
K distinguishable from one which grants a contracting party the power to K
make a discretionary assessment on behalf of both parties (as was the case
in Socimer and Braganza v BP Shipping Ltd [2015] 1 WLR 1661, §30),
L and that a Socimer-type implied term is not reasonably necessary to give L
business efficacy to the contract insofar as the former category of
M contractual terms is concerned (§67); and M
(4) It is trite that the court will not imply terms which are inconsistent
N with the express terms of the contract or the nature of the contractual N
relationship between the parties. It was fundamental to the relationship
between the lender bank and the borrower company that the credit
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facilities were terminable on demand, and it was part of the bargain
between the parties (§69).”
P P
18. As for the assertion that P’s reliance on clause 7.5 may render
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the clause a penalty clause6, it is based on the premise that the outstanding
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S S
T 6 T
See ibid, §§36-37.
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sums are not yet due but this premise is groundless for the reasons already
C C
given.
D D
19. Besides, any argument that the underlying liabilities of D2 is
E E
invalid or enforceable is not open to Ds as they are liable as primary debtors
F and are liable to indemnify P against any costs, loss or liability it incurs as a F
result of D2 not paying any amount which would, but for the unenforceability,
G G
invalidity or illegality have been payable by D2: see clause 2 of the CG, clause
H 6 of the PG and clause 19.02 of the Mortgage. H
I I
20. For the above reasons, I am satisfied that no credible arguable
J defence has been shown by Ds and it is appropriate to dispose of these J
proceedings summarily under O. 28, r.4 of RHC.
K K
L 21. The original of the Mortgage was produced and shown to me. I L
am satisfied that the requirements under O.88, r.5 of RHC have been complied
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with.
N N
22. Accordingly, I will make an order in terms of the draft Order as
O amended by me (to give 28 days for vacant possession of the Property to be O
P
given).
P
Q [Discussion on costs] Q
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23. Mr Chow sought costs on an indemnity basis and summary assessment
S of P’s costs. I am satisfied that contractually, P is entitled to costs of these S
proceedings against Ds on an indemnity basis: see the Mortgage (clause
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18.01), the GCA (clause 16) and the PG (clause 1.01(c)).
U U
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A A
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B B
24. Having considered P’s Statement of Costs submitted to me, and D4’s
C C
objections, adopting a broadbrush approach, I have summarily assessed P’s
D costs of these proceedings at HK$320,000. D
E E
25. I am grateful for Mr Chow’s assistance.
F F
G G
( Grace Chow )
H Deputy High Court Judge H
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Mr. Tony HH Chow instructed by Messrs. P.C. Woo & Co. for the Plaintiff
J Miss Claudia Wong of Messrs. Oldham, Li & Nie for the 1 st and J
2nd Defendants
K K
The 3rd Defendant, not represented and being absent
L The 4th Defendant, appeared in person L
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N N
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P P
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