Wiseway Global Co Ltd v Qian Feng Group Ltd

• Court: High Court (Singapore)
• Judge: George Wei JC
• Judgment Date: 31 March 2015
• Neutral Citation: [2015] SGHC 85
• Citation: [2015] SGHC 85
• Published date: 07 April 2015
• Hearing Date: 02 March 2015
• Docket Number: Suit No 690 of 2014 (Registrar’s Appeals Nos 41 and 49 of 2015)
• Plaintiff Counsel: Chen Xinping and Rich Seet (WongPartnership LLP)
• Defendant Counsel: Ng Lip Chih and Jennifer Sia (NLC Law Asia LLC)
• Subject Matter: Civil Procedure,Summary Judgment,Contract,Illegality,Estoppel

George Wei JC:

The proceedings before me arise from Wiseway Global Co. Ltd’s (“the Plaintiff”) application for summary judgment under Order 14 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the ROC”) in Summons No 4487 of 2014 (“SUM 4487/2014”). On 30 January 2015, the learned assistant registrar (“the AR”) granted Qian Feng Group Limited (“the Defendant”) conditional leave to defend. The Defendant was ordered to put up security in the sum of HKD 29,789,087 by 4.00pm on 2 March 2015, failing which judgment would be given to the Plaintiff with interest and costs.

Both the Plaintiff and the Defendant filed an appeal against the AR’s decision. In Registrar’s Appeal No 41 of 2015, the Defendant appeals against the AR’s decision to grant it conditional leave to defend, arguing that unconditional leave to defend should be granted instead. In Registrar’s Appeal No 49 of 2015, the Plaintiff appeals against the AR’s decision, arguing that the Defendant ought not to have been granted leave to defend.

Having heard the parties on 2 March 2015, I reserved judgment.

Brief factual background

The Plaintiff is a company incorporated in Hong Kong. The Defendant is a company incorporated in the British Virgin Islands. It is common ground that the parties signed a “Financing Agreement” dated 30 December 2012 (“the Financing Agreement”). The Financing Agreement was in Chinese and an English translation was placed before the court. The Plaintiff’s case is that the Agreement constituted a loan extended by the Plaintiff to the Defendant for the purpose of business development; the Defence’s position is that the Agreement was never intended to be an enforceable loan or, in the alternative, that it is tainted by illegality and therefore unenforceable.

I now set out a summary of the salient clauses in the Financing Agreement: The preamble to the Financing Agreement states that the Defendant invites financing from the Plaintiff for the “purposes of business development”. Clause 1.2 states that the “purpose of the financing fund is for business acquisition and restructuring only.” Clause 1.1 states that the Plaintiff will provide RMB$20m to the Defendant at an annual interest rate of 15% and that, on the execution of the agreement (ie, after it had been signed), all the financing capital will be deposited into the bank account designated for that purpose by the Defendant. Clause 1.3 provides that the maturity period of the loan is 12 months. Clause 2 sets out the details of a financing guarantee. It provides that the Defendant shall pledge its shares in “ASIAN FASHION HOLDINGS LIMITED” (“AFH”) (the Defendant held 244,409,913 shares in AFH, which amounts to 44.54% of the total) to the Plaintiff as security for the loan. AFH is a company listed on the Singapore Stock Exchange. Clause 3.1 provides that the Defendant shall reimburse RMB$23m plus interest to the Plaintiff on the date of the expiration of the loan. Clause 7.1 states that Singapore law is the applicable law for any disputes arising out of agreement. Clause 7.2 provides that parties shall attempt to resolve the dispute on friendly terms. Failing which, on the 30th day from the date of dispute, any party is entitled to submit the matter to arbitration. Clause 8.1 provides that the exhibits to the agreement shall be regarded as an inseparable part of the agreement, and would supersede any other prior agreements or collateral agreements (whether written, oral, express, or implied), insofar as they pertain to the same subject matter. Clause 8.2 provides that “[a]ny modifications or changes to the agreement shall be made into amendment in writing and with the consent of both parties, indicated by their signatures” and further, that “a clear statement shall be made in the amendment to clarify that the amendment is based on the agreement.”

I should add that personal guarantees for the return of the loan extended under the Financing Agreement were provided by two individuals, Liu Yanlong (“Liu”), and Wang Hui (“Wang”). These guarantees were provided in writing (in Chinese) and are both dated 31 December 2012. In the first “Letter of Undertaking”, Liu and “Chang Guan Lou (Beijing) Club Management Co. Ltd.”, a company owned by Liu, undertook to repay RMB$23m to the Plaintiff on the maturity date of the loan, and agreed to have “an unlimited joint liability with the [Defendant] in repaying the borrowed sum to the [Plaintiff]” (quoted from the English translation of the guarantees). In the second, Wang agreed to the same. The letters of undertaking do not contain any choice of law clauses.

It is undisputed that on 23 January 2013, HKD 24,618,663 was transferred by the Plaintiff to the Defendant. The plaintiff also placed the following two documents into evidence via affidavit.

The first is a document titled “Loan Supplementary to Financing Agreement and Remittance Instructions” dated 30 January 2013 (“Fund Transfer Confirmation”). The Fund Transfer Confirmation appears to have been signed by both the Plaintiff and the Defendant. In the Fund Transfer Confirmation, the following points appear to have been agreed. The parties agreed to convert the currency of the financing capital from RMB to HKD. The Defendant confirmed that it received HKD 24,618,663 from the Plaintiff pursuant to the Financing Agreement; this money was transferred from the Plaintiff’s HKSB account in Hong Kong to the Defendant’s director, Lin Dao Qin’s (“Lin”), Bank of China (Hong Kong) account. The Defendant agreed to make repayment of the principal sum (together with 15% annual interest) in HKD to the Plaintiff. Therefore, at the end of one year, HKD 28,311,462 shall be due to the Plaintiff from the Defendant.

The second is an agreement which appears to have been signed and executed by the parties on 1 March 2014 (“Supplemental Agreement”). The Supplemental Agreement amends the terms of the Financing Agreement in the following salient ways: First, cl 2 of the Financing Agreement is amended in that the original security (of 244,409,913 shares in AFH) was replaced with security of 58,800,490 shares in AFH held by Asia Brand Capital Pte Ltd. Second, cl 3.1 of the Financing Agreement is amended in that the deadline for the repayment of the loan monies is extended to 31 May 2014, on which date HKD 29,789,087 would fall due to be paid by the Defendant to the Plaintiff. Third, it was agreed that...