HCSD 21/2024

[2024] HKCFI 2302

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

APPLICATION TO SET ASIDE A STATUTORY DEMAND

NO. 21 OF 2024

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J U D G M E N T

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DHCJ Yuen:

1. This is an application by the applicant whom I shall call GG ( Applicant ) to set aside a statutory demand ( SD ) issued by the respondent whom I shall call LL Ltd ( Lender ). It arises out of the following matters.

Background

Loan Agreement

2.1 . On 21 December 2022, a Loan Agreement was signed between the Lender, a company as borrower ( Borrower ), and two individuals including the Applicant as guarantors.

2.2 . Under the Loan Agreement, the Lender agreed to lend $120 million to the Borrower for a period of 24 months at 17.5% p.a. interest, guaranteed by the two guarantors.

2.3 . The loan was also secured by Second Mortgages on three properties owned by companies ( mortgagor companies ) which were not parties to the Loan Agreement. The mortgagor companies are wholly legally and beneficially owned by a company I shall call RR Co Ltd ( RR ) which is in turn wholly legally and beneficially owned by the Applicant . In this Judgment, I shall use the term “ third party-owned security ” to mean security owned by a party which is not the recipient of the SD.

Fee Letter

3.1 . On the same day as the Loan Agreement, a Fee Letter was signed between the Borrower and a company I shall call KK Ltd as introducer ( Introducer ). Under the Fee Letter, the Borrower agreed to pay the Introducer an introducer fee in an amount equal to 9% of $120 million ($10.8 million) upon drawdown of the loan under the Loan Agreement.

3.2 . It was provided in the Fee Letter that:

- any amount due and payable under the terms of the Fee Letter shall be an amount payable under the Loan Agreement ;

- if the Borrower fails to pay any sum payable under the Fee Letter on the drawdown date in accordance with the Loan Agreement, interest equivalent to 35% p.a. shall accrue on the overdue sum from due date to date of receipt .

3.3 . The Fee Letter was signed on behalf of the Introducer by a person I shall call PP , who was described as its executive director.

3.4 . The sum of $120 million was drawndown on the date of the Loan Agreement.

3.5 . On the same day, the Borrower paid the sum of $10.8 million to the Introducer by cheque. A copy of the cheque was signed by a person I shall call WW who had also signed the Loan Agreement on behalf of the Lender as “the authorized representati