HCA 1901/2019

[2024] HKCFI 2130

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1901 OF 2019

BETWEEN

_______________________

________________________

JUDGMENT

________________________

1. Introduction

1.1 The Defendant is the owner of the Twin Wealth group of companies (“ TWG ”). Under the umbrella of TWG are two Mainland companies, East China Oils & Fats Industries (Taixing) Co Ltd (“ ECTX ”) and Full Front Biotech Energy (Taixing) Co Ltd (“ FF ”).

1.2 In the second half of 2018, TWG ran into financial difficulties. In particular, by September 2018, ECTX and FF together became indebted to the Plaintiff for over US$7.8 million. In addition to the Plaintiff, TWG’s other creditors include a number of banks in Hong Kong, the Mainland and Malaysia and a company called FGV Trading Sdn Bhd. As at February 2019, TWG’s overall indebtedness was in excess of HK$814 million.

1.3 On 19 October 2018, a composite debenture (“ Composite Debenture ”) was executed by 16 companies within TWG in favour of The Hong Kong and Shanghai Banking Corporation as security trustees for the benefit of the Secured Parties (as defined therein) (“ Bank Group ”) [1] as part of TWG’s restructuring exercise (“ Restructuring Exercise ”). The Bank Group was TWG’s largest creditor at the material time.

1.4 In these proceedings, the Plaintiff’s claim against the Defendant is premised upon a guarantee said to have been offered by the Defendant in a letter dated 16 April 2019 (“ 16 April Letter ”), which was drafted and signed by the Defendant and addressed to Mr Aaron Au (“ Aaron ”), the then managing director of the Plaintiff, which offer was said to have been accepted by the Plaintiff by words or conduct (Amended Statement of Claim §§6 and 7). Prior to that, the Plaintiff was effectively an unsecured creditor.

1.5 The issues [2] which require my determination are as follows [3] :

(1) Whether the 16 April Letter is a legally binding guarantee whereby the Defendant guaranteed the debts of ECTX and FF owed to the Plaintiff;

(2) Further or alternatively, whether the Defendant is estopped by convention from denying that the 16 April Letter was a legally binding guarantee.

1.6 At the trial, I was helpfully assisted by Mr Bernard Man SC (leading Messrs Julian Lam and Cristian Tsang) appearing for the Plaintiff and Ms Eva Sit (leading Mr Thomas Wong) for the Defendant.

1.7 The 16 April Letter contains 8 sentences. It is the Plaintiff’s case that part of the 8 ^th sentence was an offer of an enforceable guarantee. As elaborated below, both before and after the 16 April Letter, the Plaintiff requested the Defendant to, but the De