Chan Shi Wah v. York Star Co Ltd and Another

HCA 490/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 490 OF 2016

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J U D G M E N T

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1.This was an appeal from the decision of the master given on 19 October 2016, by which he entered judgement against the 2^nd defendant. The 2^nd defendant was the issuer of a cheque made in favour of the plaintiff said, by the plaintiff, to have been a form of guarantee for indebtedness of the 1^st defendant.

2.At the conclusion of the oral hearing on 7 February 2017, I dismissed the appeal, with costs to the plaintiff.  I stated that a brief summary of the reasons would be made available in writing, and now set out those reasons.

3.Although the claim was actually premised on a cheque having been dishonoured, the plaintiff did not frame its cause of action as being a claim on a dishonoured cheque, but rather made its claim based upon the alleged underlying guarantee.  This curious decision on the part of the plaintiff had the consequence that the usual approach in cheque cases, of treating the cheque as being the equivalent of cash, and of excluding extrinsic/parole evidence as to the surrounding circumstances underpinning the cheque was of no application.

4.The main elements of the factual background do not appear to be controversial between these parties.  The 2^nd defendant requested the plaintiff to grant a short term loan to the 1^st defendant, and made this request through the agency of one Chan Bing Kai.  The plaintiff says, and the 2^nd defendant denies, that the loan was made subject to a guarantee of repayment made by the 2^nd defendant. The loan was made, and a cheque in purported repayment of the loan was issued by the 1^st defendant, but was dishonoured on the presentation.  Subsequently the 2^nd defendant was asked by Chan Bing Kai to provide a cheque to support his oral guarantee (“the guarantee cheque”).  An undated cheque in the same sum as the amount of the indebtedness was issued by the 2^nd defendant. The plaintiff allowed the 1^st defendant further time to repay the debt, at the request, it is alleged, of the 2^nd defendant, but when the debt remained unpaid, the plaintiff sought to cash the guarantee cheque.  As referred to above, this also was dishonoured on presentation.

5.In accordance with the usual approach in summary judgement applications the 2^nd defendant sought to demonstrate that there were triable issues, and indeed, an arguable defence, that the 2^nd defendant had never agreed to act as guarantor in respect of the indebtedness of the 1^st defendant. It was the 2^nd defendant's case that he had been “forced” by the third party, Chan Bing Kai to issue the cheque in question against his wishes.

6.The test in a summary judgement application is whether the defendant has raised credible triable issues.  If there are such issues, the matter should go to trial. If not, judgement should be entered against the defendant.  The court is not required to take allegations at face value, but is to test these against the evidence disclosed in the affidavits.  This is not a mini trial of factual issues, but rather a consideration as to whether there are matters that deserve to go to trial.

7.As was acknowledged by counsel for the 2^nd defendant in the course of the oral submissions, the 2^nd defendant has not, however, provided any particulars of the unlawful pressure said to have been exerted on him causing him to issue the said cheque.  The individual said to have exerted that unlawful pressure, CBK, has made an affirmation denying having exerted improper pressure, and the 2^nd defendant says that he ought to be able to cross examine on that evidence at trial, but without stating his version of what was said or done.

8.The plaintiff has pointed out through its evidence and submissions that the 2^nd defendant might be expected to have been motivated to provide the guarantee and to seek additional time on behalf of the 1^st defendant and to issue the guarantee cheque, because of the fact that the 1^st defendant was a company owned and operated by his parents.

9.In those circumstances, it is impossible to conclude that the 2^nd defendant has provided even prima facie any evidence of unlawful pressure or duress having been exerted against him. There are no real conflicts of fact on the face of the affidavit evidence requiring investigation at a trial; the 2^nd defendant relies on mere assertion of a purported defence.  Moreover, the surrounding circumstances are supportive of the likelihood of the guarantee having been made by the 2^nd defendant.

10.Even were there to have been some undue pressure put on the 2^nd defendant, I observe that the chronology makes it plain that the 2^nd defendant had a reasonable period of time available to him after issuing the so‑called guarantee cheque in which he could, if he wished to do so, have taken steps to avoid the cheque transaction.  So far as is revealed by the evidence however, the 2^nd defendant did nothing of the sort. The absence of any protest, much less action, by the 2^nd defendant militates against the defence which he seeks to establish.

11.In all the circumstances, I am not persuaded that there is any substance in the contentions of the 2^nd defendant, that he was pressured unreasonably into issuing the so‑called guarantee cheque.  There is no other explanation for that cheque having been issued in fact, other than that the 2^nd defendant had indeed offered to guarantee the debt of the 1^st defendant (his parent's company), and it follows also therefore that the contention of the 2^nd defendant and there was no guarantee given at all also must be seen as being without any substance.

12.Having considered the evidence before me, I came to the conclusion that there were no triable issues disclosed, and accordingly I dismissed the 2^nd defendants appeal.  The costs of that application are to be to the plaintiff to be taxed if not agreed.

13.Before closing, I wish to record having discussed with the parties at the appeal the importance of a realistic time estimate being made when dates are reserved for a hearing.  On any view the time estimate made for the hearing of this appeal of one day, insisted on, I was told, by the 2^nd defendant, was wholly excessive for this particular matter, which was easily concluded within one hour.  Failure to properly address the time requirements by parties self evidently may result in additional expense for the parties, and wasted court resources and, is very much to be deprecated.

Ms Yantl Sze, instructed by Kitty So & Tong, for the plaintiff

Mr Edward Fan, instructed by James W L Li & Co, for the 2^nd defendant