Leung Tong Fuk v. Chan Yuk Kwan

CACV000231X/1996

(English Translation - 英譯本)

IN THE SUPREME COURT OF HONG KONG

COURT OF APPEAL

1996, No. 231
(Civil)

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BETWEEN
	LEUNG TONG FUK	Appellant
	AND
	CHAN YUK KWAN	Respondent

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Coram: Hon. Liu, J.A., Leong and Yam, JJ. in court

Date of hearing: 20 June 1997

Date of delivery of judgment: 20 June 1997

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JUDGMENT

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Liu, J.A.

1. This is an application from the Court of First Instance made by the Appellant Leung Tong Fuk to override Justice Yeung's decision of dismissing his Claim. The claims and issues put forward by the Appellant in his Claim filed to the Court of First Instance against Mr. Chan Yuk Kwan are within the scope of the following 4 items:

1. The Appellant claimed that he was entitled to half of the interest which was about HK$750,000 in the shop premises No. 108, 1/F., Golden Shopping Centre.

2. The Appellant claimed that he represented Taiwan Lien Yig Corporation to claim for the repayment of HK$400,000 from Mr. Chan.

3. The Appellant complained that Mr. Chan sold goods belonging to the Appellant thereby obtaining $145,000. Mr. Chan should therefore return this sum of money to him.

2. At the appeal hearing in this court, the Appellant Mr. Leung seems to have confused the $145,000 under Item 3 with the $400,000 owed to Taiwan Lien Yig under Item 2.

4. The Appellant complained that after the dissolution of the partnership business between him and Mr. Chan, Mr. Chan had yet to pay him an outstanding sum of $70,000 which was part of the money Mr. Chan promised to pay him.

3. After hearing evidence from the parties and referring to documents produced in relation to these 4 main issues, the Court of First Instance dismissed the Claim of the Appellant Mr. Leung.

4. Mr. Leung's younger sister is Mr. Chan's wife, i.e. Mr. Chan is the Appellant's brother-in-law. Between the years 82 and 87, Mr. Chan and the Appellant Mr. Leung traded in computer components in partnership, but in the latter part of the period, they only engaged in computer repairing business. They had set up many shops and used different company names to conduct their partnership business.

5. At first, nearly all their goods were purchased from Taiwan Lien Yig Corporation and sold in HK. Later, a dispute arose between them and Taiwan Lien Yig mainly because when Taiwan Lien Yig demanded for the goods payment of $420,000, they could only pay $20,000. Since $400,000 of debt was a considerable amount, Taiwan Lien Yig Corporation stopped to communicate with them or supply the partnership with any goods. Afterwards, the partnership was mainly in the business of repairing computers for customers.

6. In the year between 1981-1982, Mr. Leung won the First prize of Mark Six which was $600,000.

7. Regarding the business with Taiwan Lien Yig Corporation, the Appellant Mr. Leung was responsible for the external liaison work while internally Mr. Chan was responsible for the recording of payments in and out, management and administration of the business. Therefore, theoretically, the Appellant Mr. Leung must have some idea of the Company's profit margin during the period when goods were obtained from Lien Yig Corporation and sold in HK. Later, as the business of the partnership changed to computer repairing, the income became so low that generally it was just sufficient to cover the expenses, and even if a profit was made, what Mr. Chan and the Appellant Mr. Leung could obtain from their respective shares was far from handsome.

8. These two business partners, one being responsible for the external matters and the other internal matters, are also relatives and friends. Theoretically speaking, it is unlikely that they should have lacked the slightest idea of the records and operation of their business, the measures taken and profits earned by their partnership etc. Nor is it likely that they should have brought themselves into such a big row and made accusations in Court.

9. However, the affairs in human life are difficult to predict. When the business of the partnership was on the decline with computer repairing as the only service provided, they had problems managing their business. According to Mr. Chan, these problems were created by the existence of too many shops with too few employees and the problems gradually developed into supervision difficulty. Moreover, goods were stolen on a number of occasions and misunderstanding occurred between the two parties. As a result, they agreed to dissolve the partnership business in the year of 87. The Appellant Mr. Leung had a feeling that Mr. Chan concealed the true situation. He suspected Mr. Chan secretly misappropriated benefits from the partnership business thereby obtaining money to enable himself to purchase a property privately.

10. Regarding the property at Shop no. 108 Golden (Centre), they purchased it jointly in September, 1983 for $180,000. Each share of their investment was $90,000 and Mr. Chan paid the full purchase price of $180,000. The Appellant Mr. Leung had not repaid Mr. Chan any of the $90,000 at all.

11. In the beginning of 1986, Mr. Chan purchased Shop no. 40 Golden (Centre) for $345,000 in his own name. The Appellant Mr. Leung was not aware of this at that time, but when he became aware, he suspected that the reason why Mr. Chan was able to make the investment of $345,000 was that he lined his own pocket with the money from the partnership business.

12. By this time the business was going from bad to worse losing money all the time. Even when there was no loss of money, the income was only sufficient to cover the expenses. In the middle of 87, Mr. Leung complained to Mr. Chan's children that Mr. Chan secretly stole money from the profits of the partnership business to buy Shop no. 40 Golden (Centre). When Mr. Chan learnt of this, his relations with Mr. Leung deteriorated badly. Mr. Chan had also queried the Appellant Mr. Leung about this, and at the same time indicated to him that he was not going to continue the partnership with him and requested to dissolve it. Mr. Leung also agreed that their partnership could no longer continue but he requested to check the books of accounts.

13. For many years, Mr. Leung and Mr. Chan had conducted their business under various company names to avoid copyright actions brought by computer companies. As records of the partnership business were seldom made, manpower was lacking, and items in the accounts were not clear, difficulty arose when the partnership was dissolved and business liquidated. Furthermore, there was a big misunderstanding between all parties.

14. On 7^th July 1987, the parties discussed the matter in Tin Tin Recreation Club. Apart from the two of them, there were also the cousin of Mr. Leung, the younger brother of Mr. Chan and Mr. Chan's wife (i.e. Mr. Leung's younger sister). After some arguments, both parties reached the following agreement:

1. Mr. Chan was to pay the Appellant Mr. Leung $217,000.

2. The Appellant Mr. Leung was to transfer promptly the share of interest in his name,being half of the interest in the shop premises no. 108 to his younger sister (i.e. Mr. Chan's wife).

3. Both parties agreed that all the accounts made in the past relating to the partnership business were to be cancelled once and for all, and neither the Appellant Mr. Leung nor Mr. Chan should pursue the matter against each other.

15. The Appellant Mr. Leung personally wrote up the agreement which was then signed by both parties. The agreement clearly listed the above conditions. Its contents are: Mr. Chan and Mr. Leung have on 7^th July 1987 made careful calculations for the whole day. Mr. Leung has received $217,000 as payment for the period between the formation of the partnership and 7^th July. The Appellant Mr. Leung assumes sole responsibility for all interests and the debts due to Taiwan and other companies even if there are calculation errors. Henceforth, should the matter about the past acquisition of benefits be brought up by the Appellant Mr. Leung with Mr. Chan again, it can be deemed as blackmail. Mr. Leung shall not go back on his words after the agreement is made.

16. Following the signing of the agreement, on 8 July 1987, the parties went to Leo K. W. Lok & Co to execute a formal and legally effective dissolution agreement of their partnership business, the contents of which are as follows: Regarding the partnership business between Mr. Chan and Mr. Leung conducted under Hung To Electronics Company (鴻圖電子公司), Kai Nin Trading Company (佳年貿易公司) and Sydney Computer Company (雪梨電腦公司) from 1982 to 1987, both parties agree to dissolve the partnership business of the companies concerned with the following conditions:

"1. Mr. Chan agrees to pay on or before 11 July 1987 to Mr. Leung HK$217,000 to discharge the responsibilities he should assume in the above companies concerned. Henceforth the business obligations, tax matters, payments for goods and profits and losses of the above companies shall be of no concern to Mr. Chan.

2. Mr. Leung agrees and guarantees to Mr. Chan the following terms:

a. Mr. Leung shall on or before 11^th July 1987 unconditionally sign the deed of assignment in respect of Shop No. 108, Golden Shopping Centre, Shumshuipo to transfer the title of the above property to Mr. Chan, and all the expenses shall be borne by Mr. Chan.

b. The water and electricity deposits, tenancy interest and rental deposits etc of and the title to the above shop are all to be transferred to Mr. Chan.

c. All payments for goods, government tax matters and debts etc in respect of the above companies shall be of no concern to Mr. Chan at all. Mr. Leung guarantees that should anyone demand any payment from Mr. Chan in future, he will compensate Mr. Chan for all the losses.

d. Neither party shall claim against the other for liability in respect of any disputes arisen from the previous partnership business. This is specially declared as proof."

17. When this document was signed in the solicitors' firm, there was also an English version which was signed at the same time. On 8th July 1987 the same day, both parties also went to Gallant Y. T. Ho & Co to go through the procedures of transferring the title of Shop No. 108, Golden Shopping Centre to under the name of the younger sister of the Appellant Mr. Leung (i.e. Mr. Chan's wife), so that henceforth Mr. Chan and his wife owned the title of Shop No. 108.

18. It could be said that after 1987, the dispute between the parties was satisfactorily resolved with both agreeing that they would not pursue the matter against each other. However, in 1994, the Appellant Mr. Leung filed claims to the District Court against Mr. Chan: District Court Cases No 207, 208 of 1994. In Case No. 207, Mr. Leung alleged that after the dissolution agreement of the partnership business was properly signed, Mr. Chan only paid $117,000 with $100,000 yet to be paid. In Case No. 208, the Appellant Mr. Leung said there was a batch of computer fittings valued at $145,000 left with him in his place by Taiwan Lien Yig Corporation, but Mr. Chan, with the intention to cheat him, privately sold the batch of goods without giving back the goods payment to him. This allegation is the same as items 3 and 4 under the Claim lodged with the Court of First Instance. With the mediation of Mr. Leung's father, both parties reached another agreement with the result that Mr. Chan paid the Appellant Mr. Leung HK$30,000 more. Afterwards, the Appellant Mr. Leung notified the Court to discontinue these two District Court Cases.

19. When the case was heard in the Court of First Instance, the Appellant Mr. Leung gave his own explanation additionally. He said when the two cases in the District Court were discontinued, Mr. Chan promised that he would continue to discuss with him (Mr. Leung) the question of repaying the other debts. However, Mr. Leung could not produce any document to prove this. Nor was there any other evidence to support the words of the Appellant Mr. Leung save for his own oral evidence. Moreover, in view of the documents signed in the solicitors' firms and the agreement signed after the negotiation in Tin Tin Recreation Club on 7th July 1987, the reasons the Appellant Mr. Leung offered in the Court to explain why he discontinued the two District Court cases simply defy logic.

20. At the appeal hearing of the case, Mr. Leung explains to the Court that on the night of 7^th July 1987 inside Tin Tin Recreation Club, Mr. Chan indicated to him that of the $400,000 owed to Taiwan Lien Yig, goods of about one hundred forty thousand odd dollars worth were already delivered to a Hong Kong customer on behalf of Taiwan Lien Yig. The Appellant Mr. Leung further complains to the Court that Mr. Chan at that time misled him because the goods delivered were not the goods deposited by Lien Yig in his (Mr. Leung's) home. Yet the Appellant Mr. Leung does not remember whether he had mentioned this matter to the judge of the Court of First Instance.

21. From his judgment , the judge of the Court of First Instance took the view that the suggestion that the Appellant Mr. Leung mistook the goods delivered to Mrs. Chow on the instruction of Lien Yig for his own goods, i.e. part of the $400,000 worth of goods from Taiwan Lien Yig, was incredible. He therefore made a finding of fact that the goods delivered to Mrs. Chow were not the same goods deposited by Lien Yig in the home of the Appellant Mr. Leung. Accordingly, the goods delivered were not the $400,000 worth of goods deposited by Taiwan Lien Yig in his place. For this reason, the Appellant Mr. Leung had no factual or legal basis to claim $140,000 from Mr. Chan.

22. However, the Appellant Mr. Leung now submits in this Court that the $140,000 worth of goods delivered to Mrs. Chow and the goods stored in his place are of course different. The goods delivered to Mrs. Chow were keyboards and outer cases while the goods stored in his place were all keyboards. Since the 2 batches of goods were not the same, when Mr. Chan told him inside Tin Tin Recreation Club that one hundred and forty thousand odd dollars should be deducted from the four hundred thousand dollars of goods payment, he was in effect treating the other batch of goods sent to Mrs. Chow as the goods of Taiwan Lien Yig Co in order to deceive him. Now it seems Mr. Leung's complaint is this: As the batches of goods are not the same, what Mr. Chan did inside Tin Tin Recreation Club was deliberately using another batch of goods to cause confusion so as to make him think that they were the goods belonging to Taiwan Lien Yig.

23. Of course, if, in describing to the judge of the Court of First Instance the argument and agreement with Mr. Chan in Tin Tin Recreation Club that day, the Appellant Mr. Leung had raised or pointed out this issue, he could have relied on this in the appeal. But even the Appellant Mr. Leung himself forgets whether he mentioned this point to the judge of the Court of First Instance. The issue before the Court of First Instance was only this: Whether the $140,000 worth of goods delivered by Mr. Chan were the $400,000 worth of goods belonging to Taiwan Lien Yig. The conclusion reached by the Court of First Instance was: since the goods delivered to Mrs. Chow and those deposited with the Appellant Mr. Leung were two totally different batches of goods, Mr. Chan had not delivered the $400,000 worth of goods belonging to Taiwan Lien Yig to Mrs. Chow, and therefore the evidence of the Appellant Mr. Leung could not be accepted. Relying on the evidence, the judge of the Court of First Instance refused to grant the Appellant Mr. Leung the sum he claimed. Now, Mr. Leung himself agrees that the two batches of goods are different but even he himself forgets whether he had addressed the judge of the Court of First Instance on the relevant circumstances. As a result, this Court is in the view that the Appellant Mr. Leung is not entitled to complain that the judge of the Court of First Instance made an error in this respect.

24. The Appellant Mr. Leung listed a total of 31 points as grounds of appeal, but these grounds are far from clear and in fact very confusing. Having considered them from the legal point of view and from other points of view, this court cannot find any proper grounds of appeal. His 31 points are made even more difficult to comprehend by the fact that he mixed up his dissatisfaction, personal feelings, his alleged facts and errors he thought the judge had made all together. Perhaps because of this, the 31 points become so confusing that they cannot help his case at all. This court is in the view that all the grounds must be rejected.

25. At the trial of this case in the Court of First Instance, the Appellant Mr. Leung invited Mr. Chan Kam Nam from Taiwan to testify that Hung To Company still owed Taiwan Lien Yig Corporation $400,000. In summary, the Appellant Mr. Leung complained that Mr. Chan falsified accounts, failed to produce to the Court all the documents he had, destroyed papers and certificates, concealed tax information, privately misappropriated profits of the partnership, committed perjury, gave false evidence, privately bought and sold goods of the partnership business and misled him when they discussed the dissolution of the partnerships business.

26. Regarding part of the $400,000 of Taiwan Lien Yig Corporation, the Appellant Mr. Leung now even says that his own elder brother gave false evidence in court. Mr. Leung's elder brother said in court that he was present when Mr. Chan paid the two hundred and ten thousand odd dollars to the Appellant Mr. Leung in a very clear manner. The Appellant Mr. Leung complained that this elder brother might not have been in Hong Kong because he left for Macau on 1^st July. If he arrived back at Hong Kong from Macau on 8^th July 1987, he would have been to his home, but since his brother had not been to his home, he finds it impossible that his elder brother would have witnessed Mr. Chan making the payment in Hong Kong on 8^th July 1987. Mr. Leung's elder brother denied in court that he was at that time not in Hong Kong. The Appellant Mr. Leung asked his brother to produce his passport as evidence, but this was not procedurally followed up, nor was the passport produced. However, before the judge of the Court of First Instance, there were the evidence from Mr. Leung's elder brother, the suspicion of the Appellant Mr. Leung, evidence from Mr. Chan, other physical evidence and documents signed in solicitors firms, so even if the information from the Immigration Department or his brother's passport is available to the Appellant Mr. Leung, he may not be able to prove necessarily that his elder brother was not in HK on 8^th July 1987. According to Mr. Chan, all sums of money had already been paid to the Appellant Mr. Leung. On the morning of 8^th July 1987, he paid fifty thousand dollars cash in the home of the Appellant Mr. Leung in the presence of the parents of the Appellant Mr. Leung, the then wife of Mr. Leung and Mr. Leung's elder brother. Another seventy thousand odd dollars was paid to him in Gallant Y T Ho & Co and the balance of $82,400 was paid by cheque to Mr. Leung in Leo K W Lok & Co. Concerning the fifty thousand dollars cash, the Appellant Mr. Leung does not raise any dispute. As for the alleged unpaid outstanding amount in this case, it is believed that the Appellant Mr. Leung includes it in the seventy thousand odd dollars cash paid in Gollant Y T Ho & Co. However, Mr. Leung had admitted in writing on the photocopy of a cheque in the sum of eighty thousand odd dollars that the outstanding sum had been fully paid and "(for the purpose of) the two sides' cancelling the business partnership. (This being the balance of payment for) all the interests and benefits arisen." The Court of First Instance did not accept the explanation offered by the Appellant Mr. Leung for this document.

27. As for the one hundred and forty thousand odd dollars of goods payment, the Court has studied the issue carefully and has stated the reasons in the above. Judging from Mr. Leung's conduct and demeanor, he also all along took it that the money had been fully paid. Not until July 1994 did he file his claim to the court and by then, more than 6 years had passed since July 1987. Even if there are other facts he can rely on, in law he still cannot claim the money from Mr. Chan because of the question of "Limitation of Time". The Appellant Mr. Leung also tacitly accepted in the proceedings of the District Court that the agreement made in Tin Tin Recreation Club was valid. It should be born in mind that the agreement was personally written up by the Appellant Mr. Leung, who after the agreement was signed, transferred half of the property title to his younger sister (i.e. Mr. Chan's wife) in accordance with the agreement.

28. On 30^th March 1992, suffering from financial difficulty, the Appellant Mr. Leung wrote to Mr. Chan in the hope that he would lend him $15,000. He did not mention in the letter that Mr. Chan owed him other sums of money.

29. On 14^th December 1993, the Appellant Mr. Leung wrote to Mr. Chan again, and again in this letter he did not mention that Mr. Chan had not paid up the $217,000 as agreed in the partnership dissolution agreement. After Mr. Chan agreed to pay thirty thousand dollars more subsequent to the Appellant's filing his claims to the District Court, both the two cases were discontinued together. At the trial of this case in the Court of First Instance, even Mr. Leung Hau Kee, elder brother of Mr. Leung, personally came to support Mr. Chan's case in the court, testifying that $217,000 had been fully paid to the Appellant Mr. Leung.

30. Under these circumstances, everything in the case, be it witnesses' evidence, exhibits or the express or implied admissions made by the Appellant Mr. Leung personally or on documents, is consistent with Mr. Chan's case in all respects. The judge of the Court of First Instance commented that Mr. Chan was able to manage his financial affairs properly whereas Mr. Leung suffered business failure and poverty, being pressed for repayment of debts by financial companies and at the same time his marriage also broke up.

31. In the circumstances, the judge of the Court of First Instance could not but rejected all the items claimed by the Appellant Mr. Leung, and further ruled that the Appellant Mr. Leung could not sue Mr. Chan on behalf of Taiwan Lien Yig Corporation. Besides the 31 points of grounds of appeal, the Appellant also submits to the court on all the issues stated in this judgment. Despite the court's attempt to understand each of the 31 points of grounds and arguments advanced by the Appellant Mr. Leung, nothing can be found that can support the Appellant Mr. Leung's appeal. Having studied the evidence and documents produced, looked individually into the comprehensible points of the 31 points raised by the Appellant Mr. Leung and having heard all the explanations and arguments put forward by the Appellant, the court is satisfied that the Appellant Mr. Leung fails to show there is any flaw or error in the judgment of the judge of Court of First Instance. Therefore, the Appellant Mr. Leung's application for appeal must be rejected. The Court is in the view that the judgement of the Court of First Instance is correct and so it is upheld.

32. Both parties act in person without legal representation. This being the case, unless there is request from either party, the court does not find that either party should pay the other's costs.

B. Liu Justice of Appeal

A. Leong Judge of High Court

D. Yam Judge of High Court

Representation:

In person