Wang Sinngok v. Cheung Hung Hung
Read the full judgment text of DCCJ 3951/2016 on BabelCite. This District Court judgment was delivered on 7 April 2017.
1. This is the plaintiff’s application for summary judgment under Order 14 of the Rules of the District Court.
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DCCJ 3951/2016 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 3951 OF 2016 -------------------------
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--------------------- DECISION ---------------------- 1.This is the plaintiff’s application for summary judgment under Order 14 of the Rules of the District Court. 2.In short, the plaintiff has advanced 2 separate loans in the total sum of HK$450,000 to the defendant with interest payable each month (“the Loans”). The plaintiff claims that as of the date of the issue of writ, a sum of $445,709.67 has remained outstanding, of which the plaintiff is now seeking summary judgment upon. BACKGROUND 3.The plaintiff is the younger brother of one Madam Wang Li Liang (王麗涼) (“Ms Wang”) who is a friend of the defendant. They came from the same village in Fujian in the Mainland. 4.According to the defendant, in about September 2012, she wished to obtain a bank loan for her husband’s business. Ms Wang then introduced her brother to the defendant. The defendant met with the plaintiff at the plaintiff’s home in early October 2012. A sum of $250,000 in cash was then given to the defendant by the plaintiff. An IOU written in Chinese which was dated 8 October 2012 was later signed by the defendant (“the 1st IOU”). 5.More than 2 years later, in December 2014, the defendant borrowed another sum of $200,000 from the plaintiff. On this occasion, another IOU was signed by the defendant with the copy of her identity card printed on top. The second IOU was dated 18 December 2014 (“the 2nd IOU”). 6.It is to be noted that in both IOUs, the defendant stated that “due to cash flow needs”, she had borrowed the money from “her friend” (“友人”), ie the plaintiff. The plaintiff’s case 7.The plaintiff claims that the defendant agreed to borrow those 2 sums of money at the interest rate of 36% per annum. The plaintiff says that the Loans are evidenced and/or recorded by the two IOUs. The plaintiff further claims that in breach of the terms of the loan agreements, the defendant had defaulted in payment of the Loans and/or the accrued interests that fell due. 8.The plaintiff further claims that in late March 2016, Ms Wang negotiated with the defendant regarding the repayment schedule. It was agreed between the plaintiff (through Ms Wang) and the defendant that:-
9.From 26 April 2016 onwards, the defendant has defaulted in payment of the monthly instalment under the March 2016 Agreement. The plaintiff says that this evinced an intention to repudiate the March 2016 Agreement, which was accepted by the plaintiff through the issue of the demand letter via his solicitors dated 26 May 2016. Under the letter, a schedule containing a breakdown of sum allegedly owed by the defendant (as of 11 May 2016) in respect of outstanding Loans and interest thereon has been provided. According to the schedule, a sum of $407,000 was due and payable by the defendant as of 11 May 2016. 10.On 17 June 2016, the plaintiff’s solicitors contacted the defendant, whereby the defendant, besides accepting / confirming the accuracy of the Schedule and the sum due, offered to repay the outstanding loan by instalment (at no less $15,000 per month). However, the defendant has failed to repay any of the owing sum to the plaintiff since the issue of the demand letter. 11.As of the date of the issue of the writ, the plaintiff says that the defendant still owed him a sum of $445,709.67 ($400,000 principal + $45,709.67 interest). The defendant’s case 12.Reading from the defendant’s defence and counterclaim (D&CC) and affirmation filed in opposition of the application (“Def’s Aff”), it appears that the following are the main grounds of defence raised by the defendant:-
DISCUSSION Undisputed or indisputable facts 13.Having read Def’s Aff and the 2nd affirmation filed by the plaintiff (“P’s 2nd Aff”), the following facts are undisputed by the defendant:-
14.Further, the following facts cannot be disputed or become indisputable in light of the defendant’s concessions/admissions in her D&CC and Def’s Aff:-
Issues in dispute 15.According to Ms Chrystal Choy, counsel for the defendant, there are at least 4 lines of defence raised in the D&CC, on which triable issues were raised by the defendant, which warrant this case to go to trial. They are:-
D1: Actual Undue Influence Issue 16.The leading case on undue influence is Royal Bank of Scotland v Etridge (No 2) [2001] 3 WLR 1021 (“Etridge”). Lord Hobhouse of Woodborough in Etridge explains actual undue influence at 1054E as follows:-
17.Hence, actual undue influence arises out of a relationship between two persons where one has acquired over another a measure of influence, or ascendancy. This is explained in 1029F:-
18.In the Court of Appeal case of Bank of Credit and Commence International SA v Aboody [1990] 1 Q B 923 at 967, Slade LJ summarized it in the following manner:-
19.In short, actual undue influence may be proved by:-
20.A party seeking to prove undue influence may do so by one of the following ways:-
21.The learned author of Restatement also noted at p 201 that “cases in which a person has sought to establish [actual] undue influence…by direct proof, rather than by relying on an evidential presumption, are very rare.” The person alleging actual undue influence often needs to “point to threats or pressure which, in the context of the relationship between the parties, unacceptably undermines [her] independent judgement.” (emphasis added) 22.In my view, the following passage in Nelson Enonchong on Duress, Undue Influence and Unconscionable Dealing (2nd Ed.) §10-036 at [160], cited by Mr Vincent Chiu, Counsel for the plaintiff, during the hearing is of particular importance in the context of our present case:-
23.In other words, for actual undue influence to operate, there needs to exist a high sufficient degree of trust and confidence between the parties but it needs not be in relation to the management of the complainant’s financial affairs: see Ibid. at 10-036 at [235]. 24.In Goldsworthy v Brickell [1987] 1 Ch. 378 at p 401, Nourse LJ stated that what must be shown is “that the degree of trust and confidence is such that the party in whom it is reposed… is in a position to influence” the party reposing it”. Thus, the mere fact that a party reposed some degree of trust and confidence in another is not necessarily enough to satisfy the requirement: Ibid., at 10-037 at p 235. 25.I agree with Mr Chiu’s submissions that the defendant has failed to provide any credible evidence to substantiate the allegation of actual undue influence in the present case:-
26.Based on the above, I have no hesitation to find that the defendant’s claim of actual undue influence is without any factual foundation and does not constitute to an arguable defence. It follows that she has no right to rescind the Loans and her counterclaim must fail also. D.2 The Interest Rate Issue 27.The defendant claims that there was no agreement on the terms of the Loans, particularly on the interest rate, due to the fact that:-
D.2.1 The defendant’s alleged illiteracy 28.In my view, the defendant’s claim of her being illiterate and therefore did not understand the nature of the Loan is not only unbelievable but contrary to the contemporaneous evidence:-
29.More importantly, in my judgment, being illiterate does not mean that the defendant had any difficulty in understanding what she was doing, namely, she was borrowing 2 separate sums of money totalling $450,000 from the plaintiff on which she had agreed to repay interest at $7,500 and $6,000 per month respectively. In my judgment, it would not take an adult, whether literate or not, to understand such a simple truth in life: if you borrow money from someone, you have to repay them, usually with interest. In my view, hiding behind a self-proclaimed and self-serving claim of illiteracy is not an arguable defence at all. D.2.2 Was it a bank loan or personal loan? 30.In my view, the defendant’s claim that she thought she was taking out a bank loan rather than a personal loan from the plaintiff is so absurd that it is not even worth serious consideration. 31.It is trite that a unilateral mistake has no effect on a contract unless such mistake is over the terms of the agreement: see Chitty on Contracts (32nd ed.) at §3-002, pp 340-341. It has never been part of the defendant’s case that it was a term of the Loans that it needed to be a bank loan. 32.The defendant’s claim that she thought she was obtaining a bank loan was purely based on what Ms Wang had allegedly told her. She was allegedly told by Ms Wang that the plaintiff worked at a bank and that the plaintiff would obtain a bank loan with favourable terms for her. In my judgment, such bare assertion was totally inconsistent with the contemporaneous documents and the surrounding circumstances. 33.The fact that she went to the plaintiff’s home rather than to a bank to talk about the terms of such Loans shows that she knew it could not have been a loan taken out from a bank. 34.Further, it flies in the face of common sense to suggest that a bank officer would hand over $250,000 in cash to a borrower in his flat first time when he meets her without as much as requiring the defendant to sign a single piece of document to apply for the loan. However, this was exactly the defendant claims the plaintiff had done which makes her whole case sounds so hollow. 35.Judging from the rather fluent texted messages sent by the defendant to the plaintiff when she was chased by the plaintiff to repay the Loans, it does not appear to me that the defendant would have any difficulty in understanding the simple contents of the 2 IOUs. In my view, such handwritten IOUs cannot by any stretch of imagination be part of a bank loan. 36.In addition, the fact that the defendant had been regularly depositing money into the personal account of the defendant as interest repayments for a period of over 3 years strongly indicates that she could not have believed that it was a bank loan. 37.Last but not the least, the fact that the 2nd Loan was taken out more than 2 years after the 1st Loan was made and that there was no complaint made by the defendant in between such lengthy period indicates that the defendant was fully aware the true nature of the Loans. D.2.3 No agreement to 36% interest rate? 38.Although the interest rate at 36% was not spelt out in the IOUs, it is important to bear in mind that there was no dispute that the defendant had accepted the basic terms of the 1st Loan, namely, borrowing $250,000 from the plaintiff with monthly interest agreed at $7,500. In my judgment, the defendant, who has admitted in her affirmation that she could do “basic arithmetic”, would have no difficulty in working out the percentage of the interest rate per annum. 39.Equally, the defendant who had accepted the 2nd Loan on the same terms as the 1st Loan would have no difficulty in working out the interest rate for the 2nd Loan. 40.What is most significant in my view is the fact that the defendant had been repaying the interests for a period of almost 3 years according to the terms agreed between her and the plaintiff until such time when she was no longer able to afford to continue to do so. 41.Hence, in my judgment, there is no room for argument to say that the defendant was not clear about the terms of the Loans including the interest rate at 36% per annum. D.3 No Default in Repayments Issue 42.The defendant also alleges that there was no default in the repayment of the Loans, given the fact that she had made repayments in the total sum of $485,500 over the years. The defendant says that this was more than the sum stated in the statement of claim. Further, she says that it is not certain whether the repayments were for principal or interest. 43.In my view, the defendant’s defence based on this ground is also not arguable for the following reasons. 44.First, as a matter of law, if no date for repayment is specified for the loan, the money is repayable on demand: see Halsbury’s Laws of Hong Kong (2nd ed.) Mortgages and Securities, at §280-113. The fact that the plaintiff had demanded the repayment of the entire outstanding amount of the Loans as of 26 May 2016 via the demand letter sent by his solicitors means that all outstanding amount of the Loans became repayable on that date. The failure of the defendant in repaying such amount was a clear breach of the agreement. 45.Second, the defendant’s complaint that the plaintiff had unilaterally applied her repayments to interest and not to principal also does not withstand any scrutiny. 46.It is trite that, in case of an interest bearing debt, where there is no appropriation by either the debtor or the creditor, the law will, unless a contrary intention appears, apply the payment to discharge any interest due before applying it to the earliest items of principals: see Chitty on Contracts, supra, at §§21-061 to 21-069, pp 1623-1626. This is not disputed by the defendant as a matter of law. 47.In her affirmation, the defendant confirmed that there was no appropriation of her repayments to principal and interest: (§14 of Def’s Aff). Further, the plaintiff in his 2nd affirmation stated that the defendant clearly appreciated that her monthly payment of $7,500 was for repayment of interest only and the $50,000 paid in November 2015 was for the repayment of principal: (see §§16-17 of P’s 2nd Aff). 48.Given the above, I do not see how this defence can even take off the ground. D.4 The March 2016 Agreement Issue 49.The defendant argues that the March 2016 Agreement is not binding on the defendant by reason that no agreement was reached between the defendant and Ms Wang and/or Ms Wang was not acting as the agent of the plaintiff. 50.I cannot agree with such proposition. 51.First, I agree with Mr Chiu that the plaintiff’s present application does not depend on the breach of the March 2016 Agreement as pleaded in §§5-6 of the statement of claim. 52.Second, whether there was an agreement between the defendant and Ms Wang or not in March 2016, the defendant’s obligation to repay the Loans fell due once her failure to repay part of the interest or principal. The fact that the defendant admitted that she had failed to repay further sum after May 2016 as “HK$21,000 was really all I could afford, so I did not pay any more money” (see §28 of Def’s Aff) means that all the outstanding sum became due on that date. Therefore, the issues of whether the March 2016 Agreement is binding on her or if Ms Wang was acting as agent of the plaintiff or not becomes purely academic. CONCLUSION 53.In conclusion, I do not consider that the defendant has made out any arguable defence to warrant this case to go to trial. Accordingly, I would order judgment be entered in favour of the plaintiff in the sum of HK$445,709.67 together with interest thereon. Interest is calculated based on 1% above the prime rate from date of issue of writ to date of judgment and thereafter at judgment rate. The defendant is also ordered to pay the plaintiff’s costs of the action, including the present application, such costs to be taxed if not agreed, with certificate for counsel. The above costs order will be made on a nisi basis. In the absence of any application by either party within 14 days, it will become absolute. 54.Lastly, I would like to thank counsel on both sides for their helpful assistance.
Mr Vincent Chiu, instructed by Leung & Associates, for the plaintiff Miss Chrystal Choy, instructed by Huen & Partners, for the defendant |