Chan Sin Yee v. Chan Sau Shan

DCCJ 3271/2019

[2021] HKDC 260

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3271 OF 2019

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Before: Deputy District Judge Frances Lok in Chambers

Date of Hearing: 26 February 2021

Date of Decision: 4 March 2021

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DECISION

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Introduction

1.By Decision dated 11 January 2021, I allowed the plaintiff’s appeal from the Master’s Order dated 5 October 2020 refusing her application for summary judgment.  This is the defendant’s application for leave to appeal to the Court of Appeal against that Decision under s.63 of the District Court Ordinance (Cap. 336) (“DCO”) and Ord. 58, r.2 of The Rules of the District Court (Cap. 336H).

Applicable principles

2.There is no dispute on the applicable principles.  Leave to appeal shall not be granted unless the Court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard: DCO s 63A(2).   The prospects of succeeding must be reasonable and therefore more than fanciful, without having to be probable: SMSE v KL [2009] 4 HKLRD 125, [17]; A & M Manufacturing and Marketing Limited v Iu Po Shing DCCJ 2153/2003 (23 Nov 2010), [8] – [11].

The grounds of the proposed appeal

3.The defendant’s counsel, Mr Kenneth Shum, submitted that notwithstanding four grounds of appeal were set out in the summons for leave dated 3 February 2021, the grounds of appeal boiled down to two main issues.  First, the argument that the plaintiff did not provide any consideration for the Cheque.  Secondly, the argument that the plaintiff failed to “plead the facts to support her case”.

4.Mr Shum argued that the plaintiff was very eager to enter into the Last Agreement, that she initiated its signing, and she never said in her two affidavits that “but for” the Cheque, she would not enter into the Last Agreement.  Emphasis was made that the defendant was not a party to the contract and received no direct benefit under it.

5.These matters are, however, irrelevant.  On the undisputed evidence before me, the defendant provided the Cheque to the plaintiff for the purpose of the return of principal by MCI, and it was accepted by the plaintiff on such basis (para. 23 of the defendant’s affirmation; paras. 9 and 12 of the plaintiff’s 1^st affidavit).  As explained in para. 26 of the Decision, I am of the view that the plaintiff’s acceptance of the Cheque as full performance of MCI’s obligation under Clause 3 of the Last Agreement was sufficient to constitute valuable consideration for the Cheque.  By “full performance”, I was referring to MCI’s obligation under Clause 3 to repay the principal within 7 days after the maturity date (乙方必須在7天內，將甲方所提供的投資資金退還甲方).

6.In reaching the above view, I have considered all the evidence before me including the terms of the written agreements and the contemporaneous communication between the parties.

7.Mr Shum provided no ground to dispute the analysis at paras. 26 to 29 of the Decision.  Rather, the submissions surrounded the question whether BOEO s.27(1)(b) applies. It is argued that the Cheque was given by the defendant (drawer) to repay an antecedent debt or liability of MCI (a third party). Reliance is placed on Fortune Focus International Ltd v THE (Holdings) Co Ltd [1998] 1 HKC 578, 581G-I, for the proposition that BOEO s.27(1)(b) does not apply to the case of an antecedent debt or liability of a third party rather than the drawer, unless the relationship between the receipt of the cheque and the antecedent debt or liability also gave rise to a consideration sufficient to support a simple contract.

8.This argument, not raised in the hearing on 6 January 2021, is bound to fail, for the simple reason that the plaintiff does not rely on s.27(1)(b), hence there was no discussion about this in the Decision.  Mr Shum fairly accepted that even if s.27(1)(b) does not apply, valuable consideration for the Cheque may still be constituted by any consideration sufficient to support a simple contract under s.27(1)(a).    

9.As to the argument regarding lack of pleading, which was likewise not raised in the hearing on 6 January, it was premised on the argument that the plaintiff relied on a case of collateral agreement, or pre-condition to the Last Agreement, “to the effect that she would agree to enter into the Last Agreement with MCI only if the Defendant delivered his personal cheque to her for the return of her principal”.    It was a false premise because the plaintiff did not rely on any such collateral agreement or pre-condition.

10.I will, however, address a further point regarding pleadings in cases concerning dishonoured cheques that have not been raised by the defendant’s counsel in written submissions but was discussed in the oral hearing.   

11.I have noted in para. 22(3) of the Decision that every party whose signature appears on a bill is prima facie deemed to have become a party thereto for value: BOEO s 30(1).  It is therefore unnecessary for the person who seeks to enforce a cheque against a party liable to him on the instrument to plead that the engagement of that party constituted by his signature of the instrument was given for consideration: Sin Yuk Hung v Sin Tung San HCA 474/2013 (18 Dec 2013) [20].   The learned editors of Bullen & Leake & Jacob’s Precedents of Pleadings, Vol. 1, 19^th Ed. at [10-23] suggested that “it is preferable to state the consideration given where it is practicable to do so, and essential so to do if it is known that this is disputed”.   

12.I summarize the general principles regarding the pleading of consideration in cases concerning dishonoured cheques as follows.  (1) It is unnecessary to plead consideration in the statement of claim given that it is presumed.   (2) If the defence of want of consideration is raised, however, it is good practice for the plaintiff to state the consideration clearly in the reply.  (3) If this is not done, the defendant may consider seeking voluntary particulars.   Such approach will clarify the parties’ case at the earliest opportunity and save costs.  It will also avoid unnecessary arguments over pleadings in summary judgment or strike out applications, which often take place in cases of this kind.

13.In this case, the plaintiff denied want of consideration in the reply and defence to counterclaim but, instead of setting out clearly what was the consideration, only made some averments of facts.  The defendant did not seek particular either.   Whilst this is undesirable, the defendant’s counsel fairly accepted that it is not fatal to the plaintiff’s application for summary judgment.   In the circumstances, I am of the view that the defendant has failed to show reasonable prospect of success in the intended appeal.  

Disposition

14.For the reasons stated above, I dismiss the defendant’s application for leave to appeal.   Parties agreed that costs should follow the event.  I therefore order that the defendant do pay the plaintiff’s costs of this application, on a party and party basis and with certificate for counsel, to be taxed if not agreed.

Mr Ray Kwan, instructed by Wat & Co, for the plaintiff

Mr Kenneth Shum, instructed by Anthony Kwan & Co, for the defendant