張鵬舉 v. 原翠美
Read the full judgment text of HCA 2005/2019 on BabelCite. This High Court CFI judgment was delivered on 31 May 2022.
1. This is the defendant’s appeal against the judgment entered by the master after hearing of the plaintiff’s application for summary judgment on 4 August 2021.
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HCA 2005/2019 [2022] HKCFI 1630 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2005 OF 2019 ________________________ BETWEEN
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________________________ D E C I S I O N ________________________ 1.This is the defendant’s appeal against the judgment entered by the master after hearing of the plaintiff’s application for summary judgment on 4 August 2021. Background 2.At the material times, the parties were traders in jewellery and gemstones. The plaintiff traded in his name or his trade name, 佰德珠寶 (“Pak Tak”), while the defendant had her business by the name of 天原珠寶 (“Tin Yuen”). The plaintiff traded in expensive gemstones such as emeralds and rubies while the defendant traded in the lesser expensive opals. Both have their shops in Shenzhen. The two came to know each other in a trade fair in the Mainland in May 2019. 3.There is no dispute that in the trade, traders often borrow from other traders gemstones and jewellery items which the borrowing traders do not carry or offer in order to show to their customers. If the customers decide to buy, the borrowing trader would agree with the lending trader to turn the loan of the relevant items into sale and purchase so as to acquire the items for onward sale to his or her own customers. Otherwise, the items on loan naturally would have to be returned to the lending trader. Essentially this is said to be what happened in the present case. 4.The present dispute involved 12 items (total of 14 pieces) of jewellery handed by the plaintiff on loan to the defendant at the request of the latter. The defendant received the items in mid-September 2019. The total value of the items marked by the plaintiff was RMB6,343,000. The arrangement was agreed orally. The plaintiff pleaded that as the oral agreement. At one point, the defendant requested to turn the loan of 4 items (5 pieces) into sale and purchase, which the plaintiff agreed. This was what the plaintiff pleaded as the varied oral agreement. 5.For the sale and purchase of the 4 items, the total price, as marked by the plaintiff, was RMB1,995,000. This was to be paid in two parts: RMB700,000 and RMB1,295,000. The plaintiff specified that a first payment of RMB200,000 would have to be made by 21 September 2019, and a sum of RMB1,295,000 would have to be made immediately after the long holiday known as the Golden Week, i.e. 7 October 2019. The defendant duly paid RMB200,000 on 21 September 2019. 6.Obviously there was a balance of RMB500,000 of the first part of the purchase price mentioned above that would have to be paid, but the date of which was somehow left out of mention. It will be seen below that the plaintiff did ask the defendant about the payment of that sum. 7.The plaintiff then drew up a “借貨單” (or borrowing note) (“the Note”) on 30 September 2019 setting out the items which have been delivered to the defendant (as tabulated below), which was signed by the plaintiff and the defendant:
8.The plaintiff also marked on the Note his request for the payment of the sum of RMB500,000 mentioned above. 9.There is no dispute that no further payment came. According to the plaintiff, he terminated the sale and purchase, and requested for the return of all the items on loan. 10.On 10 October 2019, the plaintiff set out in writing on a保証書 (assurance or guarantee) (“the Guarantee” as pleaded) the timetable for the defendant’s return of the items, which the defendant signed:
11.There is no dispute that items 8 and 10 were returned to the plaintiff, though not on 10 but on 12 October 2019. As to the remaining items, none was returned. 12.By letter dated 17 October 2019, the plaintiff through solicitors demanded the defendant for the return of the plaintiff’s jewellery. The letter was addressed to the defendant at her business addresses in Shenzhen and Hong Kong. No reply to that was received. The plaintiff also chased for the return of the items via WeChat with the defendant, which will be referred to below. 13.After all the deadlines in the Guarantee have elapsed, the plaintiff commenced the present action in November 2019 against the defendant for the return of the balance of the jewellery items on loan to the defendant (ie except for items nos 8 and 10 that have been returned) or alternatively their value as damages. Giving credit to the RMB200,000 received from the defendant, the plaintiff claims the total value of the items not returned in the sum of RMB4,783,000. 14.Legally represented, the defendant challenged the jurisdiction of the Hong Kong court and applied to stay the present action on the ground of forum non conveniens in favour of dispute resolution in the Mainland. After hearing on 9 September 2020, the master dismissed the defendant’s application with costs. 15.The defence was then filed on 21 December 2020 by the defendant, apparently acting in person then. 16.By summons filed on 4 February 2021, the plaintiff applied for summary judgment against the defendant. For that, the plaintiff made clear that he would seek judgment for damages representing the value of the non-returned items of jewellery. 17.As mentioned, after hearing on 4 August 2021, the master entered judgment against the defendant in amount claimed with interest and costs. 18.By notice filed on 16 August 2021, the defendant appeals. The principles 19.The principles applicable to an appeal against a master’s decision under O58 of the RHC need no introduction. It is a re-hearing of the application before the master. 20.The principles governing summary judgment application under O14 also need no explanation. While it remains the plaintiff’s legal burden to prove his claim, the defendant has the evidential burden of satisfying the court that his defence raises issues that should go to trial or that there is some other reason why the case ought to go to trial. To discharge such burden, the defence has to be bona fide and credible. Bare assertions do no suffice, the defendant’s affidavit must condescend upon particulars: see generally Hong Kong Civil Procedure 2022 (Vol 1) at §14/4/1-14/4/4. Subject matter of the claim 21.Before turning to the specific defences, the plaintiff rightly points out the problematic pleading by the defendant in that she did not answer the plaintiff’s case in respect of the items and pieces of jewellery items being the subject matter of the claim as set out in his pleading. She adopted a completely different numbering system from that as particularised by the plaintiff. She also referred to items apparently extraneous to the subject matter of the claim. 22.Amongst what the defendant refers to:
23.There is the Note and the Guarantee signed by the defendant. Subject to the discussion of the specific defence in respect of these two documents, they serve as the record of the items of jewellery handed by the plaintiff and received by the defendant or on her behalf. From the defendant, there is no contrary or any documentary record in this respect. The matching exercise mentioned above reveals that she did not even plead to what happened to each and every item of the subject matter of claim. 24.Insofar as the defendant ever seeks to put in issue the subject matter of the claim for the present purpose, the defendant does not begin to discharge her burden to condescend upon particulars with the relevant evidence. The specific defences 25.The defendant pleaded the following specific defences:
26.By way of affirmation, the defendant further raised that the plaintiff’s item no 6 was sold by her or her company to another third party, and the other items have been wrongfully detained in the Mainland. 27.By way of written submissions, counsel for the defendant argues that the Note and the Guarantee are unclear, ambiguous and lack the essential elements or details to be enforceable (“the Unenforceability Argument”). 28.When it came to the hearing, counsel for the defendant further argues that the plaintiff’s pleaded claim is defective (“the Defective Pleading Argument”). The Capacity Argument 29.The defendant argues that the parties dealt with each other for and on behalf of their respective companies, and neither the plaintiff is entitled to claim nor the defendant is liable for the return or payment for the former’s jewellery items. 30.Whilst the plaintiff’s case, which the defendant does not say otherwise, is that the parties transacted orally, the plaintiff relies on the Note and the Guarantee as the documentary evidence of the transaction. The Note set out the items of jewellery in question. The plaintiff acknowledges having written down the reference to Tin Yuen, but that alone, so read, was equally consistent with part of the description of the defendant. That the Guarantee subsequently signed by the defendant bore no similar description reflects the lack of any consciousness on the part of the parties about attaching importance to such description in the document in terms of contractual capacity. A more revealing description reflective of the parties’ understanding in respect of their contractual capacity only for and on behalf of their respective companies would have been for them to put in their composite signatures for their respective companies. That did not happen. The plaintiff and the defendant signed as the lender and the borrower respectively. 31.The WeChat correspondence between the plaintiff and the defendant on 21 September 2019 recorded that the defendant arranged the first payment for the plaintiff’s items nos 1 to 4, which were then turned from loan to sale and purchase mentioned above. The plaintiff explained that such payment was made in 4 tranches of RMB50,000 each by the defendant on that day, which the plaintiff acknowledged receipt by his WeChat reply to the defendant. That is not disputed by the defendant. 32.The WeChat correspondence on 30 September 2019, ie the date of the Note, recorded the plaintiff’s request to the defendant to make payment of the sum of RMB500,000 being the balance of the first payment for the plaintiff’s items nos 1 to 4. His request was still for payment to be arranged by the defendant to his personal account. The defendant replied that she would follow up. 33.Insofar as the plaintiff is concerned, the circumstances then were such that he consistently considered himself to be personally interested in the deal with the defendant, irrespective of whether his company was also intended to be so interested. As a matter of law and fact, personal and corporate interest and liability in a deal are not mutually exclusive unless the circumstances clearly show that. This is not the case here. 34.Then there was the Guarantee, which set out the timetable for the return of the balance of the plaintiff’s items of jewellery. As mentioned, the defendant signed the document personally without qualification. 35.The WeChat correspondence between the parties on 20 October 2019, ie subsequent to the Guarantee, recorded the plaintiff’s demand for the return of the items of jewellery according to the timetable set out in the Guarantee. The defendant’s response only connoted her acceptance of responsibility to arrange the return. Nothing there indicates that the defendant was taking any issue as to personal liability or, according to her, the lack of it. 36.Against the above documentary evidence, the only documentary evidence that the defendant manages to produce is the WeChat correspondence in August and September 2019. The defendant makes it her point that it was a group WeChat of the 6 persons from the parties’ business or companies. As counsel for the plaintiff puts it, that there was such a group WeChat is neither here nor there. That could equally, if not more likely, an arrangement for communication amongst the persons in the group, albeit in their business dealings. It was not representative of the capacity in which the parties traded in a particular deal. Had it been as alleged by the defendant, the same group WeChat would have consistently been used by the parties in communicating about their deals. That clearly did not happen in the present case. That hardly suffices as documentary evidence in contradicting the plaintiff’s case or as evidence in discharge of the defendant’s burden to raise issue of a credible defence. 37.Whether or not the parties’ respective companies are also involved, the parties could be personally interested and liable in the deal in question. It should also be noted that whilst the defendant raises the issue that the transaction, and thus liability to pay for or return the plaintiff’s jewellery items, was between the parties’ respective companies in the Mainland, the defendant never concedes that her company is therefore liable or that the balance of the plaintiff’s jewellery items have been or would be returned. When the defendant shows no sign of having caused or will cause the return of those items to the plaintiff or his company, she can hardly be considered as bona fide in her defence in this action. The 3rd party Argument 38.In her defence, the defendant alleged that the plaintiff’s items nos 2, 9 and 11 were further loaned by her company to the 3rd Party. Whether true or not, that was dealing with the items on the part of the defendant or her company with the 3rd Party. The suggestion that the plaintiff was somehow aware of that because both the plaintiff and the 3rd Party had shops in the same vicinity has no relevance either. Insofar as the intention is to go further to suggest any fraud or conspiracy between the plaintiff and the 3rd Party, that came to be put in far less forthcoming manner than would have been expected. In any event, it is trite that allegation of such serious nature ought not to be lightly made unless there is clear instruction and on cogent evidential basis. Making bold and bare suggestion of that sort in the absence of such basis and evidence falls far short of discharging the defendant’s burden for the present purpose. 39.The defendant was silent in her pleading about what happened to the plaintiff’s items nos 1, 3 to 8, 10 and 12. She sought to say more in her affirmation filed for the purpose of her application to stay the proceedings in this action, which, as mentioned, failed. According to that affirmation, the defendant alleges that the other items from the plaintiff were wrongfully detained by third parties who are PRC residents. Again, this is no more than a bold and bare assertion. Whilst this does not form part of her pleaded case, the plaintiff through his solicitors did request for further and better particulars by letter in February 2020. No response whatsoever was received from the defendant’s then solicitors. 40.The defendant also alleges that she (or according to her, her company) purchased the plaintiff’s item no 6, and for that she paid the sum of RMB200,000 mentioned above. This contradicts the plaintiff’s case that the sum of RMB200,000 was paid as the first payment for the then proposed purchase by the defendant of his items nos 1 to 4. 41.The defendant’s allegation is not credible. First, as set out in the Note, the plaintiff’s item no 6 was priced at RMB268,000. There is no explanation by the defendant how the sum of RMB200,000 came to be the payment for that. Such allegation is also contradicted by her own pleaded case. Her pleaded case is that the sum of RMB200,000 was indeed then part payment for various items from the plaintiff instead of payment for the plaintiff’s item no 6. In any event, the defendant is reasonably expected, but has failed, to produce any documentary record of hers concerning such allegedly completed sale. The Duress/Undue Influence Argument 42.The defendant alleges that the Note and the Guarantee were signed due to duress and undue influence exerted by the plaintiff or his agents. 43.First, the argument advanced in defence is misconceived. 44.As mentioned in the background, the relationship between the parties was founded on the loan of the jewellery items by the plaintiff to the defendant at her request in line with the trade practice, which is not in dispute. Unless any items originally on loan was turned into sale and purchase, they would have to be returned by the defendant to the plaintiff. This must be the understanding of the parties at the time they entered into the arrangement. The defendant never disputes that. Nor does she contend any other terms of arrangement between the parties at the material times. 45.It was against the above circumstances that the Note and the Guarantee subsequently came into existence. They were admittedly the plaintiff’s idea. However, the Note, sufficiently proximate in time, served as a record of the items of jewellery from the plaintiff on loan to and received by the defendant. It did not come into existence as a contractual document providing for the obligation of the defendant to pay for any items turned into sale and purchase or to return the items not bought by the defendant. 46.The Guarantee set out the timetable for the defendant’s return of the items, which the defendant has always been liable to do. It is misconceived on the part of her counsel to argue as if this were the defendant’s personal guarantee of a third party’s primary liability. 47.On the basis of the undisputed fact that except for the plaintiff’s items nos 8 and 10, none of the other items have ever been returned to the plaintiff at all, and even after the commencement of the present action, the plaintiff does not need to found his cause of action by enforcing the Note or the timetable under the Guarantee as contractual documents other than to rely on them as contemporaneous documentary evidence of the defendant’s acknowledgement of her liability, which she failed to comply with. 48.In the circumstances, there is no real issue of whether the Note or the Guarantee or any transaction entered into by the defendant is liable to be vitiated on the ground of duress or undue influence. Even in the absence of the Guarantee, the defendant would have to return the balance of the items of the plaintiff’s jewellery. 49.Second, the defendant hardly comes close to establishing the basis for the alleged duress and undue influence. 50.Undue influence may be actual. It may also be presumed on the basis of certain relationship between the parties recognised by the law: see Bank of China (Hong Kong) Ltd v Wong King Sing & Anor [2002] 1 HKLRD 358 (citing Bank of Credit and Commerce International SA v Aboody [1990] QB 923 and Barclays Bank Plc v O’Brien [1994] 1 AC 180 at 189-190). 51.What the defendant alleges in this respect were the following events:
52.The plaintiff and the defendant, who came to know each other in business context a few months before the business dealing in question. Their relationship did not at all fall into any of the categories which the law recognises as possibly giving rise to any presumed undue influence: see Wong Kin Sing (above) at §37. 53.In other words, the defendant must prove affirmatively that she entered into an impugned transaction not of her own free will but as a result of actual undue influence exerted on her. That entails establishing that:
54.The plaintiff admitted that he, with others, had visited the defendant in Hong Kong on 29 September and 10 October 2019. On those occasions, the Note and the Guarantee were signed respectively. However, he denies exerting any duress or undue influence on the defendant during those visits. 55.The fact was that even on the basis of the defendant’s allegations, the plaintiff was allowed entry into her premises. There is no allegation about intimation or use of threat or force. Apart from the mere presence and the alleged insistence on the plaintiff’s part, it is unknown and incomprehensible what conduct on the part of the plaintiff and those accompanying him on those occasions are said to, and could, amount to undue influence in the sense recognised by the authorities. The allegation about reference to the custody litigation between the defendant and her ex-husband is bold and far-fetched, as it is simply unknown how the plaintiff as a completely extraneous party to such custody dispute would be in a position to make use of that as a context or instrument of coercion. 56.The allegation of duress and undue influence is also incredible. The plaintiff has produced the contemporaneous WeChat correspondence between him and the defendant mentioned below, which shows the attitude and response of the defendant to his demand first for payment and then for the return of the jewellery items. 57.In the small hours of 30 September 2019, the plaintiff via WeChat expressed to the defendant his concern about the balance of the first payment for the items then turned into sale and purchase, namely RMB500,000 (see §6 above). The reply of the defendant in the morning of that day was respectful and consoling, and she promised to follow up the matter. As can be seen, that was also the date of the Note, which the defendant now purports to vitiate. 58.In the afternoon of 20 October 2019, the plaintiff via WeChat referred to the lack of return of the two items of jewellery (the plaintiff’s items nos 12(1) and (2)) by 15 October 2019 by the defendant, contrary to the deadline promised under the Guarantee. At the same night, the defendant replied again in a polite manner, and undertook to return the plaintiff’s item no 6 on the following day, and items nos 12(1) and (2) as soon as she had liaised with her own customer. 59.Put it simply, the defendant’s responses to the plaintiff’s chasers, and her attitude as manifested, just did not sit well at all with the existence of any duress and undue influence from the plaintiff and her signing of the documents in question as a result. 60.In any event, yet fundamentally, the defendant’s allegation of duress and undue influence lacks proper context. As explained, these factors, if proved to have existed, would be ground for impugning a transaction entered into with the influencer. In the present case, the Note and the Guarantee did not constitute the transaction in question. 61.As mentioned in the background, the relationship between the parties was founded on the loan of the jewellery items by the plaintiff to the defendant at her request in line with the trade practice, which is not in dispute. Unless any items originally on loan was turned into sale and purchase, the defendant had no reason not to return the balance of the plaintiff’s jewellery. This was the understanding of the parties at the time they entered into the arrangement. The defendant never disputes that. Nor does she contend any other terms of arrangement between the parties at the material times. 62.It was against the above circumstances that the Note and then the Guarantee came into existence. They were admittedly the plaintiff’s idea. However, the Note served as a record of the items of jewellery from the plaintiff on loan to and received by the defendant. It did not come into existence as a contractual document providing for the obligation of the defendant to pay for any items turned into sale and purchase or to return the items not bought by the defendant. So was the Guarantee which set out the timetable for the defendant’s return of the items. The plaintiff’s pleaded case of non-compliance with the Note and the Guarantee has to be understood in context. 63.On the basis of the undisputed fact that except for the plaintiff’s items nos 8 and 10, none of the other items have ever been returned to the plaintiff at all and as of the commencement of the present action, the plaintiff does not need to found his cause of action by enforcing the timetable under the Guarantee other than to rely on that as a contemporaneous documentary evidence of the defendant’s acknowledgement of liability. The alleged duress and undue influence, with a view to vitiating the Note and the Guarantee, leads the defendant nowhere in disputing her liability to return the plaintiff’s jewellery. The Unenforceability Argument 64.Counsel for the defendant argues that the Note and the Guarantee were unclear and ambiguous, and that in any event, the Guarantee does not contain the necessary particulars as required in a formal guarantee of liability. 65.For the reason explained in respect of the defence of duress and undue influence, I agree with the plaintiff that such argument is entirely misconceived. It is misconceived on the part of her counsel to so argue as if this were the defendant’s personal guarantee of a third party’s primary liability. Likewise, the complaint about lack of details or particulars of the Guarantee is irrelevant, and neither here nor there. The Defective Pleading Argument 66.The plaintiff’s claim is framed in terms of the Oral Agreement, the Varied Oral Agreement, and then its breach and cancellation. The demand by the plaintiff was met with the return of some but not all of the items of jewellery on loan. Hence the claim for their return or value. 67.At the hearing, counsel for the defendant argued that the claim is defective in that there is no pleaded claim for bailment or conversion, and hence no basis for the entitlement of the plaintiff to his claim. 68.I reject the above argument. Whilst advancing the argument, the defendant’s counsel never complains that it is unclear to his client the case that she has to answer in this action. The reference to the contractual basis of the original loan of the items of jewellery and the subsequent variation of the arrangement aside, the plaintiff’s factual contentions in respect of (i) the loan and receipt of the jewellery items, (ii) the payment that had been made by the defendant, (iii) the signing of the Note by the parties, (iv) the signing of the Guarantee by the defendant, (v) the defendant’s return of a couple of the items and (vi) the eventual failure of the defendant to return the rest of the items were all pleaded. Subject to the defence discussed above, the defendant never disputes these factual contentions of the plaintiff. The basis of the plaintiff’s alleged entitlement and thus the case that the defendant has to answer is clear. Counsel’s argument is nothing but technical. Conclusion 69.What the defendant raises do not constitute credible or, more importantly, bona fide defence to the claim. There is no other reason why the case should proceed to trial. In the premises, the plaintiff should be entitled to summary judgment. 70.The appeal is dismissed with costs to the plaintiff to be taxed, if not agreed, with certificate for counsel.
Ms Alison Choy, instructed by Fan Wong & Tso, for the plaintiff Mr Hylas Chung, instructed by Gary Lau & Partners, for the defendant |
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