張侃 v. 尚品滙(香港)國際貿易有限公司

DCCJ 4405/2019

[2022] HKDC 997

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4405 OF 2019

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Before:  Deputy District Judge Gary C C Lam in Chambers (paper disposal)

Dates of Written Submissions:  30 August 2022 and 6, 13 and 14 September 2022

Date of Decision:  20 September 2022

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DECISION

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INTRODUCTION

1.By Summons filed by the plaintiff on 22 August 2022 with a draft notice of appeal (the “Draft Notice of Appeal”) annexed to it, the plaintiff applies for leave to appeal from my judgment handed down on 26 July 2022 (the “Judgment”) dismissing the plaintiff’s claim and allowing the defendant’s counterclaim, and for an order of stay of the execution of my order there, inter alia, that the plaintiff do pay the defendant US$200,000 with interest.

GROUND 1

2.Ground 1 of the Draft Notice of Appeal is a pleading point. In essence, the plaintiff complains that for the defence of ministerial receipt, the defendant merely pleaded “its role in the receipt and onward transfer of the USD300,000 was no more than ministerial”: see Amended Defence and Counterclaim §11F. The plaintiff complains that no particulars were pleaded and that it was not known whether the defence would be run upon the ministerial receipt was upon agency and/or an obligation to pay over. The plaintiff submits that in allowing the defendant to establish this defence would be unfairly prejudicial to the plaintiff.

3.I am unable to agree. The issue of the defence of ministerial receipt was raised by the plea. In its Opening Submissions, the plaintiff was also well aware of the defence and the legal principles in relation to this defence. In §67.2 of his Opening Submissions, he submitted that there was no plea and evidence of agency, and in §67.3, he submitted that there was no plea and evidence of the obligation to pay over. Thus, the plaintiff was well aware that the issues would be whether there was an agency relationship and/or the obligation to pay over. Further, the facts I found in support of the defence were also all pleaded. It may well be the plaintiff’s tactical decision not to seek further and better particulars of this defence, but the issue of this defence had always been there, and the facts I found in support would not take the plaintiff by surprise.

4.It is just like a typical claim of breach of contract. The claimant may just plead that there was an agreement of certain rights and obligations. If there were no particulars as to an offer and acceptance, the defendant cannot be heard to complain later that the claimant cannot adduce evidence as to the offer and acceptance. At most it would be an issue of credibility of the evidence.

5.In the premises, I find that there is no reasonable prospect of success of Ground 1.

GROUND 2

6.Ground 2 should be divided into two parts. The first part is Grounds 2.1-2.3 concerning the inference of the agency relationship between the defendant and Chen, and the second part is Ground 2.4 concerning good faith requirement of the defence.

Grounds 2.1-2.3

7.The first part is an appeal on mixed question of fact and law. As I said in §41 of the Judgment, I inferred the legal consequence of the agency relationship from the facts. The plaintiff complains that there was no evidence to show that Chen was the ultimate recipient or beneficiary of the monies. This, in my view, is beside the point. It can be that Chen was not the ultimate recipient or beneficiary of the monies, but the defendant was still used as a nominee for Chen as I found. Therefore, I am not satisfied that there is any reasonable prospect of success in respect of Grounds 2.1-2.3.

Ground 2.4

8.The second part concerns knowledge. The plaintiff submits that given my finding of absence of bona fide in respect of the defence of bona fide change of position in §§43-46 of the Judgment, there could also be no bona fide in the ministerial receipt. The plaintiff now submits that for a defence of ministerial receipt to succeed, the receipt must be in good faith. In his written submissions for the present application, Mr Keith Tam, counsel for the plaintiff, refers me to Portman Building Society v Hamlyn Taylor Neck (a firm) [1998] 4 All ER 202 (CA) at 207h-208b; Aesthetics Architecture Pty Ltd v Main Crown Enterprises Ltd, HCA 483/2012, 29 August 2013 at §§73-74 and 81-83 and CACV 188/2013, 11 August 2014 at §§18 and 28) and also specifically to Goff & Jones on the Law of Unjust Enrichment (9^th ed) §§28-01 and 28-15).

9.At trial, the focus of the submissions on this defence was never on bona fide or absence of good faith. In his Opening Submissions, Mr Tam only briefly made a one-liner at §67.4 “In any event, for reasons set out above, D did not act in good faith”, and when referring to the textbook Goff & Jones, he only referred me generally to “§§28-01-28-03” without singling out the good faith requirement. In his Closing Submissions, Mr Tam did not make any submissions on this point of good faith at all, but just submitted at §46 of the Closing Submissions that “As set out in §67 of the Opening Submissions of P, there is completely no evidence (nor is it pleaded) that D is under any duty or obligation to account to the recipients of the Third Party Transfers, let alone the existence of any agency relationship”. It appears to me that at closing submissions, even Mr Tam himself, when referring back to §67 of his Opening Submissions, did not find the focus to be on good faith.

10.At trial, the submissions in relation to bad faith and thus my finding on the absence of bona fide were all related to the defence of bona fide change of position only, but not ministerial receipt.

11.In fact, none of the cases now referred to me by Mr Tam were cited at trial. While Mr Tam did refer me to Goff & Jones at trial, as said above, he referred to §§28-01-28-03 generally, and did not refer to §28-15 as now at all.

12.That said, I do accept that in §12F of the Re-Re-Amended Reply and Amended Defence to Counterclaim, the plaintiff did plead bad faith in response to the defence of ministerial receipt, and the pleader repeated the paragraphs pleaded in support of bad faith for the reply of lack of bona fide change of position.

13.Be that as it may the way the submissions in respect of the defence of ministerial receipt were presented before me at trial led me and the Judgment to focus on agency and obligation to pay over, and the good faith requirement in respect of ministerial receipt did not really come out as a live issue.

14.This requirement of good faith for the defence of ministerial receipt may be regarded as a “fresh point” on appeal in the sense that this was not really argued at trial. Nevertheless, strictly speaking, this was an issue crystalised in the pleadings. Further, the bad faith pleaded was the same bad faith for lack of bona fide change of position, in relation to which I heard evidence and made findings at §§43-46 of the Judgment. Even assuming that it would be regarded as a fresh point on appeal, applying K v Commissioner of Police [2021] 2 HKLRD 645 concerning when a fresh point may be raised on appeal, I would think that there is a good prospect that this point could be raised on appeal.

15.But after all, the question still remains whether or not there is a reasonable prospect of success in this second part of Ground 2. Having considered the above, I am satisfied that there is at least a reasonable prospect of success in Ground 2.4, and thus I grant leave to appeal on this ground.

GROUND 3

16.Ground 3 concerns my fact-findings of absence of apparent authority. The plaintiff essentially repeats his arguments at trial, which I shall not repeat here. The only matter I would like to point out is that the plaintiff repeats his argument at trial in Ground 3.4 that the amount of the Loan was not unusually large in the light of the defendant’s annual turnover in the region of HK$50-60 million. It is common ground that at the time of entering into the relevant loan agreement, the plaintiff did not have knowledge of the defendant’s annual turnover. Thus, I cannot see how this ground would assist the plaintiff at all.

17.In his written submissions, Mr Tam refers me to a few cases not cited at trial to demonstrate that it has been found that use of a company chop was regarded as sufficient authority to act on behalf of the company. These are all fact-sensitive. One of the peculiar features of the present case was that a shop asked for a loan of a significant amount from a customer for the first time, when the relationship was not any business relationship (for example constant wholesale business) but a pure shop-and-customer relationship. I do not find those cases helpful to advance the plaintiff’s ground of appeal.

18.In the premises, I am not satisfied that there is any reasonable prospect of success in respect of Ground 3.

GROUND 4

19.Ground 4 concerns my finding in §28 of the Judgment that even if there were apparent authority, it would be irrational or reckless for the plaintiff to rely upon such apparent authority. The plaintiff emphasises in Ground 4.1 that at the relevant time, the plaintiff did not have any knowledge of the internal approval procedures of the defendant.

20.My finding in §28 of the Judgment is that in the context explained there, the plaintiff was irrational or reckless. I do not see how the plaintiff’s emphasis in Ground 4.1 would have any impact upon my finding.

STAY APPLICATION

21.By the same Summons, the plaintiff at the same time applies for an order to stay. The starting point is that “[w]here the appeal is against an award of damages, the long established practice is that a stay will normally be granted only where the appellant satisfies the court that, if the damages are paid, then there will be no reasonable prospect of his recovering them in the event of the appeal succeeding”: see Hong Kong Civil Procedure 2022 Vol 1 §59/13/1. There is no evidence filed in support of the stay application, and Mr Tam only makes mere submissions, without any evidence, that without a stay, the appeal would be rendered nugatory and there would be a serious deleterious effect on the plaintiff. The submissions even do not go to the recoverability of any money paid or to be paid to the defendant. While I formed the view above that there is at least a reasonable prospect of success in respect of Ground 2.4, I do not think I can at this stage form a view that the appeal is so strong that stay of the award of damages should be granted, especially when Mr Benjamin Chain, counsel for the defendant, has not made much submission on Ground 2.4. On balance, I am not satisfied that I should depart from “the long established practice” without any proper evidence. I therefore refuse the stay application.

CONCLUSION

22.In the circumstances, I grant leave to the plaintiff to appeal on Ground 2.4 of the Draft Notice of Appeal and dismiss the plaintiff’s application for stay. I make a costs order nisi that (1) 40% of the costs of the plaintiff’s Summons filed on 22 August 2022 be in the cause of the appeal, with certificate for counsel, and (2) the remaining 60% be to the defendant, with certificate for counsel, to be summarily assessed on paper. For summary assessment, I direct that upon the costs order nisi becoming absolute, the defendant do lodge and serve a statement of costs within 3 days, and the plaintiff do lodge and serve a list of objections within 7 days thereafter.

Mr Keith Tam, instructed by Yuen & Partners, for the plaintiff

Mr Benjamin Chain, instructed by Pansy Leung Tang & Chua, for the defendant