Chua Nai King v. Yip Shut Yuen

Case No.CACV 9/1991

Court

Court of Appeal

Date26 Mar 1991

Judge—

Case Document

100%Judiciary

IN THE COURT OF APPEAL	1991, No. 9
	(Civil)

BETWEEN

	CHUA NAI KING	Plaintiff (Appellant)
	AND
	YIP SHUT YUEN	Defendant (Respondent)

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Coram: Hon Sir Derek Cons, V-P, Kempster and Clough, JJA

Date of Hearing: 26 March 1991

Date of Judgment: 26 March 1991

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JUDGMENT

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Kempster, JA:

1. This is an appeal by the plaintiff, Mr Chua Nai-king, from a judgment of Saied J given on 20th December 1990 whereby, on appeal from an order of Master Jones, he granted the defendant, Mr Yip Shut-yuen, unconditional leave to defend in these proceedings. The plaintiff seeks summary judgment or, alternatively, an order that the leave to defend granted be made subject to the condition that the defendant bring $1,183,432 into court.

2. By his Statement of Claim, endorsed on a writ which was issued on 25th July 1990, the plaintiff claims the amount of a cheque dated 30th June and drawn in his favour by the defendant on Dan Sing Bank Ltd, which had been returned dishonoured, together with interest. The defendant filed a Defence whereby he admitted the issue of the cheque but alleged a total failure of consideration; being the transfer of certain snares. There is a counterclaim for expenses said to have been incurred on the plaintiff's behalf. The defendant has made it clear that he will seek to amend his pleading. In turn the plaintiff filed a Reply alleging that the cheque had been issued to secure the repayment of a loan made for the purchase of shares as is evidenced by the terms of a promissory note dated 16th May 1990 and, as is common ground, signed by the defendant.

3. In support of his application for summary judgment not made until 9th October, the plaintiff made an affirmation of even date, which complies with the requirements of RSC Order 14 rule 2, verifies the contents of the Statement of Claim and of the Reply and exhibits, among other things, the cheque and the promissory note. The promissory note reads as follows:

	"TO: MR CHUA NAI KING
	PROMISSORY NOTE
	I, YIP SHUT YUEN , acknowledge receipt of LOAN Hong Kong Dollars One Million One Hundred Eighty-three Thousand Four Hundred Thirty-two Only (HK$1,183,432.00) from Mr CHUA Nai King and promise to repay to Mr CHUA Nai King the said sum on the 30th day of June 1990 or at any time when called upon to do so and also all costs, legal fees on indemnity basis, charges and expenses, if any, which Mr CHUA Nai King may incur in endorsing or seeking to enforce payment of all or any part of the money which may be so owing by me as aforesaid. As evidence of my undertaking herein and in security for repayment of the said loan, I hereby give to you my cheque drawn on Dah Sing Bank Ltd Bank (Cheque No: D24776) dated 30-06-1990 for the said Hong Kong Dollars One Million One Hundred Eighty-three Thousand Four Hunderd Thirty-two Only.
	SIGNATURE OF BORROWER (signed)
	NAME OF BORROWER YIP SHUT YUEN ID No. XXXXXXX(X)
	ADDRESS 1308 Two Exchange Square Central Hong Kong
	WITNESS:
	(signed) dated 16th day of May 1990. Name : YIP WING KWAN ID No: XXXXXXX(X)"

4. The defendant made an affirmation on 4th November to the effect that he had not received a loan but had agreed to buy shares in a Taiwan company on certain conditions which had not been met by the date appearing on the cheque. Those conditions were:

"	(a)	the plaintiff must produce a satisfactory audited account showing the net asset value of the Company should be between NT$3,000,000.00 and NT$5,000,000.00;
	(b)	there be no litigation of any sort pending against the Company;
	(c)	the shares must be transferred to me within two weeks."

Presently conditions (a) and (b) are not pleaded in the Defence.

5. The defendant also deposed to a telephone conversation with the plaintiff on 30th June in the course of which he said that he no longer wished to purchase the shares and asked for the return of the cheque. In paragraph 7 of one of the affirmations which followed, made by the defendant on 16th November, he said:

"I did not read the Promissory Note in detail because I saw the word 'loan' and at once said to him (the plaintiff) that I had never borrowed money from him. He told me that it was his company's standard practice for the Promissory Note to be signed as well. I did not really understand what he meant by that. As a caution, I asked the plaintiff to endorse on the back of the Promissory Note a statement to the effect that the amount on the cheque was to be used for purchasing shares of the Company, which the plaintiff did accordingly ... In truth and in fact, I never borrowed any money from the plaintiff, nor did I ever receive any money from the plaintiff."

The promissory note exhibited is so endorsed. Hr Yip Wing-kwan, referred to later in the same paragraph, purported to corroborate the defendant's evidence including his mental processes.

6. While I have difficulty in believing that "a merchant dealing in securities, commodities and futures for over 15 years" with "business interests in Hong Kong and Taiwan," to quote from paragraph 3 of the defendant's last affirmation, would append his signature by way of acknowledgment of a non-existent loan the plaintiff, for his part, nowhere describes how or when any loan was made. Here it may be that an issue or question arises which ought to be tried (RSC Order 14 rule 3) albeit

"We have repeatedly said ... that a bill of exchange or a promissory note is to be treated as cash. It is to be honoured unless there is some good reason to the contrary."

[per Lord Denning MR in Fielding & Platt Ltd. v. Selim Najjar [1969] 1 WLR 357 at p 361] and an antecedent debt or liability is deemed valuable consideration. Bills of Exchange ordinance (Cap 19) Section 27(1)(b).

7. Added to reservations about the allegation of loan is my general reluctance to interfere with the determination of a judge on an application for summary judgment. As Sir John Donaldson MR said in Lloyds Bank Ltd v. Ellis-Fewster [1983] 1 WLR 559 at p 562:

"This was essentially a matter for the judge's discretion. He thought there was a triable issue. In a case where the triability of the issue depends upon evidence as opposed to law, I would think it a very surprising situation if the Court of Appeal was prepared to disturb the judge's view. If one judge thinks there is a triable issue, it would be surprising if two or three judges think there is not."

With reference to the plaintiff's challenge to the judge's order as to costs similar considerations apply. In the event I am satisfied that this appeal fails and should be disimissed.

Sir Derek Cons, V-P:

8. I agree with my Lord that the appeal should be dismissed and for the reasons he has given.

Clough, JA:

9. I also agree.

Representation:

Kenneth Ho (M/s Leo K.W. Lox & Co) for Plaintiff/Appellant

Kenneth C.L. Chen (M/s Simon C.W. Yung & Co) for Defendant/Respondent