Federal Enterprises Co Ltd v. Leung Sau Wing

HCA000793/1971

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 793 OF 1971

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Coram: Briggs, J. in Court

Date of Judgment: 19th March, 1973.

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JUDGMENT

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1. On or about December 30th 1970 the plaintiffs sold 2,050 piculs of iron rods to the defendant for $88,432.62. In payment, on that date, the defendant gave two checks to the plaintiffs. One was a cash check for $40,000, the other was a check for $45,000 post dated to January 20th 1971. This makes $85,000. On the 30th of December the exact price of the iron rods had not been worked out. When it had been calculated, the defendant gave the plaintiffs another check for the balance of $3,432.67. This check is of great importance and I will deal with it later. The check for $40,000 was cashed by the plaintiff.

2. At the request of the defendant the check for $45,000, number 167514 was replaced by a second check for a like amount numbered 168741. This was post dated to January 24th 1971. The reason for this substitution was that the defendant would not have been able to meet it when it fell due.

3. The second check for $45,000 was also replaced by two separate checks one for $5,000 and one for $40,000. This was again at the defendant's request and it was for the same reason, lack of funds. The check for $5,000 was cashed. The check for $40,000, number 171461 was post dated to February 2nd 1971. This check was replaced by yet another check for a like amount at the defendant's request. The new check was post dated to February 27th 1971. Its number was 172711.

4. The plaintiffs presented this check for payment but it was dishonoured. In consequence the plaintiff brought this action.

5. The defence is that the defendant has paid the plaintiff the full amount of $40,000 in cash.

6. The history of this case is of some importance. The plaintiff issued his writ on April 16th 1971 and the defendant entered an appearance a few days later.

7. On April 30th the plaintiff applied for judgment in Order 14 proceedings when unconditional leave to defend was given to the defendant. In his affirmation which was an exhibit in this case the defendant stated that he had satisfied his debt to the plaintiffs by paying $20,000 on two occasions to the agent of the plaintiff's, one Chan Po. The affirmation gave details of the payments as to time and place, and the defendant exhibited two documents which he said were receipts for the two sums he had handed to Chan Po. He also deposed that he had known Chan Po as the plaintiffs' agent for over two years and had had previous dealings with him, had paid him moneys due to the plaintiffs and had received receipts for such sums.

8. A defence was filed and these matters were pleaded.

9. In due course, discovery of documents was ordered and the defendant made the usual affirmation. The only receipts mentioned in his list were the two receipts to which I have referred above. The two receipts were for two sums of $20,000 signed by Chan Po and were dated February 28th and March 10th. No receipt from the plaintiff company was listed at all.

10. During the course of the trial the defendant produced three more receipts as follows:-

All these receipts are, like the previous two receipts, hand written in Chinese and signed by Chan Po.

11. The importance of these three other receipts is of course very great since it was by proof of previous transactions with the man Chan Po that the defendant hoped to prove that Chan Po was the agent of the plaintiffs.

12. The defence was filed on 22nd May, On May 31st 1971 the plaintiffs filed a Reply in which they categorically stated that they had no employee of the name of Chan Po and never had had an employee with that name.

13. With the knowledge of the contents of the Reply the defendant filed his list of documents on June 26th: but did not, as I have said, disclose that he had three additional receipts signed by Chan Po.

14. One Mak Chee the manager of the plaintiff company gave evidence and said that no person of the name of Chan Po had ever been employed in his company. He named three persons in his employ who acted as debt collectors for the company. He, Mak Chee, was the only person in the company who could give a valid receipt. The system of giving a temporary receipt was not used by the company. When a debt collector went to collect a debt he would take with him a receipt already made out and signed by Mak Chee. Then that receipt could be exchanged for a cash or a post dated check. But a receipt would not be given when a check for a given amount was exchanged for a second check of like amount.

15. Mak Chee deposed to the various transactions set out above. And his evidence was largely corroborated by one Cheung Yu, the broker who introduced the parties to each other in December 1970. Mak Chee produced certain duplicate receipts which were receipts for various sums or checks received from the defendant. These receipts are on printed forms which come from books of receipts, a duplicate being retained by the company.

16. For example there were two duplicate receipts dated December 30th 1970. The first is for a check for $40,000, a cash check: the second for $45,000, a check post dated to January 20th 1971. These represent the original two checks given by the defendant to the plaintiffs in part payment for the iron rods. There is a duplicate receipt for $3,432.67 dated January 12th 1971 for a check post dated to January 30th 1971. And there are two duplicate receipts dated February 2nd 1971, one for $5,000 a cash check, and one for a check for $40,000 post dated to February 10th.

17. All these duplicate receipts are contained in books of duplicate receipts. And are in their regular order so far as other duplicate receipts are concerned. The books appear to have been in regular use. And I accept them as genuine.

18. Mak Chee said that when a check was handed to the company in replacement of another check he did not give a receipt. But when the sum of $45,000 was split into two he did give two receipts. Since it was a replacement check he did not give a receipt for check No. 172711, the subject matter of this action.

19. The defendant denied having received such receipts at all. He said he had only received the five receipts from Chan Po: no others.

20. One of these is a receipt for check number 167522 for $3,432.67 dated 30th January and it is dated the same date, 30th January. The defendant said that that was the date on which the check was handed to Chan Po. It is the date on the check. But the plaintiff says it was a post dated not a cash check. The duplicate receipt of the plaintiff for this amount is dated January 12th. According to Mak Chee it was a check post dated to January 30th, and was received on January 12th. This duplicate receipt appears in a book of 50 such duplicates. The first is dated December 30th 1970, the last January 25th 1971. The book has not been tampered with and I accept that it is genuine. I find therefore that this check was not handed over to the plaintiff on January 30th but on January 12th.

21. As I have said Mak Chee said that only he could give a valid receipt for money for the company and he has signed all the receipts of which the duplicates are to be found in all the three books put in evidence.

22. In addition Mak Chee denied that his company had ever employed a man named Chan Po. This was corroborated by the Accounts Clerk to the plaintiff company who produced the relevant wages books of the company dealing with payments to the company's staff. And which do not show the existence of a 'Chan Po'.

23. The burden of proof that Chan Po exists and was the agent of the plaintiff lies on the defendant and he has not satisfied that burden.

24. He has not called Chan Po. And he has given no reason why he has not done so. According to the defendant Chan Po is an old acquaintance. It would have been easy to subpoena him.

25. I have reached the conclusion that I cannot accept the so called Chan Po receipts as genuine. I accept the evidence of Mak Chee and his witnesses and reject the evidence of the defendant. I was not impressed by him in the witness box. And the discrepancy in the date of the receipt for the sum of $3,432.67 and the late production by the defence of the three earlier receipts is more than suspicious. It appears to me that the defendant has manufactured the evidence for his defence.

26. There is yet another matter. On March 2nd 1971 the solicitor for the plaintiff sent a letter to the defendant demanding payment of the $40,000 threatening legal action if the sum were not paid. No reply was sent to this although according to the defendant he held a receipt for payment of $20,000 signed by the plaintiff's agent Chan Po dated February 28th 1971.

27. It is obvious that if the defendant had paid this amount he or the solicitor who was then representing him would have told the plaintiff or his solicitor. The second receipt is dated March 10th which is 7 days after the receipt of the solicitor's letter demanding payment. Yet again the defendant did not reply to the effect that he had paid the plaintiff's agent the whole amount. I do not believe that the defendant would behave in such a way had he in fact paid the debt.

28. In the defence it was also pleaded that the defendant had not received notice that the check, the subject matter of this action had been dishonoured. There is nothing in this point. In his evidence, the defendant admitted that he had received notice from the Bank.

29. There will be judgment for the plaintiffs for $40,000 with costs. Interest at 8% per annum from today.

Representation:

Mr. K.H. Woo (Peter Mo & Co.) for plaintiff

Miss J. Leong (John N. Smart & Co.) for defendant