Wong Kam Kong v. Yu Chick (or Chik) Wo and Another

HCA001344/1983

IN THE HIGH COURT OF JUSTICE

BETWEEN

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Coram: Hon. Liu J.

Date of Hearing: 13th, 14th and 15th March, 1984.

Date of Delivery of Judgment: 15th March, 1984.

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JUDGMENT

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1. In this action, the plaintiff claims against the defendant on a dishonoured cheque in the sum of $66,275.52. The plaintiff also claims interest and costs. Third party proceedings have been commenced by the defendant against the Third Party. Pursuant to directions given in these third party proceedings, the defendant claims against the Third Party for an indemnity or contribution as the court shall deem it. Inclusive of costs in the action proper, the defendant, therefore, prays against the Third Party in the third party proceedings a judgment for an amount to be found due therein together with costs.

2. I will refer to the plaintiff as "Mr. Wong", the defendant as "Mr. Yu" and the Third Party as "Mr. Chan". By consent, evidence given in these proceedings be treated as evidence given in the action proper as well as evidence given in the third party proceedings.

3. In order to understand the plaintiff's, Mr. Wong's claim against the defendant, Mr. Yu, it would be convenient to start with the background history as related to the court by Mr. Chan, the Third Party. The Third Party, Mr. Chan, was a director and general manager of a freight company in Hong Kong which is either associated with or a subsidiary of a Thailand company described as the parent company. Mr. Chan and Mr. Yu had known one another for a period of time, and Mr. Chan was then a man who had been engaged in the freight trade as it was called, for quite some time and was well known to members in the same trade. At the end of 1982, for the 1st time Mr. Yu approached Mr. Chan for a transaction. Mr. Chan was not very impressed with the standing of the company in which Mr. Yu operated, but he, Mr. Chan, was tempted by the size of the business so offered by Mr. Yu. That was the first and the last transaction between the freight company of Mr. Chan and the company of Mr. Yu. Freight accumulated at or came to $66,275.52. Before the company of Mr. Chan undertook to deliver cargo for the company of Mr. Yu, as Mr. Chan would himself ultimately be responsible for freight vis-a-vis his company and himself, he allegedly secured a personal undertaking from Mr. Yu to be responsible for freight charges in the transaction. Mr. Yu, so maintained Mr. Chan, readily agreed to the proposal and gave his undertaking as requested. When freight charges in the sum of $66,275.52 had been in arrear for slightly over a month, on the 8th November 1982 or thereabout, the cheque in this action was given by Mr. Yu to Mr. Chan allegedly pursuant to and in honour of that personal undertaking. This cheque was subsequently passed on to Mr. Wong by Mr. Chan when Mr. Chan was in need of cash in exchange of some cash and two and three cash cheques from Mr. Wong. Mr. Wong was said to be a very good friend of Mr. Chan's of more than five years standing. The cheque so given by Mr. Chan to Mr. Wong was incomplete in the sense that it was a crossed cheque with the payee left blank. Mr. Wong, allegedly at the request of Mr. Chan, inserted his own name as payee and after about a week, the same cheque was presented for payment but was dishonoured by reason of insufficient fund in the account, of Mr. Yu with the Kwong On Bank Limited.

4. Before I turn to the case of Mr. Wong, it would not be out of place here for me to relate to the version advanced by Mr. Yu. He denied that there was ever any personal undertaking. The indebtedness by way of freight charges payable by the company of the defendant's to Mr. Chan's company was not a matter in dispute. According to Mr. Yu, on the 8th November 1982, he was contacted by Mr. Chan who informed him that his boss presumably from the Thailand parent company would land in Hong Kong some time after 2 that afternoon, that he, Mr. Chan, was to take his Thailand parent company boss to the Regal Meredien Hotel for accommodation and that he would meet Mr. Yu in the coffee shop of the same hotel. According to Mr. Yu, he made the appointment, and at about 3 o'clock in the afternoon, he and Mr. Chan met as prearranged. Mr. Chan, so claimed Mr. Yu, appeared to be in a state of anxiety. According to Mr. Yu, Mr. Chan told him that his boss from the Thailand parent company was in town, up-stairs, desirous of looking into the outstanding freight charges in the Hong Kong company's account and that he was certainly not in a very good mood and, in fact, very angry. As for the outstanding collectable debt due from Mr. Yu's company to the company of Mr. Chan in the sum of $66,275.52, Mr. Chan suggested, so ran the evidence of Mr. Yu, that a cheque had to be issued for showing to the much agitated Thailand parent company boss up-stairs in a hotel room of Regal Meredien. Mr. Yu explained that ha had only his personal cheque on him and not his company cheque and that although there was some mention of having his company cheque fetched in about half an hour, Mr. Chan allegedly impressed upon Mr. Yu, as a matter of grave urgency with an infuriated superior in an up-stairs hotel room, that there was no time to waste. Mr. Chan was also said to have satisfied Mr. Yu that he could find some way to explain away the personal cheque to his boss as one from a director of the defendant's company. Mr. Yu, thereupon, claimed to have emphasized to Mr. Chan that as there was insufficient fund in his personal account to meet the proposed cheque in the sum of the outstanding freight, its production would virtually be a conspiracy between he himself and Mr. Chan to deceive the furious superior of the Thailand parent company up-stairs waiting in the hotel room of the Regel Meredien. In reply, Mr. Chan was said to have assured the defendant, Mr. Yu, that it would not matter because the cheque to be issued by Mr. Yu would not be presented at any time for payment and that he "was free to arrange the procedure of depositing or paying a cheque in Hong Kong". A point was well taken by Mr. Chan that if it had been for a mere deception, a cheque from his friend or anyone would serve the purpose. I can see the force of that contention but for the possibility of a deliberate manoeuvre to procure a personal cheque of Mr. Yu, whose limited company was not in good shape and was ultimately wound up on the 17th January 1983. But it was not explained by Mr. Chan as to why, being allegedly in honour of a continuing personal undertaking to meet freight responsibility of the defendant's own company in favour of Mr. Chan himself, this cheque, though duly crossed, was not drawn in favour of him, Mr. Chan as payee. This cheque was given to Mr. Chan crossed but with "Payee" left in blank. Mr. Yu's version is that that was done at the request of Mr. Chan who claimed to have "to consult his boss as to whether payment should be deposited into the account of the Hong Kong company or account of the Thailand company". Mr. Chan throughout maintained that this cheque was given in honour of an undertaking to himself, yet he handed it over to his company's accounts clerk and told his friend, the plaintiff, that the cheque was for his company and not for himself.

5. The circumstances as disclosed in the version of Mr. Yu's were very unusual. On the surface, the story as told by Mr. Yu would even appear to be quite incredible, but against that and bearing that in mind, I have had the opportunity of observing Mr. Chan in cross-examination. He struck me as an efficient business executive. From time to time, during the course of his examination, he sought to draw an analogy from his given examples with a view to deducing some common sense explanations for certain facets in these proceedings. It is not so much that these analogies drawn by Mr. Chan were apt or truly convincing, but he did present them with conviction and apparent self confidence. There can be little doubt that Mr. Chan could be a very persuasive person, especially to members of his circle in which he was a recognised successful operator. On the other hand, Mr. Yu appeared to be meek and indecisive in his demeanour as it was reflected also in part of his testimony.

6. This version given by Mr. Yu, though unusual, had the advantage of the corroboration, in some material respects, of Mr. Leung who may very well be described as a mutual friend of the two. But, in fact, he has known Mr. Yu for a much longer time than he has know Mr. Chan. Mr. Leung himself was decidedly dissatisfied with what he described as a blackmailing manipulation of Mr. Chan by suspending dispatch of his goods from Bangkok. Mr. Leung definitely had little good opinion of Mr. Chan. Moreover, he, I am told, is a clansman of Mr. Yu's wife. I have not lost sight of these side aspects, but according to Mr. Leung, early in 1983, some time in February, before the Chinese New Year, when he happened to be in the office of Mr. Yu, he came to learn of an arrangement for a meeting between Mr. Yu and Mr. Chan. He came along to and was present at the meeting in a Tokwawan restaurant. He told the court that he had not realised the significance and importance, as far as Mr. Yu and Mr. Chan are concerned, of that particular Tokwawan meeting. As far as he himself was concerned, he had an axe to grind, as it were. He went with Mr. Yu to see Mr. Chan taking advantage of the arranged meeting between the two to bring up the suspended dispatch of his goods in Thailand. What transpired between Mr. Chan and Mr. Leung was not a matter of relevance. As for Mr. Yu and Mr. Chan, according to Mr. Leung, Mr. Yu confronted him, Mr. Chan to the effect that he, Mr. Yu, was asked by Mr. Chan to come for the cheque. Mr. Leung recounted part of the conversation between Mr. Yu and Mr. Chan in the course of Mr. Yu's demand for the return of the cheque: Mr. Yu was said by Mr. Leung to have said to Mr .Chan something to the effect that the cheque which had previously been lent to Mr. Chan merely for his temporary use should be returned and that the cheque should not be used by anyone else. Mr. Chan was allegedly heard by Mr. Leung to agree to return it after a few days giving the excuse that his friend was then in Mainland China. According to Mr. Yu, he made this demand at the Tokwawan restaurant after he had received notice from his banker that his cheque was presented with Mr. Wong as payee. Mr. Leung did not recall any mention of dishonour of the cheque, but the gist of the conversation as related by him was consistent with it. Mr. Leung described Mr. Yu as very angry. On further questioning, Mr. Leung also recalled that Mr. Yu enquired of Mr. Chan as to when his friend would return from China.

7. Mr. Yu himself explained to the court that he trusted Mr. Chan and started to chase after him for the return of the cheque about a week after the 8th November and that thereafter, he constantly sought the return of the cheque from Mr. Chan who had invariably put him off.

8. The Tokwawan meeting was not disputed. Mr. Yu did not refer to Mr. Leung in his own evidence, but the presence of Mr. Leung at this Tokwawan meeting was really common ground between the defendant, Mr. Yu, Mr. Leung as well as Mr. Chan, who gave a different version as to what transpired at this particular meeting. Little was asked of Mr. Leung as to the alleged conversation so overheard, but I have to give allowance to the fact that Mr. Chan was unrepresented.

9. Mr. Chan cut a poor figure in the witness box. He was always ready with an explanation. His effort to equate mid 1982 to October 1982 was pathetic. He was less than satisfactory in accounting for the absence of his company's books, if indeed they are relevant. The financial difficulty of the company of the defendant's seemed to have been relied upon as the cause for obtaining Mr. Yu's alleged undertaking. The reason given for such a personal undertaking in the last two sentences in paragraph 1 of Mr. Chan's Defence in the third party proceedings was not consistent with his allegation that for the first time he became aware of the financial difficulty of the defendant's company only on the 8th November. Then, he told the court that the defendant's company was possibly not up to the standard required by an institution called the International Air Transport Association, laying down a minimum paid-up capital of $800,000. He further said that the defendant's company's position was generally known in the trade, that it operated from a small office and that he had know the defendant personally for some time. From all these circumstantial factors, he claimed to be able to infer that the defendant's company was possibly not sound. He was driven to admit in cross-examination that in a way he was contradicting himself.

10. Bearing in mind all the matters I have mentioned and the general feel of the case from the evidence of the witnesses, I find that the defendant, Mr. Yu, did not give any or any enforceable undertaking to Mr. Chan as alleged. Whetever loose talk there had been between Mr. Yu and Mr. Chan prior to the first and only engagement from which the present dispute arose, Mr. Yu, I find, did not personally undertake to be responsible to Mr. Chan himself freight charges incurred by the defendant's company with Mr. Chan's company. In the final analysis, particularly in view of the corroboration of Mr. Leung whose evidence I accept, I find that for whatever reason Mr. Yu felt somewhat obliged to give the cheque in question, exhibit "P1"; in the coffee shop on the 8th November 1982, it was as explained by Mr. Yu, given to Mr. Chan for temporary use and was never intended to be presented for payment. But if I had to make any further findings of fact prior and leading to the issuance of this cheque "P1", I would prefer the version of Mr. Yu to that of the Third Party, Mr. Chan.

11. I return now to the evidence of Mr. Chan for the events following the coffee shop meeting on the 8th November. Whilst the circumstances related to by Mr. Yu and Mr. Leung for the purpose of the cheque "P1" corroborated one another, the evidence of Mr. Chan and Mr. Wong did not altogether coincide. Mr. Wong is a friend of Mr. Chan's of more than five years standing. They are very good friends so this court was told. Mr. Chan testified that he did not tell Mr. Wong that there would be sufficient fund in one or two days' time. He said he was not clear as to whether Mr. Wong, the plaintiff, was lying or mistaken on that score. Later, in further cross-examination, whilst still maintaining that he did not specifically ask Mr. Wong to cash it in a day or two, he sought to explain that he mentioned it in a casual Chinese way meaning "not exactly one or two days" but later. According to Mr. Wong, he said, it seemed that that Mr. Chan told him that he should deposit the cheque one or two days later. In his cross-examination of Mr. Wong who agreed with the suggestion, Mr. Chan would have this court believe that he, Mr. Chan, told Mr. Wong that he, Mr. Chan, had to contact the drawer before Mr. Wong could deposit the cheque. In such his cross-examination of Mr. Wong, the plaintiff, Mr. Chan made a further suggestion that Mr. Wong "might be able to cash the cheque on a day after (he) had given the cheque because (he) might be able to contact (his) friend to deposit sufficient fund in his account for (Mr. Wong) to cash the cheque" Again, to this suggestion, the plaintiff, Mr. Wong allegedly agreed.

12. Mr. Wong had earlier told the court that on or about the 27th or 28th December, some six weeks after the date on "P1", the cheque in question, when he was given it by Mr. Chan for ready cash and cash cheques, he realised that it was dated the 8th November 1982. According to Mr. Wong, he was specifically told by Mr. Chan that there would be sufficient fund in a day or two. He said he did not enquire of Mr. Chan as to why he, Mr. Chan, himself did not cash the cheque, and his evidence relating to availability of fund in a day or two would seem to have been advanced as an explanation for his neglect to make that enquiry. Mr. Chan himself kept the cheque for more than six weeks and admitted to have suspicion as to whether the cheque could be honoured. Mr. Chan felt justified in maintaining that it was unnecessary for him to warn Mr. Wong that he, Mr. Chan himself had no idea as to when Mr. Yu would be able to raise sufficient fund for the cheque. There was hardly any good reason for passing off this G-weeks' old cheque to a friend.

13. On the overall evidence, I find that Mr. Chan made it clear to Mr. Wong that the cheque in question was for his company and not himself as Mr. Chan disclosed in his cross-examination. Whatever the nature of the switch of this cheque was, it was made blatantly clear to Mr. Wong that the cheque was not to be presented without further reference to and consultation with the drawer as in the precise words suggested by Mr. Chan to Mr. Wong in cross-examination that he, Mr. Wong, "had to contact (his) friend before (Mr.Wong) could deposit the cheque".

14. According to Mr. Wong, he presented the cheque for payment about a week later because of his absence from Hong Kong. But according to Mr. Chan, having been told that the cheque was for his, Mr. Chan 's company and that he, Mr. Chan "had to contact (his) friend before (Mr. Wong) could deposit" it, came January, and he requested Mr. Wong, the plaintiff, to present the cheque for payment just to see if payment could be met, in Mr. Chan's own words: "I told him to present it to see if there was fund". Of these two somewhat conflicting versions of Mr. Chan and Mr. Wong, I am inclined to accept that of Mr. Chan, which was in fact agreed to by Mr. Wong who had put in his own variations.

15. It is highly suspicious that Mr. Wong, the plaintiff, could not have been aware of the full facts as found by this court between Mr. Yu and Mr. Chan, but the court must not act on speculation. Suffice it for me to find that as far as Mr. Wong, the plaintiff, is concerned, for whatever reason the cheque in this action was passed on to him, it was done so with the clear knowledge that it was not to be presented for payment without further reference at least to Mr. Chan who would have himself, in turn, to consult with the drawer. Mr. Wong made no mention that he had referred this matter subsequently to Mr. Chan. He gave the impression that he could present the cheque for payment at any time soon thereafter, a cheque bearing a date some six weeks ago, and he presented it some time on the 5th January 1983. In any case, he knew, as I have found, that at the request of Mr. Chan the cheque was to be presented only "to see if there was fund", although Mr. Wong himself failed to mention any further instructions from Mr. Chan as regards the presentation of this cheque.

16. The plaintiff, Mr. Wong, explained that at the request of Mr. Chan, he put himself on the cheque, "P1", as payee when he was allegedly given this cheque in exchange for valuable consideration. The cheque was obviously, on the face of it, then incomplete. Mr. Wong knew that he did not have authority to complete this cheque, "P1", as he did, because as a matter of fact, according to Mr. Chan, Mr. Wong was told that the cheque was for Mr. Chan's company and not for himself personally. The cheque was given to Mr. Chan for temporary use and never to be presented. There was thus no permission or consent from Mr. Yu as drawer to have Mr. Wong put in as payee. In addition, being payee as he had made himself to be, even without consent or authority, Mr. Wong cannot be a holder in due course. In conclusion, Mr. Wong would be in no better position than that of Mr. Chan, the Third Party in the third party proceedings. Furthermore, the payment of this cheque was explicitly made subject to the restriction as revealed by Mr. Chan to Mr. Wong that a further reference to and consultation with the drawer was necessary. The cheque was presented, according to Mr. Wong, without enquiry if such consultation or reference had been made. The cheque was presented, according to Mr. Chan, in an endeavour to test the possibility of it being met by funds, if any, in the account of the drawer, Mr. Yu.

17. For all these reasons, in effect I uphold the version given to this court by Mr. Yu.

18. The cheque, therefore, was giver in the circumstances as related to the court by Mr. Yu and was in fact given without any consideration but with the motive of giving, though improperly, a helping hand to a friend in a moment of alleged predicament so persuasively brought home to the defendant, Mr. Yu, by Mr. Chan on the occasion of the 8th November 1982 in the coffee shop of Regal Meredien Hotel. Consequently, the claim of the plaintiff against the defendant must fail, and in the circumstances, it would be quite unnecessary for me to grant any relief sought by the defendant in his Statement of Claim filed in the third party proceedings against the Third Party, Mr. Chan. I order that the plaintiff's action against the defendant be dismissed with costs to the defendant. I further order that the defendant do have costs in the third party proceedings against the Third Party, Mr. Chan.

Representation:

Mr. S.H. Chow instructed by Messrs. Chan, Lau and Wai for the Plaintiff.

Miss Sze Kin instructed by Messrs. John, Ku and Tam for the Defendant.

Mr. Gary Chan, Third Party, in person.