Wong Ping Hin v. Lee Mo Tai t/a Tsui Wah Garden and Another
Read the full judgment text of HCA 12798/1982 on BabelCite. This High Court CFI judgment was delivered on 22 June 1984 before Souyave, Deputy Judge.
Civil litigation – bills of exchange – dishonoured cheque – claim by payee against alleged co-signer as drawer – sole proprietorship firm Tsui Wah Garden – whether signature on cheque is genuine or forged – whether plaintiff advanced HK$500,000 loan to firm – ostensible authority – estoppel – Bills of Exchange Ordinance (Cap 19) s.24 and s.23(b) – burden of proof in civil forgery cases – Doe D. Devine v. Wilson – Bowstead on Agency – plaintiff's action against 1st defendant dismissed with costs to 1st defendant. Whether on a disputed signature the burden of proof in a civil case lies on the party producing the instrument and asserting its validity, to be discharged on a balance of probabilities, rather than on the party alleging forgery to the criminal standard – held, the legal burden lies on the plaintiff asserting the cheque's validity. Whether the signature 'Lee Mo Tai' on cheque P1 was the genuine signature of the 1st defendant or a forgery, where the 1st defendant relied on s.24 of the Bills of Exchange Ordinance and the plaintiff relied on ostensible authority and estoppel – held, on visual comparison of the disputed signature with multiple specimen signatures of the 1st defendant (including court-taken specimens, affirmations, and certified copies), clear dissimilarities in the first and third characters established that the signature was a forgery, and the 1st defendant did not authorise or concur in the drawing of the cheque. Whether the plaintiff in fact advanced a loan of HK$500,000 to the firm Tsui Wah Garden through the 2nd defendant, as alleged, with the cheque given as security – held, no; the alleged cash loan paid in mixed currencies in a restaurant without documentation, in circumstances where the plaintiff had previously documented a similar loan by solicitor-drawn promissory note, and where the plaintiff never contacted the 1st defendant before she left for the UK, was inherently improbable and untrue. Whether the 1st defendant or the firm held out the 2nd defendant as having authority to obtain a loan and issue a firm cheque as security, so as to give rise to apparent (ostensible) authority – held, no; an agent cannot by his own representations create the appearance of his own authority, and the only facts the plaintiff could point to (a prior two-signature cheque cashed in March 1982 and the appearance of cheque P1) were insufficient and indeed suggested the 2nd defendant could not act alone. Whether the 1st defendant was estopped from denying the 2nd defendant's authority to sign the cheque and obtain the loan – held, no; the estoppel depended on ostensible authority, which was not established, and in any event the underlying loan was not proved. In the result, the plaintiff's action against the 1st defendant was dismissed and the plaintiff was ordered to pay the 1st defendant's costs.
Legal issues: Burden of proof on genuineness of signature on a cheque where forgery is alleged · Genuineness of the 1st defendant's signature on cheque P1 · Whether a loan of HK$500,000 was made by the plaintiff to the firm Tsui Wah Garden · Whether the 2nd defendant had apparent (ostensible) authority to bind the 1st defendant or Tsui Wah Garden · Whether the 1st defendant was estopped from denying the 2nd defendant's authority
Outcome: Plaintiff's action against the 1st defendant dismissed; plaintiff failed to prove the loan and failed to establish ostensible authority, estoppel, or the genuineness of the signature on cheque P1.
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HCA012798/1982
BETWEEN
Coram: Souyave, Deputy Judge Date of Judgment: 22 June 1984 __________ JUDGMENT __________ 1. On the 30th December 1982, the plaintiff entered the present action against the 1st and 2nd defendants claiming the sum of HK$500,000.00 being the aggregate value of a cheque No. TPB 064170 dated the 2nd November 1982 and drawn by the 1st and 2nd defendants as drawers at Nanyang Commercial Bank, Limited, Tai Po Branch, in favour of the plaintiff, which cheque was dishonoured and notice of such dishonour having been rendered by the plaintiff to the 1st and 2nd defendants or in any event dispensed with under the law. 2. Judgment in default of notice of intention to defend was entered against the 1st defendant on the 1st March 1983. This was set aside on the 13th May 1983 on the ground (inter alia), as far I can understand, that the 1st defendant had no knowledge of the action until the 4th May 1983, when the bailiff came to her premises to execute the said judgment. 3. As regards the 2nd defendant, there were a number of interlocutory proceedings but eventually judgment in default of service of defence was entered against him on the 4th August 1983. 4. Therefore, in this action I am now only concerned with the claim against the 1st defendant, Lee Mo Tai, who, within the extended time - limit allowed to her, filed a Defence on the 24th May 1983. 5. Her defence is thus -
6. In his Reply, dated the 26th July 1983, the plaintiff admits that the 1st defendant is the sole proprietor of Tsui Wah Garden and that the 1st defendant and her son, the 2nd defendant, were the joint signatories of the account under reference at the Tai Po Branch of the Nanyang Commercial Bank Limited. He pleads that he had no knowledge or notice of the suspension of the said account as from the 17th May 1982, as alleged by the 1st defendant, or of any allegation made by her in this regard in paragraph 2 of Defence. 7. Further, in reply to paragraph 3 of the 1st defendant's Defence, the plaintiff pleads ostensible authority and estoppel averring as follows, in paragraphs 4(a) to (f) and (g) respectively :-
8. In paragraph 5 of his Reply, the plaintiff alleges that through his solicitors by letter dated the 9th November 1982 he gave notice of dishonour of the cheque to the 1st defendant. (I would observe at this juncture that this did not arise as a disputed issue at the trial). The plaintiff joins issues with the 1st defendant on each and every allegation contained in her Defence save as to what expressly appears in his Reply where the same consists of admissions. 9. Section 24 of the Bills of Exchange Ordinance Chapter 19 reads:-
10. The first issue in this case is whether the signature Lee 4o Tai on the cheque (P1), purported to be that of the 1st defendant, is genuine or a forgery. 11. However, in determining this issue, the question that arises is on which party lies the burden of proof. Is it on the plaintiff to prove the genuineness of the 1st defendant's signature on the cheque or on the 1st defendant to prove that her purported signature thereon is a forgery? 12. Miss Kwan for the 1st defendant submits that it is on the plaintiff to prove the genuineness of the 1st defendant's signature on the cheque for the following reasons -
13. In Doe D. Devine v. Wilson (an appeal from the Supreme Court of New South Wales to the Privy Council), cited by learned counsel for the 1st defendant, the plaintiff, in his capacity of heir-at-law of one Nicholas Devine (deceased), which was admitted, sought in an action of ejectment against the defendants to recover possession of land which he claimed had devolved upon him from Nicholas Devine. One of the defences raised by the defendants was that Nicholas Devine had made a conveyance of that land to one Rochfort under whom the defendants claimed. The issue was whether that conveyance was forged. On appeal, the Privy Council said the following, (at p. 592 of the Report) :
14. In the present action, there is no admission in the pleadings by the 1st defendant that she signed the cheque but that she signed it in circumstances tainted with fraud in which case the burden would lie on her to establish the fraud. Here, the onus lies on the plaintiff to prove on the preponderance of evidence that the 1st defendant signed the cheque and unless he succeeds in so doing he must fail on his assertion on that issue. The situation here is, as far as the burden of proving the forgery, very much the same as in Doe D. Devine v. Wilson where the defendant had the onus of proving the genuineness of the alleged conveyance from Charles Devine to Rochfort on the preponderance of evidence. In any event, the plaintiff says that he has adduced sufficient evidence to prove his assertion. The 1st defendant has on her side adduced evidence to prove the contrary. This court has to weigh the conflicting evidence, consider all the probabilities of the case and determine the question according to the balance of probabilities. 15. I think it is convenient at this stage to deal with a further or alternative contention made by learned counsel for the Plaintiff that the 1st defendant being sued as a firm, the fact admitted by the 1st defendant that the firm's chop is on the cheque is evidence establishing that the cheque was issued by the firm. In this respect, the plaintiff relies on the proviso to section 23(b) of Cap. 19 ( cited earlier ). I do not agree with this contention To bring the situation within that proviso, the plaintiff has to prove that the chop mentioned is itself the signature of the firm. Facts in evidence 16. The plaintiff testified and called no witness. The 1st defendant gave evidence and called three witnesses, namely, DW2YU YUN CHEUNG, a bank manager of the Nanyang Commercial Bank Limited, DW3 - CHAN YAN, an assistant manager of that bank, and DW4 - CHAN SUI YUNG, the 1st defendant's eldest daughter. The plaintiff's evidence 17. The plaintiff is presently an Hotel Assistant Head Waiter. At the time he made the loan in 1982, he was engaged as a business man during day time and employed as the Captain of Casanova Restaurant after 5 p.m. His salary as Captain was $3,000.00 p.m. and his income as a business man was on the average $10,000.00 per month. There was no evidence that he had any other source of income. 18. He first came to know the 2nd defendant, the son of the 1st defendant, about the end of 1981. The 2nd defendant was then running a restaurant. In March 1982, he and the 2nd defendant were considering going into a restaurant business together but he afterwards abandoned the idea and agreed to lend the 2nd defendant several sums totalling $500,000.00 (without interest) to assist him in that business. In May 1982 a promissory note drawn up by, and signed in the presence of, solicitors (ExL P6) was signed by the 2nd defendant acknowledging that loan of 5500,000.00. The 2nd defendant failed to pay that debt due on or before the 4th November 1982. Subsequently, the plaintiff obtained judgment against him in another action. 19. At the end of June 1982, the 2nd defendant (while still owing the plaintiff on the promissory note ExL P6 referred) approached the plaintiff for another loan of $500,000.00 but on this occasion for the firm Tsui Wah Garden (i.e. the 1st defendant's firm), which firm, he alleged, was in financial difficulty, stating he was the son of the1st defendant, the proprietress thereof, and that he was the General Manager thereof as he had already told the plaintiff earlier and had given the plaintiff his card ExL P describing himself as such. The plaintiff understood from the 2nd defendant that under the law of the Ching Dynasty, to which the 2nd defendant's family was subject, as his father had died, his mother (the 1st defendant) had no right to control his father's assets. As a result the plaintiff made enquiry about the legal position from the Legal Aid Department, and therefrom and from what the 2nd defendant had said, he understood from the 2nd defendant that he was "the real person who controlled that firm, that the management of that firm was under his control" and he believed the 2nd defendant. On the strength of all that, the plaintiff eventually in July 1982 gave the 2nd defendant a cash loan of $500,000.00 for the use of the firm on the security of the cheque P1 post-dated to 2nd November 1982, according to normal practice in commerce in Hong Kong. That sum was paid by the plaintiff to the 2nd defendant on the 19th July 1982 in the Kwok Hei Restaurant (near Wai Gardens, Tokawan, Kowloon) in the presence of 2nd defendant's wife and his friend Li Ma Yuk. That sum was made of Hong Kong currency and Singapore currency, all these not adding up to exactly HK$500,000.00 but the 2nd defendant still said that would be HK$500 ,000.00. (As detailed by the plaintiff when cross-examined, there were HK$60,000.00 he withdrew from the bank, HK$80,000.00 by cashing gold, Singapore currency 100,000 which equalled to HK$330,000.00 not sure of rate.) 20. On receiving the loan, the 2nd defendant there and then at a table in the restaurant wrote out the cheque P1 in favour of the plaintiff. The plaintiff cannot remember clearly if the two signatures on P1 were already there but says that "but on a brief glance at it it appeared they were there already, and the chop was already on it". On accepting the cheque, the plaintiff considered that it was in order because on a previous occasion, about 4 months earlier and that was apparently in March, he saw the 2nd defendant cashing a cheque at Nanyang Commercial Bank on which there was a chop. The cheque P1 was dishonoured on presentation on or after his due 2nd November 1982. Hence, the present action. 21. When cross-examined, the plaintiff said he had met the 1st defendant casually exchanging greetings only on more than 3 or 4 occasions, and that on each ocasion she was accompanied by the 2nd defendant who had at first introduced her to him his mother, Mrs. Chan, but that he had never dealt in any transaction with the 1st defendant. The plaintiff said that about the end of June 1982, when the loan of HK$500,000.00 to the firm was being discussed, the 2nd defendant had told him that his mother, the 1st defendant, was going to England and so he was authorised to deal with the matter, that the 2nd defendant had all the time said that usually his mother would sign a cheque before giving it to him, that she would make out a blank cheque with the chop on it, and then he would be authorised to deal with the matter. The plaintiff's understanding from the 2nd defendant was that he was the General Manager of Tsui Wah Garden, and that he proved it to him by cashing the cheque in March 1982, that all the 2nd defendant needed was his mother's signature which could be put down beforehand plus the chop of the firm and he could use the money of that bank account by putting his signature on that cheque. 22. Plaintiff went on to explain that he thought the 2nd defendant was in control of Tsui Wah Garden from the conversation he had with the 2nd defendant alone. He had the impression that the 2nd defendant was the "plenipotentiary" of the 1st defendant from what the 2nd defendant told him, from the fact he said he was the General Manager of the firm, from the card (P2) and his signature on the cheque (meaning obviously the cheque 2nd defendant cashed in March). With reference to the loan of $500,000.00 he had made direct to the 2nd defendant (P6), he said he had no confidence in the 2nd defendant and that was why they went to solicitors to make a promissory note. As to the 2nd loan of $500,000.00, he told the 2nd defendant he would not trust him to the extent of making a loan of $1,000,000.00 to him, but he would trust his firm and would make a loan to his firm, requiring no other security but the cheque P1. The plaintiff emphasized that early in March he had gone to the bank with the 2nd defendant for the specific purpose of seeing the 2nd defendant cash a cheque, that the 2nd defendant showed him the cheque which he looked at it along the journey for a long time and he could see the chop on it and another signature which the 2nd defendant said it was his mother's, but the plaintiff went on to say that besides going to the bank he and the 2nd defendant were going to have a look at the shop in respect of which they were going to enter into business together. 23. In re-examination, the plaintiff said he trusted the "credibility" of the firm itself rather than the 2nd defendant in respect of the 2nd loan, that he knew at that time that the firm was financially sound so as to pay back the loan of $500,000.00 and he was aware that the Chan family had substantial assets. The 1st defendant's evidence (DW1) 24. Her husband, Mr. Chan, who died in September 1979, had, among others assets, a gardening business called Tsui Wah Garden. On his death, she took over the business trading as the sole proprietress thereof. Her son, the 2nd defendant, who was studying in the United Kingdom at the time, was called back. He remained here ever since in Hong Kong as he was not interested to go back to the United Kingdom. She ran the business assisted by the 2nd defendant and her three daughters. Her husband's brother helped them for a year but she was (according to her Business Registration Application Form ExL P5) the sole owner and commenced business on 1st October 1979. The 2nd defendant and the 3 daughters were assigned various duties and responsibilities, but the 2nd defendant was not appointed the general manager of the firm and had no say in the financial administration. 25. The plaintiff was not pleased with the 2nd defendant's general conduct. He showed no interest in business and she did not trust him. However, as she thought it would be in the interest of the firm to import in it some male element and he was her son, she wanted to give him a chance to mend his ways, she made him one of the signatories to the Current Account which she opened with Nanyang Commercial Bank Limited, Tai Po Branch. The cheque book for that account was kept by the secretary, who whenever a cheque had to be drawn, would fill in the particulars, and then it would be signed by the 2nd defendant and herself who would affix the chop kept in her custody under lock and key. That was the procedure in normal situation, but in urgent situation she would put the chop on the cheque which she would sign handing it over to the 2nd defendant for him to take delivery of the goods or some commodities, allowing the 2nd defendant to fill in the particulars, i.e. the payee's name, the amount and date. According to her, that urgent situation arose only once and that was in the beginning of 1982. It arose in this way. It was a few days before Chinese New Year 1982. The firm owned a Mr. Wong Lai for "tangerines" supplied but the exact amount was not known. She issued a blank cheque, signed and chopped by her, to the 2nd defendant with instruction to fill in the relevant particulars and gave it to Mr. Wong in settlement. Subsequently, she had to issue another cheque in settlement of another customer's bill, thinking then that she had sufficient funds in the bank account to meet it as prior to issuing the blank cheque, she had paid in a cheque for $180,000.00 received from the Housing Department. The cheque which she subsequently issued was dishonoured because of unsufficiency of funds, and on enquiries she discovered that on that very morning the 2nd defendant had withdrawn all the money using the blank cheque meant for Mr. Wong. As a result, she decided not to allow the 2nd defendant to sign any cheque jointly with her. Instead of cancelling him as a signatory, she decided to instruct the Bank to suspend all payments from that account which she later confirmed in writing by letter dated 17th May 1982 ExL D2 reading:
According to her, as from that incident the 2nd defendant no longer worked in Tsui Wah Garden until the Chinese New Year 1983 when he came back and assisted her. 26. The 1st defendant proceeded to the United Kingdom and was away from Hong Kong from 1st July to 27th August 1982. Before leaving, she did not sign any blank cheque which he gave to the 2nd defendant. She denies that she signed the cheque P1 and said that her purported signature (Lee Mo Tai) thereon is not her signature. Pointing to dissimilarities, she says, referring to her purported signature on P1, that -
(She was asked by the court to write specimens of her signature when giving evidence, she did so. - see ExL D12). 27. She first learned about the cheque P1 about prior to January 1983 from her daughter. On enquiries, the 2nd defendant said it had nothing to do with her and he would take care of the matter with the plaintiff, and the 2nd defendant told her that he had stolen it as well as the chop when she was not there to see and she was not paying attention. She did nothing about it until the bailiff came to Tsui Wah Garden some time in May 1983 to execute the judgment against her in default of notice of intention to defend. 28. She testified that she had never authorised the 2nd defendant to obtain any loan from any source in relation to the Tsui Wah Garden that she did not know that the 2nd defendant was considering entering into business with the plaintiff, and that she could not remember having ever met the plaintiff or exchanged greetings with him. 29. In cross-examination, she explained that the 2nd defendant wanted to remain in Hong Kong, was not interested in the Tsui Wah Garden business and wanted to sit around doing nothing. He assisted her in the business from her husband's death to beginning of 1982 when he stole money on the blank cheque, then he ceased working for a whole year and only came back to assist early 1983, and he has now disappeared without leaving an address. Her attention was called to some passages of two affirmations she made for the purpose of setting aside the judgment by default (the said affirmations being on file). In that of 12/5/83 she stated at paragraph 3 -
She admitted having signed this affirmation after it was explained to her. Confronted with that passage, she said it was not true and what she had testified at the trial was true. She later on the same day (after an adjournment because she said she felt unwell) admitted these sentences to be correct, then she went back to her former assertion and said it was only on one occasion she gave the 2nd defendant a blank cheque with her signature and chop on it, and that she allowed him to draw cheques for the use of the firm not for his own use. Then she said there was a time about Chinese Near Year 1982 when the 2nd defendant and his wife (the latter was at one time the secretary of the firm) had possession of the cheque book and the chop of the company. 30. She was then referred to her affirmation of 7/5/83 paragraph 2, where she stated that the account was not suspended until about 17th May 1982. She admitted she said so but she had given verbal instructions to the Bank in February 1982. Then she was referred back to paragraph 4 of her affirmation of 12/5/83 reading:
While admitting she said so, she said she agreed the 2nd defendant drew money using cheques not authorised by her to get money, but she did not know if it was for settlement of gambling debts and he did so on more than one occasion, and she mentioned two occasions. Finally she said "At first, my eldest daughter and 2nd daughter were responsible for handling financial matters after my son left in May 1982. It was my habit to entrust financial matters to members of my family rather than attending to them myself. No, it was my eldest daughter that was responsible - all along it was her to handle the financial matters. My second daughter returned from England and handled my financial matters roughly from August 1982. Before August 1982, the eldest daughter did so. The latter was mainly responsible for the account of the firm and that was why she was not one of the signatories of the account. That business was run by one big family and any signature of either my daughter or my son would do" 31. Questioned about the financial position of the firm in June/July 1982, she admitted that at that period of time the firm had no ready cash to pay for the overdraft of $150,000 at the Nanyang Bank Commercial Ltd., Tai Po, but she said it teas not bankrupt as it had a lot of capital assets, and customers owed the firm money which it expected to collect on completion of certain projects. She admitted that during that period May to September 1982 the firm was in great need of cash, that a number of cheques were dishonoured but denied that she ceased operating an account with the bank because she no longer had overdraft facilities. She said the Government still owes the firm $1,000,000 for beautifying projects on Government estates. She denied the suggestion that she signed P1 or that if it was not signed by her it was signed by her son, the 2nd defendant, on her behalf with her authority, and that it was for a loan made to the firm by the plaintiff because the firm eras in financial difficulty. 32. In re-examination, she maintained she did not at any time in the middle of later part of 1982 receive any loan of $500,000 from her son or anyone. She explained that her second daughter Chan Shui Fun started to act as secretary of the firm around October 1982, that before that it was a person by the name of Eva who had been there about a year and before her, it was the 2nd defendant's wife. DW4's testimony 33. She is the 1st defendant's (DW1's) eldest daughter. She was a manager of Tsui Wah Garden with responsibilities on the technical side of the business and for tendering for Government estates projects. Her brother, the 2nd defendant, was also a manager but responsible for many aspects of the running of the firm which included financial matters and management of personnel. As manager with much responsibilities, she would submit tenders for Government estates projects and sign contract with Hong Kong Authorities on behalf of the firm. Her mother had no business experience, but would be informed of what she and her brother decided and she would sign cheques. 34. From October 1980, the 2nd defendant was actively involved in the business and this situation lasted a few months until about April/May 1981 After that, he shorted no interest and would only occasionally come to the office. In 1982, his interest slackened more and she had to do some of the supervisory works on the projects. He would only be interested enquiring if debts had been collected. By 1982, she was the one who was in fact running the business, attending to all responsibilities with the authorisation of the mother as "plenipotentiary". In 1982, she refrained from letting her brother know of the running of the firm as it was discovered that money was missing from the bank account and she suspected that money had been withdrawn by her brother using her mother's forged signature or her mother's signature obtained by fraud or inducement. Then one day, her brother admitted having used a cheque already signed by her mother and meant for payment to a customer to obtain $10,000 for his own use. She explained that her brother and his wife had custody of the cheque book until early March/April 1982, but she did not know who had the chop. Her brother and his wife were responsible for accounts and when later she happened to look at the accounts, they were all in a mess and on checking she thought $1,000,000 paid in and withdrawn were not accounted for. As a result of the embezzlement by her brother of the $10,000, she drafted the letter D2 which was signed by her mother and sent to the Manager of the Bank. As they did not know how many cheques, her brother might have in his possession, the bank account eras suspended. They did not tell the Bank exactly the reason for the suspension of the account as they found that embarrassing for the family. 35. DW4 went on to say that she knows her mother's signature and had seen her sign many times, and that there are 2 characters in the signature Lee Mo Tai on the cheque Exh. P1 which do not look like those in her mother's signature. According to her, as to the 1st character "Lee", the writing is different from that of her mother's writing in that her mother would usually employ a continuous stroke, that the lover part of that character is not written by her like on the cheque with upward stroke tapering towards the end, that her mother's writing would be clumsy and she would employ a balanced way of writing the whole character. The second character "Mo" in the middle looks very similar but usually that character would be written smaller when written by her mother, and the 3rd character "Tai" would be written in a crammed manner (showing what she means on D15) which is not the case on the cheque. 36. DW4 first learnt about the cheque P1 in May 1983 when she returned to Hong Kong from Shanghai, when the bailiff came. She did not know of any letter from solicitors to Tsui Wah Garden about the cheque in November 1982. She made enquiries from her brother but he did not answer. In July 1982 she was running the firm business, and she was not informed by anyone that a loan had been made by the plaintiff to Tsui Wah Garden. She thinks that her mother's signature on Exh. P1 was written by her brother, the 2nd defendant, because he had imitated her mother's signature and her own signature on a cheque (which she produced at the trial as Exh. D16), which she herself never signed. She had to meet the cheque and pay up, because her brother had been caught and taken by the creditor, and she got the cheque D16 back. 37. Cross-examined, she gave a more precise picture of the administration of the firm, stating that although she and her brother (the 2nd defendant) had their respective assignment of work as manager, the ultimate decision remained in her mother. She herself could not really say how her brother managed to cash cheques, and it appeared that her mother did not in fact know how that happened. She confirmed that it was the Secretary's duty to fill in the relevant particulars on a cheque for presentation to her brother (the 2nd defendant) and her mother (the 1st defendant) for signing, and that at one time, when the 2nd defendant's wife was secretary, the firm's cheque book and chop were in the custody of the 2nd defendant and his wife who was the secretary. In the middle of 1981 she discovered that the 2nd defendant had stolen money on the cheque and they tried to put a stop to it but from middle 1981 she was at odds with her mother and brother and she cannot say if her brother still managed to continue stealing. In any event, he was still drawing money from the account at the Nanyang Commercial Bank Ltd., Tai Po, and it was decided to send the letter D2 to the bank. They did not know what the 2nd defendant had concealed with him, he happened to have the cheque book with him and inspite of requests he never returned it stating that he had left it at his home, although he promised to do so. The Bank was not told the exact reason for suspending the account for face saving. 38. Questioned about her mother's signature, on the photocopy of the business registration form D5, she admitted that the 2 side strokes under the cross on P5 are also not connected and agreed that her mother's signature differs at times. She agreed that after her brother's theft of money in 1981, neither she nor her mother took any steps to warn the public at large about that, but stated that she did not know what her mother did, and if she chased after him for the return of the money. 39. In re-examination, she explained that before her mother took charge of the business in 1979, she seldom had to write any character, and that, therefore, say, in 1979 when she signed P5 her signature thereon would not have been stabilised, but that by 1982 it was stabilised and it was then different from the signature on P1 by reasons of the dissimilarities she had mentioned when giving evidence in chief. She is 100% certain that the signature on P1 is not her mother's signature for those reasons. DW2's testimony 40. Mr. Yu (DW2) was the Manager of the Nanyang Commercial Bank, Tai Po Branch, from 2/12/80 to September 1982. He confirmed that Tsui Wah Garden A/C No. 182-0 was opened on 18/12/79 with signatories to that account plus a chop, the signatories being the 1st defendant plus Chan Kon Yau, that later on the 10/10/80 the mandate was changed so that the signatories were the 1st defendant and her son (the 2nd defendant). It was an account with overdraft facilities to $150,000 which was increased to $200,000. The Bank received the letter D2 in May 1982, after receiving verbal instructions, to suspend the account. He remembered that the 1st defendant had told him verbally that there would be a change with regard to the signatories in future giving no reason. From 13/5/82 the Bank stopped paying from the account but after that date she paid 3 cheques with the consent of the 1st defendant after consulting her. In crossexamination, DW2 confirmed that there was no instruction to suspend the account prior to 13/5/82. He was no longer at Taipo Branch when the cheque P1 was presented for payment and rejected on ground "Not arranged for". He said that on such occasion the bank would not have checked on the signatories but simply refused to pay on the ground that it exceeded limit of overdraft. He knows the 2nd defendant as being the son of the 1st defendant and one of the signatories to the account. He was never told of the 2nd defendant's position in the firm. He knew the 1st defendant was the sole proprietor of the firm and, as far as he was concerned, the 1st defendant was the one in charge of it. DW3's testimony 41. Mr. Chan (DW3) has been the Assistant Manager of the Nanyang Commercial Bank Limited even during the time DW2 was the Manager. After DW2 left Taipo Branch in September 1982, he continued being Assistant Manager but in charge of it. His testimony is very much what DW2 testified. He was in charge of that branch of the Bank when P1 was presented for payment but he himself did not deal with it. He confirmed that the words "Not arranged for" mean insufficient money in bank and not implying that the signatories had been checked and found not in order. Findings As to the cheque P1 42. As I have already indicated, the first main issue in this case is the genuineness or forgery of the signature Lee Mo Tai (1st defendant's name) on the cheque P1. 43. On the evidence, I find that the 1st defendant attempted to conceal the whole truth when she testified that she had only issued blank cheques, signed by her and with the firm's chop thereon, on about 1 or 2 occasions. I find the whole truth is what she herself stated in paragraphs 3 and 4 of her Affirmation of the 12th May 1983 (which is at folio 18 of the record) which is that at one time she entrusted the 2nd defendant with a cheque book which contained blank cheques already signed by her (and obviously with the firm's chop thereon) for the purpose of making purchases for the firm, leaving the 2nd defendant to fill in the particulars of the purchase (and obviously the date and payee), and that she stopped that procedure when she discovered that the 2nd defendant had used blank cheques for cashing money for his own use, e.g. settling his gambling debts. I do not accept the 1st defendant's evidence that she verbally requested the bank as early as February or March 1982 of the suspension of the firm's account with it. Otherwise I think that the 1st defendant has told the truth. I also think that her daughter DW4 has also told the truth. 44. Neither side has called any handwriting expert to give evidence. Because of this, my task has been made more difficult on the issue of the genuineness or forgery of the 1st defendant's signature on P1. 45. The plaintiff relies on the following on this issue: (1) the fact that the cheque P1 is clearly a cheque of the firm with the firm's chop thereon. (2) the fact in evidence that about 4 months earlier, the 2nd defendant cashed a similar cheque with the firm's chop on it at the bank without any trouble. (3) the fact that the 2nd defendant is the son of the 1st defendant, and (4) the admission made by the 1st defendant in her affirmation of the 12/5/83 that she had on occasions given blank cheques, with her signature and the chop thereon, to the 2nd defendant for him to make purchases for the firm. I am asked to infer from these facts and surrounding circumstances in the case that the signature Iee Mo Tai on P1 is that of the 1st defendant, inasmuch as it is similar to whatever specimens of the 1st defendant's signature are before me. In addition, the plaintiff says that the 2nd defendant did tell him the 1st defendant had signed the cheque P1, but I do not think that this admissible against the 1st defendant since it was not said in the presence of the 1st defendant. 46. The 1st defendant's evidence on this issue comes from her own testimony and that of her daughter DW4. The 1st defendant testified that she did not sign P1 and that the signature Lee Mo Tai thereon is not her signature. DW4 has testified to the same effect. Both the 1st defendant and DW4 have testified about the dissimilarities in the signature. Lee Mo Tai on P1 and the 1st defendant's genuine signature. I have set out earlier when their evidence was referred what are the dissimilarities. They both referred to the dissimilarities in the first and last characters. Although they did not use very precise language, I understood what they meant. 47. For the purpose of comparison, it is necessary to have specimens of the genuine signature of the 1st defendant. For that purpose, I have before me -
True it is that (3), (4) and (5) are photocopies, however I think they are useful to determine if (1) and the last three characters of (2) are specimens of her usual signature which she has been using since she started running the firm at the end of 1979 and eventually if the signature Lee Mo Tai on P1 is the 1st defendant's genuine signature or not. 48. On comparison, I find that what the 1st defendant and DW4 have claimed as dissimilarities are correct. It is obvious to me that the first character Lee on the cheque P1 is not at all similar to anyone of the signatures (1) and (2) or photocopies (3), (4) and (5) in that what appears like a cross + (in the upper part of 1st character) written on the cheque is followed immediately underneath by a sort of horizontal stroke whereas in the signatures (1) and (2) and photocopies (3), (4) and (5) (which look all alike substantially at least) that does not occur. Also, what looks like a "Z" underneath in the lower part of the 1st character Lee is different on the cheque from that on the other mentioned documents (1), (2),(3), (4) and (5). The third character TAI is also different in that the lower part thereof on all the documents (1)(2)(3) (4) and (5) has something looking like two "ps", one superimposing the other but with the top of a " p" overlapping, whereas on the cheque there is only one "p ". 49. I would add that looking at the cheque P1, it appears to me that the two signatures thereon have been made by the same colour ink and from the same pen. So are the rest of the handwriting. Further, I would observe that, in her Affirmation of the 12/5/83, the 1st defendant, although admitting she gave blank cheques with her signature (and chop) thereon to the 2nd defendant, denied that she did sign the cheque P1. 50. I am of the opinion that the dissimilarities referred support the 1st defendant's allegation that the signature Iee Mo Tai on the cheque P1 is not hers and I believe both the 1st defendant and also DW4 on that issue. 51. I find that the signature Iee Mo Tai on the cheque P1 is a forgery of the 1st defendant's signature. 52. I also find that the 1st defendant did not authorise or concur in the drawing of the cheque P1. 53. On the evidence, I further find that the chop of the firm, without the 1st defendant's signature, was not at any time the signature of the firm. As to the alleged loan 54. As to the plaintiff's evidence, the following are my observations as to the circumstances in which he claims the loan of $500,000 was made by him to the 1st defendant's firm Tsui Wah Garden and as to the issue of the cheque P1 to him by the 2nd defendant:-
55. Bearing all these in mind, I am not prepared to believe the plaintiff's allegation that he in fact made a loan of $500,000 to the firm Tsui Wah Garden. I find it to be untrue, and that was not the reason why he received the cheque P1 from the 2nd defendant. I find that the said cheque was given not for a loan to the firm as the plaintiff alleges but for something else between the plaintiff and the 2nd defendant about which this Court has not been told the truth by the plaintiff. 56. Having come to the conclusion that there was no loan of $500,000 made to the firm Tsui Wah Garden by the plaintiff as he alleges, the plaintiff's present action must fail on that ground alone as he is suing on the cheque P1 as security given for this alleged loan. I would add that in this case, the plaintiff having failed to prove the loan alleged, the issues of ostensible authority and estoppel pleaded cannot therefore arise. Ostensible Authority- Estoppel 57. However, on the assumption that there was a loan of $500,000 made by the plaintiff to Tsui Wah Garden in respect of which the 2nd defendant issued to him the cheque P1, I will now pass on to the issue of apparent (ostensible) authority pleaded by the plaintiff which he claims binds the 1st defendant or Tsui Wah Garden firm. 58. The conditions for the doctrine of apparent (ostensible) authority are:
59. The facts pleaded by the plaintiff in respect of ostensible authority are set out in paragraph 4(a) to (b) of his Reply. Therein, the plaintiff alleges that the 1st defendant -
had thereby represented and held out the 2nd defendant as having full authority :-
60. The plaintiff goes on to aver that he advanced the said loan to the 1st defendant and/or her firm in the belief induced by such holding out that the 2nd defendant had full authority of the 1st defendant jointly to issue and sign a cheque of the 1st defendant's firm as security for the repayment of the said loan. 61. As to the issue of "holding out", the plaintiff can only rely on facts and circumstances emanating from the 1st defendant which the plaintiff was aware at the time of the alleged transaction, ie. the date of the alleged loan, which eras the 17th July 1982, induced by the alleged "holding out". For example, he cannot rely on the fact admitted in paragraph 4 of the 1st defendant's affirmation of the 12/5/83, which was not then known to him, that on occasions she used to give blank cheques with her signature and the firm's chop thereon to the 2nd defendant to allow the latter to make purchases for the firm, although such fact is evidence supporting the plaintiff's statement that on a previous occasion in March 1982, he saw the 2nd defendant cash a cheque on which there were his signature and another signature and a chop, or evidence on the issue of the genuineness or forgery of the 1st defendant's signature on the cheque P1. Nor can the plaintiff rely on what the 2nd defendant told him in the absence of the 1st defendant and which was not within her knowledge. In this connection, we read the following at Bowstead on Agency 14th Ed. at p.237.
It is important to bear in mind that the plaintiff admits that he never had any business dealing or transaction with the 1st defendant, and that all his dealings had been with the 2nd defendant in the absence of the 1st defendant. There is no evidence that the 1st defendant was aware of any dealing between the 2nd defendant and the plaintiff. Whatever the 2nd defendant may have said to the plaintiff, in the absence and not within the knowledge of the 1st defendant, as for example that he was the general manager of the firm or had full control of the firm, cannot bind the 1st defendant in the circumstances. 62. In my view, in this case on the facts in evidence, the only facts or circumstances on which the plaintiff can rely to prove the "holding out" are (1) that on a previous occasion in March 1982, he saw a cheque (and there is no evidence from the plaintiff as to what was the amount on the cheque) with two signatures thereon and a chop, one being the 2nd defendant's signature and the other apparently that of the 1st defendant according to what the 2nd defendant told him, and that the said cheque was on presentation to the Bank honoured in his presence, and (2) that on the 17th July 1982 the cheque P1 looked similar in form to the previous cheque with the two signatures and the chop thereon. In my opinion, these facts alone cannot constitute or prove a "holding out" by the 1st defendant or the firm that the 2nd defendant had the authority to transact a loan on behalf of herself or the firm. Moreover, it must have been quite obvious to the plaintiff, from the mere fact that there were two signatures on the cheque on either occasion that two signatures were required and that therefore the 2nd plaintiff could not himself alone be a person with full powers to represent the 1st defendant or the firm. I therefore find that the plaintiff has failed to prove there had been a "holding out" by the 1st defendant or the firm Tsui Wah Garden to the plaintiff that the 2nd defendant had her or that firm's authority to transact the loan of $500,000 as alleged. 63. Having come to this conclusion on the issue of "ostensible authority", the plaintiff cannot also succeed on the issue of "estoppel" which, as pleaded in paragraph 4(g) of his Reply, is based on the alleged "ostensible authority" of the 2nd defendant as agent of the 1st defendant or the firm Tsui Wah Garden. 64. In the result, the plaintiff's present action against the 1st defendant is dismissed. The plaintiff shall pay the 1st defendant's costs.
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