George Y.M. Wang v. Chantecler Restaurant and Bakery Ltd

HCA002929/1972

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 2929 OF 1972

-----------------

Coram: Briggs, C.J.

Date of Judgment: 27th May 1974

-----------------

JUDGMENT

-----------------

1. In this case the plaintiff claims for the return of $18,740 being money which he alleges he lent to the defendants in October 1971. The plaintiff is a doctor ordinarily resident in the United States. The defendants are a limited company which, amongst other things, operates a restaurant in Kowloon known as the Chantecler Restaurant. In the amended defence, the defendants deny that they have borrowed any money from the plaintiff at any time.

2. At the relevant time in 1971 one Mr. S.S. Kir (Kir Sig Sheng) was the Managing Director and Treasurer and the majority shareholder in the defendant company.

3. In June 1971 one of his daughters married the plaintiff, both parties being in the United States at the time. The marriage was not a success and the plaintiff divorced his wife in 1972. Mr. S.S. Kir died in September 1973 about a year after the writ in this action was issued.

4. The plaintiff said that some time in 1971, a few months after his marriage, his wife received a letter from her father, Mr. S.S. Kir. At that time the plaintiff and his wife were living in the United States: Mr. S.S. Kir was in Hong Kong. According to the plaintiff the letter stated that the defendants wished to raise money to meet the expenses of moving their premises: they had obtained a loan from the Bank on which they were required to pay interest at 18%: the suggestion was that if the plaintiff would lend the defendants money he would be repaid with interest at 12%.

5. The plaintiff knew that his father-in-law was the majority shareholder and Managing Director etc. in the defendant company. At the time he had some idle capital which was only earning 4 ½. So he agreed to lend the defendants HK$20,000. He therefore sent a cheque, No. 11-2469/1210, for US$3,340. The cheque was exhibited. It is drawn on the plaintiff's personal account with the Hong Kong Bank of California and crossed: the payee being the defendants - The Chantecler Restaurant Ltd.

6. The plaintiff told the court that at the time he thought that the proper rate of exchange was US$1 to HK$6. HK$20,000 at that rate would be US$3,333.30. He rounded this figure up to US$3,340. He said he did this for the purpose of easier book-keeping.

7. The plaintiff said he received no interest on this sum paid. He wrote to S.S. Kir, his father-in-law, about five times asking for the return of his money. He never communicated with the defendants.

8. The plaintiff said that as is the practice of banks in the United States, the used cheque was returned to him. He retained this in his desk because it was a valid legal receipt. His wife removed this before he divorced her and it was she who produced the used cheque as an exhibit in this case when she was called as a witness for the defendants in this action. In April 1972 before this action began the plaintiff obtained a photostat copy of the cheque from his bank.

9. In cross-examination the plaintiff admitted that though he is a Chinese, long residence in the United States has resulted in his having difficulty in spelling Chinese names in English and in writing Chinese characters.

10. He said his marriage began to flounder in December 1971. And he was emphatic that the sum represented by the cheque was a loan to the defendants and not a gift to his wife's father or to her family.

11. In re-examiration, he said that interest was to be paid on the loan at 3-monthly intervals and it was to be paid to his mother, Wang Shing Heung, who was resident in Hong Kong and known to his father-in-law.

12. The only other witness called on behalf of the plaintiff was his mother. She said that the plaintiff had been married before and that when he announced that he was to marry the daughter of Mr. S.S. Kir in her own words, she "had no feelings in the matter at all." The marriage was not negotiated between the two families. She got in touch with the Kir family and a bridal party was held in Hong Kong at which, of course, the bride and groom were not present. She said repeatedly that no present was sent by the plaintiff's family to the Kir family and that they never asked for one.

13. No other witness was called for the plaintiff. The burden of proof is on the plaintiff to show that the sum claimed by him was a loan and a loan to the defendants. He has proved that he drew a cheque for US$3,340 in favour of the defendants: that it was a crossed cheque and would, therefore, have to pass through the bank account of the defendants. And he swears it was a loan to the defendants.

14. The defence to the claim is in two parts. The first is contained in the evidence of HSU Sin Ching, a Director of the defendant company and SO Lai Kun, the company's accountant. The second part is found in the evidence of the two daughters of the late Mr. S.S. Kir.

15. The evidence of the two officials of the company was that the company had never borrowed any money from the plaintiff at all, indeed there had been no dealings between the defendant company and the plaintiff at all.

16. HUS Sin Ching said that towards the end of 1971 Mr. S.S. Kir handed him a cheque made out to the Company for US$3,340 drawn by Mr. Kir's son-in-law. He was asked to pass it through the defendant's account at the bank and to credit Mr. Kir's director's account with the amount. Copies of the relevant accounts were put in evidence, and it is clear that the cheque passed through the defendant company's bank account and that Mr. Kir's account with the company was credited with the amount of HK$19,650.50, which is the correct sum in Hong Kong dollars. This was not a normal transaction, Mr. Hsu said, it was done as a favour to Mr. Kir.

17. Mr. Kir had a deposit account with the defendant company at the time and in February 1972 it showed a balance in his favour of $108,000. This sum is shown as a liability in the audited account of the defendant company under the heading "Directors' Deposit Account". Mr. Kir had complete control of this account.

18. Mr. Hsu said that at the relevant time the Restaurant was doing well. They had banking facilities for an overdraft to the extent of over $100,000 but found it unnecessary to use them. This is borne out by the balance sheets which were put in evidence. Any loan made to the company would be shown in the account books. And no loan such as is claimed here is there to be found. Further, Mr. Hsu said that Mr. S.S. Kir never lent any money to the company.

19. Finally, he said that Mr. Kir had no power to borrow money on the defendant company's behalf. If money was to be borrowed by the company such a transaction would have to be discussed and approved by the directors. The sum in question in this case was never discussed in any meeting of the Board.

20. Mr. Hsu also made the point that the company did not move their premises in 1971. They last moved in 1965. Any loan made in 1971 could not have been for the purposes of covering such expenses. The accounts bear this out.

21. Further evidence as to the state of the finances of the defendant was given by the accountant of the company, Mr. SO Lai Kun This corroborates the evidence of Mr. Hsu and shows that the sum of $19,650.50 was not entered in the books of the company as a loan.

22. The evidence of the two daughters of Mr. Kir was to the effect that the plaintiff agreed to give his father-in-law a gift of HK$20,000.

23. Kir Wai Ying, the divorced wife of the plaintiff said that she and the plaintiff agreed that he would do this before their marriage as a gift of the marriage, referring to a not uncommon practice in Hong Kong. She said that the plaintiff was short of money at the time of the marriage so he postponed the payment of the sum until October 1971, four months after the marriage. He sent the sum of US$3,340 which he erroneously thought was the then equivalent of HK$20,000. It was not. Her father told her this so she sent a cheque for US$210 to make up the full amount. This latter cheque was drawn by her on a joint account with the plaintiff. It was made payable to her father personally. He deposited the amount in his deposit account with the defendant company. She explained why the plaintiff made his cheque payable to the Chantecler Restaurant Limited and not to Mr. Kir by drawing attention to the plaintiff's lack of knowledge of Chinese characters and the spelling in English of Chinese names.

24. She said that she sent the plaintiff's cheque to her elder sister, Kir Wai Ping, who was then resident in Hong Kong. This need occasion no surprise for there was evidence that the late Mr. Kir was illiterate. Kir Wai Ying said in her evidence that she or her sister when she was at home would assist her father by making out the books of cheques for him and like tasks. He could, however, and did sign his name in English.

25. There is in this case a direct conflict of evidence. The claim is for the return of money lent to the defendants.

26. Upon consideration of all the evidence in this case I have come to the firm conclusion that no loan was made to the defendants. The evidence of the two officers of the defendant company convinces me of that. Undoubtedly, money was sent by the plaintiff to Mr. Kir use being made of the defendant company's account. I see nothing remarkable in that: I am satisfied that the defendant company did not intend to borrow money either from the plaintiff or from Mr. Kir. The company was in a healthy financial state at the time and had more than adequate borrowing facilities. The Company had not recently moved their premises nor did they redecorate them in 1971. This is borne out by the accounts. Further, there is the evidence that there was no entry in the books of the defendant company of a loan of this amount and no payment of any interest. Mr. Kir was the father-in-law of the plaintiff and the majority shareholder in the company. It is reasonable to suppose that he would have ensured that any loan would be accounted for in the usual way. Mr. Kir's honesty has not been questioned.

27. I am inclined to accept the evidence of Mr. Kir's two daughters as to the reason the gift was made. Normally, of course, a wedding gift such as is mentioned in this case is made prior to the marriage. And I have borne in mind the fact that the younger daughter may have had some ulterior motive when giving evidence against the plaintiff. I did not see her give evidence since she gave her evidence de bene esse. It is unnecessary for me to come to a conclusion of fact as to the reason for the gift. However, I do find as a fact that the sum was paid as a gift to the late Mr. Kir and was not a loan to the defendant. In reaching the conclusion I am rejecting the evidence given by the plaintiff to the contrary.

28. There will be judgment to the defendant with costs.

Representation:

C.P. Lee (P.K.H. Wong & Co.) for Plaintiff.

H.Y. Leung ( Edmund Cheung & Co.) for Defendant.