Chan Shiu Yung v. Tse Koon Kau

HCA007460/1982

IN THE HIGH COURT OF JUSTICE

BETWEEN

Coram: Hon. Mantell J.

Date: 6th October, 1983.

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JUDGMENT

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1. This is a sorry tale of unwise speculation which, to borrow a phrase, resulted in a bad case of burned fingers. The plaintiff is a married lady no longer, if she will forgive me for saying so, in the first flush of youth. She told me that she has never learnt to read or write. But that she is a competent and thrifty housewife, there can be no doubt as evidenced from the fact that by April 1980, she had managed over the years to save $210,000, all of which came from allowances made by her husband out of his business as a cafe proprietor. They were her life savings and she formed the intention of investing then, profitably.

2. So, the scene is set. The other dramatis personae are as follows. The defendant, now aged 82 and sadly as became apparent, during the hearing, frail from old age and ill health. One must suppose him to have been more robust in 1980. He was then a respected and trusted elder of his village. He was one of two directors of Jing Lun Co. Ltd., a shoe manufacturing company. He was one of several shareholders of that company and he was a witness in this action. There is the defendant's son who was the other director of Jing Lun and also a shareholder. He was not a witness. There is the plaintiff's husband. He was not a witness. And there is the plaintiff's husband's younger brother also not a witness.

3. Now, the plaintiff told me that she had mentioned to her husband her intention to invest some or all of her money but that conversation was private. I infer the conversation to have been a private one from the fact that she described it as "pillow talk". Nonetheless, some time after her conversation with her husband, she received a deputation consisting of the defendant and her husband's younger brother. She had not discussed her intentions so far as investment was concerned with her brother-in-law but somehow, and one can only speculate as to the means, he had come to hear of them.

4. According to her, the defendant offered her the opportunity of investing in Jing Lun. There was, he said someone who had shares on offer. They could be hers for upwards of $100,000 or as it turned out, more precisely for $150,000. She gave him a cheque which is part of the Agreed Bundle of documents for $150,000. The cheque was paid into the defendant's bank account. Two or three weeks later, again with her brother-in-law, the defendant came to see her again. For what she had in mind, $100,000 was not enough. He wanted much more. She was only able to raise $60,000. She gave him a cheque for $60,000. The cheque was paid into the defendant's bank account.

5. On each occasion, the cheque was not handed over directly by the plaintiff to the defendant but was taker to him a day or so later by her husband. But with regard to this, the plaintiff was adamant that on each occasion that she spoke with the defendant being the occasions giving rise to the handing over of the two cheques, she was making it plain that the money was to be used for the purchase of shares. She never received any share certificate nor were any shares purchased on her behalf. That is common ground.

6. She told me, and this I accept, that she asked the defendant more than once about what had happened to her money and when was she going to get some shares and more particularly, wasn't it about time that they went to a solicitor's office to get the thing sorted out. And on each occasion, she said, and 1 accept, that he told her that matters were proceeding and in effect, told her not to worry.

7. Now, if the plaintiff is right in telling me that she gave the gooney to the defendant so that he might use it to acquire shares on her behalf, then certainly what happened to her money was not that because it appears from the defendant's evidence supported by receipts in the Agreed Bundle of documents that in total the sum of upwards of $430,000 which included the $210,000 received from the plaintiff had been paid partly to Jing Lun and partly to solicitors acting for Jing Lun but not for shares. The receipts show, as was the defendant's evidence which I accept, that $50,000 was applied as a deposit for the transfer of the workshop, $80,000 in settlement of some of Jing Lun's debt and $250,000 for the balance of the price of the workshop itself, for plant, workshop decoration and chattels. The money which was not paid directly to Jing Lun but which, for the purposes of this action I shall assume ended up with Jing Lun, was paid to solicitors and was expresses to be partly purchase money and partly costs on account.

8. Now, the plaintiff's claim is the money had been received to her use. She calls on the defendant to account for the money which he received. The fact that the claim is put in that way now is important and I shall explain why. As originally cast, the Statement of Claim was for breach of contract.it alleged that there had been a contract between the plaintiff and the defendant for the sale and purchase of shares, that the money had been paid to the defendant as the purchase price of the shares and that the defendant was in breach of contract in failing to transfer the shares in a reasonable time or at all. Rescission was claimed. Now, as the case was opened to me and as it appeared daring the course of the plaintiff's evidence, it was apparent that the claim as framed was misconceived and I made that view known on the first day of this hearing to Miss Wong who appears for, the plaintiff and I gave her the opportunity of considering the matter and applying for such amendment as she thought appropriate this morning. I thought I have made it plain enough to counsel what it was I thought was the proper form of pleading and I think I was understood certainly by Mr. Wong. This morning, Miss .gong duly did make application but not in the manner which I had expected and at that point, in the most courteous manner possible and entirely properly in the interests of his client, Mr. Wong interposed to express what lie felt was a justifible grievance, namely, that the court. appeared to be intervening in the cause of one of the protagonists by suggesting a form of pleading other than that which the plaintiff had chosen to adopt and a form of pleading, which Mr. Wong felt, was the only appropriate one if the plaintiff was to succeed on the case as presented. Well, I agree that that in making the observations I did on the first day and in giving a further opportunity to Miss Wong to amend today, I was assisting the plaintiff to put her house in order so far as the pleadings were concerned. Further than that, when in the event, no application was made which, in my judgment, gave me the opportunity of deciding this Case on the real issue between the parties, I did direct an amendment to the Statement of Claim so that if it should include in the alternative, a claim for money had and received to the use of the plaintiff. I took the view having invited argument from the Bar that under the rules, I was entitled to so direct in the exercise of my discretion, provided always that in doing so, the result would not be unfair to the defendant. By which I mean unfair in the sense that he would be prejudiced in this trial. I concluded that in doing as I did, the defendant was not prejudiced because the case advanced on behalf of the defendant would have been the same factually however the pleadings have stood at the outset and when I gave Mr. Wong the opportunity to seek an adjournment or to call further evidence or to seek leave to Cross-examine the plaintiff again, he declined the opportunity. But I mention those matters now so that they should appear in my judgment, in Case it be thought hereafter, that my direction with regard to the pleadings gives rise to a justifible grieveance on the part of the defendant. I also mention them now because they may be relaxant in any subsequent application made to me as it will become apparent in the course of this judgment that the plaintiff Can only succeed by reason of that amendment and that it was not open to the plaintiff to succeed on the pleading as it stood prior to the amendments made this morning, it being her Case, there was no contract between the plaintiff and the defendant and no breach of Contract.

9. The defendant's case as pleaded and as supported in evidence is that he was a member of a syndicate on consortium seeking control of Jing Lun. I summarise when I say that he invited the plaintiff to join that syndicate together with her husband and her brother-in-law. Their Contribution towards the funds of this joint enterprise was to be the sum of $210,000. The defendant's case is that the plaintiff knew that it was intended that the money should be applied to the acquisition of the workshop and plant of the Jing Lun Company and to the discharge of some of its debts. She was in agreement with that overall plan. Indeed, she was present at two important meetings when it was discussed, one of them, which sticks in my mind, being at a seafood restaurant. In the event, the money having been used in that way, the company was the subject to a winding-up order and all the money was lost. lie is very sorry but it is just too had.

10. He was not cross-examined for this reason. He finished his evidence in chief late yesterday afternoon and the court adjourned. This morning, he was not well enough to attend and I readily accept that that is the case because it was obvious to everyone in court yesterday afternoon that the old gentleman was not well. That presented a difficulty. The matter was considered by counsel and in the event, Miss Wong did not make any application for adjournment although I indicated had she done so, I would willingly have granted it. So, what I have to do is to take account of his evidence such as it is bearing in mind that it could not be tested in cross-examination. An important matter relating to two aspects of his evidence however I cannot disregard. That was his evidence about the two meetings at which, he said, the plaintiff was present when without saying in terms what was discussed, he made it plain that the overall strategy of the joint enterprise was discussed.

11. Now, those matters were never put in cross-examination by Mr. Wong to the plaintiff and I can only conclude that hitherto he had not been instructed about them. That is not to say that I consider the defendant eras not trying to tell me the truth about that; rather do I think it probable that either he forgot to tell his instructing solicitor, Mr. Wong, about them or that by the time he gave evidence, he had forgotten who was at the meeting. Indeed, from time to time during the course of his evidence, as I think we all well remember he referred to his age and infirmity and claimed that certain matters were not easy for him to recall. And so, should it appear that I reject his evidence, and in some respects, I do, please do not let it be thought by anyone that I do so because I do not believe that he was attempting to tell the truth. I think that after the passage ore several years and the intervention of ill health, he may very well believe that what he was saying to me was precisely the truth. But, on all the essential matters, I do accept the evidence of the plaintiff. I have not found it easy to come to a conclusion about the evidence and I bear in mind that in the first place, the burden of proof in this case must rest upon the plaintiff and I have so approached the matter. The plaintiff is not a lady to whom the language of commerce comes easily. In fact, I judge that she is totally inexperienced in such matters. There is a discrepancy between her original pleading and her case as presented. Originally she was alleging that she was intending to buy the shares of Wing Tai Fung and there did come a time when she referred to that company in her evidence as being the company in which she intended to invest rather than Jing Lun. That was not a very satisfactory part of her evidence. Still, I am satisfied that whether or not she gave instructions to the defendant which were as plain as might be desirable in a commercial enterprise of this kind, she did not at any time authorise the use of the money that was in fact, made of it. Being satisfied of that, she is bound to succeed. If it, be the case that all those matters are to be proved on the balance of probabilities by the plaintiff, I am satisfied that they have been proved. It is my own view, upon which I invited argument, that in a case of this sort where the claim is laid as one of money having been received by the defendant to the use of the plaintiff that once it is established that the money has been received by the defendant to the plaintiffs use, the evidential burden shifts to the defendant to show that the use he made of it was an authorised use onto account. for it in some other way. If I am right about that, though it is not necessary for me to decide it in the circumstances of this case, it mast follow in view of what I have said about my view of the evidence, that the defendant would not have discharged that burden.

12. Consequently, there will be judgment for the plaintiff in the sum of $210,000. Counsel have agreed that the appropriate rate for interest is 11½% and that it should run from the date of the writ. I order accordingly. Having heard argument from counsel with regard to the question of costs and for the reasons which appear in the body of my judgment, I am going to order that the costs of this action up to the, date of the amendment this morning which enabled the plaintiff to succeed be paid by the plaintiff which, of, course; include the costs thrown away, if any, by the amendment. Any costs incurred after the time of the amendment, if it is possible for such a division to be made, to be paid by the defendant. Liberty to apply on the question of costs.

Representation:

Miss H. C. Wong (K.M. Lai & Li) for Plaintiff.

Mr. Alexander Wong (Laurence Pang & Co.) for Defendant.