Siu Kwan v. Lam Fat and Another
Read the full judgment text of HCA 1125/1968 on BabelCite. This High Court CFI judgment was delivered on 22 July 1969.
1. The plaintiff claims $61,000 from the first and second defendants as drawers of a cheque dated 1st August 1968 drawn upon the Wing On Bank Limited, Wanchai branch, payable to the plaintiff. The cheque was dishonoured upon presentation on 12th August 1968, the reason for the dishonour being "insufficient funds".
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HCA001125/1968 IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 1125 OF 1968 -----------------
----------------- Coram: Blair-Kerr, J. in Court Date of Judgment: 22 July 1969 ----------------- JUDGMENT ----------------- 1. The plaintiff claims $61,000 from the first and second defendants as drawers of a cheque dated 1st August 1968 drawn upon the Wing On Bank Limited, Wanchai branch, payable to the plaintiff. The cheque was dishonoured upon presentation on 12th August 1968, the reason for the dishonour being "insufficient funds". 2. The plaintiff sought an order for summary judgment under 0.14, r.1; and the first defendant consented to judgment being entered against him for the sum of $61,000 and costs. On 16th October, the second defendant was granted leave to defend provided she complied forthwith with the following conditions:-
3. The second defendant failed to comply with any of these conditions; and on 19th October 1968 the plaintiff entered judgment against her for the sum of $61,000 and costs. 4. The plaintiff then applied for a charging order on the second defendant's flat; and an order nisi was made on 26th October. However, it then came to the plaintiff's knowledge that on 14th October the second defendant had assigned the flat to her mother; and it is now common ground that although the conveyance purports to show that the consideration for the assignment was $40,000, in fact no money passed. 5. The second defendant was imprisoned under Order 49B. However, on 22nd November, the Full Court allowed her appeal against the conditions which had been imposed when granting her leave to defend. The judgment against her for $61,000 and all subsequent proceedings were set aside; and she was released from prison. 6. The plaintiff has been in he suckling pig business since 1958. His present firm (Sang Cheong Sui Lap Shop) carries on business at 296, Shanghai Street, ground floor. According to him, this firm was started in 1965, although it was not registered under the Business Registration Regulations until 20th September 1968 - some three weeks after the writ in this action was issued. In his application for registration, he stated that he had one partner, a man named Mak Cho; and, in evidence, he said that he had a 70% share in the firm and that Mak Cho had a 30% share. 7. Most of the suckling pigs dealt with by Sang Cheong are purchased from an organization operating in Mainland China. During the disturbances in 1967 there was an embargo on the export of pigs from China; and this commodity was in very short supply in Hong Kong for about six months or so. 8. Mak Cho's family reside in Macau; and during the 1967 disturbances, he and the plaintiff conceived the idea of purchasing pigs, slaughtering them in Macau, and importing the pork into Hong Kong. They each put up $10,000; pork was imported daily into Hong Kong from Macau by lighters and sold to stall-holders for cash at very enhanced prices. According to the plaintiff, the cash so obtained was returned to Macau daily and used for the purchase of more pigs; all profits were kept in Macau in the home of Mak Cho's mother-in-law; and by December 1967 he and his partner had accumulated in Macau about $160,000. 9. As regards the cheque for $61,000, the plaintiff's case is this: that since 1965 the first defendant has sold pigs for him on a commission basis; that in July 1966 the first defendant introduced the second defendant to him as his concubine and the two defendants had played mahjong at the premises of Sang Cheong on a number of occasions between 1966 and 1968; that, in May 1968, the first defendant said that he wished to borrow $61,000 because he and the second defendant wished to purchase a flat at Man King Building, Man Wai Street, Kowloon, for $50,000; that the balance of $11,000 was the estimated cost of decorating the flat, buying furniture and paying solicitors' fees; that the second defendant was expecting to receive money from a relative in Thailand; that they anticipated that the loan would be repaid in two months' time; that the first defendant said that he and second defendant would give him (the plaintiff) a post-dated cheque for the amount of the loan; that he was reluctant to lend $61,000 to the defendants, but that the first defendant put pressure upon him by threatening to stop working for Sang Cheong as a canvasser and to canvas business for a competitor of the plaintiff in the suckling pig business; that Sang Cheong was making about $200 per day from business introduced by the first defendant; that if he had carried out his threat, the business of Sang Cheong would have decreased by about 60%; that he (the plaintiff) accordingly agreed to lend $61,000 to the defendants; that the first defendant said that the loan should be made not later than 28th May 1968; that he (plaintiff) arranged for $57,000 to be brought to Hong Kong from Macau; that on 28th May the first and second defendants came to the cockloft of 296 Shanghai Street, ground floor; that the second defendant took a cheque book out of her bandbag and handed it to the first defendant; that he saw the first defendant write out a cheque for $61,000 in his favour and date it "1st August 1968"; that he saw the second defendant sign the cheque; that she then passed it back to the first defendant who also signed it; that he (the plaintiff) then handed over $60,000 in notes of $500 denomination and $1,000 in notes of $100 denomination; that the defendants counted the money; that the second defendant put the money in her handbag; that on 27th July the first defendant asked him not to present the cheque on 1st August because the remittance from Thailand had not arrived; that on 4th August he (the plaintiff) asked the first defendant what was the position as regards the remittance from Thailand and that the first defendant again said that it had not arrived; that he (the plaintiff) presented the cheque on 12th August; and that it was dishonoured. 10. The plaintiff called Mak Cho as a witness; and he confirmed the plaintiff's evidence that he and the plaintiff traded under the name Sang Cheong and that their shares in this firm were respectively 30% and 70%. He also confirmed the plaintiff's evidence relating to the importation of pork by lighter during the 1967 disturbances. He said that he regarded this as an extremely risky business in view of the communist embargo on the importation of pork into Hong Kong during that period. He confirmed the plaintiff's evidence that their profits were kept in Macau at his mother-in-law's home and he said that in May 1968, at the request of the plaintiff, he arranged for the transfer of $57,000 in cash from his mother-in-Law's home in Macau to the plaintiff in Hong Kong. He said he had no knowledge of the purpose for which the plaintiff intended to use this money. 11. The plaintiff also called the first defendant as a witness. He appeared on sub-poena. He said that on 14th May 1968 he asked the plaintiff to lend him $61,000; that he told the plaintiff that the reason for the loan was that the second defendant was purchasing a flat at Man King Building for $50,000; that the balance of $11,000 was required for solicitors fees, decorating the flat, and for the purchase of furniture; that the loan would be repaid when the second defendant received a remittance from a friend of hers which she anticipated would be within two or three months; and that he and the second defendant would sign a post-dated cheque in favour of the plaintiff. He also alleged that he told the plaintiff that if the remittance was not received he (the first defendant) would mortgage the flat; - presumably to repay the loan. The first defendant confirmed the plaintiff's evidence regarding the signing of the cheque and the alleged acceptance by the second defendant from the plaintiff of $61,000 in cash. 12. As regards the purchase of the flat by the second defendant, it is not in dispute that on 24th April 1968 she paid a deposit of $2,000 to the vendors; that on this occasion she signed a "provisional receipt" in which she agreed that on 3rd May she would pay $25,000 towards the purchase price and execute a formal sale and purchase agreement at the offices of the vendors' solicitors, failing which the deposit of $2,000 would be forfeited and the vendors would be entitled to re-sell the premises; that by this "provisional receipt" she further agreed to pay the balance of the purchase price of the flat on 30th May, 1968. The last clause of the "provisional receipt" reads:
In view of this clause, the net amount payable on 3rd May was $23,000. In fact no payment was made on 3rd May; but on 8th May $23,000 was paid by the second defendant to the vendors' solicitors. On 29th May the balance of $25,000 was similarly paid; and the assignment in her favour is dated 4th July 1968. 13. The second defendant is 26 years of age and she is unmarried. She is, or at any rate until April 1968 she was, a dance hostess. A son was born to her some 7 or 8 years ago. On her own admission, she is a gambler; and she has been admitted to hospital on several occasions for treatment for bleeding stomach ulcers caused, according to her, by her consumption of alcohol. 14. It would appear that she has never given her body exclusively to any one man. Between 1966 and 1968 she cohabited with the first defendant and had sexual intercourse with him on numerous occasions; but she also slept with other men during this period. 15. In April 1967 she opened a Savings Account with the Far East Bank. This account shows that on 7th May, 1968 there was a deposit of $20,000; that on 8th May, 1968 there was a further deposit of $3,100; and that on 8th May there was a withdrawal of $23,000. 16. In April 1967 a current account in the Wing On Bank, Wanchai Branch, was opened in the joint names of the first and second defendants. Cheques drawn on this account required the signatures of both defendants. The only sum credited to the account was $5,000 on 10th April, 1967. According to the second defendant, this sum was the proceeds of sale of a lorry which she had previously purchased for her father. The bank statement shows that, on 13th April 1967, $1,000 was withdrawn from that account; that, on the 17th April 1967, $3,100 was withdrawn; that on 22nd May 1967, $351 was withdrawn; and, that on 26th June 1967, $500 was withdrawn. The account has not been operated since June 1967; and when the cheque for $61,000 was dishonoured on 12th August, 1968, the credit balance was $49. 17. A key personality in this case is a man named Lam Chong Ming. He is a wealthy business man who resides in Thailand but whose business interests, whatever they are, necessitate his visiting Hong Kong frequently for short periods. He has a number of agents (or "contact men", as counsel for the plaintiff described them) in Hong Kong; and one of these contact men is a person named Lam Kee Siu. Lam Chong Ming is 51 years of age; and he has two wives in Thailand and 10 children by them; but it appears that early in 1968 he asked Lam Kee Kiu to arrange for him to meet a woman with whom he could cohabit during his periodic visits to Hong Kong. Lam Kee Kiu did so. How he got in touch with the second defendant is not clear; but it appears that he must have known her prior to April 1968. He said in evidence that she told him that for some considerable time the first defendant had been living on her earnings as a dance hostess; that she was frightened of him and that she wanted to get out of his clutches. In any event, Lam Kee Siu introduced her to Lam Chong Ming about the middle of April 1968. 18. The first defendant heard about the proposed relationship between the second defendant and Lam Chong Ming. He was not averse to sharing her favours with the wealthy Thai merchant; but he very quickly saw a chance of turning the situation to profit. He therefore suggested to the second defendant that this was a glorious opportunity to squeeze very considerable sums of money out of Lam Chong Ming. She admitted in evidence that initially she agreed to the first defendant's suggestion. Lam Kee Siu put it rather differently. He said that she pretended to the first defendant to agree with his suggestion that Lam Chong Ming be "cheated", but that in fact she was hoping to "hook" the wealthy Thai merchant and be independent of the first defendant. 19. According to the second defendant, the first defendant told her that he was a partner in Sang Cheong; that this firm was short of capital; that the idea was that Lam Chong Ming should be persuaded to buy her a flat in Hong Kong, and that she should then mortgage the flat and give the money which had been borrowed upon the security of the flat to the first defendant to enable him to purchase the equipment for Sang Cheong; that she agreed to the first defendant's proposals and set about persuading Lam Chong Ming to buy her a flat. 20. The first defendant said in evidence that he was not a partner in Sang Cheong and that he had never given the second defendant any reason to think that he was a partner. He denied that he ever suggested to her that she should raise money for him to purchase equipment for Sang Cheong by mortgaging the flat. He agreed that the purchase of a flat formed part of their plan "to cheat" Lam Chong Ming; but he was rather vague as to the methods to be employed to achieve this result, although he did suggest that he and the second defendant had agreed "to use the yellow leg chicken method". I understood this to mean that once the flat had been purchased, the first defendant would burst in upon the second defendant and Lam Chong Ming at a time when he expected to find them in a compromising position; that he would then accuse Lam Chong Ming of committing adultery with "his wife" and blackmail him into paying a large sum of money. The first defendant said that at one stage he had contemplated "squeezing" several lakhs of dollars out of the Thai meronant by such methods. 21. Lam Chong Ming said that no sexual intercourse took place between him and the second defendant on his first meeting with her because he left for Japan almost immediately, that he then returned to Hong Kong and spent four days here before returning to Bangkok towards the end of April 1968; and that during this period of four days he had sexual intercourse with the second defendant on one occasion and had tea with her on several occasions. 22. There is no doubt that Lam Chong Ming regarded the second defendant as entirely suitable for his purpose; and, recognizing this, the second defendant asked him to buy her a flat in Hong Kong. In evidence she said:
It is not in dispute that Lam Chong Ming gave her U.S.$350 before he left for Japan; and on 7th May 1968 (i.e. about a week after he left Hong Kong) he remitted $20,000 to her through one of his agents in Hong Kong. She said that this was the $20,000 which was credited to her account with the Far East Bank on 7th May and formed the greater part of the $23,000 which she paid to the vendors' solicitors on 8th May. 23. In evidence she alleged that, after she had received the $20,000 from Lam Chong Ming on 7th May, she told the first defendant that she did not wish to carry on with their plan to "cheat" the Thai merchant. The reason she gave (and she admitted that she told the first defendant a lie) was that no intercourse had taken place between her and Lam Chong Ming, and that she did not feel like indulging in intercourse with him! I find it very difficult to understand how she could have expected the first defendant to accept that story! 24. Lam Chong Ming did not visit Hong Kong between the end of April and 28th May 1968. The second defendant spoke to him by long-distance telephone and she met him at Kai Tak Airport on 28th May. On 29th May Lam Chong Ming drew $26,000 by means of a cheque drawn in his favour by his Hong Kong agents; and he and the second defendant said in evidence that, upon cashing this cheque, they proceeded to the offices of the vendors' solicitors and that they paid the balance of $25,000 in respect of the purchase price of the flat. 25. Lam Chong Ming remained in Hong Kong for a few days on this occasion; and after his departure the first defendant spoke to her. My note of her evidence reads:-
She then said that on a day in June or July 1968, the first defendant came to Flat 42, 15 floor, Man King Building and demanded $1,000; that she gave him the cheque book relating to their joint account with the Wing On Bank; that she saw him write on a cheque the Chinese characters for "one thousand dollars only" but that the date and the payee's name were left blank; and that she signed the cheque and saw him put it in his pocket. 26. The second defendant admits that, except during the periods when Lam Chong Ming was in Hong Kong, she had sexual intercourse with the first defendant till August 1968. She alleged, however, that she received no money for her favours and that she permitted the first defendant to have intercourse only because he threatened to inform Lam Chong Ming about their relationship if she refused to accede to his advances. 27. The first defendant said that he and the second defendant cohabited till 15th August on which date they quarrelled because she refused to repay the money which, he alleged, she had borrowed from the plaintiff. 28. It is not in dispute that she travelled to Bangkok on 17th August to visit Lam Chong Ming. When she gave evidence she gave no indication that Lam Kee Siu had accompanied her on this trip; but when Lam Kee Siu gave evidence he so informed the Court; and he was not challenged on this. 29. It also appears that, when the second defendant and Lam Kee Siu were in Bangkok, the first defendant wrote a number of offensive letters. Lam Kee Siu said that he received one such letter; and the second defendant and Lam Chong Ming said that they each received an offensive letter from the first defendant. The letters were not produced in evidence; but it appears that the first defendant accused Lam Chong Ming of taking away "his wife" and that he accused the second defendant of cheating him. At any rate, she showed Lam Chong Ming the letter which she had received; and she returned to Hong Kong with Lam Kee Siu shortly afterwards. 30. On her arrival in Hong Kong, she heard for the first time that she was going to be sued for the sum of $61,000. She said in evidence that she thought about the matter and came to the conclusion that the first defendant must have forged the cheque for $1,000 into a cheque for $61,000 by inserting the Chinese characters for "sixty" immediately after the Chinese character meaning "dollars" and by inserting the numeral "6" immediately prior to the numerals "1000". 31. She went on to say that she then checked the bank account at the Wing On Bank, and found for the first time that a cheque for $3,100 dated 17th April 1967 had been cashed. She said that she then recalled that on one occasion when she was playing mahjong she found that she was short of money; that she asked the first defendant to cash a cheque for $100; and that it appeared to her that he had forged this cheque by inserting the character for "three" immediately after the character meaning "dollars" and by inserting the numeral "3" before the numerals "100". 32. The case for the second defendant as pleaded in her statement of defence, is that the cheque for $1,000 was forged by the first defendant as described by her in evidence; and that because the cheque has been materially altered within the meaning of s.64 of the Bills of Exchange Orders she is not liable on it. Paragraph 3 of the statement of defence proceeds thus:
There is no further reference in the statement of defence to the nature and scope of the alleged fraudulent conspiracy. It was put to the first defendant that by the end of May or beginning of June 1968 he knew that the second defendant was not going to participate further in any plan to extract money from Lam Chong Ming; that, in his rage, he conceived the idea of cheating her out of $61,000; and that to perpetrate this fraud on her, he "enlisted the assistance of the plaintiff" who was his "close associate". The details of the manner in which the first defendant "enlisted the assistance of the plaintiff" and how the plaintiff was persuaded to lend his assistance was not put to the first defendant; nor was the defence, as it eventually emerged at the trial, ever put to the plaintiff; and it was not suggested by any of the witnesses that the plaintiff was aware of the conspiracy between the two defendants to cheat Lam Chong Ming. 33. I accepted the plaintiff's evidence that in 1967 he and Mak Cho made a very considerable profit from their business of importing pork from Macau and selling it at inflated prices. Even if the profits so made should have been declared for purposes of Business Profits Tax (and counsel for the plaintiff does not accept that to be the position in law) I certainly do not regard this fact as tending to prove that no such profits were made; and, although one might ordinarily suspect a story about two businessmen keeping a large sum of money in the house of a relative in Macau, one has to remember that the business in which the plaintiff was engaged during the latter part of 1967 was very risky. There is no doubt in my mind that in May 1968 the plaintiff was in a position to lend $61,000. The vital question, of course, is whether he did in fact lend $61,000, and, if so, whether the money was loaned to the first defendant only or to both the first and second defendants as described by him. In this connection, the allegation is that it was an interest-free loan. 34. The plaintiff appeared to give his evidence in a straightforward way. He was not shaken in cross-examination; and, as I have said, it was never put to him that he was in a conspiracy with the first defendant to cheat the second defendant. I was quite impressed with him; and, at that stage, my feeling was that the second defendant would have an uphill job to establish that she was not liable on the cheque. 35. However, when the first defendant was giving evidence, I began to have serious doubts about the matter. In my view, he is an utterly unscrupulous individual. In 1967, he was well aware that the plaintiff had flouted the Communist embargo upon the importation of pork into Hong Kong; and no doubt he knew that the plaintiff had made a considerable profit out of this business. I accepted the plaintiff's evideence that, for some reason or other, Sang Cheong continues to be dependant upon the first defendant for canvassing business and that the first defendant, if so minded, could even to-day, take away about 60% of the business of this firm in suckling pigs. The plaintiff has made no effort to recover the amount of his judgment debt against the first defendant; and the reason he gives is that he is not prepared to lose 60% of his business. Be that as it may, there is no doubt in my mind that the first defendant was in 1968, and is to-day, in a position to bring pressure to bear upon the plaintiff, and that he is not the sort of person who would have any scruples about doing so if he thought that this would bring him financial gain. 36. The second defendant is a rather pathetic little soul. As I have said, her drunken, gambling and immoral life is beginning to take its toll of her body and mind. She has a Chinese nickname which was translated as "cross-wires". She was completely unable to co-relate events. It was a waste of time asking her how long before such-and-such an alleged event something else happened. Counsel for the plaintiff submitted that she was prevaricating because her evidence about the signing of the cheque for $1000 was untrue. I do not feel that I can accept that submission. She appeared to realise the dangers inherent in being closely questioned in Court; but her refusal to answer many of counsel's questions was, in my view, simply because she had no clear mental picture of the order in which many events occurred. A court must necessarily be very careful indeed before accepting anything alleged by a witness of this kind. 37. Nevertheless, I feel that certain things are reasonably clear. In my view, this young woman was very much under the influence of the first defendant. It was at his suggestion that the joint account in The Wing On Bank was opened although the initial credit of $5,000 was her money. Although she was his mistress for over two years, there was no evidence that he paid her a cent. I accepted her evidence that on one occasion the first defendant and a friend of his tried to enlist her help in some scheme which involved the forging of Macau betting slips. I also accept her evidence that she did not sign a cheque for $3,100 on 17th April 1967; and that in all probability, the cheque which she actually signed was one for $100, which the first defendant subsequently forged. I think it is more likely than not that the first defendant did say to her that the object of the scheme to swindle Lam Chong Ming was to obtain money for the purchase of equipment for Sang Cheong; that she did initially join the first defendant in some conspiracy to swindle Lam Chong Ming, but that, once she felt reasonably sure that she had "hooked" the wealthy Thai merchant, she wanted to break off her association with the first defendant. There is no doubt that at some stage she told the first defendant that she was taking no further part in any scheme to swindle Lam Chong Ming; that she did go to Thailand on 17th August 1968; and that the first defendant addressed abusive letters to her and Lam Chong Ming during the latter part of that month. 38. On 14th May 1968 (the day the first defendant alleges that he approached the plaintiff for the loan of $61,000) he knew that the initial deposit of $2,000 for the purchase of the flat had been paid; and that the first instalment of $23,000 had been paid on 8th May. As regards the $23,000, his story was that he borrowed $2,000 from someone; that the second defendant told him that $20,000 had been borrowed by Lam Kee Siu from some friend of his; that Lam Kee Siu was pressing for repayment of this loan; and that after the second defendant borrowed the $61,000 from the plaintiff, she repaid the $20,000 to Lam Kee Siu and kept the balance herself, except for $3000 which she handed to him (the first defendant). 39. I do not accept this evidence. When Lam Kee Siu came to give evidence it was not put to him by either side that he had advanced the $20,000 to enable the first instalment of $23,000 to be paid on 8th May; and I do not believe that he did advance this $20,000 and I do not think that the first defendant believed that Lam Kee Siu had done so. 40. I accept the evidence of the second defendant and Lam Chong Ming in regard to the purchase of the flat. The U.S.$350 was used to pay the initial deposit and the two instalments of $23,000 and $25,000 were paid all as described by the second defendant and Lam Chong Ming. 41. I do not put any weight on the evidence of the second defendant's father and Lam Kee Siu regarding the signing of the cheque for $1,000 in Man King Building. Both these witnesses came into court with a well-prepared story about how they witnessed the second defendant being bullied by the first defendant into signing this cheque for $1,000. I do not believe that they ever saw the cheque. I have grave doubts as to whether they were even present at the time when it was signed. 42. Nevertheless, I have come to the conclusion that that it is more likely than not that the first defendant did forge the cheque for $1,000 into one for $61,000. As I have said, I do not accept the first defendant's evidence that $20,000 was borrowed from Lam Kee Siu to enable the instalment of $23,000 to be paid on the flat on 8th May. The $23,000 consisted of the proceeds of certain jewellery sold by the second defendant and the $20,000 which she received from Lam Chong Ming; and the first defendant was well aware of that. Furthermore, I do not accept the first defendant's evidence that $11,000 was a genuine estimate of the cost of furnishing the flat, decorating it and paying solicitors' fees for the conveyancing work involved. On 14th May, any estimate of these three items could only have been a very rough one; and if there had been a genuine request for a loan one would have expected the sum to be in the region of $40,000. To the knowledge of the first defendant by the 14th May, $25,000 had already been paid towards the flat by Lam Chong Ming. That left a balance of $25,000 for the flat. If there had been any genuine estimate of the cost of furnishing and decorating the flat and paying solicitors' fees, one would have expected such an estimate to have been in the neighbourhood of $10,000 or $15,000, but not $11,000. 43. Looking at the cheque there is nothing to indicate that it has been tampered with in any way. But bearing in mind the peculiar sum involved, and the fact that the second defendant is rather a scatter-brained young woman who was very much under the influence of the first defendant, in my view she either signed the cheque "blind" or signed it without taking sufficient care to notice that it had been written in such a way that it would have been very easy for the first defendant to insert the character for "sixty" and the Roman numeral '6'. I am sure that she was speaking the truth when she said that she received no part of the $61,000 said to have been borrowed from the plaintiff. 44. It may well be that the plaintiff loaned $61,000 to the first defendant; but I think it is more likely than not that the plaintiff was lying when he said that the second defendant signed the cheque in his presence and that he saw her put $61,000 into her handbag. In testifying in this effect, I can only think that he must have been acting under pressure from the first defendant. 45. There will therefore be judgment to the second defendant on the claim and costs.
Representation: H. Litton (K.C. Yung & Co.) for Plaintiff J. Swaine (Ho & Wong) for 2nd Defendant Judgment landed down. |