Ho Nai Yee v. Jimmy Hair Dressing Saloon

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION No. 63 OF 1945

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Coram: Mr. Justice E.H. Williams.

Date of Judgment: 20 September 1947

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JUDGMENT

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1. I have already given judgment in this case for the defendants and I now proceed to set out the grounds for my decision. No difficult question of law falls to be considered.

2. Plaintiff claimed that in August, 1938, he purchased from one Lo Wai Kam, a hairdressing saloon situated at No.12, D'Aguilar St., ground floor, for the sum of $480: that he thereafter re-organised the business under the name of Jimmy's Beauty Saloon, expending $23,000 on reconditioning the premises: that the defendants were now wrongfully in possession and he asked for a declaration of ownership of the business and other relief.

3. Defendants claimed that plaintiff, shortly after his purchase, had sold his interest for $1000 to one Mui Cheung Man alias Jimmy May (hereafter referred to as Jimmy May): that Jimmy May had in turn sold the business to Mui King Hung who again had sold it to one Chan Chok Long, defendant, the present owner of the business.

4. Alternately the defendants claim that plaintiff is estopped from claiming that he is the owner, because at the time of the assignment to Chan Chok Long plaintiff, with full knowledge of the intended sale, made no claim to ownership and by his silence, permitted defendant to believe that Mui King Hung had the right to sell.

5. It was admitted at the hearing that plaintiff had purchased the business from Lo Wah Kam on 23rd August, 1938.

6. At the time of the purchase, plaintiff and Jimmy May were partners in the Jimmy May Finance Corporation (hereafter referred to as the Corporation) with a paid-up capital of over $50,000. Plaintiff had $10,000 share in the Corporation, its office being in the Wang Hing building: Jimmy May had $40,000 in it, so that between them they held the greatest interest in it.

7. On 13th October, 1938, two deposit receipts were given by the Hong Kong Electric Co. in respect of sums deposited by 'the J May Finance Corporation, 12 D'Aguilar St., grd. flr.' Plaintiff claimed he paid them in respect of the Saloon, giving as his reason for the receipts being made in the name of the Corporation that the Saloon was not yet changed into the name it afterwards bore and had no firm chop and that, if he later wished to withdraw the deposit, some chop would be required. This seems to me to be a very inadequate reason. Plaintiff's evidence was that he had changed the name to Jimmy's Saloon about the end of September, 1938, though at a later stage he says he changed the name in December, 1938. There is nothing in the receipts to show whether the deposit was paid in respect of any current supplied to the Saloon. To all intents and purposes, it is a deposit in respect of current consumed by the Corporation at that address. I should add that in the same premises was also carried on by Jimmy May a dispensary business called Jimmy's dispensary owned by Jimmy May. It was later moved to another address.

8. Plaintiff stated that on 19th October, 1938, and on 9th December, he paid deposits to the Hong Kong and China Gas Co. : he produced receipts for them in the name of Jimmy's Barber Shop. Plaintiff further stated that he himself remained in charge of the business for about a year - though he only visited the premises once a month - thereafter, owing to ill-health, he appointed Jimmy May as Manager, without any salary, and he himself continued to visit the premises as before. He did not give Jimmy May any salary as the latter was well-to-do and not interested in pay. He was apparently to carry on managing without salary until some indefinite date when plaintiff was in a position to pay him.

9. Plaintiff claimed that soon after the purchase he spent $23,000 on reconditioning the premises and purchasing equipment, of which sum he obtained $19,000 from the Corporation, the remainder being put up by himself. In 1940, the Corporation was dissolved by which time he had repaid $9000, leaving $10,000 payable and this, he said, by agreement, became a personal debt between himself and Jimmy May.

10. Plaintiff claimed he left Hong Kong about June, 1942, in order to carry on a smuggling business: that he only paid 4 brief visits during the occupation spending only a day or so on each occasion and knew nothing of the affairs of the Saloon until his return in 1946. He had left Jimmy May still in charge. On his first visit about July, 1943, he called at the Saloon and there saw some of the old fokis and some new fokis. He did not see Jimmy May there but he says he asked whether business was good. He received the reply to the effect that they were doing moderately well. If he was still sole owner (which is, of course, denied by defence) it seems to me surprising that he made no further inquiries. One would expect that, having put so much money into the business and he admits that the sum was, to him, considerable, he would have asked to see the books and put further inquiries to ascertain whether and how much profit or loss he was making. Instead, he addresses an inquiry which a complete stranger without any financial interest in the business might make. He paid a second visit a few months later but had no time to visit the Saloon. He says he tried to find Jimmy May at another office or at Jimmy's private address but failed. His third visit to the Colony was in December, 1944, when he called at the Saloon but saw no one he knew. He again made no inquiries as to the state of his business. He could not find Jimmy May in the Colony. He paid a further visit to the Colony some months later but, as he was in a hurry, he did not visit the Saloon.

11. He finally returned to the Colony in February, 1946. The next action he did was to instruct his solicitors early in August. Again, it is difficult to understand such delay, if he really was the owner. He states he called at the Saloon about March 'to see whether the business was good' but he addressed no questions to anyone. He met Jimmy May in June, 1946, and, as a result, he visited his solicitors. In consequence, the solicitor wrote to defendants stating that plaintiff had, prior to hostilities carried on the business and that the furniture and fixtures now in the premises were his property. A demand was made for their return within 7 days. His claim is that he is the owner of the business with the goodwill, stock-in-trade, signboard, furniture and fixtures. Why is that not clearly stated in the letter instead of a mere request for the return of furniture and fixtures? Plaintiff's explanation is that his solicitor must have misunderstood his instructions.

12. In cross-examination, plaintiff admitted that the daily takings in the Saloon prior to the war were paid into the Corporation accounts: that advertisements had been put in the press for barbers, application to be made to the Corporation at the Wang Hing building address: that in the early months of the occupation the licence, required by the Japanese to be exhibited in all business premises was in the name of Jimmy May.

13. At the close of plaintiff's evidence, counsel for the defence submitted there was no case to answer. Though the plaintiff's evidence was indeed very unconvincing, I held there was a case and so the defence called witnesses.

14. The defendant gave evidence and produced certain documents viz. a deed of sale and also copies of advertisements in the press. Defendant stated that one Mui Wing Mow, agent for Mui King Hung, proprietor of the Saloon, and Wong Chow, manager, had sold him the Saloon for M.Y. 19,250 on the 5th July, 1944. A notice of the intended transfer had previously been inserted in 5 issues of the Wa Kiu Tat Po. Such notice follows, in most respects, the notice required to be inserted in the Chinese newspapers under the Fraudulent Transfers of Business Ordinance, No.25 of 1923. Unless such notice is published in the press and in the Gazette (which, latter, was impossible during the occupation) the transferee becomes liable in certain cases for the liabilities of the transferor. Mui Wing Mow, who is uncle of Mui King Hung, produced to defendants a letter from Mui King Hung giving the former written authority to sell. After the deed of sale was signed, the defendant applied for and obtained a business licence on the 5th August, 1944. His first notice of any rival claimant was the letter from the plaintiff's solicitors written on 7th August, 1946.

15. His evidence as regards the sale was confirmed by that of Wong Chow, who had signed the deed of sale as manager. Wong Chow had originally applied for a job as barber in the Saloon in 1938. His application was made at the Corporation's office where he met Jimmy May and plaintiff but he failed to secure a job. He became manager later when Mui King Hung purchased the Saloon from Jimmy May in 1942 - he gave evidence about this sale. He spoke of Mui King Hung's departure for Macau after having put Mui Wing Mow in charge. He gave other evidence to which I shall later refer.

16. I am quite satisfied that as far as defendant was concerned he did everything in good faith and that he had no knowledge of any defect in the title, if such existed. He gave his evidence in a convincing manner and, unlike some of the witnesses on both sides, I had no doubt he was a witness of credibility.

17. I come now to the evidence regarding events which took place at the time of the sale in 1938 by Lo Wa Kam, who is now dead. A defence witness Kwok Wai Man, a barber gave evidence in a rather disjointed manner but which is briefly to this effect. A relative of Jimmy May had returned from America. She had received specialised training there in hair-dressing and Jimmy May therefore desired to purchase a saloon in which she could be established. He asked the witness and plaintiff to look around for a barber's shop and the witness introduced Lo Wa Kam to him. It is admitted by plaintiff that it was this witness who had been responsible for his introduction to Lo Wa Kam. Jimmy May agreed to pay $1000 for a saloon, of which part was to be paid to witness and part to plaintiff as commission. An agreement was made by which Lo Wa Kam was to receive $480, $120 was solicitors' fees and $200 each was to be paid to witness and plaintiff. Jimmy May, being a rich man, did not wish to have his name appear in the deed of transfer as purchaser for fear creditors of Lo Wa Kam might pursue him with various claims, true or otherwise. It was therefore arranged that plaintiff should first sign the deed of sale as purchaser. After this transfer was signed, a receipt was given by Jimmy May to plaintiff for $1000, the witness signing as middle-man. The transaction was in effect, therefore a sale first to plaintiff by Lo Wa Kam and a subsequent transfer of plaintiff's interest to Jimmy May. Were this the only evidence of such a transfer, I would have ruled that the burden of proving the transfer had not been discharged by the defence.

18. A witness Chiu Tak, also a barber, gave evidence that he had been engaged by Jimmy May in August, 1938, whom he had interviewed at the Corporation's offices in Wang Hing building after seeing a notice in the press. When he went there, he met Jimmy May and the plaintiff and discussed terms in consequence of which he received a letter of appointment. He produced the envelope, 'marked letter of appointment' but said he had lost the actual letter. At Jimmy May's request, he obtained contractors to do some repairs to the Saloon. For the first few months, he was paid by cheque made out by Jimmy May, on the Wing On Bank - thereafter he was paid in cash as payments were made more frequently. After a year he lost his job. He could not say whether the cheques were personal cheques of Jimmy May or cheques of the Corporation. His evidence was not seriously challeneged in cross-examination. If accepted, it does not carry the defence very far - it merely shews that from the start, Jimmy May was taking some part in the running of the Saloon.

19. A witness Tong Man Leung spoke as to his knowledge of the sale of the Saloon by Jimmy May to Mui King Hung, Jimmy May's brother, in July, 1942. He claimed he was present when the brother discussed the terms of the sale and that plaintiff was also present. Plaintiff, however, claims that he had left Hong Kong by this - on his own evidence he was in Hong Kong up to a short time before this incident. That there was such a sale or agreement to sell is admitted by Jimmy May, who was called by plaintiff in rebuttal, and to whose evidence I shall later refer. Witness stated he left Hong Kong in 1942, returning here in October, 1943, where he remained for some years. He also said he saw plaintiff frequently in Hong Kong during this period.

20. Reverting to the evidence of Wong Chow in so far as it concerns this aspect of the case, Wong Chow confirms the evidence of the previous witness that there was a sale by Jimmy May to his brother early in July, 1942. The price agreed was M.Y. 4000 of which M.Y. 2000 was in actual cash, the balance being value in medicines. It will be remembered that there was on the same premises as the Saloon, Jimmy's dispensary. This was removed to another premises shortly after July 1942. by Jimmy May at the request of his brother. The witness also spoke of seeing an advertisement in the press prior to the sale by Jimmy May to the effect that the business was for sale. He claimed that the business licence required by the Japanese was at first in the name of Jimmy May but was later transferred into his name when Mui King Hung had appointed him as manager.

21. I attach considerable importance to the advertisement inserted in the press admittedly by Jimmy May. Whilst witnesses may wish for their own reasons to give evidence which is not the truth, the same does not apply to written evidence such as the press notice which came into existence years before the present dispute arose. It is a notice of intended sale inserted for 7 days in the Wa Kiu Yat Po, from the 7 - 13 July, 1942. The notice is to the effect that the proprietor of the Saloon desired to sell the business and invited those interested to contact the advertiser at No.12 D'Aguilar St. G.F. It is obvious that this notice needed some explaining away by Jimmy May in view of his evidence that he never actually sold the premises to his brother and that he had no authority from plaintiff to do so.

22. Wong Chow also gave evidence that when the business was sold to defendant in 1944, both plaintiff and Jimmy May were in Hong Kong and knew about it. He said that a few days after the sale, plaintiff came to the Saloon and asked whether he had been successful in the sale. He also added that about this time, at the request of plaintiff, he gave Jimmy May a spare ration card to enable the latter to leave the Colony. Another witness Chiu Suk Mang confirms that plaintiff was in the Colony more frequently during the Japanese occupation than plaintiff admits for he says he saw him sometimes daily, sometimes 10-20 times per month.

23. Wong Chow was subjected to lengthy cross-examination as to his evidence of the sale by Jimmy May to his brother Regarding this evidence, though I was of the opinion that he was correct as to the fact of there being such a sale (an opinion strengthened beyond doubt by Jimmy May's evidence later) I formed the view that he was stating far more about it than he himself actually knew. As to his evidence that plaintiff, being present in Hong Kong, was well aware that the sale to defendant was or had taken place and had kept silence, I was not satisfied. To succeed on this plea of estoppel, the onus is on the defence to satisfy me clearly that there was such standing by with silence and with knowledge. In view of my finding on the facts, it was unnecessary for me to make any decision on the alternative defence of estoppel but I here record my finding that the defence of estoppel was not made out. There still remains the main ground of defence.

24. Additional evidence was given by the defence in the person of Tsui Chak Lam, agent for the owner of the premises that Mui King Hung was entered as tenant in the record of tenants on and from 1st January, 1943, until defendant became tenant in September, 1944. Records prior to January, 1943, are not available. The evidence supports, in a small way, the defence case that there had been a sale by Jimmy May for it is to be remembered that Jimmy May was still in the Colony in January, 1943.

25. At the close of the defence, the plaintiff called Jimmy May to give rebuttal evidence. Counsel for defence, in his closing address, described him in very unflattering terms. Whilst not subscribing fully to his description, I have no doubt that his evidence is far from the truth. He appeared to be more interested in rehabilitating himself in the eyes of the plaintiff than in telling the truth. In examination-in-chief, he said that in 1938 plaintiff, having purchased the Saloon, approached the Corporation for money. The Corporation agreed and thereafter paid various bills for plaintiff in connection with the reconditioning and equipment of the Saloon. He looked after the Saloon from 1939 onwards until he handed over to Mui King Hung. He had been offered the Saloon by Lo Wa Kam in 1938 but declined. Plaintiff, he said, left Hong Kong in June, 1942, (which agrees with plaintiff's evidence) and then in July he advertised his intention to sell. He said he had no permission from plaintiff but did it because Hong Kong was a place of terror and he wanted to leave the Colony with his family. He hoped to be able to explain his actions to plaintiff later. As he received no answers to the advertisement, he was approached by his brother Mui King Hung. They agreed on a price for the business, H.K. $5000, part in cash and part in medicines. The brother took over the Saloon about 18th July, 1942 and paid him an amount by instalments totalling $3500 in cash and medicines leaving a balance of $1,500 by September or October, 1942.

26. To questions put by me, Jimmy May replied that he never told his brother that the real owner was plaintiff. He said 'I had no wish to deceive him but I did'. He also added that, in spite of the terror in Hong Kong which impelled him to sell the business about a month after plaintiff's departure, he did not leave Hong Kong until March, 1944.

27. He asked his brother in October, 1942, for the remainder of the money due but did not get it back nor did he ask the brother to hand back the business. He also stated that he had no deeds relating to the business. This was obviously a misstatement, to say the least, as he later admitted in his evidence to the Court that he had received the various documents from plaintiff (i.e. the assignment by Lo Wa Kam to plaintiff, the deposit receipts with the Electric and Gas Co.) Plaintiff, he said, had given them to him to keep when he (plaintiff) wished to get money from the Corporation. When plaintiff was leaving the Colony in June, 1942, he told the witness to deal with the business as he thought fit which meant he could carry on or close the Saloon or even hire it to another party but not to sell. At the time of plaintiff's departure, he still owed the witness the $10,000.

28. In cross-examination, he said at the time of his transactions with his brother, he had offered the deed and the receipts to him but the brother said he did not want to see them. When the plaintiff had returned to the Colony in 1946, he had told him he had sold the business to his brother but that as the brother had not paid the balance, he had suggested to the brother he should look after the business for the time being. His contention as expressed in Court was that, as the brother had not paid the balance, he considered him merely as manager and not owner. He had told his brother so in October, 1942. I should remark that witness's view of the legal position is quite at variance with the true position. He admitted that from the time of the purchase, he had paid bills for the Saloon out of the Corporation's funds and had interviewed prospective barbers for employment. He did this to help plaintiff as plaintiff was ill.

29. Other witnesses were called in rebuttal but their evidence went mainly to shew that plaintiff was not in the Colony in 1944 when defendants acquired the business and so did not stand by with knowledge. On this point, as already stated, I have held against defendant.

30. The outstanding features of the case for the plaintiff which have mainly influenced me in favour of the defendant on the major issue, are the active part Jimmy May took in the running of the Saloon right from the time plaintiff acquired it in 1938: plaintiff's indebtedness to Jimmy May in the sum of $10,000: Jimmy May's statement that when plaintiff left, he instructed him to deal with the Saloon as he thought fit: his effort to sell the business, by his advertisement in the press and his subsequent sale to his brother (his mental reservation that he considered his brother only as manager is ludicrous): plaintiff's striking indifference to his own rights, if he really was the owner, when he visited the Colony during the Japanese occupation (I believe that plaintiff visited the Colony on more than four occasions): plaintiff's inaction on his final return from February, 1946 to August, 1946, his half-hearted claim as contained in his solicitor's letter of August 7th merely for the return of furniture and fittings. These features combined with evidence given by the defence have satisfied me that plaintiff transferred all his interests in the Saloon to Jimmy May shortly after the purchase in 1938 and that thereafter it was assigned to defendant in the normal way.

31. I have accordingly held that plaintiff has failed in the action and have given judgment to defendant with costs.