Union Textiles Weaving Factory Ltd v. Globaltex (Asia) Ltd

DCCJ 643/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 643 OF 2003

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BETWEEN

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Coram : H.H. Judge Chow in Courts

Dates of Hearing : 31^st January and 1^st February, 2005

Date of handing down Judgment : 14^th April, 2005

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J U D G M E N T

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1.In this action, the Plaintiff claims against the 1^st and the 2^nd Defendant for a sum of $188,716.03, allegedly being a debt due and payable by these 2 Defendants.  Summary judgment has been entered against the 3^rd Defendant in the sum of $188,716.03.

2.The Plaintiff is a company incorporated in Hong Kong and carries on the business of trading in cloth and providing finance for export of garment.  The 2^nd and 3^rd Defendants are husband and wife; they are the shareholders and directors of the 1^st Defendant, which was a local trading company running the business of exporting garments to other countries.

3.On 1^st September, 2001, the Plaintiff entered into a consultancy agreement (“the Consultancy Agreement”) with the 1^st Defendant, which provides, inter alias, that if the Plaintiff lends money to the 1^st Defendant, interest shall be charged at 1% per month, and the shareholders and directors and the Defendant shall guarantee the repayment of the loan. 

4.On 23^rd November, 2001, the 3^rd Defendant on behalf of the 1^st Defendant endorsed her signature on the account prepared by the Plaintiff after certain transactions and acknowledged a sum of $142,514.51, being an amount due from the 1^st Defendant to the Plaintiff under the said account.  The 2^nd Defendant issued to the Plaintiff two personal cheques (undated) Nos. 968241 and 013417 in the total sum of $150,000 in settlement of the said account with interest.  Thereafter, the 2^nd Defendant issued to the Plaintiff a set of 14 post-dated cheques so that the said sum of $150,000 with interest would be repaid by instalments within a year.  The 2^nd Defendant’s two undated personal cheques in the total sum of $150,000 were returned to the 2^nd Defendant by the Plaintiff.

5.On 25^th January 2002, the Plaintiff entered into a new agreement (“the New Agreement”) with the 1^st, 2^nd and 3^rd Defendants to replace the Consultancy Agreement with the following express terms and conditions:-

(1)	The Plaintiff shall charge 3% service charges, plus bank charges and interest on all L/C or loan transaction.
(2)	The 1st Defendant acknowledged owing to the Plaintiff a total sum of HK$150,000.00 which shall be repaid by the 2nd Defendant personally by the following personal cheques:
	15/12/01  1,500.00   15/01/02  9,500.00   15/02/02 9,420.00   15/03/02    9,340.00   15/04/02  9,260.00   15/05/02  9,180.00   15/06/02 9,100.00   15/07/02  9,020.00   15/08/02 8,940.00   15/09/02 8,860.00   15/10/02 8,780.00   15/11/02 8,700.00   15/12/02 8,620.00   15/01/03 54,000.00
(3)	The Plaintiff has the right to terminate this agreement and demand for early repayment.
(4)	The 1st, 2nd and 3rd Defendant shall guarantee between each other payment of all L/S and loan.

6.The total sum of these 14 cheques is $164,220.  The cheques in the sums of $1,500 and $9,340 were honoured.  The cheques in the sums of $9,420 and $9,180 were dishonoured on 23.2.2002 and 31.10.2002 respectively.  The cheques in the sums of $9,020, $8,940, $8,860, $8,780, $8,700 and $8,620 were presented for payment on 2.1.2003, but they were all dishonoured.

7.On 5.12.2002, the 3^rd Defendant asked for another loan of $100,000 for the purchase of certain quotas, saying that the transaction would be completed soon.  The Plaintiff issued a cheque dated 5.12.2002 for the sum of $100,000 as a further loan to the 1^st Defendant.  At the same time, the 2^nd and 3^rd Defendants issued an undated cheque for and on behalf of the 1^st Defendant as security for the repayment of the said loan of $100,000.  On 2.1.2003 the Plaintiff presented this cheque for payment, but it was dishonoured.

8.On 16.1.2003 and 22.1.2003, the Plaintiff through its legal representative, issued a letter to the 1^st Defendant, and the 2^nd and 3^rd Defendants respectively, demanding the re-payment of the debt in the total sum of $253,380.  But no payment of this sum has been made.

9.There exists an over-payment of $1,406.18 ($38,161 - $36,754.82) by the Plaintiff to the 1^st Defendant.  Therefore the total debt owed by the 1^st and 2^nd Defendants to the Plaintiff is $265,626.18 ($164,220 + $100,000 + 1,406.18).  On 22.1.2003, the Plaintiff received a sum of $64,663.97 under a letter of credit from a bank credited to the Plaintiff.  The Plaintiff owed the Defendants $1,704.83 because of various transactions and set-offs between 27.8.2001 to 24.2.2002.  Therefore the claim against the 1^st and 2^nd Defendants stands at $188,417.38 ($265,626.18 - $1,500 - $9,340 - $64,663.97 - $1,704.83).

10.The 1^st Defendant simply has no defence against the claim.

11.The 2^nd Defendant’s case is that he was not involved in the dealings.  That is incredible.  It is he who issued the above-mentioned cheques in question.  2 of the 14 cheques issued by him were honoured.  Therefore he paid these 2 cheques.  He signed the New Agreement.  He said that he had signed everything without asking.  That is inherently incredible.  If he was not involved in the dealing with the Plaintiff, why did he pay the 2 cheques in question, and why did he draw out the numerous cheques in question?  It is his case that the loan amount of $150,000 was never made.  That cannot be right.  If that is the case, there is no reason for his 2 personal cheques in the sum of $1,500 and $9,340 to have been honoured.  The Plaintiff’s director, Mr. Wong Tang Yiu, explained in his supplemental statement dated 6.1.2005, how the sum of $142,514.51 as at 23.11.2001 had become the sum of $150,000 as at 15.12.2001:-

The sum of HK$149,630.54 was then rounded up to HK$150,000.00 as suggested by the 3^rd Defendant.  He agreed because it was only a small difference of HK$369.46.  I do accept Mr. Wong’s evidence.  I reject the 2^nd Defendant’s allegations.  He simply has no defence at all.

12.Accordingly, I enter judgment in favour of the Plaintiff in the sum of $188,417.38 against the 1^st and the 2^nd Defendants jointly and severally, the said sum to be paid within 14 days from today, with interest thereon at judgment rate, commencing from 4^th February, 2003, until payment.

Costs

13.I make an order nisi, to be made absolute in 14 day’s time, that the 1^st and the 2^nd Defendants are to pay the Plaintiff costs of this action, with Certificate for Counsel, to be taxed, if not agreed.

The Plaintiff : represented by Mr. Albert Poon, instructed by M/S Christine F.L. Ip & Young, Solicitors.

The 1^st Defendant : represented by Mr. John Cooper.

The 2^nd Defendant : in person.