Hi-watt International Enterprises Ltd v. Multi-luck Development Ltd and Another
Read the full judgment text of HCA 4305/2001 on BabelCite. This High Court CFI judgment was delivered on 22 February 2006.
1. At the end of the trial of this action, I entered judgment with interest and costs in favour of the plaintiff. The following are the reasons for the judgment.
Cited by 1 case
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HCA 4305/2001 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 4305 OF 2001 ____________ BETWEEN
____________ Before: Hon Chung J in Court Dates of Hearing: 20 to 22 February 2006 Date of Judgment: 22 February 2006 Date of Handing Down Reasons for Judgment: 26 May 2006 __________________________________ REASONS FOR JUDGMENT __________________________________ Introduction 1.At the end of the trial of this action, I entered judgment with interest and costs in favour of the plaintiff. The following are the reasons for the judgment. Background Facts 2.Prior to about 2001, the plaintiff and the 1st defendant were closely related. There was a partial overlap in their directorship and the office premises and staff were also shared. 3.As can be expected, there have also been funds flowing between the two companies. Issues in this Action 4.The plaintiff claimed the sum of HK$1.25 million odd from the 1st defendant. The claim was based on a real account stated. By the time of the trial, the plaintiff only pursued its claim against the 1st defendant (“the defendant”). The account stated was allegedly evidenced in a document executed by the defendant on 3 April 1996 (“the Apr 96 accounts”). 5.The defendant, on the other hand, denied that the Apr 96 accounts were a real account stated. In the defence pleadings, it was agreed there were cross-debts between the two companies. However, the defendant pleaded that the indebtedness shown in the Apr 96 accounts was only:-
It was claimed that the Apr 96 accounts was executed upon the plaintiff’s misrepresentation that the Apr 96 accounts accurately recorded the true state of accounts. The words “on the face of the accounts” (在帳面上) were inserted into the Apr 96 accounts to indicate that the parties recognized the need for the defendant to verify the accounts. Important Documents 6.The first important document is naturally the Apr 96 accounts. The relevant parts read:-
7.The other relevant document was a letter dated 19 May 2001 (that is, more than 5 years after the date of the Apr 96 accounts) signed by the 2nd defendant. The important parts are:-
(“the May 01 letter”). 8.The above documents have been included in the bundles agreed for use at trial. Hence, their authenticity and admissibility were undisputed. 9.As set out below, I rejected the testimony of defence witnesses and found the testimony of the plaintiff witnesses to have no weight in the determination of the issues in this action. 10.However, I agreed with the plaintiff that the above documents should be given full weight. As stated above, there was no dispute regarding their authenticity or admissibility. There was also no dispute that the 2nd defendant has authority to sign them. Further, as the plaintiff correctly submitted, they were consistent with a number of what can be regarded as contemporaneous documents such as:-
11.The defence contended that there were documents which were inconsistent with the above documents. I also agreed with the plaintiff that the contention was based on speculations, or was otherwise unfounded. 12.There was no dispute whether the Apr 96 accounts amounted in law to a real account stated was also a matter of construction of the document: Chitty on Contracts (2004) 29th Ed., para. 29-191 (pp. 1748-9), text to nn. 1042-1053. Having examined the contents, I am satisfied that the Apr 96 accounts amounted to a real account stated. Witnesses’ Testimony 13.Four witnesses testified at trial:-
14.For the reasons set out below, I rejected the testimony of the defence witnesses as incredible. 15.Their testimony regarding the Apr 96 accounts was in short as follows. Wu has since the defendant’s incorporation been involved in its operation (at least the business side of its operation). He was at the time a director and the plaintiff’s deputy general manager. He was a seasoned businessman; he has about 20 to 30 years’ business experience. 16.Liang has also been involved in the defendant’s operation (at least the administrative side of it) since its incorporation. He was at the time a director and the plaintiff’s assistant general manager. 17.The defence witnesses’ version of events at trial was very different from the way in which the defence case was pleaded. In essence, it was not that the accounts between the plaintiff and the defendant needed to be verified, but was simply that:-
Further, when Wu testified, he said that, even by the time of the May 01 letter, he still had not checked the defendant’s books and accounts and he still regarded the Apr 96 accounts were accurate. 18.I pause to note that Wu admitted in his testimony he probably had seen the defendant’s account ledger (see para. 10(2) above) before he signed the Apr 96 accounts on the defendant’s behalf. 19.The defence case regarding alleged misrepresentation was changed in a material way. Originally, it was pleaded that Kong fraudulently misrepresented that the trial balance was accurate in order to induce the defendant to sign the Apr 96 accounts. That was amended after February 2006 to allege that the misrepresentation was made by either Kong or a Mr. Su. 20.I considered the defence testimony to be inherently incredible. First, it is unbelievable that an experienced businessman would sign documents (that is, the Apr 96 accounts and the May 01 letter) which in effect were an acknowledgement of indebtedness when such debts never existed in fact. Further, the version of events testified to was inconsistent with the defendant’s pleaded case. 21.The case relating to the alleged misrepresentation was also rejected. I noted that the change in this part of the pleading followed the filing of Kong’s witness statement dated 10 February 2006 in which he basically refuted any improper conduct on his part. Such a change was more consistent with the making up of a case to tally with how events developed. 22.On the other hand, the testimony of the plaintiff’s witnesses should be given no weight. Although Kong signed the Apr 96 accounts on behalf of the plaintiff, he could not recall clearly what happened at the time. Moreover, he only joined the plaintiff in late 1995 and so, by the time of the Apr 96 accounts, he was not familiar with the details relating to the account between the plaintiff and the defendant. 23.Deng only joined the plaintiff in 1999. He only became involved with this matter (including this action) in 2002. 24.Having so concluded in relation to credibility, I should state that, if it had been necessary to do so, I would have preferred the testimony of the plaintiff’s witnesses to that of the defence witnesses. Other Matters 25.For completeness, I should also mention that the defence has raised additional arguments regarding:-
There is no need to go into the details suffice it to say I agreed with the plaintiff’s submissions and disagreed with those of the defence regarding these matters. Costs Order 26.There was no apparent reason to depart from the usual rule that costs should follow the event. The defendant has not suggested I should depart from that rule. Accordingly, I made the costs order that the costs were to be paid by the defendant to the plaintiff to be taxed if not agreed.
Mr Thomas Au, instructed by Messrs Wat & Co., for the Plaintiff Ms Jane Lo, instructed by Messrs J Chan & Lai, for the Defendants |
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