Yeung Suet Wah v. Chui Man Wai

DCCJ 5642/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5642 OF 2005

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BETWEEN

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Coram : Deputy District Judge Anthony Chow in Chambers (Open to public)

Date of Hearing : 27^th July 2006

Date of Handing Down Judgment : 3^rd August 2006

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JUDGMENT

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1.I have before me two applications for interlocutory judgment under Order 14 of the Rules of District Court. The first summons is by the plaintiff for a judgment in the sum of HK$72,666.00. The second summons is by the defendant for a judgment in the sum of HK$50,000.00.

Background:

2.The plaintiff was one of two persons named as landlord in a lease agreement involving a property on the mainland (the "Premises"). The tenant on that lease agreement was a party called "新城市家私厂(徐伟先生) (the "Mainland Lease"). There were disputes as to who was the owner of the Premises and whether the landlord or the owner had an obligation to provide the tenant with documents to assist the tenant to obtain some permits with the Mainland authorities. There was a civil action commenced in the Mainland Courts, which action has now been withdrawn.

The claim and defence:

3.The plaintiff alleged in part payment of his obligations under the Mainland Lease, the defendant drew a cheque in the sum of HK$72,666.00, against his account with the Fortis Bank in Hong Kong, in favour of the plaintiff. The cheque was dishonoured, for which the plaintiff commenced this action.

4.The defendant originally raised two grounds of defence: forum non conveniens because the Mainland Lease dealt with property located on the Mainland and total failure of consideration of the dishonoured cheque.

5.Prior to this hearing, Mr. Chan, solicitor for the defendant wisely withdrew the first ground of defence. I say wisely, because this claim is based on a dishonoured cheque and it is trite that in law a cheque is a separate and independent contract. What is the proper forum to settle disputes with the lease agreement is irrelevant to the proper forum to settle disputes about the cheque.

6.As to the defence of total failure of consideration, the defendant's arguments are: First, the defendant was not a party to the Mainland Lease. Second, although the plaintiff is named in the Mainland Lease as one of the parties, there was a subsequent oral agreement that replaced 佳潤洗水廠as the landlord.

7.Since the defendant was not obligated to pay any money to the plaintiff under the Mainland Lease, there was total failure of consideration.

The counterclaim and defence to counterclaim:

8.The defendant stated that on or about 6^th September 2004, he gave a personal cheque in the sum of HK$50,000.00 to the plaintiff. The defendant alleged that sum was a personal loan to the plaintiff.

9.The plaintiff alleged that the HK$50,000.00 was part payment of rentals, water and electricity, lift maintenance and management charges under the Mainland Lease for the month of September 2004.

The law:

10.The legal principle is well known: The defendant must show that there are triable issues. He has to satisfy the court that he has a 'real or bona fide defence.' If he makes an allegation, it must be credible or believable in the light of the evidence placed before the court. [Para 14/4/9 Hong Kong Civil Procedure 2006].

The plaintiff's order 14 application:

11.Although the aforesaid principle clearly placed the burden on the defendant to show there was total failure of consideration; however Mr. Chan seems to disagree. In paragraph 5.7 of Mr. Chan's skeleton submission he stated: " The Plaintiff has not pleaded nor stated in any of her Affirmation that there was any consideration moving from the Plaintiff to the Defendant or any one else, in exchange of the Dishonoured Cheque."

12.Mr. Chan is clearly wrong in this approach, unless the defendant can establish there is a triable issue, summary judgment will be given, the plaintiff need not plead or state anything.

13.Let's look at the defendant's case on total failure of consideration. In paragraph 13 to 15 of his affirmation, the defendant stated:

"	13.	In early June 2005, the Landlord asked the Factory to pay Landlord the rentals, water, electricity, lift maintenance and management charges for June 2005 in respect of the Premises in the total sum of RMB77,026.00, breakdown of which are as follows:-
		…
		Adopting the exchange rate of RMB1.00 to HK$1.06, the Hong Kong dollar equivalent of RMB of 77,026.00 is HK$72,666.00.
		A copy of the bundle Receipt issued by the Landlord to the payee the Factory is now produced and shown to me marked "CMW-2".
	14.	The Defendant mistakenly gave the said cheque in the sum of HK$72,666.00 to the Plaintiff.
	15.	The payment of the rentals, water and electricity, lift maintenance and management charges for June 2005 in respect of the Premises, if payable, should be paid by the Factory and not by me and to the Landlord instead of to the Plaintiff.
	16.	At all times, the Defendant did not owe to the Plaintiff the rental, water and electricity, lift maintenance and management charges for June 2005 or any other money in respect of the Lease Agreement or otherwise."

14.In other words, the defendant's case of total failure of consideration is based on the allegation that the plaintiff is not entitled to receive and the defendant is not obligated to pay any rentals under the Mainland Lease. 

15.In his submission, Mr. Chan stated the plaintiff was not a party to the Mainland Lease and in paragraph 9 of his affirmation, the defendant referred  "佳潤洗水廠" as the "Landlord". This is not just confusing but plainly wrong, because on the face of the Mainland Lease the plaintiff 杨雪华and her father 杨国, were clearly stated as 甲方. The 乙方was stated as one 新城市家私厂(徐伟先生). In paragraph 1 the parties agreed "…甲方将厂房出租给乙方作为工厂使用,宿舍作为員工住宿之用." Accordingly, on the face of the Mainland Lease, the plaintiff and her father were the landlords and新城市家私厂(徐伟先生) was the tenant .

16.The defendant alleged, in paragraph 9 of his affirmation, that at the time of the Mainland Lease, the plaintiff informed him, inter alia, 佳潤洗水廠was the owner of the Premises and all rentals and other payments under the lease should be made to 佳潤洗水廠.

17.The defendant referred to the receipts, which bear the chop of佳潤洗水廠as evidence that rentals were paid to 佳潤洗水廠 and not to the plaintiff. 

18.The plaintiff denied this allegation and exhibited the following as evidence that the defendant paid rentals for the Premises to her and her father in the past. First, a cheque issued by the defendant, dated 30^th April 2004, again from his account with the Fortis Bank, to 杨国for HK$100,000.00 (page 88 of the bundle). Second, a certificate of deposit issued by the 深圳农村商业银行大水坑支行, that a cheque issued by 徐文伟for RMB57339.19 and payable to the plaintiff 杨雪华, was cashed by the plaintiff on 21^st July 2004 (page 91 of the bundle).

19.The defendant failed to explain the purpose of these two cheques and from the evidence there can only be one purpose, payment of the deposit and rentals for the Mainland Lease.

20.This is clearly contrary to the defendant's allegation that all rentals and other payments under the lease were made to 佳潤洗水廠. I find the defendant's allegation that the plaintiff was not entitled to receive rentals under the Mainland Lease incredible.

21.Furthermore, Ms. Wu counsel for the plaintiff, in her reply pointed to the fact that 新城市家私厂(徐伟先生) is in fact one of the same person as the defendant 徐文伟.

22.In paragraph 25 of the defendant's affirmation, in support of his counter claim, the defendant stated: "…The Plaintiff issued me (sic) a hand written receipt. A copy of the said receipt dated 6^th September 2004 and signed by the Plaintiff evidencing in writing her receipt of the sum of HK$50,000.00 from me is now produced and showed to me marked "CMW-4"."

23.CMW-4 states: "收到徐伟先生伍萬元支票No. 000528. (signed) 杨雪华 6/9-04. 50000港币换1.06=53000人民币计(signed) 杨雪华 6/9-04." (Emphasis added). Clearly the defendant acknowledged that he is徐伟先生, one of the same person as新城市家私厂(徐伟先生), the tenant in the Mainland Lease.

24.To summarize, the dishonoured cheque was issued by the tenant to the landlord, for payment of rentals, owed under a lease agreement. There was clearly consideration for the cheque. To borrow a phrase from Mr. Justice Godfrey J.A. in Man Earn Ltd. v. Wing Ting Fong [1996] 1 HKC 225, the defence was clearly 'frivolous and practically moonshine', the plaintiff should have her summary judgment.

The defendant's order 14 application:

25.The defendant's sole evidence that the HK$50,000.00 paid to the plaintiff was a personal loan is the same receipt marked CMW-4.

26.CMW-4 did not mention any personal loan and since I have already found the plaintiff was entitled to receive rentals under the Mainland Lease, the plaintiff's defence that the $50,000.00 cheque was part payment of rentals for September 2005 is clearly a 'real or bona fide defence'. There should be unconditional leave for the plaintiff to defend the counter claim.

Orders:

(1)	On the Order 14 application by the plaintiff, judgment for the plaintiff, defendant do pay the plaintiff the sum of HK$72,666.00 together with interest at the judgment rate from date of writ until full payment.
(2)	On the Order 14 application by the defendant, unconditional leave for the plaintiff to defend.
(3)	Costs of the plaintiff's order 14 application and the claim be to the plaintiff, with certificate for counsel, to be taxed if not agreed.
(4)	Costs of the defendant's order 14 application be costs in the cause.

Ms. Teresa Wu, instructed by M/s David Ravenscroft & Co. for the Plaintiff.

Mr. Chan Koon Yuen Windaus, of M/s Fairbairn Catley Low & Kong for the Defendant.