Cheung Chu v. Wong Sun Wo, William
Read the full judgment text of DCCJ 271/2006 on BabelCite. This District Court judgment.
1. This is an application by the Plaintiff against the Defendant for summary judgment upon a dishonoured cheque in the sum of $200,000, for reason of “account-closed”.
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DCCJ 271/2006 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 271 OF 2006 ____________ BETWEEN
____________ Coram: Deputy District Judge M. Chow Date of Hearing: 29th August 2006 Date of Handing Down Judgment: 6th September 2006 ________________ JUDGMENT ________________ 1.This is an application by the Plaintiff against the Defendant for summary judgment upon a dishonoured cheque in the sum of $200,000, for reason of “account-closed”. Background 2.At the material time, the Plaintiff was the registered owner of the property (a piece of land) located at Lot 1452 in District Demarcation 7, Tai Po. 3.On 7th September, 2002, the Plaintiff agreed to sell and the Defendant agreed to buy the Property at the consideration of $390,000. 4.Pursuant to the First Agreement, the Defendant paid the 1st installment of $10,000 to the Plaintiff. 5.On 13th September, 2002, upon execution of the Assignment of the Property in favour of the Defendant who paid a further sum of $130,000 to the Plaintiff. 6.Balance of $250,000 was paid by post-dated cheque dated 7th January, 2003. (the 1st post-posted cheque). 7.The 1st post dated cheque was dishonoured upon presentation. 8.On 21st January, 2003, the Plaintiff and the Defendant entered into a Second Additional Agreement that: -
9.On 28th January, 2003, the Defendant failed to pay $150,000 to the Plaintiff. 10.Between 28th January, 2003 and April, 2003, the Plaintiff could not locate the Defendant. 11.On 22nd April, 2003, the Plaintiff and the Defendant entered into a supplementary agreement: - 補充協議
12.The 2 post–dated cheques were dishonoured upon presentation because the bank account was closed. 13.The four agreements: -
14.For the purpose of this application for summary judgment, Mr. Yeung, Counsel of the Defendant, raise 3 defences, namely, (1) illegality of the term ‘toi tei fee’ [陀地費] in the First Agreement. (2) the two post-dated cheques were meant to be held in escrow . (3) Interest in excess of 60% per annum under Section 24 of the Money Lenders Ordinance Cap163. 1. Illegality 15.The Defendant raise an issue of illegality of the First Agreement which contained a term of “除甲方須負責地盤之[陀地費]外，其它一切費用一概由乙方負責。” Translation: “Except for the “toi tei fee” of the site which shall be borne by Party A, all other costs shall be borne by Party B. 16.The Defence’s submission was that part of the consideration of the First Agreement was for the payment of “toi tei fee” [陀地費] and that term of the payment could not be severed from the whole consideration of the First Agreement. The Court should be slowed to enforce the Agreement. 17.The First Agreement was a sale and purchase Agreement between the Plaintiff and the Defendant. The Plaintiff had performed the First Agreement by assigning the interest of the Property to the Defendant without reliance on the alleged ‘toi tei fee’ [陀地費]. $390,000 was the price for selling the piece of land to the Defendant. It had nothing to do with the ‘toi tei fee’ [陀地費]. The Defendant had mortgaged the Property to the existing mortgagee, Joy Advance Finance Limited by an all monies Mortgage dated 16th September, 2002 and a three storey building had been erected on the Property. 18.Clearly, the performance of the First Agreement and subsequent agreements did not rely on the term of ‘toi tei fee’ [陀地費]. Doctrine of Severance can be applied in the present case. 19.Mr. Yeung placed heavy emphasis on the term of ‘toi tei fee’ [陀地費] which has an implication of element of criminality. 20.The term of “ 除甲方須負責地盤之[陀地費]外，其它一切費用一概由乙方負責。 ” has a simple and straight forward meaning that the Plaintiff was not required to pay this fee only when demanded (by a third party). It was certainly not the meaning of this term that the Plaintiff would go out to the site and asked if anyone wanted ‘toi tei fee’ [陀地費]. Mr. Yeung did not elaborate why the term of ‘toi tei fee’ [陀地費] would amount to illegality of the performance of contract. However, there is a difference between the person who demanded the payment of ‘toi tei fee’ [陀地費] with menace and the person who submitted himself to the demand would normally be a victim of a crime. 21.In any event, the Plaintiff did not pay any ‘toi tei fee’ [陀地費]. I therefore ruled that the term of “ 除甲方須負責地盤之[陀地費]外，其它一切費用一概由乙方負責。 ”is not an illegal term as alleged by the Defence. It follows that there is no illegality in the performance of the First Agreement. 2. Escrow 22.Mr. Yeung submitted that the Defendant only paid cash to the Plaintiff and the reasonable inference would be that the 2 post-dated cheques should be held in escrow. 23.Delivery of a cheque in escrow means that the cheque was to be delivered so as not to take effect as a bill until certain condition should have been fulfilled. [Chalmers and Guest on Bill of Exchange and Cheques, 16th Edition, para 2-152 and 153.] 7th January, 2003 24.The Defendant should have paid the balance of the purchase price on 7th January, 2003. However, the $250,000 post-dated cheque was dishonoured. 28th January, 2003 25.The Defendant again failed to pay $150,000 on 28th January, 2003 as agreed between the parties. He disappeared. 22nd April, 2003 26.In this last agreement, the Defendant delivered 2 post dated cheques namely,
27.The reason why the Defendant could not pay was because he had financial difficulties. In the supplementary agreement dated 22nd April, 2003, the Defendant stated that“ 因本人資金出現問題令至未能依期全數付清樓價尾數港幣 ($150,000.00)。” 28.Due to the Defendant ‘s financial difficulties to pay, the Plaintiff extend further time from 28th January, 2003 to 15th 2003 and 22nd May, 2003 for the Defendant to pay the balance. 29.Both cheques’ account holder was Hou Fai Consultant Engineering Co.. The Defendant was the sole proprietor of this company. In fact this company was closed since 18-6-2002. 30.The bank informed the Plaintiff that the bank account of the 2 post-dated cheques in fact had been closed. At the time of producing these 2 cheques to the Plaintiff, the Defendant should have known that the 2 post-dated cheques were not as good as cash. He had no means to pay either on the 15th or 22nd May, 2003. He was trying to delay payment. 31.In the supplementary agreement dated 22nd April, 2003, there was no mention of the 2 post-dated cheques being drawn in escrow and it was certainly not pleaded in the defence. I reject the Defendant’s assertion that the 2 cheques were meant to be held up by the Plaintiff in escrow. 3. Interest 32.With respect, this argument is misconceive. Money Lenders Ordinance Cap.163 is
33.And S.2 defines the meaning of ‘loans’
34.Clearly, in this present case, the Plaintiff is suing for recovery of a ‘debt’ not a ‘loan’. 35.S.24 of the Money Lenders Ordinance has no application in this matter. 36.For the above reasons, I conclude that the Defendant has no “real or bona fide defence”. I enter judgment for the Plaintiff. Order
Ms. Judy K.P. Mak, of M/s Adrian Yeung & Cheng, for the Plaintiff Mr. Dominic YEUNG, inst’d by M/s Henry Wan & Yeung, for the Defendant |