Yeung Sai Hung v. Chan Tse Ying
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DCCJ 1313/2006 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 1313 OF 2006 -------------------- BETWEEN
-------------------- Coram : Deputy District Judge W. C. Li in Court Date of Trial : 11th – 12th January 2007 Date of Handing Down Judgment : 17th January 2007 ______________________ J U D G M E N T ______________________ 1.The Plaintiff’s claim was for HK$303,600.00 being the amount of a dishonoured cheque dated 21 October 2003 drawn by the Defendant in favour of the Plaintiff. The Plaintiff claimed that he had on 10 September 2003 lent $300,000.00 in cash to the Defendant and the Defendant gave him the cheque for $303,600.00 which was postdated to 21 October 2003. The Defence was one of total failure of consideration. The Defendant’s case was that there was no such loan as alleged and a cheque drawn by a company called Crown Management Limited (hereinafter called “Crown”) for the same amount of HK$303,600.00 was given to the Plaintiff’s father, Mr. Yeung Ki Sing (hereinafter referred to as “Mr. Yeung”), on 10 September 2003, pursuant to an agreement by Mr. Yeung to sell his remaining 11.7% shareholding in Crown’s for HK$285,000.00 to a nominee of the Defendant, Mr. Lam Chi Kwan, and it was part of this sale agreement that Crown would also pay Mr. Yeung, $303,600.00 being a repayment of part of the security deposit money for securing a contract tender with the Housing Department. 2.The Plaintiff was 18 years old in 2003 and he was made a director of Crown by his father who was then the Chief Executive Officer of this company. The Defendant was then the Financial Controller of Crown. The Plaintiff said he had wanted to do some business on his own and he asked his father for the capital for a Shanghainese restaurant. Mr. Yeung was a retired civil servant who had worked as a Housing Assistant with the Housing Department. The Plaintiff testified that they used to live in a public housing estate and after his father retired in about 1999, there appeared to be plenty of money in the family, and he did not appreciate the value of money then. Mr. Yeung was formerly the majority shareholder of Crown but he sold about 40% of his majority shareholding to the Defendant’s brother and also the remaining 11.7% shareholding to the Defendant’s nominee, Mr. Lam Chi Kwan, who was employed as a project manager at Crown. The Defendant said a total of 3 sums of money were paid to Mr. Yeung on 5 September 2003 pursuant to the sale of Mr. Yeung’s shareholding in Crown. Two cheques drawn on Crown’s company account for the sums of HK$285,000.00 and HK$774,257.00 respectively were made payable to Mr. Yeung. The third cheque was the Defendant’s personal cheque dated 5 September 2003 for the amount of HK$303,600.00 made payable to the Plaintiff. The Defendant’s case was that it was upon Mr. Yeung’s request that he gave him his personal cheque made payable to the Plaintiff, Mr. Yeung claimed that he had litigation pending and it was inconvenient for him to have large incomes in cash. The Defendant said he postdated his cheque to 21 October 2003 to allow himself time to reconsider the matter, and after consultation with the accounts office of Crown and with Mr. Lam Chi Kwan, he decided that it was not appropriate for him to use his personal cheque made payable to the Plaintiff to pay for the HK$303,600.00 payable to Mr. Yeung for the refund of the security deposit money. He then asked Mr. Yeung to come to the office of Crown to replace the cheque with a Crown’s cheque for the like amount. The Defendant testified that he had prepared the cheque and the receipt for the cheque and had them both dated back to 5 September 2003 which was the date on which Mr. Yeung sold and transfer the shares in Crown. Mr. Yeung did not return his personal cheque to him on 10 September 2003. The Defendant asked Mr. Yeung to cancel and destroy the cheque and Mr. Yeung said he would return the cheque to him in a few days. The Defendant further testified that Mr. Yeung had asked for a cash cheque and he had accompanied Mr. Yeung to the Bank of China at Kowloon Bay to cash the cheque on the same day, i.e. 10 September 2003. Mr. Yeung took cash over the counter at the Bank of China. Mr. Yeung did not return his personal cheque after that and when it was near 21 October 2003, the date on his personal cheque, the Defendant instructed his bank to countermand the cheque. On 21 November 2003, this cheque was presented for payment by the Plaintiff or his father and was therefore dishonoured. The Defendant testified that Mr Yeung then rang him to enquire why the cheque was stopped, and the Defendant scolded him for failing to return the cheque and eventually presenting it for payment at the bank. The Defendant said Mr. Yeung eventually came to his office and returned the cheque to him, and he had destroyed it in a shredder. It was not in dispute between the parties that the original of this dishonoured cheque had been returned to the Defendant. The Plaintiff claimed that he had gone up to the Defendant’s office with the dishonoured cheque and the Defendant took it away from him and promised to give him cash for it when the Defendant’s business had the money ready. The Plaintiff said he trusted the Defendant and did not think that the Defendant would cheat him. 3.The Plaintiff’s case was that he gave $300,000.00 cash loan to the Defendant on 10 September 2003 and the money was withdrawn from his Premier Banking Account of the HongKong Bank. He withdrew $310,000.00 in cash, gave the Defendant $300,000.00 and kept $10,000.00 for his own use. His Premier HK Bank account was opened on 6 September 2003 when his father deposited HK$880,000.00 in cash into the account. From the bank statement produced by the Plaintiff, it was evident that the Plaintiff’s account basically had little or no money in it and there were two occasions when large sums of monies in cash were deposited into the account. HK$880,000.00 was deposited in cash when the account was opened on 6 September 2003. On 8 September 2003, there were 4 ATM withdrawal/transfers totaling $40,000.00. On 10 September 2003, there was a cash withdrawal of $310,000.00. On 11 September 2003, there was a cash ATM withdrawal of $20,000.00 and a transfer of $500,000.00 leaving the account balance at zero. On 13 September 2003, there was a cash deposit of $270,000.00. On 16 September 2003, there was a withdrawal by cashier order of $270,000.00. An instant deposit in cash of $100 was made on the same day to put the account balance in the blue at $100.00. On 23 September 2003, this remaining $100 was withdrawn leaving the balance at zero again. That was the state of the Plaintiff’s bank account as shown in the bank statement. 4.Mr. Yeung testified that he did not know that his son had lent $300,000.00 to the Defendant until the Plaintiff told him about the dishonoured cheque in late November 2003. Mr Yeung ‘s evidence was that on 5 September 2003 when he signed the transfer notes on the sale of his remaining shares to Mr. Lam Chi Kwan, he received 3 cheques given to him by the Defendant. These cheques were all dated 5 September 2003 drawn on the account of Crown. The first cheque was cheque No. 024349 for the amount of $285,000.00. This was in payment of the sale of his remaining 11.7% shareholding in Crown. The second cheque was cheque No. 024350 for $774,257.00. This was for repayment of certain monies due to him from Crown. The third cheque was No.024359 for the amount of $303,600.00. This was the cheque which was agreed to be paid as refund of security deposit money to Mr. Yeung in the sale of his 11.7% shareholding agreement. In his oral evidence, Mr. Yeung told the court that the Defendant had told him not to pay in the third cheque until later as the company had insufficient funds to cover the three cheques on 5 September 2003. It was put to and agreed by him in cross examination that this differed from the evidence in his witness statement. In his witness statement, Mr. Yeung said he did not have time on 5 September 2003 to go to the bank, so the third cheque was only cashed on 10 September 2003. His explanation in court was that he was told by the Defendant on 5 September 2003 to cash the cheque 2 days later as there were insufficient funds in the company account then, and 2 days later, he did not have time to go to the bank, so he only cashed this cheque on 10 September 2003. 5.From the bank statement of Crown, it was evident that its bank account had sufficient money to cover all the cheques on 5 September 2003. It was also noted that the numbers of the 3 cheques were not in sequence. The first 2 cheques were numbered 024349 and 024350 but the third cheque was numbered 204359. It was more likely than not that the first two cheques were given to Mr. Yeung on 5 September 2003 and the third cheque, with 9 cheque numbers in between, was not given to him on that day. It was also obvious that Mr. Yeung’s evidence in court as to why he had not cashed the third cheque on 5 September 2003 differed from his witness statement which failed to mention that the Defendant had asked him not to cash in the third cheque until 2 days later for reason of insufficient funds in the bank. Mr. Yeung in his witness statement also denied that he had any personal financial problem or inconvenience due to litigation in hand, and he had not asked the Defendant to give him the Defendant’s personal cheque for $303,600.00 made payable to his son instead. The Defence had shown to the court that there were two civil claims against Mr. Yeung at the time, one at the District Court and the other at the High Court. Mr. Yeung also agreed that he was declared bankrupt in about July 2006 for owing over a million dollars. Having considered the whole scenario, I did not find Mr. Yeung’s evidence credible at all. 6.The monies in the Plaintiff’s bank account obviously belonged to his father and were only funds that had passed through his account. The Plaintiff’s evidence that he had wanted to do business and his father had given him the monies in the two cash deposits of $880,000.00 and $270,000.00, and that he had given a loan of $300,000.00 in cash to the Defendant without the knowledge and consent of his father, were improbable and wholly unconvincing. No acknowledgement in writing for the loan was recorded or given. It was such a co-incidence that in return for the loan, the Defendant gave the Plaintiff a postdated cheque for $303,600.00, exactly the same amount as the third cheque paid to Mr. Yeung. The Plaintiff’s evidence was that there had been no discussion or agreement on payment of interest on the loan, and the Defendant had given him $3,600.00 for no apparent reason as interest payable on the loan. This was an incredible co-incidence. The Plaintiff’s evidence was equally incredible. 7.The Defendant had shown on the evidence that he had already paid the amount of $303,600.00 to the Plaintiff’s father and that was for the return of security deposit money which had been agreed to be given back to the Plaintiff’s father on his sale of remaining shares in Crown. I found it reasonable and convincing that the third cheque for $303,600.00 was given to Mr. Yeung and the receipt for the cheque was signed on 10 September 2003 although both the cheque and receipt were dated or backdated to 5 September 2003 which was the actual date of the transfer of Mr. Yeung’s remaining shares in Crown. I was satisfied that the Defendant did not owe any money to the Plaintiff. The Plaintiff’s claim that he had lent the Defendant $300,000.00 in cash on 10 September 2003 was not sustainable. The evidence showed that the Plaintiff had withdrawn $310,000.00 in cash from his bank on 10 September 2003. That did not amount to evidence that $300,000.00 had been given to the Defendant as a loan. The Plaintiff’s evidence that he was then young and easy with his money, and that he had respected and trusted the Defendant and therefore he lent him the money in cash without any written agreement, were not just improbable but incredible. I did not think that the Plaintiff and his father were giving true evidence in court. As the Plaintiff had not given any consideration for the Defendant’s cheque, his claim for dishonoured cheque in this action must fail. I therefore dismiss the Plaintiff’s claim together with an order for costs in favour of the Defendant. I order that the Plaintiff shall pay the Defendant’s costs of this action, to be taxed if not agreed. The Plaintiff’s own costs is to be taxed in accordance with Legal Aid Regulations. This costs order nisi is to be made absolute 14 days after handing down of this judgment.
Representation: Mr Fung Kowk Ki of Messrs. Fung & Fung for the Plaintiff Miss Wong Suk Hon of Messrs. Chow & Ho for the Defendant |