Thien Kok Wai v. Leung Kin Ling Joe

DCCJ 4149/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4149 OF 2006

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BETWEEN

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Coram :  His Honour Judge Chow

Date of hearing :  10^th January, 2007

Date of handing down Decision :  16^th February, 2007

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DECISION

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1.This is an application made by the Plaintiff for summary judgment against the Defendant for $850,000, together with interest and costs.

Background

2.In or about September 2004, the Plaintiff, the Defendant, one Mr. Yeung and one Mr. Lay together agreed to form a limited company by the name of Marvel Union Limited (“MUL”) under the trade name “Chill Club”.  Each of them holds 25% shareholding in MUL.  It was estimated that the initial working capital for the Chill Club would be approximately HK$700,000.00.  It was agreed that each of the shareholders would make an initial investment of HK$175,000.00, being 25% of HK$700,000.00.

3.The Plaintiff claimed that pursuant to this agreement he contributed his part of $175,000 of the investment in MUL.

4.The Plaintiff alleged that in or about September 2004, just before MUL was incorporated, the Defendant approached the Plaintiff for a loan by making a telephone to the Plaintiff and the Plaintiff agreed “to lend to the Defendant a sum of HK$270,000.00 for the Defendant to contribute towards his part of the investment in MUL and/or other purposes of the Defendant”.  Thereafter the Plaintiff issued and gave a cheque (in the sum of $270,000.00) to the Defendant.  The Cheque was made payable to the Defendant.

5.In or about April 2005, the Plaintiff, the Defendant, one Mr. Tam Tin Wai, one Mr. Lam Wing Yee and one Mr. Lai Chin Pang together caused the incorporation of a private company limited known as Glorious Empire Limited (“GEL”) for the purpose of carrying on the business of a Japanese hot-pot restaurant.  The shareholding in GEL is as follows:-

(1)	Tam Tin Wai	10%
(2)	the Defendant	20%
(3)	the Plaintiff	20%
(4)	Lam Wing Yee	25%
(5)	Lai Chin Pang	25%

6.The shareholders of GEL agreed each of them would make an initial investment in accordance with each of our shareholding in GEL as follows:-

(1)	Tam Tin Wai	HK$200,000.00
(2)	the Defendant	HK$400,000.00
(3)	the Plaintiff	HK$400,000.00
(4)	Lam Wing Yee	HK$500,000.00
(5)	Lai Chin Pang	HK$500,000.00

7.Pursuant to the agreement amongst the shareholders of GEL, the Plaintiff claimed that duly contributed towards his part of the investment in GEL in the total sum of $418,000.

8.The Plaintiff claimed that in or about May, 2005, he and the Defendant reached an oral agreement in a telephone conversation that he agreed “to lend to the Defendant monies as and when requested by the Defendant, which eventually totaled HK$580,000.00, in order for the Defendant to contribute towards his part of the investment in GEL and/or other purposes of the Defendant”.

9.Pursuant to the GEL loan, the Plaintiff issued and gave to the Defendant a number of cheques, which amounted to $580,000.  These cheques were all made payable to the Defendant.

10.The Defendant denies that $270,000 was a loan to him.  In his affirmation he said,

“11.   I was responsible for the whole business project of Chill Club…….. As between the Plaintiff and I, in consideration of me introducing this business opportunity as well as new business partners to him, my work done in planning the business and that I would be personally responsible for setting up the whole business and also responsible for its day-to-day management, the Plaintiff would pay for my share of the initial investment.  In other words, the Plaintiff would invest a total sum of HK$350,000 in MUL and I would not have to make any capital investment whilst both of us would still be holding 25% of MUL’s shares …………………….

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16.   The arrangement between the Plaintiff and I in respect of the investment in GEL was similar to that of MUL.  In consideration of my efforts in planning the business, finding new partners, setting up the new business and managing the day-to day affairs of GEL, the Plaintiff agreed to pay for my share of the initial capital investment.  In other words, the Plaintiff would have to pay a total sum of HK$800,000 whereas I did not have to make any capital contribution whilst both of us would be holding 20% of GEL’s shares.”

11.From 6.9.2004 to 14.12.2004, the Defendant alleged that various sums, being contributions from other shareholders towards the capital of MUL, besides the Plaintiff, were transferred to the Defendant’s bank account, for investment in MUL.  His case is that the sum of $270,000 is part payment of the Plaintiff’s initial capital investment in MUL.  The Defendant alleged that he used the money contributed from the shareholders of MUL in his personal bank account to meet MUL’s expenses.

12.Regarding the cheques which made up the total sum of $580,000, the Defendant alleged that other shareholders of GEL, besides the Plaintiff, also paid their capital investment to the Defendant’s personal bank account, and the Defendant did use the money in his personal account to settle GEL’s expenses.

13.It cannot be disputed that the Defendant did use the money in his saving account to meet the expenses of MUL and GEL.  The Plaintiff has not adduced any evidence to refute the allegation that besides the Plaintiff, other shareholders of MUL and GEL did make contribution of their respective shares in MUL and GEL by making such payments into the personal bank account of the Defendant.

14.The Plaintiff adduced evidence to show that he did make his contribution towards the investment in GEL, but he did not submit any evidence to show that he did pay his share of $175,000 in the investment of MUL, in order to rebut the Defendant’s alleged defence; he merely relied on his allegation that he did make such payment of $175,000.  The fact that he submitted evidence to show that he did make his contribution towards GEL’s business is not evidence to refute the Defendant’s Defence in respect of the MUL business.  Can I say that the Defendant’s defence is not believable?  The answer is clearly “No”.

15.The answer the Plaintiff provided on 27.12.2006 to the Defendant’s request is that he lent the sums for the Defendant to contribute towards the Defendant’s part in the investment in MUL and GEL “and/or other purposes of the Defendant”.  In the 2^nd affirmation of the Plaintiff dated 29.12.2006, he did not specify what the other purposes of the Defendant were.  The conjunction “or” in “and/or” indicates that the alleged loans of $270,000 or $518,000 could be unconnected to “other purposes of the Defendant”.  Alternatively, the alleged loans could be unconnected with the purpose of lending to the Defendant for his contributions towards his part of his investment in MUL and GEL.  Further, the alleged loans could have been made to the Defendant for the said contributions as well as for other purposes of the Defendant.  In order to ascertain the true nature of the passing of the Plaintiff’s money, it is important to know the purpose or purposes for which the monies were passed.  It is the purpose or purposes  that determine their nature, namely, whether they were loans or not.    It is important for the Court to know what the purpose or purposes for which the monies were passed.  But the Plaintiff did not specify what the purpose or purposes were.According to the Plaintiff, he had the telephone conversations with the Defendant, he must have known for what  purpose or purposes the monies were passed, because this is a fact which happened in the past.  It cannot be the case that it is an “and/or” situation.  Without such clarification the Plaintiff’s case is unclear.

16.For the reasons stated above, it is clear that it is not a proper case that I should enter judgment in favour of the Plaintiff as claimed.  I therefore dismiss this application for summary judgment.  I award costs to the defendant, to be taxed, if not agreed, with certificate for Counsel.

The Plaintiff:   represented by Mr. Jacky Ip, instructed by M/S Tso Au Yim & Yeung, Solicitors.

The Defendant:   represented by Ms. Shannon Leung, instructed by M/S Robin Bridge & John Liu, Solicitors.