Wong Kwai Ming v. Yeung Shuet Ping

CACV 350/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 350 OF 2006

(ON APPEAL FROM HCA NO. 1371 OF 2004)

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BETWEEN

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Before: Hon Tang VP, Waung J and A Cheung J in Court

Date of Hearing: 23 May 2007

Date of Judgment: 23 May 2007

Date of Reasons for Judgment: 31 May 2007

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REASONS FOR JUDGMENT

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Hon Tang VP (giving the reasons for judgment of the Court):

Introduction

1.This is the plaintiff’s appeal against the judgment of Recorder P Fung, SC, whereby the plaintiff was ordered to pay the defendant the sum of $269,352.

2.The plaintiff was the defendant’s subcontractor in the waste disposal business, and claimed the sum of $1,205,427, being the outstanding balance in respect of such subcontract work.  It appeared that the plaintiff and his wife, Madam Leung, worked as a team.

3.The defendant’s case was that the total value of the subcontract work was $1,698,152 (or $1,698,150), of which she had paid $1,100,523 but that the plaintiff in turn owed her $866,979, leaving a net balance of $269,352 in her favour.  It was in respect of this net balance, that the learned recorder gave judgment in her favour.  The defendant’s case in relation to the sum of $866,979 was supported by her evidence as well as certain handwritten notes.

4.Although we are only concerned with the net balance and hence the defendant’s counterclaim, it will help if we mention briefly how the learned recorder disposed some of the other issues before him.

5.An important component of the plaintiff’s claim was the subcontract fee for the so-called “KTS Works” which according to the plaintiff, amounted to $988,800, at the agreed fixed rate of $30,900 per month.

6.The defendant’s case was that the subcontract fee for the KTS Works was agreed to be variable according to the volume of work.  Thus varied, the fee should be $471,000 for the relevant period.  The plaintiff did not dispute the figure of $471,000 which was supported by detailed monthly schedules.

7.On this important issue, the learned recorder had to consider the evidence of the plaintiff and his wife on the one hand, and the evidence of the defendant on the other.

8.The learned recorder concluded in paras. 30 and 31 of his judgment:

“	30.	The allegation on the part of the Plaintiff and his wife is so bizarre that it is simply incapable of belief.
	31.	Furthermore, the Plaintiff’s allegation of agreement on a fixed rate is contradicted by the evidence of Wong Man Shing, who was called by the Plaintiff as a witness.  Wong Man Shing has about 20 years’ experience in the trade.  His company is very substantial because he employs a staff of 500–600 persons.  His evidence was that people in the trade would never agree to a fixed sum for any subcontract work.  The fee for a subcontract would vary depending on the addition or deletion of locations.”

9.On every factual issue, the learned recorder found against the plaintiff.  It is unnecessary for us to go into his reasons.  Suffice it for us to say, with respect, we found the learned recorder’s reasons, good and convincing.

The Appeal

10.The challenge on appeal is directed to the defendant’s counterclaim.

11.Basically, the defendant’s case is that at the request of the plaintiff and / or his wife, the defendant paid the plaintiff’s workers or workers of Yue Fat Environmental Cleaning Company Limited (“Yue Fat”), a company owned and controlled by the plaintiff and his wife.

12.Also, at their request the defendant had made various other payments on the plaintiff’s behalf, or on behalf of Yue Fat.  Further, between 1 September 2001 and 12 November 2003, the defendant was employed as a foreman by Yue Fat at a salary of $12,000 per month, and that the plaintiff and / or his wife “asked her to set off the same against the subcontract fees.”  The total of these items was $866,979, the subject of the defendant’s set off and counterclaim.

13.The plaintiff and his wife’s evidence was that they “never asked the Defendant to employ workers for them”, although they:

“

57.

… did ask the Defendant to incur expenses on behalf of them or Yue Fat but they had reimbursed the Defendant for such expenses either by paying her or setting off the same against the subcontract fees.  In respect of any item for which the Defendant is unable to produce a receipt or other documentary evidence in support, it must mean that the Plaintiff has settled the same with the Defendant.”

14.Moreover, the defendant was never employed as a foreman by Yue Fat.  Lastly, in any event, she could not make a claim against the plaintiff because Yue Fat was a separate legal entity in relation to any expense allegedly incurred by her or work done by her for Yue Fat.

15.It is true that for many of the items in her counterclaim the defendant was “unable to produce a receipt or other documentary evidence in support, …”  (para. 57(ii))

16.But as the learned recorder explained:

“

41.

It is the Defendant’s case that on 18th December 2003 there was a meeting between the Defendant and the Plaintiff’s wife at which they were to do an accounting exercise to see who was owing whom money.  At that meeting, the Defendant produced a lot of documents including receipts and bank documents which showed that the Plaintiff ought to give her credit for various sums which she had incurred on his behalf or which he owed her.  The Plaintiff’s wife took away all those documents on the pretext that she needed to check the sums.  She also refused to make copies for the Defendant, despite the latter’s request, on the ground that her photocopying machine was out of order.  It is denied by the Plaintiff’s wife that she did anything of that sort.”

17.The learned recorder then concluded:

“

80.

I accept the evidence of the Defendant about her handwritten notes produced in court.  I accept her evidence that all her documents in support of her claim were handed by her to the Plaintiff’s wife on 18th December 2003 who refused to return the same to her or give her copies.”

18.In this context, it is useful to look at that part of the judgment which dealt with a sum of $90,000 which according to the defence, the defendant had paid to the plaintiff’s wife on 16 April 2003.

19.The learned recorder dealt with this in paras. 40 to 55 of his judgment and as he said that gave the court “an insight into the extent to which the Plaintiff and his wife were prepared to go in order to bolster up their case.”  (para. 40).

20.In the answer to the plaintiff’s request for further and better particulars given by the defendant in respect of her defence and counterclaim, she said under answer 11:

“

11.

… The Defendant recalled that she had paid a sum of around HK$90,000.00 in or about end of Year 2002 and a sum of around HK$90,000.00 in or about April 2003 by depositing the same into either one of Madam Leung’s (the plaintiff’s wife) bank account.”

21.By a letter dated 1 March 2005, the plaintiff’s then solicitors asked the defendant’s solicitors to supply documentary evidence in respect of the payment of those two sums of $90,000.  In turn, by a letter dated 10 March 2005, the defendant’s solicitors asked the plaintiff’s then solicitors for discovery of the bank statements of the two personal accounts of the plaintiff’s wife.  Those bank statements were duly supplied.

22.Then, by a letter dated 1 April 2005, the defendant’s solicitors wrote to the plaintiff’s then solicitors, saying:

“Our client did also deposit HK$90,000.00 cash to Madam Leung Yuet Sin’s Hang Seng Bank Account No. 293-5-125845 on 16th April 2003.  The said entry can be seen in Madam Leung’s bank passbook.”

23.But when Madam Leung filed her first Witness Statement dated 20 Aril 2005, she denied that the defendant had deposited $90,000 into her Hang Seng Bank Account on 16 April 2003.

24.More significantly, she went on to say in her statement:

“

47.

Meanwhile, I have ascertained on behalf the Plaintiff the said sum of HK$90,000.00 cash being deposited into my Hang Seng Bank account, which was from the repayment of loan made by Mr. Wong Kwai Ping on or about 16th April 2003.  The Plaintiff had lent a sum of HK$200,000.00 to Mr. Wong Kwai Ping during the period between around February 2002 and March 2002, Mr. Wong Kwai Ping handed a sum of HK$10,000.00 to the Plaintiff on or about 15th April 2003 and deposited a sum of HK$90,000.00 into the Hang Seng Bank A/C No. 293-5- 125845 of the Plaintiff’s wife on or about 16th April 2003.  Further, the balance of remaining debt at a sum of HK$100,000.00 was repaid on or about 26th November 2004.”

25.That was supported by a Witness Statement by the plaintiff’s brother Mr Wong Kwai-ping in his Witness Statement of 20 April 2005.

26.The rest of the story can be taken from the judgment:

“	53.	Fortunately for the Defendant, she subsequently managed to locate the relevant bank document relating to the said payment.  By her 2nd Supplemental Witness Statement dated 6th January 2006, she said in paragraph 6 thereof that shortly before that date she accidentally discovered, inter alia, the pay-in slip which showed her payment of $90,000- in cash into the Hang Seng Bank account of the Plaintiff’s wife on 16th April 2003 and she exhibited a copy of the same.
	54.	It was only subsequently to that that the Plaintiff and his wife admitted that there was in fact the payment of $90,000- by the Defendant into the bank account of the Plaintiff’s wife on 16th April 2003.  They have, however, never explained how the Plaintiff’s wife and Wong Kwai Ping came to give the evidence in their respective Witness Statements referred to above.  The Plaintiff was asked in cross-examination about this and he said that he knew that his brother had made the Witness Statement which he did but that he was not clear as to why he did that.  The Plaintiff’s wife was cross-examined about this and it was put to her that she and Wong Kwai Ping had fabricated evidence about the $90,000-.  Her answer was that the Defendant should have disclosed the pay-in slip in the first place.  On questioning by the Court, the Plaintiff’s wife said that upon checking she was not able to find evidence of any payment by Wong Kwai Ping into any of her bank accounts of a sum of $90,000- whether before or after 16th April 2003.  What is most significant of all is that Wong Kwai Ping was not called to given evidence.  I asked the Plaintiff’s Counsel, Mr. King Wong, why Wong Kwai Ping did not give evidence.  After taking instructions, Mr. King Wong’s reply was that Wong Kwai Ping, on learning that the matter of the $90,000- had been resolved, preferred not to come to Court to give evidence.
	55.	In all the circumstances, I am firmly of the view that the Plaintiff, his wife and Wong Kwai Ping together made up a story regarding the $90,000- with a view to defeating the Defendant’s entitlement to credit for the $90,000- she paid into the account of the Plaintiff’s wife on 16th April 2003 because they believed at that stage that she would be unable to produce the necessary evidence.”

The handwritten notes

27.We turn to examine the plaintiff’s complaint that insofar as the defendant relied on the hand-written notes in support of her counterclaim, the court should draw an adverse inference against her because it was clear from her evidence that those hand-written notes were based on or compiled from information contained in certain notebooks, which had been destroyed by her after the commencement of the proceedings.  We agree that in a suitable case the court might refuse to place any weight on the handwritten notes because of the destruction of the notebooks, but here one would have to balance the destruction of the notebooks against the plaintiff’s failure to produce the documents which the defendant had supplied the plaintiff.

28.Mr Simon K C Lam, for the plaintiff, submitted that the defendant ought to have sought specific discovery of those documents.  But, that would have been a futile exercise because it was the plaintiff’s case that they had not been supplied by the defendant.

29.The learned recorder who had in mind all the circumstances in relation to the destruction of the notebooks, said:

“

76.

Originally, I had doubts about the Defendant’s account about the production of the handwritten notes.  After hearing her evidence, however, I believe that she was telling the truth.  First, a substantial part of her handwritten notes is borne out by the documentary evidence, such as cheques, bank documents and receipts.  Secondly, in order to produce the handwritten notes to fit in with the indisputable documentary evidence, she would have had to be very sophisticated and crafty.  I do not think that she is that type of person.  On the contrary, I think that she is a very straight-forward and honest witness who, despite her low level of education, has a very clear mind and good memory for details.  Thirdly, her allegations of making payment to workers employed for the Plaintiff or Yue Fat and of employment as a foreman by Yue Fat are supported by two such workers, Man Wai Cheung and Lam Siu Lung, who appear to me to be honest witnesses and whose evidence I accept.”

30.We must say that Mr Lam’s attempt, by references to the transcript, to show that part of the evidence of the defendant in relation to the hand-written notes were confused and confusing, did not persuade us that the learned recorder was wrong in accepting the evidence of the defendant.

31.Mr Lam further demonstrated in Appendix 2 to his skeleton submission that the counterclaim had failed to include some items of expenditure recorded in the handwritten notes as having been incurred by the defendant on behalf of the plaintiff.  He submitted, thus, it was obvious that the hand-written notes were prepared in a haphazard manner and no weight should have been placed on them.

32.However, the learned recorder who had the benefit of similar submission made by Mr King Wong, who appeared for the plaintiff below, explained why he felt weight could and should be placed on the handwritten notes in para. 77 of his judgment.  With respect, we agree.

Yue Fat

33.The 2^nd ground of appeal that Mr Lam relied on related to the defendant’s claim that she was an employee of Yue Fat.  Mr Lam submitted that the learned recorder had failed to consider important evidence to the contrary, namely, that she was never recorded as being on the payroll of Yue Fat, no MPF contribution had ever been made on her behalf by Yue Fat, nor report made to the revenue.  Moreover, on the termination of her employment, she had made no claim for her entitlement as an employee in relation to such termination.

34.The learned recorder made no express reference to these matters but he could hardly have been unaware of them because they were the subject matter of cross-examination of the defendant, as well as submissions made by counsel.  When compared with the lack of credibility on the part of the plaintiff and his wife, as well as the learned recorder’s acceptance of the defendant as a truthful witness, it is not surprising that the learned recorder made no express reference to them.

35.Mr Lam then criticised the reference by the learned recorder to circulars and notices issued by Yue Fat, which described the defendant as a foreman.  Mr Lam submitted that there was another person who was similarly referred to in those documents as a foreman, but who, in fact, was not in the employment of Yue Fat.  But these were matters of weight for the learned recorder.

No set off

36.Lastly, Mr Lam submitted that Yue Fat was a separate legal entity and hence even if the defendant was employed as a foreman by Yue Fat, the defendant was not entitled to set off against the plaintiff.

37.But the defendant’s case which was accepted by the learned recorder was that the plaintiff had agreed that she was entitled to deduct her pay out of the subcontract fees payable.

38.Mr Lam then made the point that insofar as there was a net balance in favour of the defendant, there was no money available to be deducted.  That being the case, the defendant was not entitled to succeed in the counterclaim.

39.Admittedly, on the defendant’s case there was a net balance in her favour.  But we see no reason why this net balance should be attributed to the salaries which she was entitled to be paid by Yue Fat.

40.Moreover, as Mr Erik Shum, for the defendant pointed out, that was not a point taken in the Notice of Appeal.  The only point taken in the Notice of Appeal related to the separate existence of Yue Fat.

41.More importantly, the point was not taken at trial.

42.Mr Lam sought to explain that by saying that in the Defence and Counterclaim the defendant only alleged that she was in the employ of the plaintiff and that she was entitled to deduct her salary from moneys payable to the plaintiff, it was only necessary for the plaintiff in his reply and defence to counterclaim, to deny that she was in the employ of the plaintiff, or that she was entitled to deduct.

43.But the trial was fought on the basis that the defendant was employed either by the plaintiff or Yue Fat and that the plaintiff had agreed that she was entitled to deduct her salary from payments due to the plaintiff.  The plaintiff never took the point that there was no money owed by the plaintiff against which the salary could have been deducted.  It is too late now for the point to be raised.

44.For the above reasons, we dismissed the appeal with costs.

Mr Simon K C Lam and Mr King Wong, instructed by Messrs Au Yeung, Cheng, Ho & Tin, for the Plaintiff.

Mr Erik Shum and Ms Queenie W S Ng, instructed by Messrs Jimmie K S Wong & Partners, for the Defendant.