Hung Chung Chi Johnny v. Tang Jian

DCCJ3852/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3852 OF 2004

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BETWEEN

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Coram : His Hon Judge Leung in Chambers (open to public)

Date of hearing : 21 December 2007

Date of handing down decision : 22 January 2008

DECISION

1.On 21 September 2007, I handed down the judgment in this case.  The Plaintiff claimed on the basis of an oral loan agreement with the Defendant.  I was not satisfied on the evidence that there was intention to create a legal relationship in the provision of financial assistance by the Plaintiff to the Defendant to acquire the matrimonial home for himself and the Plaintiff’s daughter.  I dismissed the claim.  The Plaintiff now applies for leave to appeal.

2.To begin with, parties somehow considered it fit and necessary to file affirmations for the purpose of this application.  I was informed that the Plaintiff’s affirmation was filed to exhibit the draft notice of appeal.  If necessary, the draft could have been appended to the summons for leave to appeal.  The Defendant’s role in the present application should be limited but he also filed an affirmation.  If the affirmation contains new evidence, there is no basis for its use in the absence of leave to adduce it.  Use of an affirmation simply for purpose of referring to what was said during trial is not proper either.  For the purpose of this application, I make no reference to these affirmations.

3.There is no dispute on the applicable principles.  Leave would be granted if there is realistic prospect of success in the intended appeal.  Leave may also be granted if the case raises an issue where the law requires clarifying: Smith v Cosworth Casting Processes Ltd [1997] 1 WLR 1538; Ma Bik Yung v Ko Chuen, HCMP 4303/1999, 8 September 1999.

4.The draft notice contains grounds of appeal under the following headings:

(1)	Denial of natural justice;
(2)	Failure to give due regard to objective evidence of intention to be bound;
(3)	Misconceived burden of proof;
(4)	Presumption of intention to be bound not rebutted; and
(5)	Presumption of lack of intention to be bound rebutted.

Ground (1)

5.Mr Chan for the Plaintiff submitted that I addressed and decided the issue of intention to create a legal relationship in the absence of pleading, evidence and argument by the parties.  This, Mr Chan submitted, was a denial of natural justice.

6.This was the first and foremost challenge against the judgment.  This was a serious and fundamental attack on the conduct of legal process.  Regrettably the same transpired to be the result of counsel’s missing part in his reading of the actually detailed submissions of counsel for parties during trial.  Mr Chan had to concede that, though only towards the conclusion of this hearing.  This whole ground was abandoned.

Grounds (3) & (4)

7.These 2 grounds could be considered together.  They all go to the question of burden of proving intention or the lack of it for an agreement to be legally binding.

8.Mr Chan for the Plaintiff referred to para.34 of the judgment.  He submitted that I erred by misconceiving the burden of proving a legally binding loan agreement.

9.There can be no dispute that it was the burden of the Plaintiff to prove a legally binding loan agreement as pleaded, irrespective of whether he could achieve that by relying on any presumption under the law.  Paragraph 34 of the judgment follows the preceding paragraphs (paras.23-33) dealing with the Defendant’s attempt to introduce into evidence matters not raised until trial.  What I said in that paragraph clearly does not mean that the Defendant was excused from my consideration and evaluation of the evidence discussed in the subsequent paragraphs.

10.Counsel argued much, and probably too much, about the applicability of presumptions.  Mr Chan for the Plaintiff relied on Chitty on Contract, Vol.1 at para.2-156 (in the context of commercial contract).  Mr Tsang relied on Jones v Padavatton [1969] 1 WLR 328 (in the context of domestic arrangement).  The presumption of intention or the lack of it is not one of law, but of fact.  It derives from experience of life and human nature which shows that in certain circumstances the parties involved usually do or do not intend to create legal rights and obligations.  However, the court at the end of the day has to consider what the parties said and wrote in the light of all the surrounding circumstances, and then decide objectively whether the true inference is that the parties would have intended to create the legally binding agreement: see Jones v Padavatton at 332E-333D, per Salmon LJ.  To determine a case by reference to presumption and burden of proof should really be a matter of default and last resort: see Rhesa Shipping Co SA v Edmunds [1985] 2 All ER 712; Snell’s Equity (31^st ed) at para.23-05 (in the context of presumption of advancement).

11.I was not satisfied that there was intention of the parties to create a legal relationship in respect of such financial assistance: paragraph 55 of the judgment.  This was the conclusion drawn after considering the context and evaluating the evidence of the circumstances in which the idea of the financial assistance to young couple arose (paras.35-38), how the financial assistance was discussed (paras.39-42), how the money was advanced (paras.43-46), how interest came to be paid and how it was paid (paras. 47-51) as well as the parties’ pre-action correspondence and documents (paras.52-54).  This would have been the exercise whether only the Plaintiff or only the Defendant or both of them gave the relevant evidence.  The exercise was not to see whether one party’s evidence in isolation managed to negative the presumption which the other party could rely on.  All the evidence had to be and was considered.

12.I am not convinced that grounds (3) and (4) have a realistic prospect of success on appeal.

Grounds (2) & (5)

13.These 2 grounds are considered together as they relate to the sufficiency and my evaluation of the evidence of intention of the parties.

14.The first challenge is that I failed to distinguish subjective from objective intention.  It should be clear from counsel’s detailed written submissions during trial and the evaluation of the evidence in the judgment that the issue of contractual intention was always approached objectively.

15.The second challenge is about how I assessed certain evidence.  It was not suggested that I have failed to take into account certain evidence (such evidence being not mentioned in the judgment).  Mr Chan for the Plaintiff simply submitted that I failed to take sufficient account of certain evidence as evidencing objectively the parties’ intention.  Mr Chan cited in the draft notice of appeal those paragraphs of the judgment where I actually dealt with such evidence.  It was not suggested that no reasonable judge would have come to the conclusion I drew on the basis of the evidence.  That the appellate court just might draw a different conclusion, as Mr Chan seemed to suggest, is not enough for an appeal on facts to be allowed.

16.I am not convinced that the threshold for giving leave to appeal is met insofar as these 2 grounds are concerned.

CONCLUSION

17.The application for leave to appeal is dismissed.  Parties have already submitted on costs pending the outcome of this application.  I therefore order the costs of and occasioned by this application be to the Defendant.  However, in line with my observation about the unjustified use of affirmations for the purpose of this application, I order that the costs of their preparation and filing shall be excluded from the costs payable by the Plaintiff to the Defendant.  The costs shall be taxed, if not agreed, with certificate for counsel.

Representation :

Mr Maurice Chan instructed by Messrs Fung Wong Ng & Lam for the Plaintiff

Mr Patrick Tsang instructed by Messrs Alan Ho & Co for the Defendant