Coin Yield Co Ltd v. Rich Fine Engineering Ltd
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DCCJ4817/2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 4817 OF 2008 ----------------------
---------------------- Coram : H.H. Judge Chow Dates of hearing : 15th and 16th March 2010 Date of handing down Judgment : 11th May, 2010 ---------------------- J U D G M E N T ---------------------- 1.This is the Plaintiff’s claim against the Defendant as the drawer of a cheque dated 9.9.2008 in the sum of $168,000 in favour of the Plaintiff. This cheque was presented for payment on 9.9.2008, but it was dishonoured. The Plaintiff’s evidence 2.Mr. Chan Chung Yin (“Chan”) testified on behalf of the Plaintiff. He is a director of the Plaintiff, as well as a director of Hop Woo Cheung Enterprizes Limited (“Hop Woo Cheung”), which is the holding company of the Plaintiff. Hop Woo Cheung is the registered owner of Shop B, Ground Floor, Penta House, Nos. 190, 190A, 192A & 192B, Tai Po Road, Kowloon, Hong Kong (“the Premises”). 3.On 5.6.2008, a Madam Shek (“Shek”) telephoned Chan, saying that she was the secretary to a Mr. Leung Yiu Chuen (“Leung”) and asked to view the Premises. He agreed. He further said that he would bring along the demand for rates, water bill, electricity bill and the general restaurant licence for verification. 4.On 6.9.2008, Shek, Leung, Mr. Benson Ng (“Ng”) and Mr. Chim (“Chim”) arrived at the Premises. He led them to view the Premises. 5.Leung and Ng said to him that they were satisfied with the condition of the Premises and agreed to sign a tenancy agreement on behalf of the Defendant. He told them that a Chinese restaurant had been operated on the Premises before and he was still holding a valid general restaurant licence. Leung told him that he was a director of the Defendant. Chan told them that he was a director of Hop Woo Cheung, the registered owner of the Premises as well as a director of the Plaintiff, a subsidiary of Hop Woo Cheung. He further told them that the tenancy agreement would be signed by the Plaintiff as landlord. Leung and Ng said that they did not care about the arrangement as along as they could rent the Premises. In order to prove the ownership of the Premises, the relationship between the Plaintiff and Hop Woo Cheung, and the existence of the general restaurant licence, he showed them a demand note for rates for the 3rd quarter of 2008 (bearing the name of Hop Woo Cheung), a water bill dated 14.7.2008 and an electricity bill dated 15.8.2008 both bearing the name of the Plaintiff, and a general restaurant licence (collectively called “the Documents”) showing him as the licensee. 6.Then they went to a restaurant nearby to negotiate the terms of the tenancy agreement. After negotiation they agreed on the following terms:-
7.Chan recorded all the above terms in a hand-written note simultaneously (“the Note”). He told Ng and Leung that he would instruct his solicitors to prepare the tenancy agreement and other necessary documents. Ng and Leung asked him to fax the floor plan of the Premises to Ng. 8.Chan asked Leung to pay an initial deposit equivalent to one month’s rental to show his sincerity to rent the Premises. He agreed and drew on behalf of the Defendant a cheque which was post-dated to 9.9.2008. They agreed that the initial deposit would be used as part payment of the rental deposit for the tenancy agreement. 9.Leung asked Chan to fill in the name of the Plaintiff as payee on the cheque for him. He did so. Shek then went out and made a photocopy of the cheque and the Note for record. He then put the name chop of the Plaintiff on the photocopy of the cheque and signed his name in acknowledgment of the cheque. 10.On 8.9.2008, he faxed the floor plan of the Premises to Ng. 11.On 9.9.2008, he presented the cheque for payment. But it was dishonoured and returned for the reason of “Payment Countermanded By The Drawer”. 12.A few days later, Shek telephoned him, saying that Leung would like to settle the matter by paying $20,000.00. However he declined the offer. Shek said that Ng had told her that the plan to run a restaurant fell through and it was lucky that he did not quit his job. Had he quitted his job, he would have been jobless then. The Defendant’s evidence 13.Leung testified for the Defendant. In about September 2008, he was appointed by the Defendant to look for suitable premises to operate a Chinese restaurant. Then he was informed by his friend Shek Hing Ying (Shek) that some suitable premises were available for such a purpose at Shop B, Ground Floor, Pena House, Nos. 190, 190A, 192A & 192B Tai Po Road, Kowloon. 14.On 5.9.2008, together with Shek, Ng, Chim they went to see the Premises. On this occasion they were received by an unknown person. He did not see or receive any document from this unknown person. 15.Through Shek’s arrangement, together with Chim and Ng he went to view the Premises again in the morning of 8.9.2008. 16.On arrival at the Premises they were received by Chan. Chan introduced himself to them as the landlord of the Premises. Apart from his business card, Chan did not provide him with any other documents. 17.After viewing the Premises, he expressed his interest in the Premises for operating a Chinese restaurant. Then they went to a nearby restaurant to discuss matter further. At the restaurant, he raised his concerns with Chan about whether the Premises were suitable for running a Chinese restaurant. Chan then represented to him that the previous tenant had operated a Chinese restaurant on the Premises and that Chan was still holding a valid licence for running a Chinese restaurant thereon. 18.In reliance on what Chan had assured him and in the presence of Chim that he was the landlord and that the Premises had an existing valid licence for running a Chinese restaurant, he orally promised to rent the Premises at a monthly rental of $168,000 but on the condition that Chan was able to provide the Defendant later on the same day the following proofs:-
19.Chan agreed to provide the aforesaid proofs, but he also required him to pay him some deposit to show his sincerity. Accordingly, he drew on behalf of the Defendant a cheque for the sum of $168,000 upon the Defendant’s account held with Wing Hang Bank Limited (number 000518 and dated 9.9.2008) and gave it to Chan. As he did not myself read or understand the English language, he left the payee of the cheque blank and let Chan fill it in himself. When he passed the cheque to Chan, he made it clear to him that he should not present the cheque for payment until he had provided him satisfactory proof of the ownership of the Premises and the existence of the said restaurant licence later on on 8.9.2008. Before they parted, he and Chan further agreed that they would meet again to discuss and work out the terms and conditions of the tenancy agreement after he had been satisfied with the said proofs. Later on on the same day, he received a fax from Chan. As he did not know English, he brought it to an architect at Allied Architects Engineers & Associate for advice. He was advised by the architect that the fax Chan was only a floor plan of the Premises. He advised him to be “careful”. 20.Apart from the floor plan of the premises Chan did not provide him with any other documents. Because Chan had failed to provide him with proof of ownership of the Premises and proof of the existence of a valid licence for running a Chinese restaurant on 8.9.2008 as promised and the consideration for the cheque had totally failed and fearing that Chan would cheat the Defendant out of the sum of $168,000.00, he therefore went to Wing Hing Bank Limited on 9.9.2008 and stopped the payment of the cheuqe. Analysis of evidence 21.It is credible that Chan said to Shek that he would bring along the demand for rates, water bill, electricity bill and general restaurant for verification. It is natural for him to say so, for the purpose of showing his connection with the Premises. But according to Leung, when they met Chan, Chan only provided him with his business card. Chan must have been told beforehand their purpose of viewing the Premises. In order to lease out the Premises, he must have prepared himself to show his connection with the Premises. Accordingly he must have brought along the Documents on the day they met each other. 22.On 8.9. 2008, Leung received a fax from Chan. The fax was the floor plan of the Premises. Leung said that he did not know English. But he had been engaged in decoration business for years. He admitted that he had seen floor plans of buildings beforehand. He must have known that the document faxed was a floor plan. So it would be very natural for him to make a telephone call to Chan (instead of going to get advice from an architect), by making use of the telephone number appearing on Chan’s name card, and ask him why he had sent him a floor plan, instead of documents (“the relevant documents”) to show that he was the landlord of the Premises, and that a valid licence for running a Chinese restaurant on the Premises existed. But he did not do so. 23.Just by taking a look at the document faxed, anyone can tell that it was a floor plan. Leung must have known that it was a floor plan. So what kind of advice could he get from an architect? His reason for doing so is plainly not credible. Even after having been told by the architect that it was a floor plan, he did not contact Chan, asking him why he had sent a floor plan, instead of sending the relevant documents. It is very natural for him to do so, because Chan had broken his promise. He did not check it out from Chan; he simply went to the bank at about 11:00 a.m. on 9.9.2008, and stopped payment for the cheque. Even by this time he had ample time to ring up Chan, but he failed to do so. 24.Leung’s evidence is totally incredible. I reject his evidence where it contradicts Chan’s. Chan’s version is credible. I accept his evidence. I find that on 6.9.2008, Chan (on behalf of the Plaintiff) and Leung (on behalf of the Defendant) entered into an oral tenancy agreement of the Premises. The sum of $168,000 was paid by Leung as an initial deposit equivalent to one month’s rental to show his sincerity to rent the Premises. When this was done, the Plaintiff was legally bound to lease the Premises to the Defendant, and nobody else. The sum of $168,000 was to be used as part payment of the rental deposit for the tenancy agreement. This serves as the consideration for the cheque. Accordingly I enter judgment in favour of the Plaintiff. 25.I order that the Defendant do pay, within 14 days from today, to the Plaintiff $168,000, with interest thereon, at judgment rate, from 12.9.2008, until satisfaction. Costs 26.I make an order nisi, to be made absolute in 14 days’ time, that the Defendant do pay costs of this action to the Plaintiff, to be taxed, if not agreed, with certificate for Counsel.
The Plaintiff: represented by Mr. Lawrence Cheung, instructed by M/S. Howell & Co., Solicitors The Defendants: represented by Mr. Rarely Shek, instructed by M/S. Lam Pui King & Co., Solicitors |