Cheng Chiu Yuen and Another v. Kwok Yuen Yi

DCCJ 5044 of 2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL JURISDICTION

ACTION NO.  5044 OF 2009

BETWEEN

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Before: Deputy District Judge C. Lee in Chambers

Date of Hearing:  1^st June 2010

Date of Judgment:  1^st June 2010

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J U D G M E N T

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A.  APPLiCATION

1.The Plaintiffs applied for summary judgment against the Defendant for a dishonoured cheque in the amount of HK$600,000.00. 

B. BACKGROUND

2.The Plaintiffs commenced this action on dishonoured cheque with the provisional sale and purchase agreement dated 13^th October 2009 as the underlying transaction.  The Plaintiffs’ position was that after viewing the subject property by the Defendant who was accompanied by the estate agent, the said provisional agreement was signed by the estate agent for the Defendant.  Although the Defendant was not present at the time the agent signed the said agreement, the provisional agreement was also signed by the Defendant beforehand.  The agent then tendered the cheque for payment in the sum of HK$600,000 in accordance with the terms of the said agreement.

C. DEFENDANT’S SUBMISSIONS

3.Despite what he raised in his skeleton submissions, Mr. Bok, counsel for the Defendant reduced his submissions into two points during the hearing.  Firstly, he submitted that the provisional agreement between the parties was not a valid or binding agreement because the Defendant’s or the Defendant’s estate agent’s initial cannot be seen next to the amended part.  Secondly, the estate agent seems to be acting for both the vendor Plaintiffs and the purchaser defendant, the agreement was not valid. 

4.There are some other points raised in his skeleton submissions and in case his concessions made during the hearing is to be retracted, it is more desirable to cover the main points that he raised in his skeleton submissions.  I treat this as the third point, that is the Plaintiffs were not a payee of the cheque and hence they have no locus to sue on the cheque.  Fourthly, the estate agent, Mr. Philip Tang was in breach of the authority between the estate agent and the Defendant in that he should not enter into provisional agreement or tender the cheque for payment without the Defendant’s consent or express authority.

D. ISSUES

5.The ultimate question is whether the above contentions raised by the Defendant amount to triable issue or issues.

E.  DISCUSSIONS

6.In respect of the 1^st contention, Mr. Bok submitted that the provisional agreement was not valid or binding because even if the estate agent signed on the execution part, his initial or the Defendant’s initial cannot be seen next to the amended parts.  He may be right when he just looked at the exhibited copy.  The Plaintiffs brought to the Court the original carbon copy that shows some initials other than those of the Plaintiffs.  Mr. Bok clarified that those initials were not the estate agent’s.  When I further clarified with him whether he was giving evidence from the bar table, he gave me convoluted answers to my simple question.  Be there as it may, his 1^st contention must fail because he submitted as if there is no initial other than those of the Plaintiffs next to the amendment.  He made a factual mistake in building his 1^st contention.

7.In respect of his 2^nd contention, I do not follow how an estate agent, once acted for both the vendor and the purchaser, will invalidate an agreement between a vendor and the purchaser.  Mr. Bok failed to cite any authority to support his legal proposition.

8.In respect of the 3^rd contention, despite the payee’s name in the cheque was filled in as Messrs. K B Chau & Co, I am of the view that the Plaintiffs have the locus to sue at least on two basis, firstly, they were the beneficiaries of the cheque.  Secondly, the Plaintiffs as the disclosed principals, have the locus and rights to sue on the cheque, Messrs. K B Chau was a mere stakeholder of the cheque.  Simply put, clauses 2 and 5 of the provisional agreement provide that :-

“Subject to clause 6 hereof, the deposits payable under (a)/(b)/(c) above shall be paid to the Vendor’s solicitors as stakeholders who may release the same to the Vendor provided that the balance of the purchase price is sufficient to discharge the existing legal charge/mortgage.”

“The Vendor shall be represented by Messrs.  K B Chau & Co.”

9.The Plaintiffs produced powerful documents to support the balance of the purchase price is sufficient to discharge the legal charge.  The Defendant did not challenge those documents.  Hence, any deposit payment by way of cheque has to be made payable to Messrs. K B Chau & Co.  The above clauses also suggest that Messrs, K B Chau & Co., was stakeholding any money received for the Plaintiffs. 

10.In Bowstead and Reynolds on Agency, 2006 edition paragraph 8-001 at page 331 propounds that:-

“(1) A disclosed principal, whether identified or unidentified, may sue or be sued on any contract made on his behalf, and in respect of any money paid or received on his behalf, by his agent acting within the scope of his actual authority or whose acts are validly ratified.

(2)So far as concerns deeds, bills of exchange, promissory notes and cheques, this Article must be read subject to Articles 77 and 78.”

11.Article 77 concerns the “Deeds’ situation.  Article 78 at page 392 states as follows:

“(1) A principal is not liable on a bill of exchange, promissory note or cheque unless his signature appears on it: but it is not necessary that he should sign with his own hand, it is sufficient if his signature is written by some person by or under his authority.

(2)  No person can be liable as acceptor of a bill except the person on whom it is drawn, except where it is accepted for honour.”

12.In short, the legal principles on disclosed principal applies to the present case.  It seems to me that the challenge on locus standi must fail.

13.In respect of the 4^th contention, Mr. Bok submitted that the Plaintiffs has the duty to obtain Mr. Philip Tang, the estate agent to depose, failing which the Plaintiffs failed to rebut the point of lack of authority. Further, his evidence is crucial and it is more of the reason that the matter should go to trial so that the Court can seize with his evidence.  In my view, it is important to compare the objective matters with the Defendant’s assertion.  The Defendant has admitted on such objective matters as: (i) the Defendant signed the provisional agreement in blank; (ii) she signed the cheque in blank; (iii) she authorized Mr. Philip Tang to negotiate the price of the property on her behalf.  In contrast, she alleged that Mr. Philip Tang had no authority to enter into the provisional agreement or to tender the cheque for payment.  This was a bare assertion.  With the above objective matters in mind, the Plaintiffs submitted that the threshold burden is on the Defendant to show that the bare assertion is capable of being belief.  Not only the Defendant failed to obtain Mr. Philip Tang to depose what happened, Mr. Bok submitted that it was the Plaintiffs’ burden to obtain the estate agent to depose.  It seems to me that the focus is not one of whose burden to obtain Mr. Philip Tang to make an affirmation, the important question is whether the assertion of lack of authority is capable of belief.

14.Hong Kong Civil Procedure 2010 edition, Volume 1, page 230 contains this legal commentary:-

“It is trite law that the mere assertion in an affidavit of a given situation does not, ipso facto, provide leave to defend, since the defendant must satisfy the court that he has a fair or reasonable capable of belief… After reviewing all the authorities, the English Court of Appeal has laid down a definitive ruling that if the evidence of the defendant is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence and judgment will be given to the plaintiff.”

15.In brief, the mere assertion of lack of authority against the objective matters as aforesaid shows that the Defendant is incredible in any material respect.  By signing the provisional agreement in blank, by signing the cheque in blank, by asking the estate agent to negotiate the price for the Defendant, the Defendant has by conduct given message to any one dealing with the estate agent that the estate agent had the ostensible authority to make a deal.  Further, the Defendant once denied signing on the provisional agreement in her first affirmation.  But after the Plaintiffs pointed out during the Order 14 call over hearing that the original carbon copy shows the Defendant’s signature, the Defendant then admitted in her 2^nd affirmation that her signature can be found in the provisional agreement but she signed in blank.

16.Moreover, in so far as the Defendant’s assertions sought to vary or contradict the cheque, they are inadmissible.  See Po Yuen (To’s) Machine Fty Ltd v Chan Siu King CACV no. 209 of 2002, the Court of Appeal held that:-

“Evidence which sought to vary or contradict the agreement contained in a bill of exchange, namely the cheque, was inadmissible.  Section 3(1) of the Ordinance defined a bill of exchange as “unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it was addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer.”

17.In Prosperity Lamps & Components Ltd v Rotegear Corp Ltd HCA No. 14203 of 1999 dated 7 March 2000 by Cheung J (as he then was), the case concerned the defendant’s allegation of passing the cheques to an employee so that the employee could show them to the plaintiff’s account staff only. The employee should not tender the cheques and the payment by those cheques should not be made unless a third party paid to the defendant.  Cheung J reiterated the definition of a bill of exchange and held that those assertions were against the Parol evidence rule, thus inadmissible.

18.I am satisfied that in the present case, the Defendant has no defence in this action and the Plaintiffs should be granted judgment summarily.

F. CONCLUSION

19.By reason of the matters aforesaid, I make the following orders:-

(1)  Judgment for the Plaintiffs against the Defendant in the sum of HK$600,000.00

(2)  Interest on the said sum at 8% per annum pursuant to section 57(a)(ii) of the Bills of Exchange Ordinance, Cap. 19 from the date of dishonour to the date of judgment and thereafter at judgment rate until full payment.

(3)  Costs of the action be paid by the Defendant to the Plaintiffs with certificate for counsel.

(4)  Costs be assessed summarily in the agreed sum of HK$40,000.00 payable by the Defendant to the Plaintiffs within 14 days.

Mr. Derek Hu instructed by Messrs K B Chau & Co for the Plaintiffs

Mr. Bok Tin Yuen instructed by Messrs. Shea & Co., for the Defendant