Yui Chung Yin v. Ng Kit Sum
Read the full judgment text of HCA 1826/2009 on BabelCite. This High Court CFI judgment was delivered on 11 January 2013.
1. The Plaintiff and the Defendant have been in the business of trading in computers and accessories.
Cites 2 cases
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HCA 1826/2009 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1826 OF 2009 ____________
________________ J U D G M E N T ________________ 1.The Plaintiff and the Defendant have been in the business of trading in computers and accessories. 2.The Defendant is a shareholder of a private company, Helix Pacific Holdings (HK) Ltd which has two wholly-owned subsidiaries, Helix System (HK) Ltd (“Helix System”) and the other one Helix Distribution (HK) Ltd (“Helix Distribution”). The supplier is Synnex Technology International (HK) Ltd (“Synnex”). 3.The relevant chain of supply is from Synnex to Helix Distribution and Helix System, then to the Defendant and ultimately to the Plaintiff. 4.The Plaintiff is a legally aided litigant. He studied marketing at the City University of Hong Kong and graduated in the year of 2007. Before he graduated, he has already started to be engaged in business and ordered notebook computers from Taiwan and Singapore to sell to buyers from China. 5.The Plaintiff said he conducted his business in his own name and the name of China Gateway Technology Company Limited. The evidence of the Plaintiff shows that he is not new to the trade of buying and selling computers. He has some backing for finances in his business from his partner (吳凌志). 6.The Plaintiff knew one of the colleagues of the Defendant, Mr Ching Tse Ping (sometimes called Hayden and also known as Elan Adam). The Plaintiff bought computers from Hayden Ching in 2007. 7.In the middle of June 2008, the Defendant and the Plaintiff met to discuss business of purchasing computers. 8.In 2008, the Plaintiff purchased computers from the Defendant worth over HK$40 million. Further in 2008, the Plaintiff intended to purchase an investment linked insurance policy requiring payments of over HK$30,000 per month for 30 years. 9.There are two claims in this action which shall be described as Computer Dispute and Insurance Dispute. COMPUTER DISPUTE The Plaintiff’s case 10.The Plaintiff’s claim is for the sum of HK$2,149,741. 11.In summary its case is as follows:
12.According to the Plaintiff, three payments were made by the Defendant and happened in the following circumstances:
13.The Plaintiff’s counsel explained that the calculation giving rise to these sums of money is based on the refund formula set out in the written Chinese Agreement. The Defendant’s case 14.In summary, the Defendant’s case is as follows:
15.As to the position regarding the return of the three sums of money, the Defendant does not dispute that these three sums were paid back to the Plaintiff at the time albeit for different reasons. The Defendant said that any refund is discretionary.
Issues 16.The main issue between the parties is the settling of the final account - how many units were delivered / sold, and what was the unit price to be paid. Both parties accept that they have to give credit to the HK$3 million paid in advance by the Plaintiff. Why and how the refunds (HK$763,000 + HK$45,000 + HK$383,561) were made therefore do not matter to this accounting exercise. 17.The Defendant submitted in the Opening that the issues relating to the various agreements are “red herring”. For the reasons set out below, I agree. 18.The agreements - the 2008 Oral Agreement, the Lockout Agreement, the written Chinese Agreement and the Termination Agreement, are at best peripheral going to issues of credibility. There is no claim for any penalty for shortfall of computers purchased. There is no claim of any breach of the Chinese Agreement regarding when the refund should have been made. The issue is one of final accounting. 19.In relation to the number of units delivered or sold, they relate specifically to the five transactions set out in lines 3, 18, 20, 22, and 28 of the tables prepared by the parties. The Defendant’s figures are said to be supported by various invoices. The Plaintiff’s figures are not all supported by documentation. The Plaintiff relied on his own assertions. 20.As to the unit price to be paid, it turns on whether the Defendant should receive a mark-up of HK$450 as his profit margin. 21.The Plaintiff attached as Appendix 1 to his witness statement a table setting out his assertions. He was shown Exhibit D1 which he confirmed that, apart from those entries highlighted in orange, all the other entries were unsupported by any evidence. 22.Mr Lo, the Plaintiff’s Counsel, also prepared a table attached to his opening submissions which was further modified in a version handed to the Court on 18 December 2012 whereby references in support of the entries under the Plaintiff’s case have been provided. The Defendant’s Counsel, Mr Ng, has made and maintained his objections that the entries listed in this table prepared by the Plaintiff’s Counsel was unsupported by any documentary or oral evidence and that the same should be rejected as Counsel should not be allowed to give evidence at the Bar. He relied on a passage from Ma CJHC (as he then was) in Chu Woan-Chyi v. Director of Immigration [2009] 6 HKC 77 at para. 109. 23.The Defendant also attached to his witness statement a table headed as “Scott Schedule” which was enclosed with the Amended Defence and Counterclaim. The Defendant’s assertions are set out in that table together with a column called “Remark” whereby the Defendant provided comments relating to certain transactions. 24.The Defendant’s Counsel, Mr Ng, also prepared a table setting out the references as well as the Plaintiff’s and the Defendant’s cases and submitted the same to the Court on 18 December 2012. This table was re‑submitted with the written Closing Submissions. 25.I have compiled a Scott Schedule identifying the Plaintiff’s and the Defendant’s position in relation to the specific issues that necessitate my decision attached as Annex A to this judgment. The entries in the columns are abstracted from the two tables prepared by Counsel. Where references for documentary evidence have been provided, they are also set out in the Scott Schedule. 26.In relation to the unit price, the Defendant’s case is premised on the invoices that have been issued and the relevant references are set out in the Defendant’s Counsel’s table. The Plaintiff’s unit price cannot be discerned from any documentary evidence and most of it were not covered by the oral evidence of the Plaintiff. During the Closing Submissions, Mr Lo tried to explain that the entries under his table columns M, N and O are primarily obtained from the references for what has been called the Synnex invoices (see below) and the table attached to the witness statement of the Defendant. At one stage, Mr Lo also said that the unit price were derived from the tables setting out the price that would be sold under the Notebook Ownership Programme. He was not able to further elaborate on this or indeed on how the unit price and the discount set out in his columns N and O were derived. The Plaintiff’s assertions setting out the unit price are repeated in the Scott Schedule attached to the judgment but no reference could be given as none was provided by the Plaintiff’s Counsel. 27.Another issue relates to the nature of the HK$130,000 paid for the 1,000 adaptors. The question is whether there was any such agreement for cash rebate of HK$130,000 or whether the Plaintiff is entitled to HK$130,000 in cash as well as keeping the 1,000 adaptors. Modus Operandi relating to the transactions in 2008 28.There is no dispute between the parties that an order would be placed by the Plaintiff and the Defendant would inform him what amount should be paid. Thereafter a certain sum of money as requested by the Defendant would be paid into the bank account of the Defendant. Sometimes, the amount paid in was less than that requested by the Defendant, but the Plaintiff would inform him the same in advance of delivery. The Defendant had HK$3 million advance payment and hence he was willing to still make delivery even though sometimes the amount paid in was less. 29.It is also not in dispute that the Plaintiff would be responsible himself for taking delivery of the computers either at the warehouse of Synnex or the office of Helix in Kowloon Bay. 30.The Plaintiff did not produce any invoice in support of any of its figures, whether they be the number of computers delivered or the unit price. 31.The Defendant produced three sets of invoices, two of which were challenged by the Plaintiff. The invoices set out the number of computers delivered as well as the unit price to be paid by the Plaintiff. Documentary Evidence and credibility of the Plaintiff and the Defendant 32.During cross-examination, the Plaintiff was asked about whether he had any documents evidencing his case, in particular that set out in the table attached to his witness statement. He said he had records of stock he purchased (入貨記錄) for the year 2008. Apart from the quantity of goods that was delivered, he said that he also had records of the cost of the computers he purchased. The Plaintiff said this information should be in his computer at home. They were, according to the Plaintiff, some raw information, just some figures and that he did not disclose them because it was only he who could understand them. He also added that he had explained that to his lawyers. When put that he decided not to disclose those evidence, he disagreed. It was further put to him that he chose not to disclose these documents but chose to utilise ex post facto SMS and telephone conversations recordings to make out a case. He also disagreed and said that it was because he sensed danger. It was then further put to him that in order to protect himself from that “danger” he therefore concealed the information and the documentary records. His answer was that they were raw information and contained personal information. 33.It is highly unsatisfactory that a party to these proceedings has kept relevant evidence on his computer, allegedly explained that to his lawyers but failed to disclose the same. I do not make any finding as to the veracity of his statement that he had explained to the lawyers but suffice it to observe that information was admittedly concealed. 34.I find it most unlikely that a person involved in a business in the amount of over HK$40 million would not keep any record, be they invoices supplied by the seller recording the cost the buyer has to pay, or the number of computers sold. This is even more so when the Plaintiff admitted that he had a business partner (吳凌志). Further, this is the first business deal between the Plaintiff and the Defendant. It is inconceivable, in my view, that no contemporaneous records were kept. Furthermore, an amount of HK$3 million was paid in advance as a credit line. Even if, which I do not accept, the Plaintiff were ignorant in business dealings, his business partner would no doubt have insisted on such records to be kept and produced to him from time to time or in the final accounting exercise. 35.The failure to produce documents, which I find as a fact as in the light of the Plaintiff’s own evidence, weighs heavily against the Plaintiff’s case bearing in mind the incidence of burden of proof as well as against the Plaintiff’s own credibility. 36.The Defendant’s Counsel pointed out that the original claim and the Amended Statement of Claim was substantially changed, after the Defence was filed. The Defendant has also amended his Defence and Counterclaim in particular in relation to the terms of the 2008 Oral Agreement. The Defendant was cross-examined at length on this point. The Defendant was candid and admitted his own omissions and inaccuracies. However, these omissions or inaccuracies are trivial and irrelevant. What is noteworthy in respect of the amendment to the pleadings is that the Amended Statement of Claim was filed after the Defence and Counterclaim. 37.The case does not turn on the existence or otherwise of this 2008 Oral Agreement or the written Chinese Agreement. I have raised that a number of times during the evidence stage and have been confirmed by Counsel on both sides as being the correct identification of the issues in relation to the Computer Dispute. 38.The Defendant has produced documentary evidence showing the sale of the computers in relation to most of the transactions. In particular, the following 3 sets of invoices were produced:
The Plaintiff denies that it has received any of the I_MY invoices issued by the Plaintiff to the Defendant. Counsel for the Plaintiff submits that this evidence was prepared after the event and the Jack invoices issued by Helix System to the Defendant were also prepared at the same time. The allegation that this documentary evidence was created ex post facto is a serious contention suggesting effectively that the Defendant manufactured evidence to support its case. 39.Having heard the evidence of the Plaintiff and the Defendant, and on balance, I do not accept that the Plaintiff’s contentions. First, the amount of transactions involved is not insignificant and it is unlikely that invoices were never issued. Secondly, as explained by the Plaintiff, these invoices were handed to the Plaintiff every now and then when they met each other. The Plaintiff gave evidence that he himself handed them to the Defendant at the material time. The Defendant also said that they would clear up their documentations over the weekends and sometimes when they were busy, it would be about eight to ten days after a transaction. On balance, I find the Defendant’s evidence on this more credible and plausible. Thirdly, the Plaintiff’s assertion that he had never seen such I_MY invoices was never raised when faced with the letters from the Defendant in May 2009 and the Defendant’s solicitors in June 2009. He was cross-examined about the responses he made at the time. I find it only natural that if no invoices were ever issued to the Plaintiff, it would be raised in his responses including that from his solicitors at the time. Lastly, the Plaintiff expressly said he had 入貨記錄although they were not disclosed. Some documentation must therefore have passed between the parties. In any event, I find the Plaintiff not credible in giving evidence in this aspect. I prefer the evidence of the Defendant and find him credible in the way he explained how things happened in relation to the delivery of goods. 40.In the premises, I reject the Plaintiff’s assertion that these I_MY invoices were never issued to him. 41.The issuances of these I_MY invoices are contemporaneous documentary evidence of the transactions. They not only record the number of units sold but also the amount that was to be charged against the Defendant for those units. Unit price of computers 42.The Defendant’s case is that it has agreed to sell these computers to the Plaintiff in the personal name of the Defendant with a mark-up of HK$450 subject to specific discounts that may be made. 43.The Plaintiff’s case is that it would be getting the computers at a price lower than what Helix would have sold to the students under the University Notebook Ownership Programme (“the student price”). It contends that it is entitled to deduct certain sums from the student’s price as discount. 44.It is basic commercial sense that when a party enters into a business transaction they would be expecting to make a profit. This is even more so in the case of the transaction between the Plaintiff and the Defendant as the Defendant is risking upsetting Lenovo by selling computers from the stock designated for the Notebook Ownership Programme to other purchasers. On that basis, in order to address the risk faced by the Defendant, he requested for a mark-up of HK$450. There is no evidence on the part of the Defendant to satisfactorily address this point. Whilst the Plaintiff denies there was the 2008 Oral Agreement and that there was a written Chinese Agreement, the Chinese Agreement does not stipulate the price of the computers. In other words, there must have been some agreement between the parties regarding at what price these computers were to be sold. The parties accepted that during the discussions on the night of 21 July 2008, they had identified the models of computers that would be sold and the general spread for the 4,800 computers. The parties must also have discussed what price to sell and considering the credibility of the Plaintiff and Defendant in this respect, I prefer the Defendant’s evidence. 45.The Plaintiff’s case that he could buy computers at prices lower than the student price does not make commercial sense. 46.From the invoices tendered, Helix was selling the computers at the student price to the Defendant who then sold it with a profit mark-up to the Plaintiff. 47.There is no other suggestion from the Plaintiff as to why the Defendant would sell the computers at a price lower than the student prize to the Plaintiff. To do that, Helix would have had to sell to the Defendant at an even lower price if the Defendant is to make any personal benefit irrespective of the taking of the risk of losing the Lenovo business. 48.In the premises, given the evidence and the arguments that are before me, and on balance, I prefer the Defendant’s case regarding the HK$450 mark-up subject to discounts. In other words, I find that the I_MY invoices recorded the correct unit price at which the computers were sold by the Defendant to the Plaintiff. Number of computer units delivered / sold 49.This is an issue between the parties. The parties’ positions are set out in Annex A to the judgment. 50.The entries from the Plaintiff’s table are not supported by any documentary evidence as to the number of computers delivered. The Defendant’s table is supported by invoices that have been issued although there are some items for which not all the invoices were produced. Line 3 51.The Synnex invoice, the Jack invoice and the I_MY invoice all show that 350 units were ordered and delivered. 52.The Plaintiff’s argument was that the amount that was actually paid, namely HK$2,921,200 (HK$2,350,000 plus HK$571,200 paid by credit card) is closer to the Plaintiff’s pleaded case than that of the Defendant. This argument is artificial. It ignores the evidence that has been produced, and the fact that the Plaintiff’s pleaded case regarding the unit price is also not supported by evidence. 53.I find that for line 3, the total number of computers delivered and sold was 350. 54.The Defendant claims HK$7,711.20 for financing charges arising from the payment by credit card. There is no agreement proven that the financing charges would have to be borne by the Plaintiff. This claim of the Defendant therefore fails. Line 18 55.The Plaintiff said that 377 units were ordered but only 322 were delivered. This is evidenced in the Synnex invoice. The Defendant said that another 48 units were taken from Helix stock. The Plaintiff has accepted that throughout this business, some of the stocks were taken from Synnex warehouse and some from Helix office. I prefer the evidence of the Defendant which is supported by the Jack invoice and the I_MY invoice. The Plaintiff said he ordered 377 units. If the Defendant had wished to fabricate evidence, he could easily have used the number ordered, 377, instead of 370 units. 56.On balance, I prefer the Defendant’s case that 370 units were delivered and sold. Line 20 57.In respect of line 20, there was no actual payment that was received. According to the evidence of the Defendant, by the time of September 2008, the Plaintiff approached him saying he was short of cash flow and asked for refund from the HK$3 million to be made. 58.The evidence of how the refund of HK$763,000 was made up becomes relevant. According to the Plaintiff, there was an over-payment of HK$743,534 by 24 September 2008 and hence a refund of HK$763,000 was repaid. I do not accept that contention. There was first, no over‑payment in the light of my findings regarding the quantities in lines 3 and 18 and secondly, there is no evidence that at the material time there was any accounting that was done. According to the Plaintiff, he has been chasing the Defendant to conduct an accounting exercise but this was never completed until sometime in early 2009. Thirdly, the unit price contended by the Plaintiff was also not supported by evidence. In any event, the Defendant’s explanation as set out in his statement is more plausible. Whilst there was no need to make any determination of the refund formula, the way that it was actually conducted as explained in the Defendant’s witness statement makes some sense. Furthermore, the sale was also evidenced in the Jack invoice and I_MY invoice. 59.In the premises, I accept the Defendant’s case that ten computers had been delivered and sold to the Plaintiff. Line 22 60.The Plaintiff said only seven units were delivered whilst the Defendant contends that there were sixteen. 61.The Jack invoice shows that 17 computers were sold to the Defendant but the I_MY invoice shows that only 16 were actually sold. 62.These two invoices illustrate that it is not correct to assume that the I_MY invoices were prepared at the same time with the Jack invoices as submitted by the Plaintiff. 63.In any event, the only argument proffered by the Plaintiff was that the amount of HK$100,000 paid is closer to the value of seven units of computers, which according to the Plaintiff would be HK$86,882. As explained by the Defendant, at that point in time he still had a large amount of advance payment in hand and therefore was willing to deliver the computers even though the amount that was paid was short of the estimated value. 64.I conclude therefore that on balance 16 units were in fact sold and delivered by the Defendant. Line 28 65.The Defendant said he has delivered 12 computers to the Plaintiff and the Plaintiff denies the same. 66.The Plaintiff has given contradictory evidence in relation to the payment of the HK$100,000 on 15 October 2008 in his two previous affirmations and in the box. In the end, his case amounts to saying that he lent the Defendant HK$100,000 so that the Defendant could purchase computers for his friends and later on this was repaid. Hence, he said he did not take delivery of any computer. This is unbelievable. HK$100,000 is not a small amount of money. This was paid into the Defendant’s account on 15 October 2008. There is no Synnex invoice as the stock of Helix was utilised to make delivery. Some computers must have been delivered and I accept the Defendant’s case that 12 were delivered and sold to the Plaintiff. This is also evidenced in the Jack invoice and the I_MY invoice. The assertion that the Defendant has repaid the Plaintiff for this HK$100,000 is not supported by any evidence before me. Line 26 -- the 1000 adaptors 67.There is no dispute that the Plaintiff has taken delivery of 1000 adaptors. The Defendant explained that the normal cost would be much higher that HK$130 and that this stock of adaptors was sold to the Plaintiff so as to enable him to enhance his business. 68.The Defendant denies any agreement to give a cash rebate to the Plaintiff. I accept the Defendant’s evidence that the Plaintiff’s family members and friends all came to the Helix office to take delivery of those adapters. The Plaintiff does not deny that he had taken delivery and kept the adaptors. 69.In the premises, the Plaintiff’s claim that he is entitled to another HK$130,000 cash or alternatively that these adapters be provided for free is rejected. Conclusion 70.After carrying out the final accounting exercise as set out in Annex A, the Plaintiff shall pay the Defendant the sum of HK$730,147. INSURANCE DISPUTE 71.The Plaintiff claims for a return of the HK$100,000 that he paid to Mass Mutual Asia Ltd (“Mass Mutual”) by way of a cashier order on 29 April 2008. The Defendant counterclaims for the six installments of US$4,273.50 per month that he has paid by way of autopay from July to December 2008 inclusive. The total amount claimed by the Defendant is US$25,641. 72.The Plaintiff’s case is that in or around February, he met with Cheng Ming Chak, an employee of Mass Mutual where Mr Cheng tried to sell and explained an insurance policy which has a “60% cash rebate” (六 成現金回增) of the first year’s payment. The Plaintiff was told that the offer would expire in February 2008. Later on in April, the Plaintiff, the Defendant, Hayden Ching and Mr Cheng met again. He was told that the Defendant has a policy which has the “60% cash rebate” and would now like to transfer that to the Plaintiff. As a result, on 29 April 2008, he arranged for a cashier order in the amount of HK$100,000 to be paid to Mass Mutual. The Plaintiff said the Defendant agreed to but failed to transfer the policy to him as promised and as a result he lost HK$100,000. 73.The Defendant denies the Plaintiff’s case. He said he already had an existing policy with AIA. The Defendant was asked in or around April to help the Plaintiff to apply for the policy from Mass Mutual. He was not interested in that policy but filled in the application forms as well as signed a form for the change of policy ownership at the time. Having done that, he had thought that the Plaintiff and Mr Cheng would effect the transfer so that his autopay arrangement would not be triggered. During the months from around July/August to October/November, it was the busiest time of his business under the Universities Notebook Ownership Programme. As a result, he did not have any time to check his bank statements and did not know that there was an autopay of some HK$33,000 odd a month. Once he found out towards the end of 2008, he stopped the autopay. He said he had agreed to apply for the policy and expected that the Plaintiff would honour his obligation to file and effect the change of the policy ownership from the Defendant to the Plaintiff. The Plaintiff was in breach of that transfer agreement and as a result, he suffered damages. 74.The Defendant issued two subpoenas, one of ducas tecum to an authorised representative of Mass Mutual and the other to Cheng Ming Chak. The authorised representative of Mass Mutual and Mr Cheng Ming Chak provided documents to this Court evidencing the following:
75.Cheng Ming Chak gave oral evidence. He made some corrections to the witness statement he has signed having reviewed the documents regarding the two policies. He deleted a reference to the 2008 Oral Agreement pointing out that he was not involved in any other matter with the Plaintiff, the Defendant and Hayden Ching. 76.Mr Cheng came to give evidence as a neutral person and has no interest in siding with the Plaintiff or the Defendant. He was a consultant, an employee of Mass Mutual. Where the evidence of the Plaintiff and the Defendant differs, Mr Cheng’s evidence becomes pertinent to the findings of fact. 77.Mr Cheng said he had met the Plaintiff through Hayden Ching. He could not remember the details of the timing of the meetings but he remembered he had explained the insurance policy and the “bonus” offered to the Plaintiff and his girlfriend. He pointed out that it was not a cash rebate but a bonus to be invested back in the capital of the policy, and that it should be called “額外回報” and not “現金回贈”. Throughout the time, the Plaintiff and Hayden Ching were the ones he contacted. The first time he met and spoke with the Defendant was when he asked the Defendant to sign the application form for the insurance policies and the change of policy ownership application form on or around 2 April 2010. He said that the Plaintiff wanted to purchase the insurance policies and was attracted by the bonus offered. This bonus offer was extended to 3 April 2010 as evidenced in an internal document of Mass Mutual produced by Mr Cheng. He also explained the need to provide information regarding the financial capability of the applicant for these two policies. As a rule, he explained, the company would require that the amount of payment made by the policy owner should be less than 50% of the reported earnings of an applicant. The Plaintiff could not meet this requirement and hence Hayden Ching suggested that they should secure the Defendant to apply the policy on behalf of the Plaintiff. On that basis, he approached the Defendant for his signature. The application form was dated 2 April 2010. Mr Cheng also explained that whilst the change of policy ownership form had been signed by the Defendant, he had not asked the Plaintiff to sign on that one as his boss told him that any application for the change of policy ownership should not be made immediately after the coming into effect of the policies. He gave the original policy (No. 84274097) to the Plaintiff. This was produced by the Plaintiff as item 68 of his List of Documents. Towards the end of May, Mr Cheng then approached the Plaintiff and the Defendant to sign another form for the change of policy ownership. Shortly thereafter, and in any event within about a week, the Plaintiff called him and instructed him to stop filing the change of policy ownership form as the Plaintiff said he no longer wanted to purchase the policy. Mr Cheng told Hayden Ching about this but did not speak with the Defendant. Whilst he had made various calls to the Plaintiff and Hayden Ching, they did not give him any instruction as to what to do with the change of policy ownership form. Sometime around July, Mr Cheng informed Hayden Ching that autopay was being deducted from the Defendant’s account. He again did not tell the Defendant himself. He had assumed that Hayden Ching would pass the message given that he had all along been contacting only Hayden Ching and the Plaintiff. Hayden Ching did not inform the Defendant as explained by them. Later on, the Plaintiff asked for the return of the signed change of policy ownership form but Mr Cheng could no longer locate the one that had been executed by both the Plaintiff and the Defendant. He located the one that was originally signed by the Defendant in April and therefore gave it to the Plaintiff so as to stop him from harassing. He said that when the document was passed to the Plaintiff, there was no entry regarding the new owner’s details. This must have been filled in after he had handed the same to the Plaintiff. Later on, in around January 2009, when the policy was terminated, he informed both the Plaintiff and Hayden Ching that they could re-activate the policy by paying the outstanding premium and if they do not do so within one year all the payments would be treated as surrendered under the terms of the policy and they could recover nothing. Neither the Plaintiff nor Hayden Ching took any action. Mr Cheng again did not speak to the Defendant about this matter. 78.Mr Cheng was cross-examined about a telephone conversation that was recorded by the Plaintiff. This recording was said to have taken place on 10 January 2009. He was cross-examined as to why there was no mention about the return of the change of policy ownership form to the Plaintiff as he now explained in Court. Mr Cheng answered stating adamantly that he had had many conversations with the Plaintiff and during which they had discussed about the request of the Plaintiff to stop the transfer and asked for the return of the executed transfer form. He said that recording was only one of the many conversations that took place between him and the Plaintiff and therefore do not represent the complete picture. 79.I agree with the observations that the recorded telephone conversation is only one part of the evidence that has to be taken into account in deciding on the facts that took place. The selective production of telephone recordings is of limited use. The evidence must be viewed as a whole taking into account what the witnesses have said under cross‑examination. Findings 80.In my view, the Defendant’s case is corroborated by the independent evidence of Mr Cheng. I find the version of events explained by Mr Cheng plausible. 81.The Plaintiff’s case is originally premised on a document called “Amendment to Application (G03)” dated 28 April 2008. This was relied upon as an evidence showing the change of policy from policy number 84274089 to policy number 84274097. This understanding of the document is entirely misplaced and the contentions therefore ill-founded. Mr Cheng gave evidence pointing out that this document merely changed the information that had been previously submitted at the time of the application for the policy. He also explained that policy number 84274089 was a policy for the life insurance of the applicant for which he himself had to pay for in order for the two policies to be effective. Policy number 84274097 was the investment policy. This is also confirmed by the authorized representative of Mass Mutual. He also explained that the spread of investment listed on the document was actually instructed by the Plaintiff after the application has been made. He explained the two policies had to be both effected. There is no change in policy as suggested by the Plaintiff. The Plaintiff’s case is, on the basis of the evidence before me, a complete fabrication based on a wrong reading of this document. 82.I also find and prefer the evidence of the Defendant that he did not intend to have any such investment-linked life insurance policy as he already has one with AIA. 83.As to the explanation why the Defendant has to apply for the policy first, I accept the Defendant’s explanation that it was to overcome the requirement of financial capability. The Plaintiff’s argument that on the web there was no requirement of any financial capability to be satisfied is contrary to the evidence from Mr Cheng regarding how internally they would need some financial proof of the applicant before the policy can be approved. The Plaintiff has not revealed his income and it is not clear whether he was of such financial capability at the time. On the basis that he did not have to pay any tax in 2008 after filing a tax return and that he has obtained legal aid, I assume that he could not meet the requirements that would allow the policy to be approved. 84.Mr Cheng also mentioned that the Plaintiff said he had to purchase policy with a view to befriend Hayden Ching so as to secure the business of buying computers from his company in 2008. Mr Cheng was not involved but his utterance of this background also shed light on why the Plaintiff was willing to expend the money to secure this policy statement and later stall the transfer of the policy ownership to him whilst not informing the Defendant. 85.The Plaintiff was also interested and attracted to this “60% cash rebate”. However in fact, this was a misunderstanding on his part. As Mr Cheng said it was actually a bonus, 額外回報. The 60% of the first year’s payment is not going to be able to be withdrawn until some years later. 86.The thrust of the issues between the Plaintiff and the Defendant was whether it was the Plaintiff or the Defendant that has asked Cheng Ming Chak to stop the transfer of the policy ownership from their Defendant to the Plaintiff. I prefer the Defendant’s case. The Defendant has no reason to maintain this policy and has in fact signed the transfer form pending only the signature of the new owner, namely the Plaintiff. The very existence of the document bearing only the signature of the Defendant now disclosed by the Plaintiff tends to show that it was the Plaintiff who did not wish to effect the transfer. Once the transfer is effected, the autopay would then have to be borne by the Plaintiff who in the first place either did not have the financial capability to continue to pay the monthly premiums, or alternatively did not want the policy as Mr Cheng reported what he was told by the Plaintiff in late May 2008. More importantly, the unequivocal evidence of Cheng Ming Chak was that it was the Plaintiff who told him to stop the process of effecting the change of the policy ownership. He was unshaken on this. 87.In the premises it is the Plaintiff’s breach in failing to effect the change of the policy ownership from the Defendant to the Plaintiff that led to the Defendant’s account being deducted by autopay for six months of monthly premium of US$4,273.50. 88.The Defendant was cross-examined on his knowledge of the autopay as he received his monthly bank statements and the letters from Mass Mutual. I accept the evidence of the Defendant that in the busy periods in July/August to October/November, he did not open the bank statements or letters and therefore did not realise such autopay being made. When the peak season for his business is over, the Defendant immediately effected a stop to the autopay thereby resulting in the termination of the policy. 89.In the premises, the Defendant’s loss is caused by the Plaintiff’s breach of his agreement to effect the transfer of the policy ownership from the Defendant to the Plaintiff. The Defendant was the victim and his loss should be recovered from the Plaintiff. CONCLUSION 90.The Defendant’s counterclaim is successful save for the claim for the finance charge of HK$7,711.20. 91.The Plaintiff’s claim is dismissed with a costs order nisi that the Plaintiff shall bear the Defendant’s costs. 92.If either party wishes to vary the costs order nisi, the following directions shall apply:
Mr Vincent Poon, instructed by William Lam & Co, for the plaintiff Mr Felix Ng, instructed by Hom & Associates, for the defendant Annex A
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Cases cited in this judgment
Further hearings and rulings under HCA 1826/2009