Chung Khiaw Bank Limited v. Wong Oi Ming also known as Cheng Wong Oi Ming and Another

CACV000186/1985

IN THE COURT OF APPEAL

BETWEEN

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Coram: Roberts, C.J., Silke, J.A. & Power, J.

Date of Hearing: 18th February 1986

Date of Decision: 18th February 1986

Date of Judgment handed down: 5th March 1986

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JUDGMENT

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Silke, J. A.:

1. We dismissed this appeal and stated we would give our reasons later. This we now do.

2. On 28th October 1985, after a five-day trial, at which the plaintiffs were represented by Mr. Benjamin Yu and the defendants appeared in person, Hunter, J. entered Judgment for the plaintiffs, Chung Khiaw Bank Limited - "the Bank" - in the sum of $2,098,753.95; he further made an order for possession in their favour of premises in Waterloo Road, Kowloon. He dismissed a Counterclaim by the defendants.

3. The writ was issued on 14th November 1983.

4. The action was a mortgage action and came to trial after a judgment obtained by the plaintiffs had been set aside.

5. On 9th July 1981, the Bank granted an extension of banking facilities to a firm, Superb Corporation - "Superb". Cheng Kee Hin - "D2" - was its sole proprietor. Wong Oi Ming -"D1"- is the wife of D2. The line of credit granted was:- an overdraft on the firm's current account in the sum of $200,000; a fixed loan repayable in full over a period of three years after draw down of $1,000,000; and an amount of $500,000 for the establishment of documentary Letters of Credit. There was also a reference to trust receipts which need not concern us. As security for these facilities, the Bank was given a first legal mortgage of the Waterloo Road flat owned by both defendants to be charged 'in the sum of $1,700,000.

6. These facilities were drawn on and debts to the Bank were created. On 8th September 1983, the Bank, in accordance with the terms of the grant of facilities, demanded payment of the sum then due; $1,518,531.27. Payment was not made. The writ which resulted claimed the sum due upon its date of $1,556,965.30 together with interest at the rate of $807.69 per day. It also claimed an order for possession.

7. There was no dispute at trial, or today, as to the amount claimed or the fact that it was owed.

8. The Defence was in the nature of a set off and Counterclaim. The pleadings made reference to a Letter of Credit requested on 24th May 1982 in the sum of $100,000 in favour of Good Sight Trading Co. Ltd. -"Good Sight". It was stated to relate to the purchase of seasonal fruit from Taiwan where Good Sight conducted its business and it was averred that, on the strength of the financial arrangements with the Bank, Superb entered into a contract with Good Sight, dated the 1st July 1982, for the purchase of 50,000 cartons of seasonal Taiwan tangerines and 100,000 cartons of water melons. The total purchase price would have been in the region of $5.9m.

9. Because, say the defendants, the Bank "without lawful excuse or justification and/or wrongfully and/or negligently" refused to amend the address of Good Sight originally set out in that Letter of Credit, the contract was frustrated and they suffered loss. They quantified their loss in the sum of $2m.

10. It was the Defence case on the pleadings, and I make no apology for repeating the reference to pleadings in the light of that which later transpired, that, as a result of the Bank's failure to respond to a request made to them in late June 1982 to amend the address, Good Sight never received the Letter of Credit. It was averred that because Superb had not received any of the fruit shipments D2 had gone to Taiwan at the end of June 1982 and had become aware of the change of address of Good Sight. It was further averred that the instruction to the Bank to change was given upon his return to Hong Kong a short time later.

11. No arguments have been advanced tows disputing the merits of this case. The judge's findings of fact have not been contested. Of them, it is sufficient for the purposes of this appeal, to say that he could do nothing other than give a decree for the plaintiff upon its claim and that he was fully justified in dismissing the Counterclaim. The evidence given in relation to it differed very substantially from the facts as pleaded. Of it, he said:

"The issue before me which has taken up most time at the trial is the defendants' counterclaim. Here the defendants are making a single specific allegation. It is that the bank failed to amend the address on a Letter of Credit the bank had issued, notwithstanding the defendants' repeated requests for them to do so. As soon as the defendants started to give evidence in this case, they started to advance a much wider and more general allegation. This was of a failure by the bank to live up to the facilities set out in the letter of 9th July 1981.  There was no suggestion of this in the defence. It was never advanced at all before the opening day of this hearing when the defendants were both represented by solicitors and counsel. It would demand precise formulation to see exactly what it was the defendants say they were asking the bank to do, and in what terms and in what circumstances. There had been no such formulation of any sort. In my judgment it is much too late to raise allegations as broad and general as that in the context of this case."

12. In addition, it became clear in the course of the trial that there was no visit to Taiwan in 1982 and no instruction as alleged were given to the Bank in that year.

13. Having considered the evidence adduced before him, the trial judge went on:

"It follows from this that the case pleaded simply disappears. What is sought to be substituted, namely that all this happened the following year, makes absolute nonsense. The substituted case reveals that the events described could not have happened in 1982, because the defendants did not then have the right address. That short ground would be sufficient to dismiss this counterclaim."

14. He then went on to consider a subsidiary aspect of the matter.

15. It is the history of the trial procedure that gives rise to the three Grounds of Appeal argued before us by Mr. Bernacchi who, with Mr. Chan, appeared in this Court for the defendants.

16. These were:-

The adjournment

17. The trial commenced on 23rd October. The defendants were then represented by counsel and solicitors. Mr. Yu opened his case he next day was a holiday. When the matter resumed on 25th October, the defendants' counsel and solicitors asked for and were granted leave to withdraw. The judge was not made aware, nor have we been, of the reasons behind this application. This is not intended as any criticism. Counsel informed the Court that the defendants knew of the application and asked for an adjournment, though he himself was prepared to argue one issue of revolving credit and another on hearsay notices.

18. Before counsel withdrew, D2 addressed the Court and asked for an adjournment in order to obtain other legal representation. The Court was shortly addressed by Mr. Yu, who opposed any adjournment. The judge then asked D2 certain questions about his case.

19. The total purchase price $5.9m. being based on a single irrevocable Letter of Credit in the sum of $100,000 was no doubt a matter which concerned the judge. Counsel was unable to give an explanation. According to D2's explanation, it had apparently been his hope that, having obtained quotas through Good Sight, he could then purchase the fruits in lots, ship them to Hong Kong, sell them here and give a post-dated cheque for the actual purchase price to Good Sight which would be met from the proceeds of the sale. This would happen each time. The $100,000, he said, was really for the purchase of the quotas and could merrily revolve throughout the entire operation.

20. After a short adjournment D2 stated that he would have to consult solicitors but did not know how long he needed for the purpose. He said that he did not have any money at all. The judge was aware that there had been five applications for legal aid, all of which had been refused. He offered to adjourn the matter on terms that $500,000 be paid into Court and it would seem that it was to this offer that D2 replied that he did not have any money.

21. The granting of an adjournment is a discretionary matter. It is only if it can be shown that the judge, in refusing an application, exercised his discretion upon wrong principles or that his refusal would cause injustice that an Appellate Court will interfere with the exercise of that discretion. And an Appellate Court will be very slow to overturn a judge's exercise of his discretion in such circumstances.

22. The judge was aware that the action had commenced in 1983 and that it was now 1985. He had clearly considered generally the merits of the Counterclaim, the very substantial sum due to the plaintiff, virtually undisputed, and the amount of interest accuring day by day. In refusing to grant the adjournment and in continuing the trial with the defendants in person, he would have been entitled to take the view, though he did not give his reasons at the time of making the order, that to grant the adjournment would be to do injustice to the plaintiff which could not be compensated for in costs.

23. We are not prepared to say that, as matters then stood before him, he exercised his discretion wrongly so as to make it the subject of review by this Court.

Assistance by judge

24. There had been in the Defence, as pleaded at paragraph 11(a), an allegation of wrongful behaviour by a member of the staff of the Bank. This suggestion was put to and denied by that person when he gave evidence. It was not referred to by either of the defendants in the course of their evidence. It has been advanced to us by Mr. Bernacchi that the judge should have asked the defendants whether they wished to make reference to it. We cannot think that there was any such duty upon the judge in the context of this case. We saw no substance in the other submission made in support of this ground.

Fresh allegation

25. In the course of their evidence at trial, which differed markedly from the facts pleaded, the defendants raised the issue of the Bank's failure, as far back as 1981, to live up to their obligations. It was to this issue that the trial judge had made reference in the first passage from his judgment quoted above. At the time when this arose no objection was taken by Mr. Yu. This does not surprise us for the nature of it suggested that it was simply a lead up to the main complaint as set out in the Counterclaim. Mr. Bernacchi urges upon us that it is at this juncture the trial judge should have re-considered his refusal to grant an adjournment and either himself formulated amendments to the defendants' pleadings to encompass the allegations or adjourned the matter to allow the defendants seek legal assistance.

26. It is noteworthy that we were not asked for leave to amend the pleadings. A document was shown to us as a written formulation of the fresh allegations which the defendants sought to raise at that very late stage of the trial. It does not specify any cause of action or identify any loss reclaimable from the Bank as a result of that which, it is alleged, the Bank did.

27. There was no application made to the judge by the defendants for an adjournment nor do we consider that he was under a duty to suggest an adjournment himself.

28. For these reasons, we refused the orders sought and we ordered that the respondent Bank do have the costs of the appeal, such costs to be taxed and paid out of the sum of $25,000 lodged in Court by the defendants, and that the defendants be repaid such balance as may remain.

29. We acceded to Mr. Bernacchi's application for a stay of the order of possession until 31st March 1986.

Representation:

B. Bernacchi, Esq. , Q.C. & K. Chan, Esq. (Kwong & Siu) for Appellants/Defendants.

B. Yu, Esq. (C.T. Chan & Co.) for Respondent/Plaintiff.