XCHRX AMAZON LTD. v. JIMMY TAN AND ANOTHER

HCA6508/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.6508 OF 1998

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J U D G M E N T

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1. By an order of Master Bharwaney dated 30th September 1998 in O.14 proceedings, leave to defend was granted on condition that the 1st Defendant pay into court the full amount, namely $1,549,375.00 within 21 days. Amongst other directions the learned Master also gave the 1st Defendant liberty to apply to amend the condition on the grounds of financial inability or other valid grounds, within seven days.

2. The 1st Defendant lodged a notice of appeal, dated 8th October 1998. In the appeal the 1st Defendant seeks to remove the condition imposed on the leave to defend. The Plaintiff says the order should remain as it is, albeit they add that it is within the court's power, as the appeal is a hearing de novo, to dismiss the appeal and enter summary judgment.

3. The Plaintiff's claim is a straightforward action on a dishonoured cheque for $1,549,375.00.

4. The money was payment for a half share in a film. Effectively it was an investment which depended on the film's success. The pleaded Defence is that the cheque was issued by the 1st Defendant as a cash advancement to a Mr Yau Wai Ming who was a shareholder and director of the Plaintiff.

5. Later in the proceedings, both by affirmation and by argument before the learned Master, the 1st Defendant alleged that the cheque was issued subject to an oral condition precedent that Mr Yau would not present the cheque until the 1st Defendant notified him that there would be sufficient funds in the account. On appeal, Mr Benjamin Chain, informed the court that this allegation was not now relied on. His submission on appeal, in support of his argument that unconditional leave should have been granted was that there was at least a triable issue that no consideration for the cheque had been provided by the Plaintiff.

6. The cheque, as submitted by the Defendant was his share of a loan to the Plaintiff Company which purchased the film. If the film made a profit the Company would firstly repay the loan, then distribute the profits. If there was a loss the shareholder would not be repaid.

7. Mr Chain argues that the only valid consideration in these circumstances would be a release of the Plaintiff's shareholder loan, otherwise the Plaintiff would be able to recover twice. The Plaintiff on the other land relies on their forbearance to sue as good consideration. Mr Lin, counsel for the Plaintiff points to the following extracts from affirmations filed on the Plaintiff's behalf. On 17th July 1998 :-

" It is true and correct as stated in paragraph 6 thereof that the parties had jointly invested in the film called 'East Palace, West Palace' ('the Film'). However, a meeting held on the 9th day of February 1998, it has expressly agreed between the Mr. Jimmy Tan (陳志滔) ('the 1st named Defendant') and the Plaintiff (represented by Mr. Yau Wai Ming) that the 1st named Defendant shall refund the loan money of HK$1,549,375.00 to the Plaintiff. Copy of the Minutes of the said meeting in Chinese (together with its English translation thereof) which had been signed by the 1st named Defendant are now produced and shown to we marked 'LSY-2' and 'LSY-2A' respectively.

In pursuant to such agreement, the 1st named Defendant then caused the subject cheque in question to be issued to the Plaintiff."

8. On 23rd January 1999 :-

" Due to disappointment and lack of mutual trust and the fact that the 1st named Defendant was unable to give us any account or explanation as aforesaid, I on behalf of the Plaintiff demanded the repayment of the aforesaid shareholder's loan in the sum of HK$1,549,375.00, failing which the Plaintiff would take legal proceeding against the Company and the Ocean Films. Having heard what I said, the 1st named Defendant finally agreed and confirmed in the meeting that in consideration of the Plaintiff agreeing to forbear to sue the Company and/or the Ocean Films, he agreed to pay to the Plaintiff personally the sum of HK$1,549,375.00 being the amount of the Plaintiff's aforesaid shareholder's loan. I on behalf of the Plaintiff accepted the 1st named Defendant's said offer and proposal."

9. Finally, in March 1999 :-

" I expressly told the 1st named Defendant that the Plaintiff would take legal proceeding against the Company and Ocean Films and would refer this matter to the Police for handling unless the said shareholder's loan in the sum of HK$1,549,375.00 was repaid to the Plaintiff. It was under these circumstances that the 1st named Defendant asked the Plaintiff to refrain from instituting such legal proceeding and, in return, he personally agreed to pay the said sum of HK$1,549,375.00 to the Plaintiff. In the premises, the payment of the said sum of HK$1,549,375.00 which is related to the shareholder's loan only would certainly not affect the profit sharing of the Plaintiff in the Company."

10. The contemporaneous documents and correspondence provides considerable support for the Plaintiff's contentions. The minutes dated 9th February 1998 show that the 1st Defendant agreed to pay the Plaintiff before the end of February 1998 the sum being claimed being the amount of the Plaintiff's shareholder's loan to Amazon. There is also correspondence showing the Defendants' request for further time to pay after the cheque was dishonoured. A letter dated 18th March shows the 1st Defendant was willing to pay interest for the delay in payment. In late April the 1st Defendant suggested a repayment schedule and informed the Plaintiff that he owned property in China of which he could dispose in order to meet his liability. None of these documents support the Defence case.

11. By s.30 of the Bills of Exchange Cap.19 there is a presumption that every signatory to a cheque is a party to it for value. By s.27 valuable consideration for a cheque may be constituted by any consideration sufficient to support a simple contract or any antecedent debt or liability. A promise to forbear to enforce an existing claim against a third party or an actual forbearance is sufficient consideration. Mr Chain's attempt to persuade the court that forbearance to sue is not good consideration in this case must fail.

12. In the circumstances the learned Master could equally have entered final judgment. Both he and this court have come to the conclusion that this is a straightforward dishonoured cheque case for which valid consideration was given. However, I do not propose to alter his order which gave conditional leave to defend.

13. On 16th December the Plaintiff made an application by summons for final judgment to be entered against the 1st Defendant on the ground that he had failed to make the payment in within the specified period. That summons was adjourned to be heard at the same time as this appeal. The Plaintiff now asks for judgment to be entered in accordance with its 16th December summons.

14. This court's order is that judgment be entered for the Plaintiff without further application unless the 1st Defendant complies with the condition of payment in within 14 days of the handing down of this decision.

15. The costs of the appeal shall be the Plaintiff's.