GEE YAU WING TERRY v. NG KWOK WAH VINCENT

DCCJ 6362/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6362 OF 2006

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J U D G M E N T

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1.  This is a case of money borrowed and not repaid.  Nonetheless, it happened over ten odd years ago and it involved in the Buddhist terminology a group of “dharma brothers and sisters”.  The moral of the story is contained in an ancient Chinese idiom meaning as follows : “tolerance generates iniquity 姑息養奸”.

2.  The issues in dispute are however relatively simple.  They can be identified as follows.

3.  The Plaintiff claimed that in or about November 1998, by an oral agreement the Plaintiff agreed to lend to the Defendant the sum of HK$300,000.00 with interests at the rate of 20% per annum as from the date of the loan and the Defendant agreed to repay by 21^st June 1999.  Pursuant to that oral agreement, the Plaintiff made payment to the Defendant by way of a cheque on or about 22^nd December 1998.  Shortly after, the Defendant handed to the Plaintiff a post-dated cheque issued by Pearldek Ltd. and signed by the Defendant for HK$300,000.00 payable on or about 21^st June 1999 (“the first cheque”).  The Defendant also promised to repay the said interest by that time.

4.  By June 1999, the Plaintiff claimed that the Defendant asked for the rescheduling of the repayment terms and extending it to 30^th December 2000 when he represented another post-dated cheque (“the second cheque”) in the sum of HK$360,000.00 being the repayment of the principal and part of the interests in exchange for the first post-dated cheque.  The Defendant promised he would repay on or before 30^th December 2000.  The Plaintiff accepted and returned the first post-dated cheque back to the Plaintiff.  The Plaintiff did not keep a copy of that first cheque.

5.  By 30^th December 2000, the Defendant said he did not have enough money in the bank account.  His business was not going well and he asked the Plaintiff not to present the second cheque for payment.  In response, the Plaintiff was kind enough not to press for repayment, though there were times when he did ask how the Defendant’s business was doing and eventually in two emails saying he needed the cash.  All these did not make the Defendant repay.  As a result, the Plaintiff never got paid and was still holding the same 2^nd cheque and after some soul-searching, the Plaintiff only issued proceedings on 29^th December 2006, the very day before the expiry of the limitation period.

6.  The Defendant, on the one hand, never denied that he had borrowed the money.  However, he said that it was money lent to his company Pearldek Ltd. and not lent to him personally.  Thus, the Plaintiff sued the wrong party.  If that was not true or disbelieved by this Court, it was a loan made so long ago in 1998 that on any view, the Plaintiff’s right to sue was time-barred by virtue of the operation of the limitation period.

7.  Of course, the Defendant also raised a number of factual issues and I shall deal with them where necessary.  Nonetheless, this is the substance of his defence. 

Relationship between various parties

8.  The Plaintiff testified that he got to know the Defendant in a buddhist association called Dharma Buddhism Association (法華園佛教學會).  Between 1995 and 2005, the Plaintiff was actively involved in the running of the association.  He said he left the association due to his business activities and he had no time to devote himself there.  The Plaintiff said that the Defendant was in financial difficulties around 1998 and asked to borrow money from him.  At the time of asking, a loan period of half a year was mentioned.  The sum of HK$300,000.00 was lent and the money was paid out on 22^nd December 1998, as can be seen from the Plaintiff’s disclosed bank statement.  Thus, it being a loan period of half a year, the 21^st day of June 1999 would be the last date of repayment.  The interest of 20% per annum was what the Defendant offered.  Nothing was in writing as he only wanted to help the Defendant and did not bother with any of the usual formalities.  The Defendant gave him the first cheque shortly after the cashing of that HK$300,000.00 as evidence of the loan and the time for repayment.

9.  Insofar as whether the payee was filled in the Defendant’s name or it was written as cash payment or left in blank, the Plaintiff said he could not remember.  He did not know about this company Pearldek Ltd. at the time.  At one time, the Plaintiff did ask the Defendant about this company and the Defendant replied that he  used a company cheque as he did not have a personal bank account.  The Plaintiff did not think it was anything peculiar at all.  But the Plaintiff lent the money to the Defendant personally and it had nothing to do with this company Pearldek Ltd. which he knew nothing about.

10.  By the time of 21^st June 1999, the Defendant said he did not have any money and he told the Plaintiff not to present the first cheque for payment.  Then the Defendant asked for extension and the Plaintiff agreed.  As a result, the Defendant gave him the second cheque in the sum of HK$360,000.00 and it was post-dated till 30^th December 2000.  The Defendant said he would repay him by that time.  The extra sum of HK$60,000.00 was part of the interest to be paid by the Defendant.  The Plaintiff gave back the first cheque to the Defendant and did not keep a copy. 

11.  Even for the second cheque the Plaintiff did not present it to the bank for payment as the Defendant said he did not have money at the time.  Only occasionally did the Plaintiff ask for his money and it would be met up with excuses.  There were two emails sent to the Defendant as shown in the bundle.  But the Defendant said he never received them.  The Defendant never paid back the money nor any of the interests as promised.  Thus, the Plaintiff eventually decided to commence proceedings, as was his right to do so.

12.  During cross-examination, it was put to him that the Plaintiff did not leave the Buddhist association out of his own accord.  It was because of an intimate relationship formed with the Defendant’s ex-girlfriend Ms. Lau Man Yee.  The Plaintiff was married at the time and as a result and both the Plaintiff and Ms. Lau were kicked out by their buddhist teacher Mr. Lee Hak Ken (李克勤) as it was not something permitted according to the Buddhist rules and ethics.  Apparently, the Defendant was the disciplinarian of that buddhist association.  I shall revisit this issue later.  Suffice to say during cross-examination, the Plaintiff denied he was involved in an intimate relationship with Ms. Lau.

13.  There was also some dispute as to the date of giving the Plaintiff these cheques.  It was put to the Plaintiff that the 2^nd cheque in the sum of HK$360,000.00 was given to him around the middle of 2000.  But the Plaintiff said it was in or around mid-1999 perhaps in June.

14.  More importantly, it was put to the Plaintiff that at the time there was a discussion for actually investing in the Defendant’s company Pearldek Ltd.  The Defendant told him about the company, shown him documents as to its activities and so on.  But the investment was too big and the Plaintiff was not prepared to commit and preferred to lend this company some money instead in order to ease its cash flow problems.  Nothing was said about the loan period and nothing was said about interests to be repaid.  The Plaintiff wrote the company Pearldek Ltd. as directed by the Defendant.  All these matters were put to the Plaintiff and he denied each and every one of these.  In particular, the Plaintiff denied that he had lent money to Pearldek Ltd.. 

15.  The Plaintiff admitted however that he knew about the limitation period in or about 1990 a few years after he started to work in the commercial world.  He helped in his family garment business and has been working there for nearly 20 years by now.  He explained he only decided to sue the Defendant at the very end as he did not want to resort to litigation when they used to be friends.  It was a last resort as the Defendant was not responsive to his call and he still wanted his money back.

16.  The Plaintiff denied he knew anything about Pearldek Ltd. and only very recently he became aware that this company was dormant.  He never asked for a personal cheque and he knew that the Defendant was in financial difficulties.  The Plaintiff still accepted a company cheque, as the Defendant told him he did not have a personal bank account and the Plaintiff believed the Defendant would eventually repay him despite his difficulties.  When asked about the accounting documents prepared by an auditor for Pearldek Ltd., the Plaintiff said he never received it and he had moved offices a few times, even though between 1998 and 2002 he was using the same office.

17.  The Plaintiff then called one Mr. Siu Chung Wei 蕭鎮威 on his behalf.  Mr. Siu, the Plaintiff and the Defendant also got to know each in the same Buddhist association.  Mr. Siu related to the fact that he also lent money to the Defendant and as he did not have enough cash at the time, he used his wife’s account and he later repaid his wife.  He believed the Defendant when he lent the sum of HK$200,000.00 to him and that he would repay him after his financial difficulties were over; but he could not remember whether the payee was written down.  That was back in middle of 1998 and a few days later, the Defendant gave him a cheque drawn from Pearldek Ltd. in the sum of HK$200,000.00 dated 30^th August 1999 to be payable one year later in his wife’s name.  There was no written IOU as they were dharma brothers and he was lending a helping hand to the Defendant.  At the time there was nothing about interests or terms but the Defendant voluntarily gave him a number of cheques at one go and some of the cheques were referred back to the drawer for insufficient funds but at least two cheques in the sum of HK$12,000.00 were credited into his wife’s account as interests.

18.  Mr. Siu only lent the money to the Defendant personally.  He never lent it to the company Pearldek Ltd..  There was no discussion concerning investment into the company Pearldek Ltd. with him and he never saw any documents concerning any investment whatsoever.  He also did not receive any letter from an auditor of the company. 

19.  Later, the Defendant said he did not have any money to repay Mr. Siu and the Defendant gave another cheque to him and promised to repay.  The cheque left the payee blank and it was dated 30^th November 2000 in the sum of HK$250,000.00.  In cross-examination, Mr. Siu said although he saw that it was from a company cheque, he said he really did not think about it or put his mind to it.  But he was adamant that he did not lend the money to the company but to the Defendant personally. 

20.  Mr. Siu never pressed the Defendant for repayment since the Defendant asked him to bear with him and gave him more time.  Subsequently, Mr. Siu had forgotten all about it and the time limit had passed.  He could not do anything about it and he did not pay much attention to the loss of his money as it was only two months of his basic salary.  Needless to say, the Defendant never repaid any of his money back to him.

21.  Finally, Ms Lau Manyi 劉敏儀 gave evidence on the Plaintiff’s behalf.  She used to be the Defendant’s girlfriend between 1993 and 1999.  They started to co-habit around 1994 or 1995 and she moved out around 1999 or early 2000.  She was also active in the same Buddhist association.  She said the Defendant was often not in Hong Kong and she was the one drawing out cheques for the Defendant to sign when he came back from mainland china to Hong Kong.  She said there was no other signatory for Pearldek Ltd. insofar as she was aware.  It was a company controlled by the Defendant.  She said that the Defendant never used his own personal account as he did not want to be liable personally for any of his commercial activities or endeavours whatsoever.  Thus, the Defendant was always careful enough to use a company account.  The Defendant used this company account Pearldek Ltd. for a number of personal matters including paying for his rent, paying for the maid and other sundry such as electricity and other utilities.  It demonstrated, she said, the fact that the Defendant was in total control of the said company.

22.  Ms. Lau said that there was no doubt it was the Defendant who borrowed the money from both the Plaintiff and Mr. Siu.  She knew about it as she was present when both of them lent money to the Defendant.

23.  During cross-examination, it was put to Ms. Lau that she and the Plaintiff had a clandestine relationship but was discovered by the Defendant.  As a result, both of them were kicked out of the Buddhist association.  It was for this reason that she came forward to testify on the Plaintiff’s behalf as she had a grudge against the Defendant.  All these matters were denied by Ms. Lau and she said that she and the Plaintiff were only good friends and they were not involved in any intimate relationship.  She did not hold any grudge against the Defendant either as they parted only because he was always in the mainland and they had too little time together.  She left the Buddhist association because she did not like its way of concentrating only in raising funds.  Ms. Lau was very much impressed with both the Plaintiff and Mr. Siu as both of them were very generous and also did not press the Defendant for repayment which they could have done.  She knew that they only wanted to help him through a difficult time.  However, she wanted to speak the truth and to tell the court what really happened and not that they had lent money to the Defendant’s company Pearldek Ltd..

24.  The Defendant gave evidence.  He told this court in great details about his family companies.  Some of them were companies for estate planning and others were for property investments.  Further, he had big business plans in the mainland.  His company was somehow involved with one company called Ogden which was listed in the Fortune 500 at the New York Stock Exchange.  The Defendant produced documents about the various possible deals and he also said that he had shown these documents to the Plaintiff when he was trying to persuade him to invest in his company. 

25.  However, he had experienced some financial difficulties in or about 1998.  He then tried to involve other people in investing in his company.  Of course, it would involve some meetings about the investment opportunities and the prospects.  Documents were shown.  Both the Plaintiff and Mr. Siu promised to lend money to his company instead as they decided not to invest.  For each of them, he provided cheques with interests as security.  In each case, it was he who decided on the interests and how much to pay. 

26.  The Defendant said that all the money was lent to his company because it was his company which was in financial difficulties and lacked cash flow to continue.  The difficulties were not his.  

27.  He further said that in fact he and Ms. Lau Manyi separated around the year 2001 instead (but he later corrected himself back to the year 2000).  He found out that she and the Plaintiff were chatting through internet till three to four in the morning and sometimes when he was not in Hong Kong, his maid told him that the Plaintiff came to pick up Ms. Lau (bearing in mind both Ms. Lau and the Defendant had their home in the New Territories, I did not see what the problem was).  After they separated, the Defendant found out that they sometimes hiked together, thus he decided to tell their teacher Mr. Lee.  As a result, both of them were kicked out of the Buddhist association.

28.  In cross-examination, too much detail were closely examined as to the workings of the various family companies.  Its purpose, I suppose, was to demonstrate all these companies were anything but by the Defendant.  It was eventually put to the Defendant that he controlled Pearldek Ltd. and his answer was (in translation) it was de facto not mine.  It was further put to the Defendant that most if not all of these companies were run by the Defendant, to which he disagreed.  It was put to the Defendant that the money in the bank account of Pearldek Ltd. was used to pay for all his own personal expenses, to which he also disagreed.

29.  The Defendant admitted that he did not pay back money to either the Plaintiff and Mr. Siu, but the money borrowed from his teacher Mr. Lee Hak Ken was repaid.  He was always in the mainland working.  They might have met but nobody said anything about it and they did not press him for repayment.  He might have said that the company did not have money to pay them back to both the Plaintiff and Mr. Siu.  But there were certainly no term of repayment for the HK$300,000.00 owed to the Plaintiff, and yet he did expect to have some money later on for repayment.

30.  The Defendant further disagreed that he used Pearldek Ltd. to pay for his personal loans and thus using this company cheques to pay for interests.  He disagreed it was his personal loan.  In re-examination, he said that if it was a personal loan, the consideration would have been different.  He borrowed money not for his own personal use but for the company which was experiencing financial difficulties.

31.  The Defendant called his Buddhist teacher on his behalf.  Mr. Lee Hak Ken (李克勤) is a renowned feng shui master and also the head of this Buddhist association.  To be fair to him and unlike the Defendant, Mr. Lee did not want to talk about the Plaintiff’s relationship with Ms Lau as it was their personal matters.  But he confirmed that both of them were kicked out of the association.  He also confirmed that the Defendant did want the Plaintiff, Mr. Siu and himself to invest in his companies.  That his company needed capital.  But he himself declined as he did not know much about this line of business.  As far as he was concerned, he lent the sum of HK$30,000.00 to Pearldek Ltd. which was what he could afford in or about December 1998.  A year later around December 1999, Pearldek Ltd. repaid the money back to him.  He did not know what happened between the Defendant and the Plaintiff and Mr. Siu. 

32.  I have only summarized some of the matters that were ventilated during their evidence.  It is by no means meant to be exhaustive nor comprehensive.  As is often the case in any litigation, one party may put particular emphasis on one area whereas another party may look at various issues differently.  There is no difference, I presume, for a judge of facts either.

33.  Nonetheless, what matters here is the credibility of these witnesses.  In order to assess their credibility in this particular case, I am of the view that I have to look at their respective background. 

34.  The Plaintiff works in a family business.  That’s always been the case.  He met the Defendant in this Buddhist association.  No doubt they were good friends before.  When a friend was in need, he lent a helping hand.  Even the Defendant said that both the Plaintiff and Mr. Siu never really pressed him for repayment.  It is within such a context and with such characters that I have to consider their credibility, which is quite different from the usual run-of-the-mill commercial cases.

35.  Mr. Siu, on the other hand, was never bothered about the money he loaned to the Defendant.  He did not need the money and simply forgot about it.  The Defendant was in need of financial help and he provided it without much hesitation.  That was so even when he did not have enough cash at the time and he had to borrow from his wife.  He worked for Hitachi for many years as a senior consultant in the IT department.  Thus, Mr. Siu is a mature man.  Certainly I can think of no reason for him to lie on behalf of the Plaintiff.  In fact, both men strike me as honest, generous and straightforward.  I have no hesitation to accept their evidence in their entirety.

36.  Insofar as Ms. Lau is concerned, I also find her honest, straightforward and reliable.  I cannot for any moment think of a reason why she would want to lie.  Much has been said about her intimate relationship with the Plaintiff.  I do not find any substance in it.  There is not a shred of evidence produced to demonstrate that that was the case.  Even what the Defendant said, for instance, that they chatted via internet till late hours into the night, that the Plaintiff gave Ms. Lau a lift every now and then, that they go hiking together, none of such matters point to the inevitable conclusion that they were lovers.  Even if they were  kicked out of the Buddhist association, which might have been based upon the unfounded speculation by the Defendant, it proved nothing.  Surely, it could not mean that they did in fact have a relationship together. 

37.  I totally reject such allegation.  I find that it was simply an attempt by the Defendant to “blacken” her character and no doubt that of the Plaintiff.  It was also an attempt to explain why she would give evidence on the Plaintiff’s behalf.  For a calculated and scheming person as the Defendant, it is perhaps difficult to understand any sense of righteous indignation.  People do sometimes come to court to give evidence in order to put the matters right.

38.  But even for a moment assuming that they had an intimate relationship together, what was the crucial matters that the Defendant sought to destroy their character and credibility on.  Really there was none whatsoever that could be achieved.  The Defendant agreed that he never paid back the money owed to the Plaintiff.  Insofar as Pearldek Ltd. was concerned, it can be seen from the cheque stubs and other records that it was used by the Defendant as his personal bank account for his personal use.  It might be that there were other family members who were directors and shareholders of the company, but the Defendant had the cheque books, he signed the cheques, he used it to pay for all his personal expenses, he used the money to settle all his loans and he was indeed in total control of all the money in the bank account.

39.  And yet, the Defendant gave evidence and told this court that he did not control Pearldek Ltd. and that it was de facto not his.  That must be a lie and it was shown to be clearly wrong for the reasons given in the proceeding paragraph.  I therefore find the Defendant as a totally dishonest and is not capable of being believed whatsoever.  He was simply trying to make up a story to shirk his responsibility for repayment.

40.  In fact, from his behaviour, I find that he is a calculated man often out to take advantages of others and he is always careful to cover his tracks.  I find, on a  more likely than basis, that the Defendant used these company cheques to allow him a chance that one day he could point to the loans as a company loan not his personal loan, which he had done in this case in order not to pay his debtors.  He also talked big and always ready to promote himself.  No doubt he had his own followers and admirers but I do not find him honest or reliable.  When I asked him about repayment at one stage, I was surprised to find that in fact he did have enough money to repay the Plaintiff but he saved it for his own purposes and did not think fit to repay his benefiters.  I have heard a few times the Defendant’s logic that since it was the company Pearldek Ltd. which used the money borrowed from the Plaintiff and Mr. Siu, he personally should not be liable.  I totally reject this type of self-serving explanation.

41.  I find from the cheque stubs, the Defendant was writing cheques for himself every month in the sum of HK$50,000.00 to HK$60,000.00 known as allowances until at the very least the end of 2000.  But by the year 2002, it would not have been that much.  Thus, it can be seen that the Defendant used this Pearldek Ltd. for his own benefit.  He was in total control of it and used its money to pay for all his expenses as well as to pay for himself.

42.  Furthermore, I fail to understand why either the Plaintiff or Mr. Siu would suddenly want to lend money to a company which by all accounts and admittedly in the evidence of the Defendant had run out of money to stay afloat.  I could understand it better if the Defendant was claiming both these generous men gave the money to this company, though I still might not have accepted that that was the case.  But at the very least I can understand their behaviour even within the context of friendship within a dharma association.  However,  I cannot imagine for one moment that any of the dharma brothers and sisters would want to lend money to a sinking company.  They might have been generous and kind but they were not that stupid.  A personal loan to the Defendant would be a completely different matter.  As dharma brothers and sisters, they would be very keen to help a brother in trouble.  It would have been a personal favour.  Thus, I have no hesitation to find that the Defendant borrowed the sum of HK$300,000.00 in his own personal capacity.

43.  In any event, I find that the Defendant also borrowed money from Mr. Siu personally, in the same way he did with the Plaintiff.  I find that the evidence of Mr. Lee Hak Ken the defence witness not particular useful, as he did not know about the dealings between the Plaintiff, Mr. Siu and the Defendant.     

44.  Once I accept the Plaintiff and his witnesses, evidence and reject the Defendant’s, I also find that the amount of HK$300,000.00 with an annual interests at 20% became payable on 30^th December 2000.  That is the date cause of action accrued.  I accept Mr. Yao, Counsel for the Plaintiff’s submissions and I find that the second post-dated cheque was merely evidence of the loan and the time for repayment.  Thus, this limitation period issue also fails as the commencement of the proceedings was on 29^th December 1999, which was within the six year period.

45.  That being the case, I find the Plaintiff’s case proved and I give judgment for the Plaintiff in the sum of HK$300,000.00 plus interests as pleaded from 22^nd December 1998 till the date of the Writ namely 29^th December 2006 amounting to the total sum of HK$481,315.00 and continuing at the daily rate of HK$164.38 till the date of judgment.  Thereafter the interest rate will be at judgment rate.  I shall also award costs to the Plaintiff with certificate for counsel to be taxed if not agreed.    

46.  Needless to say, I thank both counsel for their effort and detailed research.  If I had not dealt with all the points raised, it is only due to those finding of facts which make these points now redundant.