LAI FAT KWONG v. CHEUNG WAI YIN

HCA273/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 273 OF 2007

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JUDGMENT

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1. This is the defendant’s appeal against the order of Master Hui made on 20 June 2007 granting summary judgment to the plaintiff on his claim against the defendant.

2. The plaintiff’s claim against the defendant is in respect of two post-dated cheques totalling HK$1,150,000 drawn by the defendant and made payable to the plaintiff.  The first cheque was for the sum of HK$750,000 and was dated 24 January 2007.  The second cheque was for the sum of HK$400,000 and dated 31 January 2007.  Both cheques were dishonoured when presented for payment on the due dates as payment was countermanded by the defendant.  Notice of dishonour was given by the plaintiff through his solicitors by a letter dated 2 February 2007.  Despite demands the defendant failed or refused to pay the said sum of HK$1,150,000. 

3. The writ with statement of claim was issued on 7 February 2007.  On 20 June 2007, on the plaintiff’s application for summary judgment, the Master gave judgment to the plaintiff for the said sum of HK$1,150,000 with interest and costs.

4. It is trite that cheques are to be treated as cash and unless there are some good reasons to the contrary, they have to be honoured.

5. The obligation is on the defendant to show a triable issue.  The defendant must satisfy the court that she has a fair or reasonable probability of showing a real or bona fide defence.

6. The defendant raises two issues :

(1)	duress resulting in her issuing the two cheques; and
(2)	absence of consideration for the two cheques.

7. If the defendant succeeds on either ground she would be entitled to unconditional leave to defend.

8. It is common ground that the plaintiff and the defendant were formerly lovers and co-habited together since about 1989.  They have a daughter together who is now about 9 years old.

9. In about 1999, the defendant says, their relationship deteriorated.  The plaintiff says that this occurred much later.  However, it seems clear that since about 1999 the plaintiff spent most of his time in the Mainland developing his plastics business.

10. There is a dispute of fact between the parties as to who is the beneficial owner of two Hong Kong companies, one being Glory Country Limited (‘Glory’) and Adda Holdings Limited (‘Adda’).  Glory holds the property where the plaintiff and defendant live in Fairview Park.  Adda is a trading company which dealt with and traded with the plaintiff’s business in the Mainland.  Both companies were established when the plaintiff and the defendant were cohabiting with each other.  Glory was set up in 1993 and Adda in 1996. 

11. The plaintiff alleges that both companies belong to him beneficially.  The defendant denies this and alleges that she is the beneficial owner of both companies.  This is a substantial dispute of fact between the parties which cannot be resolved by affidavit evidence. 

12. In February 2006 there was a transfer of one share in Glory from the plaintiff to the defendant.  In March 2006 there was a transfer of one share from the plaintiff’s brother to the defendant.  The plaintiff and his brother have alleged that their signatures were forged.  The defendant denies this and her case is that there was no forgery and that those shares were transferred to her as the beneficial interest in the companies belong to her.  This is yet another substantial issue of fact that cannot be resolved by affidavit evidence.

13. There does not appear to be any dispute that since about the end of 2006 the plaintiff and the defendant had severe arguments about their respective properties and assets.  The plaintiff alleges that the properties and assets in the name of the defendant belonged to him and she maintained the position that they belonged to her.

14. The two cheques sued on were issued on 18 January 2007 but post-dated to the due dates.  The defendant’s case is that on 17 January 2007 the plaintiff demanded that the defendant hand over her monies and assets.  She refused.  He beat her up.  There is a police report and a photograph of the defendant with an injured face which supports this.  She says that the plaintiff threatened to make a false report of forgery against her to the police.  He also, on the evidence, beat her up on 17 January 2007 and it is her case that he also threatened her that unless she gave him all her assets he would take away their daughter from Hong Kong to the Mainland so that she could never see her again.

15. The following day, 18 January 2007, she agreed to meet the plaintiff and they met in a restaurant.  She was accompanied by a member of her company staff and the plaintiff was accompanied by his son from his ex-wife.

16. The defendant’s case is that at the meeting the plaintiff demanded HK$1,150,000 in cash from her and he also demanded that she should transfer all her other assets including property as soon as possible to him.  He warned her that if she failed to do so he would proceed with his false complaint of forgery against her.  She says that she was afraid that she would go to prison because of the false report and she also feared further physical assault and the loss of her daughter.  It was in those circumstances that she agreed to pay the HK$1,150,000 but as she needed time to arrange payment she gave the plaintiff the two post-dated cheques.  Thus, she says that the cheques were issued under duress.  The plaintiff denies all such allegations and has a different version of events which are set out in his affirmation.  It is not necessary for me to repeat the same here. 

17. It seems to me that it cannot be said that the defendant’s allegations are incredible.  Her assertions are, in my view, believable.  Whether or not they will be believed is a different matter.  That is a matter to be sorted out at trial with the benefit of cross-examination and pre-trial discovery including interrogatories.

18. Ms Wong submitted that the defendant’s allegations are incredible and also pointed out that in the solicitors’ letter denying liability no mention was made of the allegation of duress.  It seems to me that this is a matter which may go to the defendant’s credibility and is a matter to be sorted out at trial.  The defendant may well be cross-examined on these matters.

19. It seems to me that the defendant has raised a triable issue on the question of duress. 

20. As I have held that there is a triable issue on the question of duress, I do not think it is desirable that I should express a view on the other ground relied on or to express a view on the other submissions of counsel on the strength or weakness of each other’s case.  All these matters will have to be resolved at trial. 

21. The defendant is entitled to unconditional leave to defend.  I allow the appeal and set aside the order of the Master.