XCHRX Vashideo Gaggoonal v. Nicole Elizabeth Kozma and Others

DCCJ1283/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1283 OF 2001

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J U D G M E N T

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1. This is an Order 14 summons whereby the plaintiff seeks judgment in the sum of $209,000, being the amount allegedly owing to him by the defendants arising out of a payment of $234,000 advanced by him on 7 April 2000.

2. It is said by the plaintiff that this sum was to be repaid in full by 31 December 2000. A part-payment of $25,000 was made on 25 November.

3. The fact of the payment and that it should by now have been repaid are not in issue. The only question that needs to be determined is whether the payment had been made by the plaintiff to the defendants trading as Tigger's Treats or whether it had been made to a limited company which they had formed called Tigger's Treats Limited. This is of real practical importance because the Limited Company is now insolvent and therefore incapable of repaying the amount owing.

4. The plaintiff's case is that the loan was to the firm, as represented by these individual defendants.

5. The defendants contend that payment was to the Limited Company as an investment in that company.

6. There is another identical action before me, 1282 of 2001, brought by a limited company owned by a friend of this plaintiff for a slightly larger sum of money in which the issue is the same.

7. I have heard the applications in turn on the same occasion and I will need to deliver a separate judgment in that other action in a moment.

8. The parties are agreed, and this must be so on the evidence, that given the identity of issues, both applications will attract the same outcome.

9. It is helpful to set out the background to this matter. On 28 October 1998, the firm of Tigger's Treats was registered as a business. The defendants who traded under this name are Nicole Kozma, her husband, Rajesh Thimothy and Nicole's father, Paul Kozma. Tigger's Treats' principal business was the sale of toys and similar products for use at children's parties. At the end of 1999, Tigger's Treats ceased trading when Tigger's Treats Limited was incorporated in order that the business might be expanded and put on a more formal footing. The assets of the old business were then taken over by the Limited Company.

10. The payment by the plaintiff was made on 7 April 2000, which if the defendants are right was some 4 months after the business of Tigger's Treats had ceased trading.

11. As against that, the plaintiff draws attention to the fact that the payment itself went, not into the Limited Company's bank account, but into Tigger's Treats' account.

12. The background to this payment by the plaintiff is that he is a friend of a Mr Sunil Sadhwani and his wife Karune. They had met Nicole Kozma on The Peak during the fete that takes place at the Matilda Hospital around the annual Sedan Chair Race. Mrs Sadhwani was looking to establish a business baking and selling cakes and pastries. Much of this sort of business would look to sell birthday cakes for children's parties. It made sense for Mrs Sadhwani to see if she might link up with Tigger's Treats that already had an entrée into this market.

13. According to Nicole Kozma, the Sadhwani's approached her again more formally in November 1999 with a view to their investing in Tigger's Treats' business. Nicole Kozma said that it was then agreed that Elite Exports Hong Kong Limited, Mr Sadhwani's company, would invest $500,000 in Tigger's Treats Limited over a period of 6 months and take a 30 per cent shareholding in that company. Mr Sadhwani is friend of the plaintiff in this action who he introduced to the defendants.

14. On 6 April 2000, following a meeting with the defendants, the plaintiff agreed to provide the sum of $234,000. It is clear that Mr Sadhwani was either unable or unwilling to advance the entire $500,000 and so he approached the plaintiff who expressed an interest in taking part of this transaction.

15. Was this payment to the business of Tigger's Treats or was it to the Limited Company? I can only enter summary judgment provided I am persuaded on the evidence that there is no arguable defence to this claim. Such a finding is simply not open to me on the evidence as it presently stands.

16. The plaintiff says that the cheque was paid into Tigger's Treats' account. This is, of course, a factor but only one amongst a number which I must have regard to.

17. Nicole Kozma deposes in her affidavit of 30 March 2001, starting at page 32 of the Bundle, that the plaintiff was aware that he was making an investment into the Limited Company. At page 33, she explains in some detail that the sort of questions he was asking during their meeting prior to the advance of the money were only consistent with an understanding by him that this was an investment in the Limited Company.

18. It is quite plain that these are all matters which give rise to a triable issue. They cannot be resolved on the basis of disputed affidavits. A judge would require to hear the various witnesses examined and cross-examined in order to determine where the truth lies. Order 14 is not appropriate in such circumstances.

19. I am satisfied that the defendants must have unconditional leave to defend. In coming to this conclusion, I have not had regard to the fact that the original writ had been issued against Tigger's Treats Limited. Normally such a course would almost of itself give rise to a triable issue but having regard to Ms Liang's affidavit explaining why she originally took that course, I am prepared to leave this feature of the case out of account.

20. So that is my ruling. The defendants will have unconditional leave to defend.

21. I propose to make an order nisi of costs in the cause in respect of this matter and I shall also direct that the defendants file their defence within 28 days of today.