MA YUK LIN AND ANOTHE v. WONG KIU NGOR

CACV 284/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 284 OF 2002

(ON APPEAL FROM HCA NO. 1590 OF 1998)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1. This is an appeal from a judgment of Yeung JA sitting as an additional judge of the Court of First Instance given on 7 June 2002. In that judgment the judge had given judgment in favour of the defendant on his counterclaim against the 1st named plaintiff Ma Yuk Lin for $6 million and interest. At the conclusion of the hearing, this appeal was dismissed with costs with reasons to be given later, which we now do.

2. The defendant's claim for $6 million arose out of a contract for the purchase of shop premises in Nelson Street, Kowloon. The defendant had entered the contract with the 1st named plaintiff, Madam Ma. The 1st named plaintiff effectively controlled the 2nd named plaintiff, Talisgold Industrial Limited ("Talisgold"). Talisgold had itself entered a contract to purchase the shop premises from another company. One important point to note is that the contract to sell the property to the defendant was made by Madam Ma. Talisgold was not a party to that contract. The deposit of $6 million had been paid by the defendant in four instalments. On the instructions of Madam Ma, it was paid into an account of Talisgold.

3. Completion of the sale agreement never took place. In February 1998, Madam Ma and Talisgold commenced the present action against the defendant. The primary claim was made by Madam Ma that she had, at all times, been ready willing and able to procure Talisgold to assign the property to the defendant and that the defendant had been in breach of contract by failing and refusing to complete. Alternatively, it was said that Madam Ma had signed the agreement with the defendant as agent or officer on behalf of Talisgold. In either event, the plaintiffs claimed the right to retain the deposit and also claimed damages. One of the issues that would have arisen on that claim is that the deposit of $6 million was considerably in excess of 10% of the sale price namely $24 million. This was, indeed, recognised in an alternative in the prayer for relief.

4. The defendant not only defended that action but counterclaimed for the return of the deposit. One of the defences was that requisitions in respect of an order which had been registered against the title to the property had not been sufficiently answered. The matter came before Godfrey JA, also sitting as an additional judge of the Court of First Instance, on 11 August 1998. He held that the defendant was entitled to rescind and had rescinded the sale and purchase agreement. He also ordered that there should be a trial of the issue as to whether Madam Ma or Talisgold, or both, were liable for the repayment of the deposit. There was an appeal to the Court of Appeal, but that appeal was dismissed. The issue which Godfrey JA had ordered to be tried came before Mr Justice Yeung first on 8 May 2001. On that occasion both plaintiffs were absent. The judge ordered that the action should nevertheless proceed and there was, in effect, a judgment in default. The material order made was that:

"Both the 1st and 2nd Plaintiffs are jointly and severally liable to repay the sum of HK$6,000,000.00 to the Defendant together with interest thereon ..."

5. On her application, Mr Justice Yeung set aside that order in respect of Madam Ma but not in respect of Talisgold by order dated 15 October 2001. Thus the matter came before the judge again in May of last year. The trial proceeded with amendments to the statement of claim which were dated the first day of the trial. Those amendments were in effect to reiterate (for this was already in the original statement of claim: see paragraph 3 above) that Madam Ma was acting as agent for Talisgold. The defence and counterclaim was not amended.

6. The judge heard evidence on behalf of the 1st plaintiff from Madam Ma and another witness Miss Szeto Yuk Kee. They both gave evidence which was directed to showing that at the time of execution of the agreement it was made clear that Madam Ma was acting as an agent. The judge also heard evidence from the defendant. His conclusion as to the evidence was clear. He did not accept Madam Ma's and Miss Szeto's evidence. It is unnecessary to go into his reasons for so holding. The judge came to the unambiguous conclusion at paragraphs 41 and 42 of his judgment:

"41. Ma entered into the Agreement in her own capacity as she was able and willing to procure Talisgold to assign the shop premises to Wong on completion. She accepted the payment of the deposit and directed Wong to pay such deposit into the account of Talisgold by telling her that it was her own company.

42. Ma was liable to repay the deposit to Wong."

This appeal

7. On this appeal, Mr Wong, who appeared on behalf of Madam Ma, sought to argue that judgment should not have been entered against Madam Ma because judgment had already been entered against the 2nd defendant. It was said that the only viable basis upon which that could have been entered against the 2nd defendant was that Madam Ma had been the 2nd defendant's agent and judgment could not be entered against both a principal and an agent. We were referred to a number of authorities for the proposition that where liability in two persons is alternate (as in the case of most principal and agent situations), judgment against one bars the obtaining of judgment against the other. This point had been raised before the judge below and had been rejected.

8. The short answer to this argument is that rightly or wrongly, judgment had been entered against Madam Ma and Talisgold not on the basis that they were principal or agent nor on the basis of any other form of alternate liability but that they were jointly and severally liable. The pleading upon which that was based was clearly paragraph 36 of the defence and counterclaim. That was a counterclaim against the plaintiffs on the basis that they were jointly and severally liable. The judgment entered on 8 May is unequivocal. It is a judgment of joint and several liability in respect of both plaintiffs. It might be observed that Godfrey JA had considered that that was a possible outcome. The fact that the judgment against the 1st plaintiff was set aside does not alter the fact that the judgment was entered against Talisgold on the basis of it being a joint and several liability. Whether or not Talisgold could set that judgment aside is not to the point. In the circumstances, Yeung JA having found that Madam Ma contracted as principal, there was nothing to debar judgment being entered against her despite the fact that judgment remained against the 2nd plaintiff.

9. In the circumstances this appeal fell to be dismissed.

Hon Le Pichon JA:

10. I agree.

Hon Ma JA:

11. I agree.