CHENG HUNG LOCK v. WONG KWOK SUM

DCCJ3326/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3326 OF 2007

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DECISION

1.  Cheng (the Plaintiff) claims against Wong (the Defendant) for the repayment of the balance of an alleged loan advanced in March 2006.  Wong filed his Defence denying the alleged loan.  Cheng applies for summary judgment.

PRINCIPLES

2.  As the Defendant, Wong has the burden to show that there are issues in dispute in this case which ought to be tried or that there are some other reasons for which the case ought to proceed to trial.  It is Wong’s burden to show such cause: see O.14, rr.3 and 4 of the Rules of the District Court, Cap.336.  The test is whether the defence is believable but the court does not mean to embark on a mini-trial on affidavits: see Hong Kong Civil Procedure 2008 at 14/4/8 – 14/4/9.

DISCUSSION

3.  The statement of claim says Cheng agreed to lend HK$192,123 to Wong in March 2006 and Wong agreed to repay in the following month.  Wong had repaid HK$90,000 and thus leaving the balance of HK$102,123 outstanding.  As mentioned above, this was expressly denied by way of pleading.  It was pleaded that a letter of demand was sent in September 2006 but Wong made no reply to it.  Wong did not plead to this allegation, perhaps apart from relying on the effect of catchall denial at the end of the Defence.

4.  In his Defence, Wong averred that in 2006, at the direction and on behalf of Cheng, he paid 2 sums of HK$45,000 each in April and May; and HK$100,000 in August.  This seems to suggest that the moneys were not paid to Cheng.  In that case, to whom did Wong pay the moneys?  Why did he pay the moneys on behalf of Cheng?

5.  In his affirmation in opposition, Wong said Cheng requested him to remit RMB200,000 from the Mainland in March 2006.  This was equivalent to HK$192,123 or, in other words, the amount of the loan alleged by Cheng.  Wong admitted he signed a cheque drawn by his company in favour of Cheng for that amount.  However, this admission was made only after Cheng has exhibited a copy of that cheque to his affirmation in support of this application.

6.  By this admission, Wong now confirms that he was supposed to make the payment of such amount to Cheng.  This is difficult to reconcile with his pleaded case mentioned above which suggests that the money was paid at the direction and on behalf of Cheng as if the payee was someone else.  Wong did not seek to explain that in his affirmation.  Instead he explained that the cheque was dishonoured because he issued the cheque when the money had yet to be remitted to Hong Kong.

7.  Wong also said he did not have sufficient money to pay Cheng at one time.  Cheng gave him an account number from time to time and asked him to deposit money accordingly.  This explains the 2 deposits of HK$45,000 each into an account, apparently of Cheng, in April and May 2006.

8.  The third payment made by Wong becomes the major controversial part.  Wong said that in August 2006, he deposited the amount of HK$100,000 into the account number of another company provided by Cheng.  That was a company in which Cheng and Wong’s mother were directors and shareholders.  The amount was deposited at the instruction of Cheng in settlement of the company’s loan to Cheng as director in the same amount.

9.  Up to this stage, whether in his pleading and affirmation, Wong was yet to explain why he agreed to pay money, whether by cheque or by deposit, as Cheng directed.  He said he just did as instructed.  He did not really concede that there was the loan by Cheng to Wong in the first place.  As mentioned above, the alleged loan remains expressly denied.  Further, if Wong did not pay the whole amount of HK$192,123 to Cheng in April just because the money remitted from the Mainland had yet to arrive, one queries why the third payment was made only in August (even assuming that Cheng only asked him in June, as Wong alleged).  While he claimed to have a complete defence to the claim, he did not say anything at all about his position regarding the balance of HK$2,123 being outstanding, even after taking into account the HK$100,000 payment.

10.  Wong’s actual admission of the debt owed to Cheng as well as that of the outstanding balance of HK$2,123 came only by way of submissions by his solicitors today. By that, parties’ dispute is now confined to whether the payment of HK$100,000 was discharge of Wong’s debt owed to Cheng.

11.  In support of his case, Wong produced the audited accounts of Cheng’s company as at March 2007 to show the record of first the company’s loan; and secondly, the discharge of the loan in that financial year.

12.  Cheng did not deny, but actually explained, the background for the company’s loan to him and Wong’s mother as directors.  But he denied that he ever asked Wong to deposit HK$100,000 into the account of the company in settlement of such loan.  He said he was in cash flow problem then and produced numerous documents in support.  The inference is that it was improbable for him to decide to settle the loan at that time.  He denied having seen the audited accounts produced by Wong.  He raised doubt about the operation and financial position of that company.

13.  During submissions, Mr Lo somehow suggested that Wong deposited the HK$100,000 as instructed by Cheng as previously without asking.  This does not sit well with the affirmative case of Wong now set out in his affirmation.  Mr Lo suggested that this was his client’s belief rather than knowledge.  I do not see the basis for such understanding from Wong’s own affirmation.

14.  More importantly, the allegation about the third payment at the direction of Cheng to that company for the settlement of the company’s loan to Cheng as the director was never mentioned in the Defence.  This is notwithstanding the stance of Wong, now revealed, that the dispute surrounds that payment only.  No explanation for this was given in Wong’s affirmation.

15.  The dispute is very much factual.  It appears much would depend on oral evidence.  What Cheng referred to would be circumstantial evidence relevant to the credibility of parties’ respective allegations.  What I cannot say is that the inference Cheng asks this court to draw is the only reasonable inference in the circumstances.

16.  Having said that, I find that it would really be Wong’s burden of proof in resolving the dispute, in view of fact that now the debt owed by Wong to Cheng is no longer in dispute; and that the only dispute arises out of Wong’s allegation about the payment for Cheng in settlement of Cheng’s debt owed to his company.

17.  I find in the circumstances that such allegation of Wong is dodgy.  Whilst I am not prepared to rule out the defence, it is clearly shadowy for which condition should be imposed before Wong should be allowed to bring this currently yet to be pleaded allegation of his to trial.  Opportunity was given to Mr Lo to address me on this alternative stance of Cheng in this application.  Yet he was not able to raise any valid argument against such consideration.  A condition of payment into court of the disputed amount is appropriate.

18.  I also see no reason why judgment should not be entered in the sum of HK$2,123, which is now conceded by Wong.

[Parties submitted on costs.]

ORDER

19.  Judgment is entered in favour of Cheng in the sum of HK$2,123 with interest thereon at the rate of 1% above HSBC prime rate from the date of writ to today and thereafter at the judgment rate until full payment.

20.  Upon Wong’s payment into court of a sum of HK$100,000 within 14 days from today:

21.  In default of payment into court as aforesaid:

22.  There will be certificate for counsel for this application in any event.