UNION BANK OF HONG KONG LIMITED v. WONG JEN TAI AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. These proceedings were commenced by Originating Summons whereby the mortgagee claims under a mortgage for securing banking facilities to the limit of $600,000 dated the 19th June 1981 against the 1st and 2nd defendants and under a Deed of Guarantee dated the 24th January 1983 against the 3rd defendant.

2. The security provided was a flat "03" on the 12th Floor of Wun Sha Tower including a Car Parking Space No. 3 on the 2nd car port floor.

3. Various affirmations have been filed on behalf of the bank in support of the claims against the mortgagor, the customer and the guarantor, the 2nd, 1st and 3rd defendants in that order. The property in question was not sold by the bank but by the mortgagor, 2nd defendant on the 17th December 1984. The 2nd defendant explained how that came about. According to plaintiff bank, after the proceeds of sale a balance in the sum of $40,765. 30 was left outstanding together with interest thereon claimed at 16% per annum as from the 5th February 1985.

4. Judgment was entered against the 2nd defendant, the mortgagor. On the application of the mortgagor, judgment against her was set aside, hence the instant appeal against that Order of the learned Master.

5. I need not refer to the alleged assignment of debt as it would introduce no complication to the instant appeal.

6. Suffice it to say, the 2nd defendant in her affirmation claimed that she told the Account Officer of the bank, Mr Yu, "that (she) did not agree that (she) owed the plaintiff the sum as claimed". She proposed a settlement, and according to the 2nd defendant, the mortgagee bank and she settled after responsible instructions having been taken. The 2nd defendant has further exhibited a letter from Messrs. Yung, Yu, Yuen & Co., solicitors for the plaintiff dated the 12th December 1984, in which payment of only $430,000 was sought to be made. That sum, so the second defendant mortgagor asserts, is the sum arrived at in the alleged settlement between the plaintiff and the 2nd defedant.

7. From the documents filed in court, there does not appear to be any denial to these allegations of the 2nd defendant. The plaintiff claims that it was incumbent upon the 2nd defendant not only to disclose the nature of her defence to the claim in liability and quantum but also to place on record specifically that she abandoned her plea or defence to the plaintiff's claim in consideration of the alleged settlement reached.

8. Counsel referred me to passages in Chitty on Contracts, 25th Edition, I am told, Volumn 1, paragraphs 209 and 211 and the archaic but sound principle in Re Warren ⁽¹⁾. At p. 1017, Mr Justice Kay affirmed the settled rule that a larger sum of money cannot be discharged by payment of a lesser sum "without more". I need hardly emphasize the words "without more".  Cooper and Parker ⁽²⁾ was also drawn to my attention, in which a plea of infancy said by Chief Justice Jervis to have appeared to him as an immaterial averment would nevertheless afford ample consideration, by its very withdrawal as a defence, for the settlement with the plaintiff in that case. Counsel for the plaintiff accepts that a plea need not be truly valid ultimately but it has to be advanced bona fide and the 2nd defendant must condescend upon particulars.

9. The 2nd defendant has alleged that she did not agree that she owed the sum calimed by the plaintiff. What is being critized is that she did not amplify the nature of the disputed liability and/or quantum. The crux of the 2nd defendant's defence lies not so much in her original challege to the plaintiff's claim, the nature of which has not been fully disclosed, but in the settlement which was finally reached. What is being alleged by the 2nd defendant is that she queried the claim of the plaintiff's; she enquired as to whether there could be an amicable settlement. Consultation was had, and the parties subsequently reached a settlement. She has even produced a letter from the solicitors of the plaintiff in fortification of her allegations.

10. It cannot be denied that the bona find of the allegations has not been challeged. The only complaint is leveled at the non-disclosure of the nature of her denial as to liability or quantum or both.

11. In the turn of events as narrated in the affirmations of the 2nd defendant, the precise nature of her dispute to the plaintiff's claim was clearly overshadowed by the settlement subsequently reached. The settlement has not been disputed by the plaintiff either before the learner Master or before me in the instant appeal. Counsel seeks to go behind what would appear to be an unchallenged settlement and argues on the effect of an unparticularised denial of liability on its validity. However vague and unspecific the nature of the 2nd defendant's defence to the plaintiff's claim is, it must be an arguably good consideration, in the circumstances, for the settlement on which the 2nd defendant relies. By the alleged settlement, the 2nd defendant has shown a bona fide defence on the merit.

12. This is an appeal in which I need not call upon Mr Chan, Counsel for the 2nd defendant. It is plain to me that the appeal has no substance and is in complete lack of merit. The same should therfore be dismissed, and I dismiss it with costs against the plaintiff.

(1)    [1884] 53 L.J. Ch. 1016

(2)    [1885] 15 C. B. 822