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HCA6738/2000
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO.6738 OF 2000
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BETWEEN
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MAN KAM SIU |
Plaintiff |
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and |
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KARLFORD
INDUSTRIAL LIMITED |
1st
Defendant |
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HUANG SHU MIN |
2nd
Defendant |
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Before : Deputy High Court Judge Poon in Court
Date of Hearing : 22 November 2005
Date of Judgment : 22 November 2005
Date of Handing Down Reasons for Judgment : 7 December 2005
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REASONS FOR JUDGMENT
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INTRODUCTION
1. On 22 November 2005, after trial, I entered judgment against the defendants for HK$1,200,000, with interest at the rate of HK$15,000 per month from 17 December 1999 until payment with credit being given to the sum of HK$45,000 paid by the 2nd defendant between April and June 2001.
2. I have indicated that I would give the reasons for judgment in writing, which I now do.
3. The background circumstances leading to this action may be summarized below.
THE PARTIES
4. The 1st defendant is the sole proprietor of Siu Sin Nursing Centre at Flat A, Ground Floor, East South Building, Nos. 43-47 Third Street, Sai Ying Poon, Hong Kong (“the Nursing Centre”). Its directors are the 2nd defendant, her son Mr Tsoi Hiu Sang (“Mr Tsoi”) and Ms Man Kam Lai (“Ms K.L. Man”).
5. The plaintiff is the younger sister of Ms K.L. Man.
THE LOAN AGREEMENT AND SECURITIES
6. By a loan agreement dated 17 December 1999 (“the Loan Agreement”), the 1st defendant borrowed HK$1,200,000 from the plaintiff at fixed interest of HK$15,000 per month. The principal and interest were repayable by 36 consecutive monthly installments commencing on 17 January 2000 thus :
(1) for the 1st 6 installments, fixed sum of HK$15,000 as interest; and
(2) for the remaining 30 installments, HK$55,000 (HK$15,000 as interest and HK$40,000 as part payment of the principal).
7. Any moneys paid by the 1st defendant under the Loan Agreement shall be applied first towards payment of monthly interest and then principal.
8. As security, the 1st defendant executed a deed of charge of 17 December (“the Deed”) over the Nursing Centre with the assets thereof in favour of the plaintiff.
9. As further security, the 2nd defendant in her capacity as the 1st defendant’s shareholder and director, executed a personal guarantee dated 17 December 1999 in favour of the plaintiff (“the Guarantee”).
10. Pursuant to the Loan Agreement, the plaintiff advanced the said loan of HK$1,200,000 to the 1st defendant on 17 December 1999.
DEFAULT
11. The 1st installment of HK$15,000 was due on 17 January 2000. But the 1st defendant failed to make any payment. The plaintiff’s solicitors then demanded payment from the defendants but there was no response.
12. The 1st defendant continued to default when it failed to make payment of any of the installments due in February to May 2000. The defendants did not respond to the demand of the plaintiff’s solicitors dated 2 June 2000 either.
PROCEEDINGS
13. On 6 July 2000, the plaintiff commenced the present action.
14. On 14 December 2000, Mr Registrar Chan entered default judgment against the defendants for HK$1,355,808 with daily interest of HK$484 from 29 October 1999 to 14 December 2000 and thereafter at judgment until payment and costs (“the Default Judgment”).
15. On 18 June 2001, Master Jones made a Charging Order Nisi to show cause in respect of the 2nd defendant’s shares in the 1st defendant (“the Charging Order”).
16. Between 23 April and 25 June 2001, the 2nd defendant made three payments to the plaintiff, totaling HK$45,000.
17. Between July and October 2001, the defendant took out various applications with a view to setting aside the Default Judgment and the Charging Order. In support, the defendant and Mr Tosi had filed a number of affirmations.
18. On 4 March 2002, Master Au-yeung allowed the defendants’ application on the condition of the defendants paying HK$20,000 into court, which they did on 25 March 2002.
19. On 6 April 2002, Mr Tsoi filed an affirmation for filing documents on behalf of the defendants.
20. By order of Master Lung dated 21 May 2003, the affirmations filed in court by the defendant are to stand as their witness statements. By a further order of 9 July 2003, Master Lung ordered that the defendant’s affirmations are to be treated as the defendant’s Defence.
21. In the end, the trial came before me on 22 November 2005.
ABSENCE OF THE 2ND DEFENDANT
22. The 1st defendant was represented by Mr Tsoi pursuant to leave granted by Mr Registrar Chan on 20 July 2001.
23. The 2nd defendant was absent. Mr Tsoi wanted to represent her. He told me that her mother could not attend court because of health reason. He seemed to have thought that he could represent the 2nd defendant because earlier at the hearing on 26 February 2002, Master Au-yeung granted leave to allow him to represent the 2nd defendant. I believe the master’s order was tailor-made for the specific purpose of the hearing then before her. I do not think she had given leave to Mr Tsoi to represent the 2nd defendant for the purpose of the entire proceedings. (Had she given such leave, it is liable to be revoked. For there is no basis to make such an order.) Mr Tsoi’s understanding was plainly misconceived. I told Mr Tsoi that the 2nd defendant must appear personally. He could not represent her for the purpose of the trial.
24. Further, Mr Tsoi thought, again mistakenly, that the affirmations filed by the 2nd defendant could be used without her attending the court. I explained to Mr Tsoi that under the order of Master Lung dated 21 May 2003, the affirmations filed by the defendants were to be treated as witness statements. Master Lung did not order that the affirmations could be received as evidence at trial with or without cross-examination. The 2nd defendant had to come to court to give evidence as witness. If she did not, then her affirmations could not be received as evidence despite Master Lung’s order.
25. Mr Tsoi was then given the opportunity to and he did call the 2nd defendant who, according to him, was in the Mainland. After making the call, Mr Tsoi told me that the 2nd defendant would not come to court and he would proceed in her absence. In the circumstances, I treated the 2nd defendant as being absent.
26. Mr Tsoi applied to have the 2nd defendant’s affirmations received as evidence without calling her. However, Mr Tsoi had not adduced any evidence to justify the 2nd defendant’s absence on medical grounds. More importantly, the various defences raised by the defendants are all facts sensitive. Huge prejudice would be caused to the plaintiff if the defendants were allowed to rely on the 2nd defendant’s affirmations without calling her. The plaintiff would be deprived of the opportunity of cross-examining her and test the veracity of her versions in the box. I accordingly refused Mr Tsoi’s application.
DEFENCE
27. There can be no dispute on the evidence before me that the parties did execute the Loan Agreement, the Deed and the Guarantee and that the plaintiff had advanced the loan of HK$1,200,000.
28. The defendants raised the following matters as defence.
(1) Oral agreement
29. First, there was a subsequent oral agreement on repayment schedule. This is the first defence the 2nd defendant sought to raise in her affirmations. She alleged that she had reached an oral agreement with the plaintiff on or about 1 June 2001 that the repayments of the loan be deferred. This the plaintiff denied.
30. The 2nd defendant being absent, there is no evidence to support her allegation. In any event, even if there was such an oral agreement, the defendants had not made any repayment as agreed other than the HK$45,000 referred to above. There is no reason why the plaintiff could not in the circumstances sue on the Loan Agreement and the Guarantee.
(2) Duplication
31. The 2nd defendant next alleged that part of the sum claimed, namely, HK$213,000 was duplicated. That sum which represented bonus due to Ms K.L. Man which had been settled in HCA7440/2000 between Ms K.L. Man and the 2nd defendant. But according to the statement of claim filed in HCA 7440/2000, that sum was never a subject matter of the claim at all. The 2nd defendant did not contest the claim and default judgment was entered against her on 6 November 2000. The 2nd defendant had not adduced any documentary evidence to support her allegation either.
32. In my view, there is simply no substance in the 2nd defendant’s allegation. And I reject it.
(3) Conspiracy
33. This is the defence raised by Mr Tsoi in his affirmation filed on 19 September 2001. He alleged that there was a conspiracy between Mr Au Keung Fok (transliteration), the solicitor handling the Loan Agreement, the Deed and the Guarantee, and the plaintiff in inducing her to sign the documents fraudulently.
34. This is a serious charge. But the defendants have adduced no evidence whatsoever to substantiate it. This is a hopeless allegation and I have no hesitation in rejecting it.
(4) Non-est factum and misrepresentation
35. Mr Tsoi relied on non-est factum and misrepresentation in respect of the execution of the loan and security documents by the 2nd defendant. He alleged that the 2nd defendant did not understand English and she believed that Mr Au would do everything in her best interest. The 2nd defendant did not know that the contents of the Loan Agreement were different from what she originally intended and when signing the Loan Agreement, Mr Au did not inform and/or explain to her the parts which were different from her original intention.
36. It should be noted that the 2nd defendant had not raised such allegations at all in her own affirmations. They were first raised by Mr Tsoi in his 3rd affirmation filed on 25 February 2002. I fail to see why the 2nd defendant had not raised them as defence in her own affirmations filed earlier, if they were true. And the 2nd defendant has not come to court to give oral evidence on those matters.
37. Further, in his oral testimony, Mr Tsoi said that when the 2nd defendant executed the documents, he was not present. He was not aware of the circumstances under which she signed them. In the circumstances, he could not substantiate the plea of non-est factum and misrepresentation. In my view, Mr Tsoi’s allegations were clearly an afterthought.
38. As to how he executed the Loan Agreement and the Deed, Mr Tsoi alleged that he was asked by the 2nd defendant to sign them shortly before he attended Mr Au’s office. Mr Au did not explain to him the contents of the documents and simply asked him to sign, which he did. Mr Au then told him to leave, which he also did.
39. The plaintiff gave oral evidence on how the documents were executed. She said that Mr Au had explained the contents of all the documents before the parties signed them.
40. I have carefully considered all the evidence. I find the plaintiff a reliable witness. On the other hand, Mr Tsoi did not impress me to be an honest witness. The fact that he was able to come up with the allegations of non-est factum and misrepresentation with no evidential support shows that he is amenable to make up stories to suit his interest. I reject his evidence insofar as it is inconsistent with the plaintiff’s.
41. This purported defence must fail.
(5) Misconduct of Mr Au
42. The defendants complained that Mr Au was guilty of professional misconduct. They had earlier lodged a complaint with the Law Society. Mr Au had also made a reply to their allegations.
43. For present purposes, it is not necessary to detail the defendants’ allegations against Mr Au and Mr Au’s reply for the simple reason that they are not relevant to the issues before me.
CONCLUSION
44. For the above reasons, all the defences raised by the defendants fail.
45. I accordingly entered judgment against them with costs.
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(J. Poon)
Deputy High Court Judge |
Mr Edward Fan, instructed by Messrs Cham & Co., for the Plaintiff
The 1st Defendant, represented by Mr Tsoi Hiu Sang, in person
The 2nd Defendant, absent
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