TAM CHE MING v. YEUNG KANG LAM

CACV 1153/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1153 OF2001

(ON APPEAL FROM HCA NO. 8925 OF 2000)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1. This is an appeal from a judgment of Sakhrani J given on 29 May 2001. The matter before the judge was an appeal from the Master, who had given the defendant leave to defend this action conditional on the payment into court of the sum of HK$2 million. The judge allowed the appeal and gave judgment for the full amount claimed of HK$2,500,000.00 together with interest at the rate of 25% per annum until payment. At the conclusion of the hearing, this appeal was dismissed and we now give our reasons in writing.

Background

2. The plaintiff's claim is twofold and is simple. In the first place there was a loan deed dated 18 April 2000 in which the plaintiff agreed to lend the defendant the sum of HK$2,500,000.00. The terms of the deed provided that the plaintiff should advance that sum on execution of the deed. The defendant was required to repay the loan, together with agreed interest of HK$15,625.00, on or before 2 May 2000. The deed then provided that if the defendant should fail to repay the loan and the agreed interest before the repayment date, the plaintiff should be entitled by giving written notice to the defendant to demand the repayment of the loan and agreed interest together with default interest at the rate of 25% per annum on the total sum and interest from 3 May 2000.

3. The second limb of the plaintiff's claim was founded upon 2 cheques. The first cheque was for HK$2,500,000.00 and the second cheque was for HK$15,625.00. It was pleaded that the plaintiff advanced the defendant the loan on 19 April 2000 and that the cheques were deposited with the plaintiff and were postdated to 2 May 2000. The statement of claim then pleads that upon presentation of the cheques the first cheque was dishonoured but the cheque in the sum of HK$15,625.00 was honoured.

4. No defence was filed until after the hearing before the Master. The defence alleges that the plaintiff had instructed the defendant to purchase a large quantity of black mine sand on the plaintiff's behalf. It is said in the defence that the later the sand was delivered the more the price to be paid for the sand would be reduced. Specifically, if delivery were to be before 25 April 2000 the price would be HK$2,500,00.00, if the delivery were to be after 25 April 2000 but before 2 May 2000 it would be HK$2,484,375.00. Finally it was said that if delivery were not made prior to 2 May 2000 but on or before 31 July 2000 the price would be reduced at a rate equivalent to 25% per annum on the total amount of HK$2,500,000.00.

5. It is then said in paragraph 1(3) of the defence, that on or about 2 May 2000 the plaintiff requested the defendant to give him 2 cheques. The first was for HK$15,625.00 and the other for HK$2,500,000.00. It is said that the first cheque was for the reduction of the price for failure to deliver the goods prior to 2 May 2000 and the second cheque was in respect of the defendant's guarantee of delivery of the goods on or before 31 July 2000.

6. It is then alleged that the goods were ready for delivery on or about 12 May 2000 and 14 July 2000. The pleading continues that, on or about 9 June 2000, on the plaintiff's instructions, the defendant resold part of the goods to a customer of the plaintiff for an equivalent of HK$500,000.00 and that the defendant paid that sum to the plaintiff by cheque. It is then averred that the balance of the black mine sand was available for delivery after 14 July 2000 and that the plaintiff failed to take delivery thereof. On that basis it is alleged that the defendant had discharged his obligations to the plaintiff.

7. In paragraph 2 of the defence it is then pleaded:

"... The defendant never agreed the plaintiff presented the 2nd cheque for the sum of HK$2,500,000.00 to the bank for payment on or about 17th August 2000 but only on condition as stated in paragraph 1(3)(c) herein and therefore the defendant countermanded it."

The cheque for HK$2.5 million

8. The defence, as pleaded, raises no ground of defence against payment of the cheque for HK$2,500,000.00. As I have outlined, paragraph 1(3) of the defence simply alleges that the cheques were given. On the face of the pleading they were given as cheques. I see no ground of defence in respect thereof.

9. The plea in paragraph 2 is a plea as to payment of the cheque. As the judge below said, it is trite law that evidence is not admissible to contradict the terms of a cheque. The plea which has been raised by the defendant is as the to the terms of payment of the cheque. That is contrary to the parol evidence rule.

10. Mr Surman, who appeared on behalf of the defendant, sought to rely on paragraph 11 of the defendant's affirmation filed on 13 October 2000. That paragraph related to the plaintiff's request to provide cheques. The relevant part read:

"I yielded to TCM's requests in order to make life easier for him trusting he would not present the 2nd cheque for payment until and unless the Goods were not delivered to him on or before 31st July 2000 and he would not enforce the loan agreement. On or about 2nd May 2000 I gave the 1st cheque and the 2nd Cheque to TCM and signed a loan agreement."

11. In my view, no defence has been raised at all. At best all that is said is that the defendant trusted that the cheques would not be presented. As was pointed out during the course of argument, that amounts to no more than a pious hope. Mr Surman tried to suggest that this statement should be understood as meaning that the property in the cheques would only pass if the goods were not delivered by 31 July 2000. That is not what paragraph 11 says.

The loan agreement

12. In relation to the loan agreement there is nothing in the defence and counterclaim that goes to provide any sort of defence to the claim made under the loan agreement. The only place where it can be said that any sort of reference is made to the loan agreement is in the defendant's evidence. There it is said that the cheques and loan agreement were provided by the defendant as an accommodation to the plaintiff at the plaintiff's request because the plaintiff's business partners wished to have some form of security in relation to the deal which was being undertaken in relation to the black mine sand.

13. Even if this matter had been pleaded I would regard it as so extraordinary as to be totally unbelievable. There is no documentation that, in any way, supports the defendant's allegation by linking the plaintiff to the purchase of black mine sand, let alone through the defendant. The only link between the plaintiff and the defendant that has been demonstrated to date has been in the documentation that shows that there may have been some dealing in financial matters wherein the defendant had previously provided financial services to the plaintiff.

14. Mr Surman sought to raise one further matter. In paragraph 1(5) of the defence reference is made to a payment of HK$500,000.00 by cheque number 269930. However that reference is made in relation to a payment in respect of the sale of goods, which must, in the context, be taken to be the sale of black mine sand. It is not alleged in the defence that this was in repayment of the loan, nor as partial payment in respect of the amount owing in respect of the cheque for HK$2,500,000.00. Neither is that alleged in the evidence filed by the defendant. Mr Surman also sought to rely upon a pleading in a defence in HCA 8851 of 2000, which was filed on behalf of the plaintiff in this action. HCA 8851 of 2000 was an action brought by the defendant in this action against the present plaintiff. In paragraph 9 and of that defence it is pleaded:

"Save that on or about 9 June 2000, the Plaintiff paid the Defendant a sum of Hong Kong Dollars five hundred thousand by way of a cheque (cheque no.269930 of The Yien Yieh Commercial Bank Limited) in partial repayment of debts of the Plaintiff owed to the Defendant, paragraph 5 is denied."

15. Relying on that pleading, Mr Surman sought to say that that was an admission of a receipt by the present plaintiff of HK$500,000 in partial repayment of the amount owed in respect of the cheque for HK$2,500,000.00. However, further and better particulars have been sought and given in respect of that plea and it is clear that the plea makes reference not to the present matters but to sums that had been owed by the present defendant to the plaintiff in respect of other dealings. Indeed, it is alleged in the further and better particulars that the sum was part of payment which totalled HK$5,300,000.00. The attempt therefore to rely upon this pleading in another action simply fails. Mr Surman's attempt to allege that that reliance upon the further and better particulars could not be made because it constituted new evidence, again, fails. It is not new evidence. It is simply part of what was pleaded in the defence upon which he sought to rely.

Conclusion

16. In my view this matter was plain. The judge was clearly right. There is no defence however, shadowy. This appeal fell to be dismissed.

Hon Le Pichon JA:

17. I agree.