謝松發 v. 蕭天財所經營之協成汽車修理公司

DCCJ 1166/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1166 OF 2013

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JUDGMENT

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Background

1.  The Plaintiff claims against the Defendant for a sum of HK$100,000 on the basis of two dishonoured cheques.  Each cheque was issued by the Defendant in the sum of HK$50,000.  One of the cheques, bearing the number “001743”, was signed by Mr. Siu Chin Hung (簫展鴻) (“Siu”), the person in charge of the Defendant, and the other one, bearing the number “001741”, was signed by Siu’s father on behalf of the Defendant.  Counsel for the Defendant confirmed that there was no issue on the identity of the drawer and that both cheques were drawn on behalf of the Defendant.

2.  The background leading to the present dispute can be briefly summarised. The Plaintiff got to know Siu and his father in the middle of 2011 when he took his car to the Defendant’s garage for a quotation for repairing his car. At that time, the ceiling of the Defendant’s garage suffered water leakage problem. The plaintiff had been in the business of construction and was a registered contractor with the Buildings Department. The Plaintiff agreed to assist the Defendant in the claim against the owners of the units above the Defendant’s garage. It was intended that the Plaintiff would undertake the ceiling repair work for the Defendant in due course. Initially, they intended to claim against the owners of the units above in the Small Claims Tribunal. The above units had been identified and referred to as Unit A2 and Unit A3. In this connection, there were two handwritten quotations prepared by the Plaintiff dated 18th June 2011. One was designated for A2 and the other was for A3. It is common ground that the claim was to be split into two, one against A2 and one against A3. The quotations set out the type of remedial works to be carried out under section A and various costs for taking out the claim and engaging experts as disbursements under section B. It was specifically stated underneath section B that the five items under section B would be payable to the contractor (Plaintiff) after the ruling by the court.

3.  The Defendant filed a claim against the owners of Units A2 and A3 respectively in the Small Claims Tribunal in late 2011. There was an application in December 2011 that the Defendant be represented by the Plaintiff in the proceedings at the Small Claims Tribunal. By a letter dated 20 December 2011, the Small Claims Tribunal refused the application and directed that the Defendant had to appear at the hearing by himself. In March 2012, the Defendant’s claims against the Units A2 and A3 in the Small Claims Tribunal were discontinued.

The two cheques

4.  The purpose for which the cheques were issued and the circumstances in which they came to be issued are disputed. The two cheques were originally dated 9 January 2012 and 13 January 2012 respectively.  According to the Plaintiff, the cheques were for part payment of the three expert reports, namely, infrared scanning report, surveyor report, and a structural engineer report (the “Three Reports”). The Defendant’s case is that the cheques were issued to the Plaintiff as deposit for the remedial work to be done to the ceiling but which would only become payable after the Defendant had won the case against Units A2 and A3 and had obtained the relevant compensation.

5.  There is no dispute that the dates on the cheques were subsequently altered to 9 October 2012 and 13 October 2012.  It is the Plaintiff’s case that the alteration was made by Siu himself to save the trouble of issuing new cheques. This is, however, hotly disputed by Siu. Siu’s case is that the dates were altered without his knowledge and authorisation.

6.  According to the Plaintiff, the alterations on the cheques were acknowledged by Siu in a written document signed by both the Plaintiff and Siu on 2 July 2012, a document appearing in the trial bundle on page 110 (“Document 110”).  In addition to this document, the Plaintiff produced two other documents allegedly signed by the Plaintiff and Siu on the same day stating that the purpose of these two cheques were for part payment of the structural engineer’s report, the surveyor’s report and the infrared scanning report. These two documents appear in the trial bundle on pages 108 & 109 respectively (“Document 108” & “Document 109”).  Counsel for the Plaintiff drew my attention to the fact that in these two documents, it was stated that the cheque must be met (“必須兌現”). The authenticity of these three documents is disputed by the Defendant.

7.  On 12 July 2012, the Plaintiff, in the name of his company, issued 2 quotations regarding ceiling repair work of the Defendant’s garage (the “July Quotations”).  According to the Plaintiff’s case, the July Quotations were signed by Siu thereby constituting contracts for the ceiling repair work.  The two July Quotations were of identical terms.  They detailed the work to be carried out and at the end stated:

“(十二)  付款辦法： 先收定金 ...... 餘款 ...... 於本公司向屋宇署呈交完工紙後收齊”....

“備註： 本公司代付之費用：

(一)	代付公证行報告費用	$30,000
(二)	代聘結構工程師撰寫報告費	$30,000
(三)	紅外線測漏報告	$16,000
	以上代付費用$76,000 (柒萬陸仟元正)
	以上須先付$50,000定金事件完工後收齊”

8.  According to the Plaintiff, the work contracted to be carried out and the cost of repair under the July Quotations were consistent with the work suggested in the Surveyor’s report.  The contract sums as stated in the July Quotations were the subject matters of the other action DCCJ 1785/2013, which is, therefore not an issue in the present action.  According to the Plaintiff, the relevance of the July Quotations here lies in the due date for full payment of the ceiling repair work and fees of the experts’ reports which was, according to the July Quotations, payable after the notice of completion of work had been submitted by the Plaintiff to the Buildings Department.

9.  According to the Plaintiff, the events that took place relating to the ceiling repair work to the Defendant’s garage were as follows:

(a)  On 15 August 2012, the Plaintiff submitted to the Buildings Department a notice of commencement of minor work;

(b)  Ceiling repair work was carried out and completed by the Plaintiff;

(c)  On 21 December 2012, the Plaintiff submitted to the Buildings Department a certificate of completion of minor works.

10.  Counsel for the Plaintiff emphasised that once the Buildings Department was notified of the work to be carried out, the work would be subject to surprise or sample check.  Monitoring by the Buildings Department meant that minor work contractors would not lightly make application for commencement of work if they did not mean to carry out the work properly. Once the Plaintiff had submitted the certificate of completion of minor work to the Buildings Department, the Plaintiff would be entitled to receive payment under the July Quotations which included the expert report fees.

11.  According to the Plaintiff, the two altered cheques were meant to be paid in October 2012 in accordance with the altered dates.  The Plaintiff presented the cheque for payment on 27 February 2013 but was returned by the Bank on 1 March 2013.  Unbeknown to the Plaintiff, the Defendant had in February 2012 countermanded the two cheques.

Defendant’s defence

12.  The Defendant’s pleaded case, as stated in the Defence filed on 7 October 2014, was that :

(a)  The two cheques originally dated 9 and 13 January 2012 were issued as deposit for the ceiling repair work to be done to the Defendant’s garage. Parties had agreed that the Plaintiff would not present the cheques for payment until after the repair work was carried out and that the repair work would not be carried out until the Defendant had obtained compensation for the damaged ceiling (from the owners of the units above the garage).

(b)  By the end of February 2012, the Plaintiff had not successfully assisted the Defendant in its compensation claims for the damaged ceiling to the garage.  No repair work was commenced.  Siu requested the return of the cheques and that the repair work would be done after Siu had obtained compensation. The Plaintiff agreed but said that he had lost the two cheques.

(c)  The dates on the cheques were altered by the Plaintiff without authorization from the Defendant.

(d)  No ceiling repair work was carried out and therefore there was total failure of consideration.

Issues before the Court

13.  The agreed issues before this court are:

1.  What was the purpose for the issue of the two cheques and whether it was subject to conditions;

2.  Whether the dates of the two cheques were altered by Siu;

3.  Whether there had been total failure of consideration for the cheques.

Plaintiff’s evidence

14.  The Plaintiff himself testified and called no other witness.  He adopted the contents of his witness statement as his evidence in chief.  He set out the circumstances in which he received the two cheques in his witness statement. He stated that he got to know Siu and his father in about November 2011 (which he corrected to be between June and August 2011) when he took his car to Siu’s garage for a quotation for repairing his car.  In about December 2011, he went to the garage about his car repair again.  On this occasion, Siu and his father asked him about the problem of the water leakage at the ceiling of their shop. It was only a casual chat. 

15.  About the end of December 2011, Siu asked the Plaintiff about water leakage problem again.  Siu was concerned about the plastering and concrete coming off exposing the steel bars on the ceiling and he wanted to claim against the units above for causing the damage.  On this occasion, the Plaintiff explained to Siu that they needed actual evidence to prove that it was the water leakage which caused the damage to their ceiling.  The Plaintiff then suggested that they should firstly complain to the Food and Environmental Hygiene Department (“FEHD”) and then engaged experts to investigate and prepare reports and if there was monetary claim it would be better to engage a loss adjuster to assess the costs of repair.  The Plaintiff explained that they needed to engage a structural engineer, an infrared scanning expert and the loss adjuster to ascertain the liability issue and the extent of damage for the purpose of making a claim.

16.  According to the Plaintiff, Siu then requested him to introduce the relevant experts to him.  He then told Siu that he would only make the introduction and that Siu would be responsible for the payment of their services.  Siu orally agreed and promised that he would pay upon the completion of the reports.

17.  In reliance upon Siu’s oral promise, the Plaintiff proceeded to instruct the relevant experts, namely, George Tsui & Associates, the structural engineer; Fair Reliance Company, the surveyors & loss adjuster; and PrimA, the infrared scanning company.  In his witness statement, the Plaintiff stated that about early January 2012, all the three reports were completed; the Plaintiff then requested Siu to pay for the three reports in accordance with the oral agreement previously made but Siu said he did not have sufficient fund in the bank and asked the Plaintiff to pay for them on his behalf for the time being.

18.  According to the Plaintiff, he was reluctant to do so but in the end he agreed to pay for the expert reports because he was the one who introduced the experts to Siu; he worried that it might adversely affect his reputation and future co-operation with those experts.  He agreed, however, only on the condition that Siu had to issue to him a cheque of $100,000 as a security.  Siu agreed and issued two cheques in the sum of $50,000 each and dated 9 January 2012 and 13 January 2012 respectively.  There is no dispute that one of the cheques was issued by Siu’s father on behalf of the Defendant.

19.  On the following day, Siu telephoned the Plaintiff asking him not to present the two cheques on their respective due dates and requesting him to agree not to present the cheques until he had transferred sufficient fund to the bank account.  About a month later, the Plaintiff telephoned Siu to enquire whether he could present the cheques.  Siu’s reply was that he still did not have sufficient fund in the bank account.  The Plaintiff felt that there was not much he could do in the circumstances.  He felt that he could only hold on to the cheques while waiting for Siu to transfer sufficient fund to the account.  The Plaintiff had constantly enquired with Siu whether he could present the cheques but Siu’s reply was always that there was insufficient fund in the account.

20.  In about June 2012, the Plaintiff reminded Siu that the cheques were about to expire and would present the cheques before they expired.  Siu requested the Plaintiff not to present the cheques.  The Plaintiff, in reply, requested Siu to issue two new cheques instead.  Both Siu and his father immediately suggested to simply amend the dates of the cheques.  Siu then altered the dates on the two cheques by putting a “0” after “1” to change the month from January to October.  Hence, the cheque dated 9.1.2012 became 9.10.2012 and the cheque dated 13.1.2012 became 13.10.2012.

21.  At the Plaintiff’s request, the Defendant signed three documents (Document 108, 109 and 110) confirming, inter alia, that the cheque issued by Siu Tin Choi dated 9.1.2012 had been amended to 9.10.2012 by Siu and the cheque issued by Siu dated 13.1.2012 had been amended by Siu to 13.10.2012.

22.  The Defendant continued to use delaying tactics.  In about end of February 2013, when the two cheques (as amended) were about to expire, the Plaintiff banked in the two cheques.  He was, however, informed by the bank a few days later that the cheques had been countermanded and that they were countermanded as early as 19 February 2012.  He went on to say that the Defendant had never informed him that he had countermanded the cheques.  He then realised that the Defendant had been deceiving him all along.  The Plaintiff reported the matter to the police.

Defendant’s evidence

23.  Siu filed a witness statement on 4 September 2015 which he adopted as his evidence in court. Siu stated that he stopped payment of the cheques in March 2012 (which he corrected to be on 19 February 2012) in light of the fact that both the compensation claim and the ceiling repair work made very little progress.  In the same paragraph, Siu admitted that in August 2012, the Plaintiff carried out ceiling repair work in the garage but alleged that those were only superficial patch up works as temporary measure leaving the major work to be carried out until he succeeded in his compensation claim.  In paragraph 11, Siu denied the cheques were for part payment of the expert reports.  In paragraph 12, he denied having signed on the three documents, namely, Documents 108,109 and 110.  

24.  By a summons dated 30 March 2016, the Defendant obtained leave of the Court to use a supplemental witness statement of Siu filed on 3 March 2016 in the other action DCCJ No. 1785/2013 which was ordered to be tried together but it was settled subsequently.

25.  At the beginning of the trial, counsel for the Plaintiff raised objection to certain paragraphs in Siu’s supplemental witness statement.  As a result, a number of paragraphs in this statement were redacted.

26.  According to the Defendant, with the assistance of the Plaintiff, the Defendant instituted claims for damages regarding the damaged ceiling of the garage in the Small Claims Tribunal.  He was not happy about the slow progress of the proceedings at the Small Claims Tribunal; he had to attend the hearing himself since the Tribunal refused to allow the Plaintiff to represent the Defendant in the proceedings.  He requested the Plaintiff to return the two cheques.  The Plaintiff told him that he lost the two cheques.  Therefore, he cancelled the two cheques.  In March 2012, he discontinued the two claims in the Small Claims Tribunal.  The Defendant engaged lawyer to press on with the compensation claims in the District Court instead.

27.  There is no dispute that the Defendant in October 2012 commenced proceedings in the District Court claiming damages for water damage to the ceiling of the garage against the two owners of the units above the Defendant’s garage. 

28.  As regards the July Quotations, he admitted that he had signed them but without paying much attention to the contents therein.  They were prepared by the Plaintiff to be used by the Defendant’s lawyer in connection with the legal proceedings in the District Court. His agreement with the Plaintiff was that such work would only be carried out after Siu had won the case and obtained compensation from the owners of the two units above. In Siu’s words, “到時判幾多就做幾多”.

29.  According to the Defendant, there was never any repair work under the July Quotations being carried out.  Siu said in his supplemental witness statement that there was only a one day “emergency” repair work carried out by the Plaintiff involving one male worker and one female worker in about August 2012. The purpose of the work was to basically cover the exposed steel bars on the ceiling with cement.

30.  Both counsel for the Plaintiff and Defendant confirmed that the dispute in relation to the works under the July Quotations were the subject matter in DCCJ 1785/2013. The Plaintiff claimed against the Defendant for the contract sums under the two July Quotations. The Plaintiff’s action was subsequently settled by the Plaintiff accepting the Defendant’s sanctioned payment. It is no longer a live issue. According to the Plaintiff’s counsel, the relevance lies in the due date for full payment of the ceiling repair work and fees of the experts’ reports which was payable after the notice of completion of work had been submitted by the Plaintiff to the Buildings Department.

Burden of proof

31.  The Defendant is the person who alleged that the cheques were given to the Plaintiff on condition and for a special purpose only and not for the purpose of transferring the property in the cheque.  I am of the view that the Defendant bears the burden of proof in this regard.

32.  It should be noted that the admissibility of extrinsic evidence to prove the purpose for which the cheques were issued and the conditions, if any, with which they were issued is no longer an issue at this trial. Even if it were, I would hold that such evidence in the present case is admissible to prove that the delivery of the cheques was conditional and that it was for a special purpose only, and not for the purpose of transferring the property in the cheque. The parol evidence rule does not apply if the intention is to show, for example, that there was no consideration or failure of consideration; or that the contract was only a conditional contract. See Chitty on Contracts, 32^nd edn, Vol 1, para 13-111, 13-112.

33.  Section 21 of the Bills of Exchange Ordinance, Cap 19, is relevant in the context of a cheque.  Section 21 provides:

“(1) Every contract on a bill, whether it is the drawer’s the acceptor’s or an indorser’s, is incomplete and recoverable, until delivery of the instrument in order to give effect thereto:

Provided that where an acceptance is written on a bill, and the drawee gives notice to or according to the directions of the person entitled to the bill that he has accepted it, the acceptance then becomes complete and irrevocable.

(2) As between immediate parties, and as regards a remote party other than a holder in due course, the delivery –

(a) in order to be effectual, must be made either by or under the authority of the party drawing, accepting, or indorsing, as the case may be;

(b) may be shown to have been conditional or for a special purpose only, and not for the purpose of transferring the property in the bill;

but if the bill is in the hands of a holder in due course, a valid delivery of the bill by all parties prior to him, so as to make them liable to him, is conclusively presumed.

(3) Where a bill is no longer in the possession of a party who has signed it as drawer, acceptor, or indorser, a valid and unconditional delivery by him is presumed until the contrary is proved.”

Analysis of the evidence

34.  The purpose and the circumstances in which the two cheques were issued are disputed. The Plaintiff produced a number of documents in support of his case including Documents 108, 109, and 110. The authenticity of these documents is hotly disputed by the Defendant. The credibility of the witnesses is one of the major issues to be decided by this court. Matters the court must take into account in assessing credibility of witnesses include documentation, conflict within evidence, inherent probabilities, and a study of how matters were originally pleaded and asserted in witness statements: Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd (2007) 3 HKLRD 439 at 481. I shall bear it in mind when assessing the credibility of both the Plaintiff and Siu in the present case.

35.  In respect of the Plaintiff’s oral evidence given in court, he had given a very different version of the event when compared with what he had stated in his witness statement. The Plaintiff said that normally the expert reports had to be paid for at the time when the reports were given to the client.  In his words, it was “一手交報告一手交錢”.  If the reports were not ready, there was no need to pay yet.  However, when the Plaintiff was asked in cross-examination about the infrared scanning report, he told the Court that in fact when PrimA carried out the scanning test on 30 January 2012 and upon the completion of the scanning test on the same day, the Plaintiff paid PrimA their fee of $32,000 by cash immediately on the spot. This was not something he had mentioned in his witness statement before.  When asked why he did not ask Siu to pay since that was what Siu agreed to do.  The Plaintiff explained that Siu was not present because he went out to lunch.  He went on to explain that according to the trade practice for infrared scanning service, it had to be paid immediately upon completion of the scanning service.  The Plaintiff said that he was aware of this trade practice all along. If that was the case, why did he not tell Siu about this trade practice beforehand? And why did he not even mention it in his witness statement?

36.  Assuming for the moment that that was indeed the trade practice, why did the Plaintiff not arrange for Siu to be present at the time or near the time of the completion of the infrared scanning?  He said the infrared scanning expert was very busy. It was very difficult to know when they could come to do the test. He said that he had already told Siu that they would come in these few days.  When the scanning expert came to the Defendant’s premises on 30 January 2012, it so happened that Siu went out to lunch.  When they completed their scanning work, Siu had not returned and that was why the Plaintiff had to pay PrimA on the spot.  He said that he so happened had that much cash on him because he had received some money from China.

37.  It appears to me that if the agreement was that Siu should be responsible for the payment of the infrared scanning service, the Plaintiff could have arranged for Siu to be present when the scanning service being carried out.  Even if Siu happened to have gone off for lunch, the Plaintiff could at least try to telephone Siu to make the necessary arrangement with Siu as to how to pay the infrared scanning people.  When asked why the Plaintiff did not even telephone Siu to ask him to return to the garage, the Plaintiff initially said that because Siu had previously told him to handle it for him. When the Plaintiff was further pressed on this issue by the Defendant’s counsel, he sought to explain that since Siu had previously said that he would only pay when all three reports were ready and that was why the Plaintiff did not expect Siu to pay for the infrared scanning service on the spot and that was why he did not telephone Siu to ask him to return to the garage to pay for the service.  It is quite obvious that the Plaintiff was changing his evidence as he went along.

38.  Further, the aforesaid explanations given by the Plaintiff were totally inconsistent with what he had stated in his witness statement.  He stated in paragraph 11 that,

(1)  when he requested Siu to pay for them in accordance with their previous agreement; the three reports were ready in about early January 2012;

(2)  but Siu put up the excuse that he did not have sufficient fund in the bank account and requested the Plaintiff to pay the experts on his behalf first;

(3)  the Plaintiff reluctantly agreed since he was the one who introduced the experts to Siu and he worried that it might adversely affect his trustworthiness if the experts did not obtain payment;

(4)  but the Plaintiff would only pay on Siu’s behalf on the condition that Siu had to issue a cheque of $100,000 to him as security. 

39.  In his witness statement which was filed in July 2015, the Plaintiff never mentioned about the fact that he had to pay PrimA cash immediately upon the completion of their scanning service and before the relevant report was even ready.  This is a new allegation raised for the first time in the course of giving oral evidence. 

40.  In respect of the two structural engineer reports, one of them bears a date of 2 March 2012 (the “First Report”) and the other one is dated 3 March 2012 (the “Second Report”).  It appears that these two reports were only ready in early March 2012 as opposed to what the Plaintiff stated in his witness statement that all the reports were ready by early January 2012. Since the Plaintiff’s evidence is that the Second Report was requested by the Defendant’s lawyer, I shall focus on the First Report in this regard. The Plaintiff sought to explain that the First Report was ready before 15 January 2012 and that the inspection was carried out in late December 2011.  He emphasised that he was present at the time of inspection.  The Plaintiff further supplemented his answer that in fact there were altogether two inspections, one in late December and one took place before 15 January 2012.

41.  When the Plaintiff was confronted with the date of inspection as stated in the First Report paragraph 1.0 that “the above premises was inspected by our Mr. G. Tsui on 22 February 2012”, the Plaintiff said immediately that he needed to correct his earlier answer in that in fact he had forgotten about the date of the 2^nd inspection.  He disagreed that the inspection took place on 22 February 2012 as stated in the First Report but he did not explain why he disagreed or why the date as appearing in the report was wrong.  In this regard, I do not believe his evidence.

42.  In respect of the surveyor report, it was prepared by Fair Reliance Company and the report bears a date of 12 February 2012.  According to this report, there was an inspection by the surveyor on 10 February 2012.  When this was put to the Plaintiff by counsel for the Defendant, the Plaintiff said that that was the 2^nd inspection.  He said that the 1^st inspection took place on either 12^th or 13^th January 2012.  This is, however, clearly contradicted by the surveyor’s report.

43.  One can see that if the agreement between Siu and the Plaintiff was that Siu was liable to pay for the expert reports once they were ready and that the two cheques respectively dated 9 January 2012 and 13 January 2012 were issued in the circumstances as the Plaintiff described in paragraph 11 of his witness statement, the relevant reports must have been ready prior to 9 January 2012. This was what the Plaintiff set out in his witness statement to explain how the two cheques came into being and that the purpose was for part payment of the three expert reports.  But the Plaintiff’s evidence in this regard is totally contradicted by the documents, namely, the three reports.  If the site inspections only took place on 10 February 2012 for the surveyor’s report and on 22 February 2012 for the structural engineer report and on 30 January 2012 for the infrared scanning report, none of these reports could have been ready in early January 2012 as alleged by the Plaintiff.  I have no doubt that the Plaintiff is not telling the truth and I have no hesitation in rejecting his evidence regarding the circumstances in which the two cheques came into existence and the purpose for which they were issued. I do not accept that the cheques were issued to the Plaintiff as part payment for the Three Expert Reports.

44.  In relation to the Defendant’s evidence regarding the purpose and the circumstances in which the two cheques were issued, the defendant’s version of the events is quite different from that of the Plaintiff.  There are some unsatisfactory aspects of Siu’s evidence. I find that he has not been completely frank with the court on certain matters. However, I do accept that the two cheques were issued as the deposit for the ceiling work to be carried out by the Plaintiff upon the successful completion of the Defendant’s claim against the owners of the two units above the Defendant’s garage. 

45.  The Defendant relied on two undated documents handwritten by the Plaintiff appearing in the trial bundle at pages 162 and 163. Each of the documents was to confirm the receipt of the cheque given by Siu in the sum of $50,000 and that it was payment of the ceiling work in relation to the damage caused by the water leakage from the units above. One of the documents contained a statement that the said cheque would not be presented for payment until after the court had given judgment for the said amount. Both documents were written on paper with the Plaintiff’s company letterhead and both documents bear the Plaintiff’s company chop at the bottom of the document. The Plaintiff agreed that he had written these two documents but denied that they represented the receipts for the two cheques in question. He said that they were prepared at the request of the Defendant. Contrary to what was stated in these documents that the Plaintiff had received the two cheques, the Plaintiff said that he in fact did not receive the cheques as referred to in the two documents. He said that the Defendant said he would give him the cheques but he did not do so in the end. Notwithstanding that he did not receive the cheques referred to in the documents, the Plaintiff handed the two documents to the Defendant. I do not believe the Plaintiff in this regard. It was clearly stated in each of the documents that he confirmed receipt of the cheque in the sum of $50,000. The documents were not signed but they both bore the Plaintiff’s company chop. In fact, there is no dispute that the two documents were written by the Plaintiff.

46.  The cheques issued by the Defendant were crossed cheques. Although, the documents referred to a cash cheque being received from Siu and that the cheque number was not mentioned in any of these two documents, I accept Siu’s evidence that the cheques referred to in these two documents were the two cheques the Defendant issued to the Plaintiff at the time. There is no dispute that  there were only two cheques in the sum of $50,000 each ever issued by the Defendant to the Plaintiff. There was no suggestion that there were other cheques being issued by the Defendant.

47.  On balance of probability, I accept the Defendant’s evidence that the two cheques in the sum of $50,000 each were issued as deposit for the ceiling work to be carried out after the Defendant had successfully obtained compensation from the units above the Defendant’s garage and that the cheques were not intended to be presented for payment until after the court had given the relevant judgment.

48.  I also find as a fact that when it came to a time when Siu found the progress going too slow, and that the Plaintiff was not allowed to represent the Defendant in the Small Claims Tribunal, Siu wanted to have the two cheques returned to him for the time being; he asked the Plaintiff to return the cheques to him and that he agreed to use the money from the compensation to pay for the ceiling work after he obtained the compensation from his claim; the Plaintiff agreed but told the Defendant that he lost the cheques; the Defendant then went to stop the cheques. 

49.  As regards whether the Defendant had informed the Plaintiff of the fact that he had stopped the cheques, I do have reservation about the Defendant’s evidence. He firstly said in his oral evidence that he had told the Plaintiff about it at the material time but when he came back to testify after the adjournment he told the court that he was not sure whether he had told the Plaintiff about it. In his witness statement, he did not mention that he had told the Plaintiff about the stopping of the cheques. If he had, one would expect him to say so in his witness statement. On balance, I do not accept that he had told the Plaintiff that he had stopped the two cheques.

Alteration of the cheques

50.  There is no dispute that the dates of the two cheques had been altered and that alteration of the date of the cheque is material alteration within the meanings of the Bills of Exchanges Ordinance, Cap 19. The Plaintiff claims against the Defendant on the two cheques. By his defence, the Defendant raised the issue that the dates of the cheques had been altered without his consent whereby his liability under the cheques had been discharged. The Plaintiff, by his reply, admitted that the dates of the cheques had been altered but he alleged that it was done by Siu with the consent of the Defendant.

Burden of proof

51.  The general rule for burden of proof in civil cases is that the burden of proof lies upon the party who substantially asserts the affirmative of the issue. This rule is adopted principally because it is just that he who invokes the aid of the law should be the first to prove his case; and partly because, in the nature of things, a negative is more difficult to establish than an affirmative. In deciding which party asserts the affirmative, regard must be had to the substance of the issue and not merely to its grammatical form. The true meaning of the rule is that where a given allegation, whether affirmative or negative, form an essential part of a party’s case, the proof of such allegation rests on him: Phipson on Evidence, 18^th ed., para.6-06.

52.  The Plaintiff admitted that the dates of the cheques had been altered but he alleged that it was done by Siu with the consent of the Defendant. Applying the general rule, I am of the view that the burden lies on the Plaintiff to prove that the alterations were made by Siu with the consent of the Defendant.

Analysis of the evidence

53.  According to the Plaintiff, in about June 2012, the Plaintiff reminded Siu that the cheques were about to expire and would present the cheques before they expired.  Siu requested the Plaintiff not to present the cheques.  The Plaintiff, in reply, requested Siu to issue two new cheques instead.  Both Siu and his father immediately suggested to simply amend the dates of the cheques. Siu then altered the dates on the two cheques by putting a “0” after “1” to change the month from January to October.

54.  The circumstances in which the cheques came to be altered as described by the Plaintiff were rather suspicious. Firstly, there was no counter-signing by the drawer near where the alteration was. Secondly, as regards the cheque drawn by Siu’s father, it should be amended by Siu’s father since he was the drawer of the cheque and that he was there at the time. However, it was Siu who altered it even though Siu’s father was present at the time. The Plaintiff did not request Siu’s father to amend it and he did not raise any issue regarding the way the cheques were allegedly amended at all.

55.  Another suspicious aspect is that the dates of the cheques were conveniently altered to October from January. Numerically, it was just a matter of adding a “0” to “1” to make “10”. But the alteration would not make any sense against the background in which the Plaintiff chased the Defendant for payment of the fees for the Three Expert Reports. By June 2012, the Defendant had been delaying payment with the excuse of insufficient fund in the bank account for some 5 months already. According to the Plaintiff, he had already paid for them. There was really no reason why the Plaintiff would agree to wait for another 3 to 4 months by accepting the date to be amended to October. The Plaintiff was unable to explain why he would not insist on earlier payment by the Defendant.

56.  The Plaintiff relied on three documents to support his allegation that it was Siu who amended the two cheques and that Siu had signed on the three documents on 2 July 2012 to confirm the amendments on the dates as well as the agreement that the cheques represented part payment for the Three Reports. These three documents are in dispute.  The authenticity of Siu’s signatures on these documents is hotly disputed.

57.  In examination-in-chief, the Plaintiff told the Court that he had handwritten the three documents, namely, “Document 108”, “Document 109” and “Document 110”.  He had prepared a copy for each of them.  He initially said the copy was also handwritten by him making a total of six handwritten documents.  But he soon corrected himself by saying that he made one photocopy for each of the three original handwritten documents and hence for each document there was one original and one photocopy.  Both Siu and himself signed on these six documents inside the cockloft of the Defendant’s garage in the presence of Siu’s father. He had made photocopies of these six documents for the earlier application for summary judgment.  He was not sure whether he could retrieve the originals but he said he could try to locate them.  He was requested by counsel for the Defendant to try bringing them to Court.

58.  On the 2^nd day of the trial, the Plaintiff did not produce any originals but produced a number of copy documents purportedly being photocopies of the three documents, Documents 108, 109 and 110.  There were 8 copies for Document 108; 5 copies for Document 109 and 7 copies for Document 110.  Both parties agreed that these copies be paginated and referred to as 108A to 108H (Exhibit P2A to H), 109A to 109E(Exhibit P3A to E) and 110A to 110C(Exhibit P4A to C); S110A to S110D(Exhibit P5A to D).

59.  Despite the Plaintiff’s evidence that there was only one original and one photocopy for each of Documents 108, 109 and 110 at the time when they were given to Siu to sign, it was discovered that S110A was not and could not have been a photocopy of Document 110 since Siu’s signature appeared at different location of the document and in fact the handwritten contents of these two documents were slightly different.  It is obvious that there were two versions of Document 110.  The Plaintiff then admitted that there were in fact two handwritten versions of Document 110 which is contrary to his earlier evidence.

60.  As regards Document 108, it was pointed out by the Defendant’s counsel that Siu’s signature in Documents 108 and 108D appeared to be identical and in exactly the same location of the document. The Plaintiff confirmed that Siu’s signature on 108 was identical to that in 108D.

61.  It appears to me that it could only happen if one of them is a photocopy of the other document or they were both photocopied from the same document. If that was the case, the Plaintiff’s signature would also be identical in both documents. But what is strange is that the Plaintiff’s signature in Document 108 is quite different from that in Document 108D. The Plaintiff denied that Siu’s signature on the documents was a forged signature. At one stage he sought to explain that Siu could have signed an exactly identical signature on these two documents. I do not accept the Plaintiff’s explanation in this regard. It is inherently improbable that Siu could have signed an exactly identical signature and on exactly the same location as appearing in Documents 108 and 108D.

62.  In order to explain this anomaly, the Plaintiff was forced to change his evidence. He later explained that in fact he had made more than one photocopy for each of the handwritten documents.  He said he in fact made two to three photocopies.  He then put his company chop on them and handed them over to Siu for him to sign.  After Siu signed on them, Siu gave them back to the Plaintiff to sign.  However, even on the basis of this scenario, it is still quite impossible for Siu to have uttered his signature on exactly the same location with an identical signature.

63.  In fact, if one looks at Document 108A, 108B, and 108C, Siu’s signature appears to be identical in these three documents but the Plaintiff’s signature is different in each of these documents. It cries out for an explanation as to how Documents 108 and 108A to 108D came into being.

64.  For Document 109, similar problem also appeared in that Document 109 was obviously not a photocopy of 109D since Siu’s signature appeared to be identical in both Documents 109 and 109D but the Plaintiff’s own signature was quite different as appearing in these two documents.

65.  The Plaintiff’s evidence in this regard was very confusing and inconsistent. I find it necessary to seek clarification from the Plaintiff.  The Plaintiff then explained to the Court that Document 108 came to be signed by the parties in the following sequence :

a.  the Plaintiff had handwritten Document 108;

b.  he put his company chop on it;

c.  he made two to three photocopies;

d.  he handed them over to Siu inside the cockloft of the Defendant’s garage;

e.  Siu signed on the original and the two to three copies in the presence of the Plaintiff and Siu’s father;

f.  after Siu handed back the signed documents, the Plaintiff wrote down the date 2/7/2012 and the words 「確認」underneath Siu’s signature on the original and the two to three photocopies;

g.  the Plaintiff took the documents home and signed them at his own home. 

66.  One can immediately see that the Plaintiff had changed his evidence yet again in that this time he said that he had in fact taken the documents home to sign. When asked why he did not sign his own signature there inside the cockloft in the presence of Siu and his father, the Plaintiff’s explanation was that in fact his own signature was redundant.  Only Siu’s signature was important, the Plaintiff said. It is not the mere presence or absence of the Plaintiff’s signature which matters. It is the way the Plaintiff changed his evidence to suit his case which cast serious doubt on the reliability and veracity of his evidence.  

67.  Out of the 8 copies of Document 108 produced by the Plaintiff, three copies did not have the words 「確認」written underneath Siu’s signature, namely, 108A, 108B and 108D.  If what the Plaintiff said about the sequence of events as set out in paragraph 65 herein were true and that he wrote down the date and the Chinese words「確認」underneath Siu’s signature on each of the documents inside the cockloft at the time, why would 108A, 108B and 108D not bear the words 「確認」.

68.  As pointed out hereinabove, the Plaintiff’s latest version in fact totally contradicted his earlier evidence that he signed the six documents (being three original and three photocopies) inside the cockloft of the Defendant’s garage as opposed to taking them away and signed them at home.

69.  I am not satisfied that Documents 108, 109 and 110 were signed in the way as described by the Plaintiff.  There were different versions of Documents 108, 109 and 110.  The Plaintiff’s purported explanations were inherently improbable, confusing and inconsistent.  I must say I cannot accept his evidence and cannot attach any weight to these documents.

70.  Further, Siu had as early as February 2012 countermanded the two cheques himself.  It is inherently improbable for Siu to have signed Document 108, 109 and 110 to confirm that he had amended the cheques and that the cheques were for payment of the three expert reports knowing that he had himself countermanded the two cheques.  

71.  I have observed the way the Plaintiff testified in court. I have taken into account his age and education background. The Plaintiff did not impress me as an honest witness. He changed his evidence ever so quickly and without much regard to what he had said earlier, especially, in relation to the creation of Documents 108, 109 and 110 and the circumstances in which the cheques came to be altered.  I harbour significant misgivings about the truthfulness of the Plaintiff’s evidence in this regard. I am not satisfied, on a balance of probability, that the two cheques were altered by Siu with the consent of Siu’s father. I find that the two cheques were altered without the consent or authorization of Siu or Siu’s father.

72.  I bear in mind that there is an allegation of forgery.  I bear in mind the well known principles concerning the standard of proof concerning serious allegations such as forgery and fraud :‑

“The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability...Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established. Ungoed-Thomas J expressed this neatly in In re Dellow’s Will Trusts [1964] 1 WLR 451, 455 : ‘The more serious the allegation the more cogent is the evidence required to overcome the unlikelihood of what is alleged and thus to prove it.’ (See Re H Minors [1996] AC 563 at 586 per Lord Nicholls)”

73.  Even if I were wrong on the burden of proof and that the Defendant should bear the burden of proof that the said alterations were not made by Siu, I would still come to the same conclusion.

74.  There are other items of evidence which have been traversed and tested in the course of trial. I do not find it necessary to deal with each and every one of them since they would not have materially affected my adjudication on the issues: what was the purpose for the issue of the two cheques and whether it was subject to conditions; and whether the dates of the two cheques were altered by Siu.

75.  There is no dispute that the date on the cheque is a material alteration. The Bills of Exchange Ordinance, Cap. 19, Section 64 (1) provides that where a bill or acceptance is materially altered without the assent of all parties liable on the bill, the bill is avoided except as against a party who has himself made, authorized, or assented to the alteration, and subsequent indorsers. The dates on the two cheques were material alterations and such alterations invalidated the said cheques.

76.  On the basis on my findings, the Plaintiff’s claim against the Defendant on the dishonoured cheques fails.  In light of my finding on the first and second issues, it is not necessary for me to deal with the last issue of total failure of consideration.

77.  I make an order that the Plaintiff’s claim against the Defendant is dismissed with a costs order nisi that the Plaintiff is to pay the Defendant’s costs of the action with certificate for counsel to be taxed if not agreed. The costs order will become absolute after 14 days. The Plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.