NG SIU KEI v. CHONG MEE MEE

HCA 5292/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 5292 OF 1998

____________

_______________

J U D G M E N T

_______________

1. The Plaintiff claims as the payee against the Defendant as the drawer of a cheque numbered 568157 in the sum of HK$200,000 dated 8 January 1998 ("the cheque") which was dishonoured on presentation on 8 January 1998. The Defendant pleads that the cheque was delivered to the Plaintiff on conditions. The conditions were not fulfilled and so the Defendant was entitled to and did countermand the cheque. As the pleadings suggest, the case turns on the circumstances pertaining to the alleged conditional delivery of the cheque.

2. Much of the evidence from both sides are centred on a provisional sale and purchase agreement ("the Provisional Agreement"). The entire agreement is set out below:-

Page 2

3. The Provisional Agreement is a proforma used by Centaline Property Agency Limited. As I understand it, the court need not be concerned with the meaning and effect of the terms and conditions therein. Rather, it is the handwritten particulars and the sequence in which the particulars were filled in that are controversial.

4. Both sides agree that the Plaintiff and the Defendant negotiated through one Connie Leung ("Connie") of Centaline Property Agency Ltd for the sale by the Plaintiff of his flat in San Francisco Towers ("the Property") to the Defendant. It is common ground that the Defendant and some companions went with Connie to inspect the Property on 6 January 1998. Thereafter, the Plaintiff and the Defendant allege different versions of events.

5. According to the Plaintiff, he initially asked a school-mate Alex Lai ("Lai") of Key Fortune Realty to sell the Property for $8 million. It was Lai who got in touch with Connie. After the inspection of the Property on 6 January 1998, there was further haggling on 7 January 1998. Eventually, at some time after 10 p.m. on 7 January 1998, Connie went to the Property with the Provisional Agreement and the cheque. This was the first time he saw the Provisional Agreement. It was in triplicate, a white top with a pink copy and a blue copy underneath. The Plaintiff noticed that the Provisional Agreement had manuscripts on it. The manuscripts which the Plaintiff says were on the Provisional Agreement at first sight have been marked by me by round brackets. It is very important to note, and there is no dispute by the Defendant, that when the Provisional Agreement was shown to the Plaintiff by Connie the price of $7.6 million had already been written into the Provisional Agreement; although the Defendants says it was written without her authorization.

6. The Plaintiff says he agreed the price of $7.6 million but he wanted to retain certain light and air-conditioning fittings. Hence another line was added to Clause 13 which originally says that all fittings would be included in the sale. According to the Plaintiff, whilst Connie was at the Property, she used her mobile telephone and apparently spoke to, he believed, the Defendant. Again, apparently Connie obtained confirmation from the Defendant of the terms handwritten into the Provisional Agreement. It was after this telephone conversation that Connie asked the Plaintiff to sign on the Provisional Agreement. Alterations, but not blanks filled in, were also initialled. If the Plaintiff's evidence is believed, the Provisional Agreement signed by the Plaintiff contained manuscripts I have marked by round brackets and square brackets. At that juncture, the manuscripts in { } summation brackets were not yet put on the Provisional Agreement except the scribble appearing to be the intial of the Defendant against Clause 13. The Plaintiff did not and does not know what happened to the Provisional Agreement after Connie took it with her upon leaving the Property late on 7 January 1998.

7. Immediately after the Plaintiff had signed the Provisional Agreement, Connie handed the cheque over to the Plaintiff as the initial deposit stated in the Provisional Agreement. The Plaintiff is adamant that Connie did not tell him that the cheque was delivered to him with conditions attached. The cheque was released to him simply for payment of the initial deposit and he could bank it. The following day, 8 January 1998, the cheque was presented. But on 9 January 1998 the Plaintiff was informed by his bank that the cheque had been dishonoured.

8. The Defendant's own evidence is that she did sign the Provisional Agreement. She initialled the alterations to Clauses 3 and 4, but she did not put the initial against Clause 13. Most importantly, the Defendant says that the price and corresponding amounts for deposits were left blank when she signed and initialled because she had stipulated to Connie that she would only purchase at $7.4 million. The Defendant says that she drew the cheque for Connie to show to the Plaintiff for proof of her (the Defendant's) earnesty in the purchase. According to the Defendant, she was advised by Connie that the cheque would help Connie to bargain for the price of $7.4 million. Thus the cheque was handed to Connie on condition that the purchase price would be $7.4 million.

9. It is the evidence of the Defendant that Connie made a photocopy of the Provisional Agreement immediately after the Defendant had signed and initialled it. She (the Defendant) did not look at the photocopy then. The Defendant denies that she had any telephone conversation with Connie between 10 to 11 p.m. on 7 January 1998 but Connie did telephone her near midnight to ask her to agree to buy at $7.6 million. According to the Defendant, she flatly refused to consider $7.6 million.

10. Some time on 8 January 1998, allegedly Connie telephoned the Defendant to say that the Plaintiff had signed the Provisional Agreement for the price of $7.6 million and Connie had released the cheque to the Plaintiff. According to her own evidence, the Defendant was furious on hearing this. She gave instructions to the bank to stop the cheque. It was at this stage that she took out the photocopy of the Provisional Agreement given to her by Connie and found that the price of $7.6 million and corresponding amounts of deposits were already on the photocopy.

11. Apparently, Connie continued to pester the Defendant about the transaction. The Defendant said to Connie that Connie would have to persuade her (the Defendant's) partners who were pooling in money for the purchase. The Defendant maintains that she had told Connie earlier that she had partners but she could not yet decide in whose name or names the Property would be bought. On 8 January 1998, the Defendant allegedly told Connie that her partners were her son, Li Hing Chuen ("the son"), a gentleman called Ignatius Chiu ("Chiu") and her sister. According to the Defendant, four of them partners would comprise three shares - she and her son would have one share and Chiu and her sister would each have one share.

12. After telling Connie over the telephone to go to see the son and other partners, the Defendant says in evidence, she informed the son to expect Connie in his office and to look at the contract carefully and if acceptable sign it and take Connie to see the other partners.

13. The son gave evidence for the Defendant. He confirmed that the Defendant told him, over the telephone, to expect Connie with the contract. He says that he was told to look at the contract carefully and if acceptable sign it and take Connie to see the other partners for signature. When Connie arrived at his office, the son noticed that the price was $7.6 million. According to him, on 7 January 1998, the Defendant, he and Chiu had agreed and told Connie that they would only buy at $7.4 million. So, on seeing $7.6 million on the Provisional Agreement, he was furious. The son admitted that he immediately crossed out the Defendant's signatures and the particulars of the purchasers that were by then on the Provisional Agreement. He further tried to tear the Provisional Agreement into pieces. There is no doubt that Connie snatched the Provisional Agreement back from the son but only after one corner of the document had been torn away.

14. It should be noted that Centaline Property Agency Limited ("Centaline") was joined as the 2nd Defendant by the counterclaim of the Defendant for vicariously liability for misfeasance by Connie. Centaline was represented by counsel at the commencement of the trial. However, after the Plaintiff had finished his evidence and there was no further witness to be called on his behalf, the Defendant discontinued the counterclaim against Centaline. Thus, Connie originally to be called by Centaline did not give evidence. So, whatever happened between Connie and the Defendant and the son, I only have the version from the Defendant and the son.

The Facts

15. I believe this case can be determined strictly according to the law governing bills of exchange. However, it is arguable, and contended by Mr Pirie for the Defendant, that circumstances relating to the signing of the Provisional Agreement affects liability. Therefore, for completeness sake, I will do the best I can to ascertain the facts.

16. The Plaintiff performed impeccably in the witness box. He was cross-examined by Mr Pirie and counsel for Centaline but not shaken a bit. There is nothing in his evidence that is inherently incredible. The only significant matter on which opposing counsel attacked him was that in his affirmation for the earlier Order 14 application he stated that Connie of Centaline was his "agent" and there was no mention in that affirmation about Lai. Mr Pirie in particular says that the Plaintiff has been inconsistent. The inconsistency is, I think, somewhat exaggerated. Connie was an estate agent and she was trying to get the Property sold. So, in a manner of speaking Connie was the agent in the sale of the Property. In any event, the Plaintiff has a better explanation. He says that when the affirmation was being prepared he did tell his solicitors about the role of Lai. Those solicitors advised him to keep matters simple so Lai was left out of the picture in the affirmation. This is a perfectly plausible explanation. No great moment turns on Lai in the circumstances of this case. Those solicitors, not knowing counsel for the other side would attach significance to the role of Connie as an agent in the technical legal sense, could have advised the Plaintiff not to mention Lai. Even if that was unwise, the Plaintiff was acting on reasonable legal advice. I do not think the so-called previous inconsistent statement in any way tarnishes the credibility of the Plaintiff.

17. The Defendant herself did not come across as an impressive witness. There were times when she appeared to be searching for an answer. There were also embarrassing pauses too. Worse still, her version of events does not ring true in several instances. She said that Connie begged her and pestered her to buy the Property, yet she said she was willing to sign the Provisional Agreement without essential terms completed and hand over a cheque for $200,000. Surely someone not in a hurry to buy should take time to get all the essential terms thrashed out and recorded before signing the Provisional Agreement. The Defendant said that she would only buy at $7.4 million and she told Connie not to part with the cheque unless the price is $7.4 million. If that is true, surely she would have insisted on putting the price of $7.4 million in the Provisional Agreement before she signed it.

18. The Defendant's evidence suggests that Connie put the price of $7.6 million immediately after the Defendant had signed it and had a photocopy made of it but the Defendant did not look at the photocopy as she put that photocopy away. There are two problems here. First, the Defendant had been running a travel agency from a prestigious address in Central for 20 years. One does not expect an experienced and successful businesswoman to take a copy of a contract for record without looking at it. Secondly, and this is more important, would Connie have done as the Defendant insinuated? Even if Connie had the gall to take the chance that the Defendant would not study the photocopy thereby immediately discover the price of $7.6 million put in by Connie without her authority, when Connie made the photocopy and handed it to the Defendant, Connie was still at the Defendant's office, she (Connie) just had had instructions from the Defendant to go to the Plaintiff to bargain for the price of $7.4 million, she (Connie) had not had the chance to speak with the Plaintiff yet. How could Connie at that stage know the lowest price at which the Plaintiff would sell? If the bottom line for the Defendant as communicated to Connie was $7.4 million and the position of the Plaintiff was still fluid at best, surely it would be extremely foolish for Connie to put $7.6 million in the Provisional Agreement at that stage.

19. The Defendant said that she was furious when Connie told her on 8 January that the Plaintiff had signed the Provisional Agreement for $7.6 million and the cheque had been handed over to the Plaintiff. She gave instructions to stop the cheque that day. Yet she told Connie to take the Provisional Agreement to see the son and other partners for signature. That, I would say, is inconsistent behaviour suggestive of falsehood.

20. Referring to the hidden partners for the purchase, the Defendant said that she did not want to be bound even though she had signed the Provisional Agreement if the unspecified partners do not agree. Yet the very facts that she signed the Provisional Agreement and that (according to her) she gave Connie the cheque to show to the Plaintiff as earnest money show every intention of hers to be bound by a legal relationship.

21. The son was not an impressive witness either judging by his demeanour. Besides, his evidence is plainly unbelievable. On the Provisional Agreement that was torn, one can see some distinctive scribbles above the Defendant's signature at two places. The scribbles are strokes up and down and distinctly above the horizontal lines which the son said were efforts to cross out the Defendant's signature. I have no difficulty in finding those strokes up and down as signatures. The son admitted that those strokes up and down were also made by him as part of his efforts to cross out the Defendant's signatures and not as his own signatures. This deliberate denial of the obvious already destroys his credibility.

22. The son admitted that he tried to tear the Provisional Agreement into pieces. The reason he gave for tearing the Provisional Agreement is that he saw the price in the Provisional Agreement as $7.6 million, not $7.4 million which he understood was insisted on by the Defendant and the other partners. But it is also his evidence that on 7 January 1998 the Defendant and another partner had further discussion with Connie in his absence after he (the son) had heard that $7.4 million was to be the price. The mother and the other partner could have changed their mind and agreed in his absence to offer $7.6 million. The son further agreed with the Defendant's evidence that he (the son) had no say in this purchase because the money for their share in the partnership purchase would come from the Defendant. Now, in those circumstances, one would have thought that, upon seeing the price $7.6 million in the Provisional Agreement he would check with the Defendant first. But he did not. He just went berserk and crossed out the signatures of the Defendant and then tried to tear the Provisional Agreement into pieces.

23. In my view, the story told by the Defendant and the son simply does not gel. The very act by the son in attempting to physically destroy the Provisional Agreement puts the son as a witness in very bad light too. He was aged over 30 and yet he behaved like a brat. I do not find him trust-worthy at all.

24. In the premises, I find that the Plaintiff told the truth and I reject those parts of the evidence of the Defendant and the son in so far as they are inconsistent with that of the Plaintiff. More particularly, I find that when the Defendant signed the Provisional Agreement the $7.6 million and corresponding amounts for deposits had been inserted in the Provisional Agreement and she was well aware of it.

25. On the facts as I have found, the Defendant is liable to pay the $200,000.

The Cheque

26. Taking the cheque alone, even if the Defendant's evidence is believed, i.e. she told Connie not to hand over the cheque to the Plaintiff unless the price is $7.4 million, there is no evidence at all that Connie in turn told the Plaintiff the condition for delivery of the cheque. It is, of course, the Defendant's case that Connie was the Plaintiff's agent and, so the argument runs, knowledge by Connie of conditional delivery is constructive notice by the Plaintiff too. The fundamental flaw in this argument is that the Defendant in handing over the cheque to Connie was asking Connie to bargain for her (the Defendant) the price of $7.4 million. Connie was instructed not to pass the cheque on to the Plaintiff unless the price was $7.4 million. So, without doubt, the cheque was to be dealt with by Connie as agent for the Defendant. The Plaintiff in the circumstances was not affected by any conditional delivery. The Plaintiff therefore took the cheque unconditionally. There is in this case no question of total failure of consideration. There is no room for argument on the applicable law in this respect. Hence the Plaintiff is entitled to recover on the cheque per se.

Order

27. There is no merit in the defence case at all whichever way one looks at it. I give judgment for the Plaintiff against the Defendant for $200,000 with interest thereon at judgment rate from 8 January 1998 until payment and costs of the action to be taxed if not agreed.