AU YEUNG PIU v. LUI WUN PIK

IN THE COURT OF APPEAL

1995, No. 67
(Civil)

___________

_________________

J U D G M E N T

_________________

Bokhary, J.A.:

1. The plaintiff's claim was for $230,000. He and the defendant were partners in a shoe manufacturing business.

2. Shortly stated, the plaintiff's case in advancing his claim ran along these lines. There was an oral agreement reflected, although not embodied, in a memorandum in the Chinese language dated February 11, 1993, under which the defendant would buy him out for $250,000. The oral agreement provided for: the payment of an initial deposit of $20,000; the payment of a further deposit of $50,000 upon the signing of a written agreement; and the payment of the balance of $180,000 by nine monthly instalments of $20,000 each. After the initial deposit of $20,000 had been set off against an advance, the defendant had backed out. So the entire balance of $230,000 became payable.

3. The defendant denied that the oral agreement sued upon had been made. And she sought leave to amend her pleadings to plead that, if it had been made, then it had been induced by misrepresentation, duress or oppression so that it should be set aside as unconscionable. But the trial judge, Cheung J, refused such leave.

4. So the crucial issue at the trial was whether the oral agreement had been made. By his judgment given on January 26 this year, the judge held that it had been made; and he gave judgment for the plaintiff as claimed accordingly.

5. The defendant now appeals to this Court.

6. On the basis of the notice of appeal as it now stands - we having given leave this morning to amend it but having refused an application made very shortly after that to re-amend it - there is no basis on which the judge's finding that the oral agreement had been made can be attacked.

7. That brings us to the attack on the judge's refusal of leave to amend the pleadings to advance an alternative case based on unconscionable conduct as I have explained.

8. The averment was by its nature a serious one. Yet, it was but sparsely particularised. Moreover, it is difficult to reconcile it with the defendant's primary case on any realistic view of what it would be coherent in the circumstances to plead by way of an alternative case. To top it all off, the application to amend came somewhat late: although that in itself might not have been fatal.

9. All things considered, I do not see how we can interfere with the exercise of the judge's discretion in refusing leave to amend. It matters not what I would have done if the discretion had been mine to exercise in the first place. But I am bound to say that I would have exercised in exactly the same way as the judge exercised it.

10. All that leaves is ground (ii) of the notice of appeal which reads as follows:-

"The Learned Judge was wrong on the evidence to find that the Defendant did not rely on the breach on the part of the Plaintiff i.e. the Plaintiff, via his solicitor, Mr Tam, unilaterally incorporated a term which did not reflect the initial agreement between the parties. Moreover, it is precisely the reason why the Defendant refused to sign on this document as the Learned Judge observed the inclusion would deprive her the right to seek an indemnity against Mr Hui and the Plaintiff in the event she was called upon by the creditors to pay up the debt sum total of $870,000.00 owed by the old partnership. By the same token, such deprivation would have in fact varied the price the parties had agreed on 11th February 1993 for the takeover of the business."

11. Mr Hui, I should mention, was a partner of the plaintiff who, putting it loosely, was replaced by the defendant.

12. What is to be found in the ground which I have just read out is not in the defendant's pleadings. Her counsel concedes that but contends that it does not have to be. I am by no means convinced that that contention is correct. But there is a simpler basis on which to deal with the matter. And it is this.

13. In any event, on the merits, there is simply no sufficient basis for upsetting the view of the judge, who saw and heard the witnesses when receiving the evidence at first-hand, that the reason why the defendant did not sign the formal agreement was not because she objected to any particular clause in it, but rather because she had changed her mind about the whole deal. The judge was faced with a defendant who denied that the oral agreement had been made, and who wanted to say that if it had been, then it was to be set aside as unconscionable by reason of misrepresentation, duress and oppression.

14. The judge had the case before him at first-hand and must have had a good "feel" of it. He made that finding as to the motivation of one of the parties. And I can see nothing which would justify our overturning that finding.

15. That being so, the appeal must, in my judgment, be dismissed. And I would dismiss it.

Liu, J.A.:

16. Counsel advances three main grounds in support of the appeal.

17. Firstly, it is submitted that the judge wrongly refused the application to amend. What it all boils down to is this: the refusal barred the defendant from relying on his intended allegations of duress and oppression in paragraph 16 as particularised in paragraph 13 of the proposed amended defence and counterclaim, but first of all the alleged acts of duress and oppression are no more than the usual pressure brought to bear in any hostile partnership dispute. The particulars given in paragraph 13 are also hopelessly inadequate, in particular it was left unspecified as to how and to what extent the defendant had been materially affected by such alleged duress and oppression. The alleged representations in the refused proposed amendments are no longer pressed upon us. Lastly, the application was made much too late. Serious allegations of this nature were rightly rejected by the judge on the first day of the trial. This ground therefore fails.

18. It is also complained that the judge resorted to material contained in a proposed amendment which he had disallowed. In the course of the evidence of the defendant, the judge inquired of her whether she had formed her own company at the end of April 1993. The response was in the negative, and the judge expressed surprise at her answer because of the information disclosed in a rejected proposed amendment of the defendant. There the defendant asserted the formation of her new company. It was not out of line for the judge to direct the defendant's attention to an inconsistency, be it in that piece of information or elsewhere and it was certainly not wrong of the judge to comment on the prevarication of the defendant arising that question and answers. This ground of appeal has, therefore, no substance.

19. Lastly, it is contended on behalf of the appellant that the judge was wrong to find "on the evidence" that the defendant did not rely on a breach committed by the plaintiff through his solicitor. The alleged breach involved essentially paragraph 8 of the draft formal agreement, which was included without instructions or consent. The judge found that there was an oral agreement to pay $250,000, $20,000 of which had been deducted from a past drawing of the plaintiff, and the remaining $230,000 was to be paid by instalments, the first of which was due upon the signing of the formal agreement. The judge found that the defendant wrongly refused to sign the formal agreement simply because of her change of mind and not account of paragraph 8. We have not been referred to any of the evidence in this case with a view to hopefully demonstrating that the finding of the judge was wrong "on the evidence". For this reason alone, the remaining complaint also falls to the ground. I agree that none of the grounds advanced by counsel for the appellant succeeds and the appeal must, therefore, be dismissed.

Litton, V.-P.:

20. I agree. The result is that this appeal by the defendant is dismissed. We will now hear counsel on the question of costs.