CHEUNG HUNG v. LAU KWOK MONG

DCCJ 5403/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5403 OF 2005

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REASONS FOR DECISION

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1.  This is an O.14 application for money had and received. It is the plaintiff’s case that she made a personal loan in the sum of HK$370,000 to the defendant, of which only HK$20,000 has been repaid. According to the defendant, the said sum was really contribution made by the plaintiff towards a joint investment in land property purchases.

2.  On 29 November 2004 the plaintiff paid into the defendant’s bank account a sum of HK$370,000.

3.  It was the defendant’s explanation in his affirmations that he used to run a real estate agency firm and the plaintiff was one of his employees. The defendant often made his profit in land sale transactions by acting as a confirmor. In 1997 he gave the plaintiff some shares in his real estate agency business and the plaintiff became his de facto partner.

4.  A trading vehicle by the name of Winjoy Industrial Limited was set up in 1994 by the defendant with the plaintiff as one of its shareholders. The plaintiff was appointed a director of Winjoy. Winjoy was set up to hold the land properties acquired by the defendant.

5.  When the defendant’s real estate agency business went downhill after 1997, the plaintiff eventually left the defendant’s firm and joined the Centaline Property Agency as a real estate agent.

6.  It was the defendant’s contention that in November 2004, through the introduction of the plaintiff, he signed provisional sale and purchase agreements in respect of the purchase of 5 commercial units on the 2^nd floor of Chung King Mansion. The trading vehicle used by the plaintiff to enter into the purchase was “Add Success Development Limited”. The plaintiff has no financial nor management interest in “Add Success Development Limited”.

7.  The defendant countermanded payments on those deposit payment cheques when information on the floor plan and the size of the mortgages on the 5 shops were not forthcoming. According to the defendant, the plaintiff undertook to take up ¼ of the investment in order to persuade the defendant to carry on with the transactions, to enable the plaintiff to earn her estate agency commission from her company in respect of those sales. Pursuant to this agreement the plaintiff paid the defendant a sum of HK$370,000 on 29 November 2004.

8.  The defendant suggested the sum of HK$20,000 which he paid to the plaintiff on 5 February 2005 was a personal loan which he advanced to the plaintiff.

9.  In between the months of February to May 2005 the defendant entered into dispute about the size of the premises with the vendor of the 5 units through their respective solicitors. The vendor forfeited the deposits in May 2005 when the defendant was not prepared to go through with the ultimate sale of the 5 units.

10.  There was no written document to explain the purpose for which the sum of HK$370,000 was paid by the plaintiff to the defendant, nor was there any documentation from the defendant to account for a suggested joint investment with the plaintiff. The whole case boils down to an issue of credibility, which obviously cannot be adjudicated upon solely on the affirmations filed by both parties. This is an inappropriate case for the granting of summary judgment.

11.  The possibility of the making of a loan of a significant sum (HK$370,000) by the plaintiff to the defendant without hesitation and without the demand for a written confirmation of the nature of the payment may need to be assessed with reference to the parties’ previous dealings, their personal relationship and their credibility. The issue of credibility can only be determined in the context of a witness’ verbal testimony. The fact that the plaintiff had a share in the sale/purchase commission in the sale of the 5 Chung King Mansion units bought by the defendant, though the plaintiff was adamant that she was not involved in the sale of those 5 units, does not sit comfortably with the rest of her factual contentions. On the other hand the fact that the defendant admitted he never consulted the defendant when he decided to withdraw from the deal, though according to the defendant, the plaintiff was meant to have ¼ interest in the 5 units makes the defendant’s defence shadowy.

12.  In his affirmation the defendant stressed he was financially sound. He raised no suggestion of impecuniosity.

13.  I grant the defendant conditional leave to defend on condition that the defendant do pay the claimed sum of HK$350,000 into court within 28 days from today. 

14.  This O.14 application is dismissed. Costs of this application would be costs in the cause of this action.