XCHRX CHENG MAN YAU v. WAH SING TRAVEL SERVICE LTD.

HCA 17724/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 17724 OF 1999

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J U D G M E N T

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1. This is an appeal by the Defendant in HCA 17724/1999 against the order of Master C B Chan granting summary judgment in favour of the Plaintiff in respect of a cheque for $259,089.27 drawn by the Defendant.

2. Mr Cheng Kin Ping ("Mr Cheng") is a shareholder and director of the Defendant. It is not disputed that the cheque in question was issued by the Defendant at the request of Mr Cheng in purported settlement of certain running accounts between the Plaintiff and Mr Cheng and/or his company, Forward Development Company. The running accounts are evidenced in a document dated 21 November 1996 in which Mr Cheng acknowledged that Forward Development Company should pay the Plaintiff the said sum of $259,089.27.

3. The defence is that there were mistakes in the running accounts although such running accounts were actually prepared by Mr Cheng himself and confirmed by the parties.

4. Initially, Mr Cheng suggests that two sums of $1,206,848.30 and $700,000.00 paid to the Plaintiff had not been accounted for. Mr Cheng now accepts that these two sums had in fact been properly accounted for and his initial assertion was a mistake. Mr Cheng, however, now suggests that at the request the Plaintiff, he had, on or about 31 August 1994, remitted a sum equivalent to HK$265,486.70 to Thailand. Instead of entering such figures in the running accounts as due from the Plaintiff, it was wrongly entered as a sum due to the Plaintiff. Hence there is a discrepancy of twice of this amount of $265,486.70, namely a sum of about $531,000.00.

5. It is Mr Cheng's contention that when he instructed the Defendant to issue the cheque in question, he had not discovered the aforesaid mistake. In the circumstances, the cheque was issued as a result of a mistake and hence there had been a total failure of consideration.

6. The Plaintiff, on the other hand, suggests that he did give Mr Cheng $265,486.70 in cash to be remitted to Thailand in August 1994 but somehow Mr Cheng did not remit the money but instead kept the money and hence the sum in question was recorded in the running accounts to the Plaintiff's credit.

7. Unfortunately, there is absolutely no record of the alleged payment of $265,486.70 in cash to Mr Cheng by the Plaintiff, nor is there any record of the alleged remittance by Mr Cheng to Thailand. The Plaintiff suggests that Mr Cheng never issued a receipt for the cash payment. Mr Cheng, on the other hand, suggests that the remittance receipt had been given to the Plaintiff. In so far as the bank does not have any record of the remittance, the remittance could have been made by way of cash, so Mr Cheng claims.

8. The parties' cases clearly give rise to serious dispute of facts as to whether cash payment was made and/or whether remittance to Thailand was made. Miss Wong, counsel for the Plaintiff, is clearly right in her submission that the Defendant's contention is completely unsupported by any evidence. Even his own banker does not support Mr Cheng's evidence that he had cashed a cheque to remit the said sum of $265,486.70 to Thailand on or about 31 August 1994. Although Mr Cheng now says that he had other source or sources for cash and might have utilised such cash for the remittance, such assertion in the light of his earlier assertion that he had actually drawn a cash cheque in order to make the remittance, is difficult to be believed.

9. It is also fair to say that when Mr Cheng asked the Defendant to issue the cheque in question, he should have carefully checked the running accounts and satisfied himself that the said sum of $259,089.27 was indeed owed and due to the Plaintiff. But the alleged mistake was not discovered although other mistakes in a running accounts were spotted and rectified soon thereafter.

10. On the other hand, I cannot ignore that the parties must have significant number of transactions involving substantial sums of money over a prolonged period. Many of such transactions were transactions by way of cash payments.

11. The alleged remittance to Thailand supposedly took place in August 1994 and the running accounts which support the Plaintiff's claim were only settled more than two years later in November 1996. There was also past history of the parties making mistakes in the running accounts.

12. As I have observed, there was also no evidence from the Plaintiff as to why the remittance to Thailand had to be cancelled. I have already made certain remarks about the Defendant's case but despite such observation, I am not persuaded that the Defendant should be debarred from an opportunity to challenge the accuracy of the running accounts between the Plaintiff and Mr Cheng, to prove his allegation that he had in fact remitted the sum of $265,486.70 to the Plaintiff's account in August 1994, and that there were in fact mistakes in the running accounts.

13. But I am not persuaded that the Defendant should be allowed to do so unconditionally. I am satisfied that the Defendant should only be allowed, in the light of the tenuous nature of its defence, to defend the matter on the payment of the sum in question into court.

14. The appeal is allowed and the order of Master C B Chan set aside. Leave is granted to the Defendant in HCA 17724/1999 to defend conditional upon the payment into court of $260,000.00 within 14 days. If the Defendant fails to comply with the aforesaid condition, the appeal is dismissed with cost to be taxed if not agreed.