THAI THI THANH HONG v. CHUNG WAI KWONG

DCCJ 4437/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4437 OF 2015

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DECISION

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Introduction

1.  The plaintiff applies for summary judgment in the sum of $380,000.00, the amount she demanded under a promissory note from the defendant, together with interest.

2.  The following matters are not disputed between the parties:-

2.1.   The defendant was the friend of the plaintiff and her husband, Mr Chow Nap Man.

2.2.   On 4 June 2010, the defendant went to the office of Messrs. Tai, Tang & Chong (“TTC”).  He signed on a promissory note (“the Note”) in the following form:-

"	Flat A, 1st Floor, 167 Shanghai Street, Kowloon.
4th June, 2010.
HK$380,000.00
ON DEMAND I, CHUNG WAI KWONG (鍾偉光) (Holder of Hong Kong Identity Card No.EXXXXXX(X)[1]) promise to pay to THAI THI THANH HONG (蔡小紅) (Holder of Hong Kong Identity Card No.RXXXXXX(X)[2]) of Flat No.9, 10th Floor, Alhambra Building, Nos.383, 385, 385A, 385B, 387, 387A, 387B, 389, 389A-C Nathan Road and Nos.15-17 Kansu Street, Kowloon, Hong Kong or order the sum of DOLLARS THREE HUNDRED AND EIGHTY THOUSAND ONLY Hong Kong Currency (HK$380,000.00) value received.”

2.3.   On the face of the Note, the defendant was interpreted the content, and signed on it in the presence of Mr Lee Kwok Lun, a solicitor at TTC.

2.4.   Upon signing the Note, the defendant obtained at TTC’s office 2 cheques (for $350,000.00 and $30,000.00 respectively) drawn in his favour, issued by the plaintiff and Mr Chow out of their joint account at Bank of China.

2.5.   The defendant deposited the 2 cheques into his bank account on 7 June 2010.

2.6.   On 22 February 2012, TTC (acting for the plaintiff) sent a letter to the defendant, demanding repayment of $380,000.00 as per the Note.

2.7.   On 29 May 2015, the plaintiff’s current solicitors sent a letter to the defendant’s current solicitors, claiming that the defendant failed to repay $380,000.00 as per the Note, or any part thereof.  The defendant was requested to repay the $380,000.00.

2.8.   No reply was received by the plaintiff after sending the above 2 letters.

2.9.   The plaintiff commenced the present case on 25 September 2015, claiming from the defendant $380,000.00 plus interest.

3.  Mr Wallace Cheung, counsel appearing for the plaintiff, submits that the Note was a promissory note and bill of exchange within the meaning of the Bills of Exchange Ordinance (Cap.19) (“the Ordinance”).  Ms Cindy Li, counsel appearing for the defendant, agrees.

The defendant’s case

4.  Ms Li submits that leave to defend should be granted because of 2 defences[3].

5.  First, the defendant claims that he only received $380,000.00 as the plaintiff’s agent for onward remittance.  In his affirmation, the defendant deposes to the following:-

5.1.   He came to know an American Vietnamese lady called Anne Hue Vo (nicknamed “Ah Wai” (阿惠), and will be referred to as such below) in around 2009.  In the same year, the plaintiff was introduced to him and Ah Wai through a common friend known as Mrs Lai.  They became good friends because all of them came from Vietnam.

5.2.   Ah Wai would bring diamonds to Hong Kong from time to time, and asked the plaintiff to sell them for her.  The defendant was often requested by the plaintiff or Ah Wai to help remitting the money from the sale of the diamonds to Ah Wai.

5.3.   By the end of May and early June of 2010, the plaintiff again requested the defendant to remit $380,000.00 to Ah Wai.  I note there is no evidence from the defendant to show that the plaintiff’s request was any different from the previous instances.  But he was told that this sum was a loan from the plaintiff to Ah Wai, because Ah Wai was short of cash to buy diamonds and jewellery in the US.

5.4.   After signing the Note and obtained the 2 cheques from the plaintiff through TTC, he first deposited them into his Bank of China account.  On the next day (i.e. 8 June 2010), he remitted $190,000.00 to Ah Wai, and $190,000.00 to a Khanh Ngan Vo Nguyen to their respective bank accounts in the US.  The defendant believed Khanh Ngan Vo Nguyen was Ah Wai’s son.

5.5.   As far as the defendant knows, Ah Wai never repaid $380,000.00 to the plaintiff, and never sent the plaintiff any diamonds after receiving the money.

6.  Secondly, the defendant claims that he signed the Note under duress.  In his affirmation, he deposes to the following:-

6.1.   The plaintiff once told the defendant that she had triad connections when she was young, and later became the ringleader of a gang involved in prostitution.  She then came to know a gentleman much older than her, and was given several million dollars. Since then, she quitted the prostitution business and turned to property investment.  She later married Mr Chow and relocated to Hong Kong.

6.2.   The defendant was scared after knowing the plaintiff’s background, as he knew Vietnam and its triad societies quite well.  But he thought it was safe to continue his friendship with the plaintiff, because she “retired” from triad activities for so long.

6.3.   At the same time when the plaintiff requested the defendant to remit $380,000.00 to Ah Wai by the end of May 2010, the plaintiff asked him to pay a visit to her lawyers to get the cheques and sign a document.  The plaintiff told him that the document was just a formality.

6.4.   The defendant was hesitant about what the plaintiff said and did not immediately agree to her suggestion.  For a few days afterwards, the plaintiff called him every night between 10 and 11p.m., and incessantly asked him to sign the document.  The plaintiff even intimidated him by saying that she would send people to cause trouble to him if he did not do so.

6.5.   The defendant was worried about the safety of himself and his wife because they were old[4], and the plaintiff knew his address.  He finally gave in to the plaintiff’s intimidation and went to TTC’s office on 4 June 2010.

6.6.   When he arrived at TTC’s office on 4 June 2010, he was shown the 2 cheques by a solicitor, and was asked to sign on an English document, which he subsequently knew to be the Note.  The solicitor did not interpret to him the content of the Note, nor tell him the consequence of signing it.  He still felt scared at TTC’s office, as he did not know TTC.  He was not sure whether the plaintiff would send someone to spy on him at TTC’s office.

7.  It is also the defendant’s case that, after he signed the Note, his relationship with the plaintiff and Mr Chow also turned sour.

8.  In January 2010, the defendant and Mr Chow bought a flat at Flat D, 5/F, New Lucky House, No.15 Jordan Road, Kowloon (“the New Lucky House property”) as tenants in common, intending to run a guesthouse there.  It is claimed that the defendant and Mr Chow each contributed half of the down payment, and were each responsible for half of the mortgage payments.  They became the registered owner of the New Lucky House property on 5 May 2010.

9.  The defendant deposes that, since June 2010, the plaintiff and Mr Chow slowly excluded him from the management of the guesthouse business.  He was even denied access to the guesthouse afterwards.

10.  He further claims that by early 2012, the plaintiff and Mr Chow repeatedly intimidated him not to intervene in the guesthouse business.  He chose to stop repaying the mortgage instalments.  It was by then the plaintiff demanded him to repay the $380,000.00 under the Note.

Legal principles on summary judgment

11.  There is no dispute as to the principles applicable to summary judgment.  Ms Li accepts that the burden is on the defendant to satisfy the court why judgment should not be given against him.  To do so, the defendant must show that there are triable issues or that there ought for some other reason to be a trial of the claim: Hong Kong Civil Procedure 2016 at §14/4/1.

12.  In determining whether there is a triable issue, it has to be first determined whether, factually, the defendant’s allegations are believable.  If they are, then it has to be considered whether they amount to an arguable defence in law: c.f. Schindler Lifts Hong Kong Ltd v Ocean Joy Investments Ltd [2003] 1 HKC 438 at §10.

13.  In considering whether the defendant’s allegations are believable, it is not appropriate for the court to embark on a mini-trial of the action on affidavit evidence.  The court simply asks itself whether what the defendant says is credible: Ng Shou Chun v Hung Chun San [1994] 1 HKC 155 at 158 (per Godfrey JA).

14.  The court will not take the alleged defence on its face value but test it against the evidence disclosed, including contemporaneous documents, whether the alleged defence is inconsistent with the defence previously put forward, or whether the defence is only recently raised despite opportunity being given to the defendant to respond earlier.  The court will also consider the inherent probability of the defence: see Paul Y Management Ltd v Eternal Unity Development Ltd CACV 16/2008 (Cheung JA, Lam & A Cheung JJ; 12 August 2008) at §19.

15.  Mr Cheung also asks me to place reliance on the following passage in Hong Kong Civil Procedure 2016 at §14/4/19:-

“Bill of exchange (rr.3 & 4) – In an action on a bill of change, the mere assertion by the defendant of fraud or illegality affecting the bill is not in itself enough to entitle him to leave to defend ... but if the plaintiff’s claim to be a bona fide holder for value is uncontested or he can establish such claim by unchallenged or unchallengeable contemporary documents, the plaintiff is entitled to judgment, since he will thereby have discharged the onus put upon him by [s.30(2) of the Ordinance] ...”

16.  He further refers to Xu Ziming v Reifeng Petroleum Chemical Holdings Ltd HCA 450/2013 (Deputy Judge Marlene Ng; 6 May 2015) at §15:-

“Where an application is made for summary judgment in respect of a claim on a dishonoured bill of exchange, the general rule is that leave to defend will not be given unless there are exceptional circumstances. A bill of exchange is to be treated as cash and should be honoured unless there is some good reason to the contrary ...”

The agency defence

17.  Ms Li submits that the alleged agency relationship between the plaintiff and the defendant is an inherently probable story on the evidence currently placed before me.  She points to:-

17.1.   The temporal proximity between the deposit of the 2 cheques the defendant obtained from the plaintiff, and the 2 remittances he made to Ah Wai and her son; and

17.2.   The identical amounts the plaintiff gave him by way of the 2 cheques, and he remitted to Ah Wai and her son.

18.  She accepts that, otherwise, there is no documentary evidence supporting the existence of the alleged agency relationship.

19.  In my judgment, the defendant’s allegation that he was only the plaintiff’s agent in receiving the 2 cheques is not believable.  Hence, it cannot be relied on to argue that the defendant did not, in fact, incur any liability to pay the plaintiff under the Note.

20.  First, the defendant’s allegation that he helped the plaintiff to remit money to Ah Wai from time to time remains to be a bare assertion.  There is no explanation from him on why evidence of previous remittances could not be, and was not adduced by way of his affirmation. 

21.  Secondly, the defendant’s allegation is simply unrealistic.  There is nothing to show that the plaintiff could not remit the money to Ah Wai direct, but must go through the defendant. The plaintiff, the defendant, and Ah Wai were allegedly just friends.  It is not submitted that remittance done by the defendant would be different from one done by the plaintiff.  The allegation lacks the ring of truth when both the plaintiff and the defendant maintained bank accounts at Bank of China, and the defendant remitted the $380,000.00 to Ah Wai from his Bank of China account.

22.  In addition, the defendant cannot account for the fact that the plaintiff only required him to sign the Note this time prior to the remittance, but not before any of the previous instances.  The defendant never alleges that the plaintiff required him to be a guarantor for the $380,000.00, on the basis that it was a loan to Ah Wai rather than her share of the profits from the diamond sale.  He never seeks to rely on the different nature of the money being remitted as the reason why this time the plaintiff asked him to sign the Note.

23.  Ms Li argues that, since the defendant was merely the plaintiff’s agent, there was no reason for him to question why he was asked to sign on a document this time but not for the previous remittances.  With respect, I cannot accept her submission.  Her submission is premised on the agency relationship being believable at the first place.  But as I have analysed above, I simply do not think the defendant is credible at all.

24.  Since the defendant’s allegation is in direct contradiction with his liability on the face of the Note, I am not persuaded that his bare assertion of an agency relationship, without more, provides him with a triable issue.

The duress defence

25.  Ms Li accepts that the defendant’s allegation on him being intimidated by the plaintiff is also a bare assertion.  But she submits that, given the nature of the plaintiff’s intimidation, it is difficult for there to be any contemporaneous record.  I take note of Ms Li’s submission, and bear in mind the nature of the defendant’s allegation when I assess its credibility.

26.  When the defendant refers to the purchase of the New Lucky House property in his affirmation, he has exhibited a copy of the provisional sale and purchase agreement entered into on 22 January 2010.  Mr Chow and the defendant signed on the agreement as the purchasers.  Their solicitors were stated to be TTC, with a Ms Tsang as the contact person.  The purchase of the New Lucky House property was stated to be completed on or before 29 April 2010.

27.  On the face of this agreement, the defendant was not a stranger to TTC.  Under normal conveyancing practice, he must have been asked to attend the office of TTC on or before the completion date to execute various documents, e.g. the formal sale and purchase agreement, the assignment, and/or the mortgage deed.  As I mentioned earlier, the defendant accepted that he became the registered owner of the New Lucky House property prior to the signing of the Note.  There is no evidence before me to show that the normal conveyancing practice was not followed for the purchase of the New Lucky House property, and hence, I infer that he must have visited the office of TTC prior to the signing of the Note on 4 June 2010.  Since the defendant bears the burden of showing a triable issue, he takes the risk of any adverse inference being drawn against him if he chooses not to put forward other documents relating to the purchase of the New Lucky House property to show that he did not actually visit the office of TTC before 4 June 2010.

28.  Only the defendant knows best why he did not choose to exhibit those documents in his affirmation.  In my judgment, the inference I have sought to draw above casts serious doubt on the credibility of his allegations about the plaintiff’s intimidation.  The documents suggest that the defendant, contrary to what he has deposed in his affirmation, was already familiar with TTC at the time when he visited their office on 4 June 2010.  I thus have serious reservation on Ms Li’s submission that the defendant’s allegation on duress is worth being tested at trial.

29.  Ms Li further submits that the defendant was elderly and ignorant, and he only took a passive role in the purchase of the New Lucky House property.  She argues thus that the defendant’s allegation remains to be capable to be believed.

30.  I am afraid the defendant cannot derive much assistance from Ms Li’s submission on him being elderly and ignorant.  The defendant does not even see fit to mention his age properly in his affirmation – the only clue (if it can be described as such) to his age was his HKID card number as stated in the Note.  But without any evidence showing the relevance of the HKID card number with one’s age, it is simply impossible for the court to evaluate Ms Li’s submission.

31.  Also, the defendant did not exhibit any document showing that he did stop repaying the mortgage instalments for the New Lucky House property some time in 2012, and the plaintiff demanded repayment under the Note shortly thereafter.  Again, this is a risk that the defendant has chosen to take.  Therefore, I do not find it capable to be believed that the plaintiff only chose to sue the defendant because of the dispute over the guesthouse business.

32.  Mr Cheung stresses that the defendant never sought to report the plaintiff’s intimidating acts to the police, nor did he raise this allegation by replying to the plaintiff’s demand letters.  Whilst I will not go as far to conclude that the defendant’s allegation of duress must have been a recent fabrication, I agree with Mr Cheung that it would be unlikely for such a serious allegation to be completely uncorroborated before the Defence was filed on 4 November 2015.

33.  Taking all the reasons I have cited above together, I am not convinced that the defendant’s allegation of being intimidated by the plaintiff into signing the Note is capable to be believed.

34.  For the avoidance of doubt, I have also considered whether there is a triable issue when the defendant’s allegations on agency and on duress are taken together.  I similarly conclude that the defendant’s allegations, considered as a whole, are incapable to be believed.  I do not think the defence on agency and the defence on duress sit comfortably well with each other.  If the defendant was only requested by the plaintiff to be her agent in remitting the money to Ah Wai, there would be no reason for her to force the defendant to, in effect, vouch for Ah Wai by assuming the entire liability to repay the $380,000.00 on demand.

35.  In summary, I find the plaintiff entitled to summary judgment for $380,000.00.

Interest

36.  The plaintiff claims pre-judgment interest on $380,000.00 from 22 February 2012 (i.e. the date of the 1^st demand letter) at prime plus 1%, praying in aid s.57(a)(ii) of the Ordinance.

37.  The defendant accepts that the plaintiff is entitled to interest under s.57(a)(ii), and he also has no dispute about the rate of interest.  But he argues that the court should not award interest to the plaintiff between 22 February 2012 and 29 May 2015, because the plaintiff provides no explanation for her inaction during this period.

38.  Mr Cheung submits that mere delay on the plaintiff’s part to commence any action against the defendant is not sufficient to deny pre-judgment interest to the plaintiff.  He referred to the Court of Appeal’s judgment in Komala Deccof & Co SA v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina) [1984] HKLR 219.  At 224B-E, Power J held as follows:-

“... I would like to refer only to the argument that the plaintiff should recover interest at a lesser rate than would otherwise have been proper to order because he has, by his delay in commencing proceedings, in effect, made the defendant his banker ... I am quite satisfied that such an argument can be given no weight in the present circumstances where the claim is for ordinary commercial debt. The plaintiff demanded payment in 1975 and 1976. The defendant ignored those demands. The situation whereby the defendant became in effect the plaintiff’s banker was therefore created by the defendant. The defendant could in 1975 or 1976 or at any time thereafter have brought that situation to an end. He was content not to do so and, indeed, allowed the situation to continue until he was required by an order of the court to make payment. There may have been some delay by the plaintiff in bringing his action but it would be wholly wrong, in my view, to allow the defendant to retain any benefit as regards interest from a situation which he both created and perpetuated.”

39.  Cons JA, after referring to some English authorities, came to the same view.  The learned judge held that there must be something exceptional to warrant a modification of the basic principle of awarding pre-judgment interest.  The onus of showing what was exceptional would rest on the losing party.  An unexplained delay, in his judgment, could not be any basis for a refusal to award interest.

40.  On the other hand, Ms Li refers me to Wan Chi Hing v Strong Master Corporation Ltd HCA 1554/2013 (Deputy Judge Eugene Fung, SC; 08.12.2015), in which the court refused to award pre-judgment interest to the winning plaintiff for a period of around 1 year.  Deputy Judge Fung referred to Claymore Services Ltd v Nautilus Properties Ltd [2007] BLR 452 at §55, and accepted that the court might exercise its discretion either to disallow interest for a period or to reduce the rate of interest if a plaintiff unreasonably delayed in commencing or prosecuting proceedings.  He also stated that Claymore Services Ltd was applied in Hong Kong in 2 previous cases: The Hong Kong Electric Co Ltd v Commissioner of Rating and Valuation LDGA 224/2004 (Au J and Member Lo; 12 April 2010); and Pfeiffer GmbH v Cheung Hay Kit HCA 1369/2011 (Zervos J; 21 November 2013).

41.  In Wan Chi Hing, the court refused to award interest for a period of 1 year because it found that, after commencing proceedings, the plaintiff made no progress with the case during that period.  Similarly, interest was denied in The Hong Kong Electric Co Ltd because the claimant failed to prosecute a related appeal that it took out.  In my judgment, these cases are distinguishable from the present, because they referred to periods of delay after the commencement of proceedings.  Further, there was evidence on which the court drew a conclusion that the plaintiff/claimant in those cases was at fault in not prosecuting their cases diligently.

42.  In Pfeiffer, the court relied on the pre-action delay to decline to award pre-judgment interest.  As Zervos J found at §8 of the judgment, there was no apparent reason to explain why the plaintiff in that case did not take any action for 3.5 years after payment was due from the defendant.  It appears that Zervos J’s judgment does not sit well with the Court of Appeal’s judgment in Pertamina. I note that Zervos J did not refer to Pertamina in his judgment.

43.  If I were not restrained by the Court of Appeal’s judgment in Pertamina, I would find Zervos J’s approach in Pfeiffer attractive.  I do not find it objectionable for there to be more flexibility for the court to weigh between, on the one hand, the unexplained delay by the plaintiff in commencing an action, and on the other, the benefit obtained by the defendant in having kept the plaintiff’s money to its use during the same period.  In my judgment, this flexibility is more consistent with the spirit of the Civil Justice Reform. Parties should be encouraged to resolve their dispute as soon as practicable, in bringing an action within reasonable time, and prosecuting the same diligently after commencement of the same.

44.  However, in my judgment, it is not open to me not to follow what the Court of Appeal decided in Pertamina in cases involving ordinary commercial debt.  In the present case, the defendant can only point to the fact that there was unexplained inaction by the plaintiff between 22 February 2012 and 29 May 2015.  I agree with Mr Cheung that this is insufficient for the court to decline pre-judgment interest to the plaintiff in the present case.

Conclusion

45.  I grant summary judgment to the plaintiff in the sum of $380,000.00.  Interest shall run at HSBC prime plus 1% on the judgment sum, from 22 February 2012 to the date of judgment, and at judgment rate thereafter up to the date of payment.

46.  I make an order nisi that the defendant do pay the plaintiff’s costs of this application and also of the whole action (including all costs reserved, if any), with a certificate for counsel.  There shall be summary assessment of such costs by me.  For this purpose:-

46.1.   The plaintiff is at liberty to lodge with court and serve a statement of costs within 7 days from today;

46.2.   The defendant is at liberty to lodge with court and serve a statement of objections (no more than 1 A4 page) within 7 days thereafter;

46.3.   The plaintiff’s costs shall then be assessed by me on paper.

47.  I thank counsel for their assistance.