WU HAN RONG v. CHAN HOR YEE HILDA

HCA 1617/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1617 OF 2014

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DECISION

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Applications

1.  There are 2 applications before the court.  The plaintiff asks for summary judgment when the defendant seeks striking out of the claim.

Background

2.  On 18 August 2014, the plaintiff commenced the present proceedings.  Briefly, the plaintiff said that she agreed to take part in the defendant’s investment schemes.  The defendant provided her post-dated cheques for the payment principle and guaranteed returns.  In early 2014, fourteen cheques (including one with a clerical mistake on it) were dishonoured.  The plaintiff therefore sued the defendant for, inter alia, the total sums over $55 m, interest or damages for conversion.

3.  The defendant contested the proceedings.

4.  Before a defence had been filed, the plaintiff issued the application for summary judgment.  In her supporting affirmation, she deposed that she started the investment in 2011.  The defendant told her that the monies would be used for trading in gold and IPO subscriptions.  She produced, inter alia, copies of the investment agreements, payment records by her to the defendant, the dishonoured cheques and a confirmation agreement signed by the defendant to substantiate her case.  She believed that the defendant had no defence.  The bank account of the defendant had been closed and she therefore asked for summary judgment as the defendant might have been dissipating or would dissipate the assets.

5.  On 24 October 2014, the defendant issued her striking out application.  In her supporting affirmation, she said, among others, that she had a long history with the plaintiff.  Part of the claim was informal loan(s) from the plaintiff to her.  However, the subject cheques were procured by duress and misrepresentation on the part of the plaintiff.  The confirmation agreement was also made under duress and she did not understand it.  In any event, the interest rate of the loans ranged from 132% to 730% and as such, they were void for illegality under Money Lender Ordinance (Cap.163).  The defendant also asked for leave to adduce further evidence.

6.  One day later, on 25 October 2014, the plaintiff’s solicitor prepared a further supporting affirmation for the application for summary judgment.  He produced copy documents to show another investment of US$150,000 by the plaintiff who had been persuaded by the defendant. The fund was put in liquidation by the Grand Court of Clayman Island (FSD 91 of 2014) and Mareva junction was also granted against the defendant and a Darran Chan in the High court of Hong Kong (HCA 1585 of 2014).

7.  Master Lai dealt with the call-over hearings of the 2 summonses on 27 October 2014.  With the confirmation from both counsel acting for the parties that no further affidavit evidence would be filed, the learned Master adjourned the 2 summonses to be heard together for 2 hours.

Rulings and reasons

8.  Parties appeared before me on 5 February 2015 for the substantive arguments.  They were both represented by counsel.  Mr Samuel Wong for the plaintiff and Mr Martin Ho, for the defendant.  Upon hearing from them, I adjourned it for a written decision to be handed down.  I now do so.

9.  I start to deal with the striking out application of the defendant.  It is not difficult.  With the copies of dishonoured cheques presented to the court, the plaintiff has discharged her burden of coming up a prima facie case. The defendant’s summons for striking out thereby collapses automatically.

10.  It remains to see if the defendant is able to show triable issue(s) or some reason to be a trial.

11.  For the present purpose, I remind myself of the underlying policy for order 14 application is to prevent the defendant from delaying the plaintiff to obtain judgment in a case where the defendant clearly has no defence.  Facing the application, the court asks 2 questions.

(a) Factually, is what the defendant says believable in light of the undisputed or indisputable circumstances? In so doing, the court is entitled to take into account of the commercial reality as well as contemporaneous documents.  However, mini-trial on affidavit evidence shall not be embarked.  Bare assertion is insufficient and the defendant must condescend upon particulars.

(b) Legally, if what the defendant says is believable, does it amount to a defence in law?

12.  In the context of dishonoured cheques, I further ask myself to bear in mind the principles as stated in paragraph 14/4/19 of HKCP 2015 at p270-271.

“…In an action on a bill of exchange, 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…

Bill of exchange are treated as cash…

Extrinsic evidence is not admissible to contradict the terms of the contract constituted by the bill of exchange, which is for unconditional payment. The only exception is where the evidence is of a condition precedent to the contract, that is, a condition which prevents the coming into force of the contract contained in the bill of exchange…”

13.  By applying the above principles into the present case, I have decided the arguments in favour of the plaintiff.

14.  The plaintiff’s case is simple and straight forward. It is well supported with contemporaneous documents.  There is no argument that those documents are fabricated.

15.  She was persuaded to invest.  Agreements were signed.  Post-dated cheques were given as security as the yield of return (and risk) was high. Things went on well for some time until some of the cheques became dishonoured.  She pressed the defendant for repayment.  It was in vain.

16.  She instructed solicitors to issue demand letters to those representing the defendant.  There was no reply.  She went to the defendant and pressed for a written confirmation (signed by the defendant with her fingerprints) of her investment and repayments due.  There was still no repayment and the plaintiff’s chasing of debt action exceeded the limit allowed by law.  She admitted her fault before the magistrate and was held bound over.  Notice of dishonour was further issued by the plaintiff’s solicitors to those of the defendant.  There was neither payment nor reply and finally, the plaintiff issued the present proceedings.

17.  On the other hand, the case of the defendant is unbelievable. It lacks of particulars and full of contradictions.

(a) The defendant started by saying that “…part of the sum underlying the present claim represents informal loan(s)…”.  However, she did not provide particulars of the loan(s) and those of the remaining.

(b) She said that she only borrowed money from the plaintiff. In her statement given to the police on 27 June 2014, she described in the followings.

“於約2010年，我透過朋友介紹，識咗一名女子吳漢容（後稱AP）之後我就用私人名義向AP借咗，港幣約1500萬，但就沒有保留任何借據或欠單，亦無講明幾時清還或每次還幾多錢，所有借款及還款都係用支票來住，但欠單及借據我就無收到任何副本，同埋唔係每次都有簽欠單同借據，而AP亦同意我有錢就還比佢呢個還錢方案而最近我亦透過律師向其訂立還款協義，但未能成功，據我所知，而家計埋利息應該有3000萬港幣未還比佢。”

The plaintiff and the defendant are not relatives. There is even no allegation that they have become close friend. The sums involved are substantial. “Loans” made under such circumstances without specifying how and when they were repaid are against commercial sense. It is further unbelievable if the loans could only be repaid if the defendant would have the money. The defendant also did not make any complaint of excessive interest on the occasion.

(c) The defendant explained that the dishonoured cheques were induced or procured by duress and misrepresentation of the plaintiff. As suggested by Mr. Wong, such defence was only suggested for the first time in the affirmation of the defendant.  Her solicitor did not even respond to the demand letters sent by the plaintiff’s solicitor, not to mention the raise of such defences. They were also not mentioned in the police statement.

(d) It then comes to the confirmation agreement. The defendant also pleaded duress and misrepresentation. Again, it was not mentioned by the defendant or her solicitors until the filing of her affirmation herein.

18.  Of course, one does not forget that the application for summary judgment by the plaintiff is premised on the dishonoured cheques, but not the underlying transactions, it further limits the availability of defence(s) to the defendant.  In other words, even if it is believable, it does not amount to a defence at law.  Regarding these, I agree to adopt the arguments of the Mr Wong in the followings.

“ANSWERS TO THE GROUNDS OF DEFENCE

…

A. “Token of Comfort” and “Not Freely Presentable” Defence

…

14. This runs foul of the principle that extrinsic evidence is not admissible to alter the terms of a cheque. Further, the Confirmation Agreement was prepared by the Defendant in her office after the Cheques were bounced and the Plaintiff was chasing her for payment. In the circumstances, it could not have featured in the issuance of the Cheques.

B. Duress and Misrepresentation Defence

…

16. Clearly, the Plaintiff could not have forced the Defendant to take her moneys and make out a cheque in its place. There was always the alternative for the Defendant to refuse to take the Plaintiff’s investment moneys. Further, the Defendant did not protest and did not try to avoid the Cheques by returning the investment moneys.

17. The Defendant further alleges at paras 12-13 of her Affirmation … that the Plaintiff duressed and intimidated her on 5 March, 7 March, 20 June and 27 June 2014, on the occasions when the Plaintiff visited her office. However, these alleged occasions were occasions after the issuance of the 14 bounced Cheques in January to February 2014 and could not have been a factor that led to the issuance of the bounced Cheques …

18. As to misrepresentation, the Defendant did not, in her affirmation, say what was said by the Plaintiff to her and how the Plaintiff misrepresented. The Plaintiff respectfully submits there is no basis for the Defendant’s allegation: it is a hallow allegation without particulars.

C. Money Lenders Ordinance (MLO) Defence

19. First, this is an action on bounced cheques and not repayment of loans.

20. …

23. Further, each cheque is a separate bill of exchange and even if it is arguable in respect of some cheques whether it arose from an investment or a loan, burden is upon the Defendant to prove that each and every of the 14 Cheques is subject to the same or a similar argument.”

Conclusion

19.  To conclude, I will make the following orders.

(a) The application for striking out by the defendant is dismissed.

(b) Summary judgment is granted to the plaintiff.  The defendant do pay the sum of $55,286,510 to the plaintiff.

(c) The defendant do further pay interest pursuant to s.57 (a) (ii) of the Bills of Exchange Ordinance (Cap.19) from the date(s) of presentment of the relevant cheques to the date of judgment herein and thereafter at judgment rate until payment.

(d) The defendant do pay costs of action and the 2 applications, including costs reserved together with certificate for counsel for hearing on 5 February 2015, to be taxed if not agreed.