THOUSAND ISLAND FOOD PLAZA LTD. v. YIP PUI HANG t/a FUKUI CO. AND ANOTHER

HCA 377/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 377 OF 2002

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J U D G M E N T

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1. This is an appeal by the 2nd Defendant (the Appellant) from an order of Master Wong made on 17 July 2002 in O.14 proceedings giving final judgment against him in the sum of $358,873.72 with an order for interest, interlocutory judgment with damages to be assessed and costs on an indemnity basis.

2. The Plaintiff's claim is as landlord of a shop in the basement of the Silvercord Building, 30 Canton Road, under a tenancy agreement dated 28 June 2000 with the 1st Defendant and a separate guarantee of the same date signed by the 2nd Defendant, whereby the 2nd Defendant guaranteed the obligations of the 1st Defendant under the tenancy agreement.

3. For the purpose of the O.14 application it has not been disputed that the 1st defendant was in arrears of his obligation to pay rent, rates and management fees, and that on 29 January 2001 he wrongfully quitted the premises.

4. For the purpose of this appeal Miss Hui for the 2nd Defendant (the Appellant) has raised only one matter which she says is a triable issue namely, whether the 2nd Defendant was induced to sign the guarantee by virtue of a misrepresentation of the Plaintiff through its property manager, Mr Wong Cheuk Hang, that he was signing purely as a witness.

5. In so far as the allegation of misrepresentation is concerned, the 2nd Defendant alleges in paragraph 12 of his second affirmation of 18 July 2002 that not long after the commencement of the 1st Defendant's business in 1998, after having a meal with the 1st Defendant, the 1st Defendant suddenly asked him to witness the execution of a tenancy agreement in the place of a friend who had just informed him that he would be unable to attend. The 2nd Defendant claims that he accompanied the 1st Defendant to the office of the Plaintiff, where Mr Wong Cheuk Hang represented to him that he should sign the document put before him as a witness of the tenancy agreement. He claims that he told Wong that he "could not read those words all prepared in English version as set out in that agreement."

6. The affidavit of Mr Wong Cheuk Hang for the Plaintiff was to the effect that he would always emphasize to an intended guarantor that the document he intended to sign was a guarantee, and that he had done so on this occasion. He witnessed the signing of the guarantee by the 2nd Defendant. He denied making the false representation alleged by the 2nd Defendant. He says that the guarantee was signed by the 2nd Defendant on or about 28 June 2000 which was the date on its face.

7. The principles applicable to O.14 application are well known. A defendant has to show the court that he has "a real or bona fide defence". It makes an allegation it must be credible or believable in the light of the evidence placed before the court.

8. The English Court of Appeal has ruled that if the evidence of the defendant is incredible in any material respect, it cannot be said that there is a fair or reasonable possibility that the defendant has a real or bona fide defence and judgment will be given to the plaintiff.

9. The first hurdle that the defendant must overcome is therefore to establish that what he alleges is credible in the sense of capable of belief. In my view in this case the 2nd Defendant has not overcome this hurdle. There are a number of features of his case which lead me to this view.

(1) His case is that he signed the guarantee in the belief that he was witnessing the 1st Defendant's signature on a tenancy agreement. The tenancy agreement and the guarantee are separate documents and the 1st Defendant's signature appears nowhere on the guarantee. The only other signature on the document is that of Mr Wong who witnessed the 2nd Defendant's signature.

(2) It is not said so expressly by the 2nd Defendant but Miss Hui, for the Appellant, deals with the last point by suggesting that it is implicit that the 2nd Defendant is suggesting that the last page of the guarantee was combined with the pages of the tenancy agreement to make the 2nd Defendant believe that it was part of the tenancy agreement. I regard this suggestion as fanciful.

Miss Hui has been unable to suggest any motive on the part of Mr Wong, the Plaintiff's property manager, for doing such a thing or making the alleged misrepresentation. I regard it is fanciful to suggest that he would have made this misrepresentation to the 2nd Defendant when the words, "guarantor" and "guarantee", appear directly above and/or alongside the place the 2nd Defendant was to affix its signature. In any event having seen the original tenancy agreement and the guarantee, it is apparent that they are on paper of different sizes, therefore it would have been apparent that the last page of the guarantee was not part of the tenancy agreement.

(3) The date appearing on the front of the guarantee, 28 June 2000, would have had no significance in 1998. From the original, it is apparent that the date was not inserted after the document had been typed. It must follow from the hypothesis put forward on behalf of the 2nd Defendant that the part allegedly signed by the 2nd Defendant in 1998 must have been carefully joined to a part created later to create the document which now appears as the guarantee. I find this suggestion incapable of belief in the circumstances of this case.

(4) The word "guarantee" appears at the head of the document and directly above the 2nd Defendant's signature. The word "guarantor" appears directly alongside his signature. The 2nd Defendant has not directly affirmed that he does not understand the words "guarantor" or "guarantee", but he simply said that he told Wong that he "could not read those words all prepared in English version as set out in the agreement."

(5) The 2nd Defendant is an experienced businessman holding a responsible position in his own family business as well as having been a senior staff member of another company.

(6) The 2nd Defendant's account in his affirmation that he affixed his signature some time in 1998 is contradicted by his own defence in which he admits that he affixed his signature on or about 28 June 2000. There is no explanation for this conflict which is indicative of an attempt to manufacture a defence from the fact that the Plaintiff mistakenly inserted the words "trading as Fukui Company" in the tenancy agreement in circumstances when between the time of the original letter of 5 June 1998 and the tenancy agreement was signed, the 1st Defendant had ceased trading in that name.

10. I find that the 2nd Defendant has failed to show that he has a real or bona fide defence capable of belief. I dismiss the appeal.