LEE SIU FONG MARY v. NGAI YEE CHAI

CACV 125/2005

 IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 125 OF 2005

(ON APPEAL FROM DCCJ 6225 OF 2002)

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J U D G M E N T

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Hon Cheung JA :

The appeal

1. This is an appeal by the defendant against the judgment of Deputy District Judge J. Lam ordering him to pay the plaintiff $92,000. 

The plaintiff’s case

2. The plaintiff claimed that she gave loans to the defendant who was her former lover on eight occasions between 1994 and 1995 in the total sum of $273,000 but the defendant had only made partial payment of $90,000 leaving $183,000 unpaid. 

3. On 7 October 2002, she commenced the present action against the defendant seeking the payment on the unpaid sum which was initially formulated at $193,000 but later amended to $183,000.

The defendant’s case

4. The defendant admitted that the plaintiff had given him four loans in 1994 :

Date of Loan	Amount
8 February 1994	$50,000
25 May 1994	$20,000
9 December 1994}
12 December 1994}	$92,000
	---------------
	$162,000

5. He denied that the plaintiff had given him the remaining four loans.  In respect of the four admitted loans of $162,000, he repaid the plaintiff $70,000 in August 1994 leaving $92,000 unpaid.  However, despite the acknowledgment of this debt, he said he was not liable to repay it on the ground that the claim was barred by limitation. 

The alleged representation and reliance

6. The plaintiff in her Re-Amended Statement of Claim filed on 18 November 2004 pleaded that :

‘ Further alternatively the Defendant had agreed to the Plaintiff on 21^st May 1995 that if the Defendant were unable to pay on 21^st May 2001, the Defendant would sell his taxi so as to repay the balance of the loan.  Acting on the representation made by the Defendant, the Plaintiff had agreed on 21^st May 1995 to postpone the payment date to 21^st May 2001.  Had the Defendant not made the representation or agreement, the Plaintiff would and, if necessary commence legal action against the Defendant to recover the loans within the limitation period.  In the premises, the Defendant is estopped from relying on the limitation ground.’

7. The plaintiff’s case is that because of her reliance on agreement the defendant’s promise to postpone payment of the loans to 21 May 2001 he was estopped from relying on limitation.

8. The defendant agreed that on 21 May 1995 when the plaintiff was demanding payment he had off-handedly told her that he would repay six years later but this proposal was rejected by the plaintiff.

The finding

9. The judge found that the plaintiff had only given four loans to the defendant and he accepted the defendant’s case that only $92,000 was due to the plaintiff.  He rejected the defence of limitation of action.  He found that

1)  the plaintiff had not agreed on 21 May 1995 to postpone the repayment to 21 May 2001.

2)  the plaintiff had continued to ask the defendant for payment in the two months after 21 May 1995.

3)  after that two months period the plaintiff had relied on the defendant’s representation to repay her in six years’ time i.e. by 21 May 2001.

4)  the plaintiff had actually waited for six years before she instructed her lawyer to issue a letter of demand on 28 May 2001.

5)  the plaintiff’s action was consistent with her relying on the defendant’s representation and as a result the defendant was estopped from relying on the limitation period.

The limitation period

10. As the four loans admitted by the defendant were made in 1994 and since no date of repayment was agreed upon they were due immediately and the cause of action accrued at that time.  This is the common law position as applied in Hong Kong : see Chitty on Contracts (29^th Ed) Vol 1 at para 28-036 and Re Brown’s Estate [1893] 2 Ch. 300.  The position will be the same even if the loan is said to be repaid on demand (with the exception of banker and customer and guarantee situations).  The cause of action for repayment of the loan will still accrue once the loan is made.  The position is different in England because of the provisions of section 5 and 6 of the Limitation Act 1980 : see Chuang Yue Chien Eugene v. Ho Yau Kwong Kevin [2002] 4 HKC 245.  In this case the plaintiff’s cause of action accrued on the dates when the four loans were made in 1994 and would be barred on the respective dates in 2000. 

11. Since the plaintiff only commenced the present action in 2005, her case would be defeated unless she could rely on estoppel which would preclude the defendant from relying on the defence of limitation.

The short point of the appeal

12. This appeal raises a short point on whether the judge was correct to say that the plaintiff had relied on the defendant’s representation and had acted on it when he had already found that the plaintiff had rejected the defendant’s offer to repay the loans in May 2001.

13. In my view the judge had clearly fallen into error when he found for the plaintiff.  It must be remembered that the defendant had only made one offer to the plaintiff to repay her in six years time and that offer was made on 21 May 1995.  The judge found that offer was rejected by the plaintiff.  It was a finding based on the evidence.  There clearly was evidence to support this finding.  The judge had taken into account the plaintiff’s previous stand as disclosed in her witness statement of 24 June 2004 that she had on 21 May 1995 rejected the defendant’s offer to repay six years later.  She only changed her stand three days before the trial when she said in her witness statement of 15 November 2004 that she had accepted the offer. 

14. The truth of the matter is that having rejected this offer or proposal on 21 May 1995 there was no further offer or proposal from the defendant for the plaintiff to accept later on.  There was no evidence that the defendant had intended to leave this offer open so that it may be accepted by the plaintiff at some later time.  There was also no evidence that the parties had discussed the time of repayment again after the offer was rejected by the plaintiff. 

15. An offer whether it is called by the name of proposal or suggestion is simply an expression of willingness to contract made with the intention that it is to become binding on the person making it as soon as it is accepted by the person to whom it is addressed : see Chitty para 2-002.  If the offer was rejected by the plaintiff, she could not unilaterally revive it by saying that she had later accepted it.  Illustrations of this principle can be found in cases such as Hyde v. Wrench (1840) 3 Beav. 334 and Norfolk County Council v. Dencora Properties Ltd(English Court of Appeal, judgment dated 9/11/1995).

16. In law there is of course a huge difference between a contract which is based on an offer and acceptance and an estoppel (in the present case a promissory estoppel) which without going into details is based on a representation and reliance of the representation.  However in the present case, it makes no difference to the legal position whether the situation is based on contract or on estoppel because the fundamental point is that there must be an offer or representation made by one party for the other party to accept or relied upon.  The so-called representation by the defendant in this case was exactly the same offer he had made and rejected by the plaintiff.  Once this was rejected then there was nothing for the plaintiff to rely upon which could form the basis of an estoppel.  Her pursuit for payment in the two months period after 21 May 1995 was inconsistent with a reliance of the defendant’s promise.  There was no further representation by the defendant that he would repay in six years time.  The case of Chuang Yue Chien Eugene relied upon by the judge was irrelevant to the issue involved in this case.  It was dealing with an application to strike out pleadings.  It stated that estoppel was available to defeat the defence of limitation.  Whether estoppel will actually be available to a party relying on it will depend on the facts of the case.

Conclusion

17. The judgment must be set aside.  Based on the finding by the judge, the defence of limitation must defeat the plaintiff’s claim.  Accordingly we will allow the appeal and dismiss the plaintiff’s claim against the defendant. 

18. We will make no order as to costs of the appeal and of the proceeding below.

Hon Yeung JA :

19. I agree and would also make the order as set out in paragraphs 17 and 18 hereof.

Hon Chung J :

20. I agree.