POON LEUNG CHOI v. YUNG KWOK WING AND ANOTHER

HCA2324/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2324 OF 2007

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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 from the order of Master Yuen.  The 1st defendant has not seen fit to appeal from that same order of the Master and he appeared in person momentarily in this hearing but, during the proceedings, asked to be excused from further attendance at this hearing.

2. The order of Master Yuen was given on 22 April this year ordering:

(a)        that the default judgment against the 1st and 2nd defendants be set aside conditional upon the 1st and 2nd defendants making payment into court of $1.5 million on or before 22 July 2008.  Failure to meet the condition would result in the judgment obtained by the plaintiff against the 1st and 2nd defendants to remain valid against both of them;

(b)       costs of that application to set aside the default judgment to be in the cause if the condition is met by the 1st and 2nd defendants but failure to meet the condition would result in costs being awarded to the plaintiff, or to be taxed if not agreed. 

3. The 2nd defendant in this appeal asks for the above order of Master Yuen to be set aside in its entirety and to be substituted by an order that the default judgment against the 2nd defendant be set aside unconditionally with costs of and occasioned by this appeal and costs below to be given to the 2nd defendant.

The Background of this Case

4. The plaintiff's claim against the 1st and 2nd defendant is for repayment of a loan of $1.5 million based on a written loan agreement in Chinese.  There is an agreed translation of that agreement before me.  The written loan agreement was dated 18 October 2002.  That agreement evidences the plaintiff lending to the 1st and 2nd defendants $1.5 million on 18 October 2002 which loan was paid over by a cheque.  It expressly states that the loan was to be for 7½ months and  to be repaid on 31 May 2000.  That reference to the date of repayment, giving the year 2000 is clearly a typo and, given that the period of the loan was expressly stated to be for 7½ months, the correct repayment date should have read 31 May 2003.  The agreement also states at the end of it "other terms to be discussed". 

5. It is common ground that no part of the loan has been repaid by either the 1st or the 2nd defendant to date to the plaintiff.  The writ in this case was issued on 2 November 2007 claiming for the loan of $1.5 million with interest and costs.  That writ endorsed with the Statement of Claim, was served on both the 1st and 2nd defendant.  By an acknowledgment of service dated 21 November 2007, both the 1st and 2nd defendants indicated that they intended to contest the plaintiff's claim against them.  However, no defence was filed by either the 1st or 2nd defendant. 

6. On 18 December 2007, the plaintiff gave notice of intention to enter judgment in lieu of any defence being filed.  There is a dispute by the 2nd defendant as to the service of such notice of intention to enter judgment against him and which I shall deal with later in this ruling. 

7. On 2 January 2008, the plaintiff applied to court for judgment against the 1st and 2nd defendants in default of defence.  On 10 January 2008, judgment was entered and sealed against the 1st and 2nd defendants in favour of the plaintiff.  A copy of the sealed judgment was then served on both the 1st and 2nd defendants.  On 30 January 2008, a summons was taken out by the 1st and 2nd defendants leading to the hearing before Master Yuen and her order from which this appeal stems. 

8. Dealing with the service of the notice of intention to enter judgment against the 2nd defendant, it is the 2nd defendant's contention that the plaintiff failed to serve him with any notice of intention to enter judgment, although there is no dispute that the 1st defendant was served with such a notice.  The plaintiff's case is contained in the affirmation and supplemental affirmation of Chan Kwok-keung which shows that a notice of intention to enter judgment in this case was prepared by the plaintiff's solicitor addressed to both defendants at the both address.  Then two copies of that notice were made.  On one, the name of the 2nd defendant was crossed out and, on the other, the name of the 1st defendant was crossed out.  Chan Kwok-Keung then placed the first notice addressed only to the 1st defendant in one envelope and the 2nd notice addressed only to the 2nd defendant in another envelope, affixed stamps to both envelopes and mailed both envelopes with the respective notices by ordinary post to the 1st and 2nd defendants at the same address. 

9. However, I am told that before mailing those two notices, one with the 2nd defendant's name crossed out and one with the 1st defendant's name crossed out, Chan Kwok-keung did not make any copies of those notices sent for retention in the solicitor's own file, therefore, the plaintiff's solicitor cannot produce, by way of evidence, the copies of the actual notices sent respectively to the 1st and 2nd defendants.  There is only an affidavit of Chan Kwok-keung attesting to the sending of those notices by ordinary post. 

10. On the other hand, the 2nd defendant, in his affidavit, attests that only one notice of intention to enter judgment was received at the address and that notice was addressed only to the 1st defendant with the 2nd defendant's name crossed out on that notice.  It is also the 2nd defendant's evidence that that notice of intention to enter judgment addressed to the 1st defendant was received in an envelope together with a copy of the sealed judgment obtained by the plaintiff in this case, albeit that the notice of intention to enter judgment was dated 18 December and the copy of the sealed judgment was dated 10 January 2008. 

11. Having looked at the contents of both the affidavits of Chan Kwok-keung and that of the 2nd defendant producing the copy of notice of intention to enter judgment, and which had the 2nd defendant's name crossed out on it, I am satisfied that what had been stated by Chan Kwok-keung in his affidavit is true and reliable.  The fact that there is a notice of intention to enter judgment addressed to the 1st defendant only with the 2nd defendant's name crossed out would itself suggest that Chan Kwok-keung would also have sent a similar notice addressed to the 2nd defendant, i.e., with the 1st defendant's name crossed out as attested to by him in his affidavit, at the same time.  Even if it was the case that the notice addressed to the 2nd defendant did not reach its intended destination, it is only incumbent upon the plaintiff to show that such a notice had been sent.  That would be sufficient to prove service and, on the affidavit attested to by Chan Kwok-keung, that was done and I accept that it was done.  In the event, I find that the judgment entered against both the 1st and 2nd defendants to be a regular judgment.  That brings me to the next point. 

Merits

12. The defence which the 2nd defendant attempted to raise to contest the plaintiff's claim is that the parties had agreed before - and I emphasise the word "before" - signing the Chinese loan agreement that the loan which was lent to the 1st and 2nd defendants by the plaintiff was intended to be for purchase of property and was only to be repaid by the defendants to the plaintiff upon the property being resold by the 1st and 2nd defendants. 

13. In putting forward this defence, the 2nd defendant relies on the "other terms to be agreed" clause stated in the agreement.  This, in my view, infringes and contravenes the Parol evidence rule in that a party to a written agreement cannot adduce oral evidence to contradict a written term.  That oral evidence upon which the 2nd defendant wishes to base his defence is therefore inadmissible in evidence and, in my view, there can be no good defence in this case to the plaintiff's claim since it is conceded that the loan of $1.5 million has not been repaid at all by either the 1st or 2nd defendant, or any part thereof. 

14. Accordingly, the appeal is dismissed and the order of Master Yuen is to stand in its entirety.  The date for complying with the condition imposed by the Master, being 22 July 2008, will remain since the 1st and 2nd defendants have had notice of that date for complying with the condition upon that order being first given by the Master. 

15. I therefore make the order that this appeal is dismissed and the order of Master Yuen in its entirety is to stand, including the costs order made by her.  The only outstanding matter, therefore, is the costs of today's appeal. 

(Submission re costs)

16. Having come to the view that there was no merit in this appeal, I think the proper costs order for me to make would be that the costs of this appeal be paid by the 2nd defendant to the plaintiff in any event and that although the 1st defendant had appeared partially in these proceedings, there would be no order as to costs in relation to the 1st defendant in respect of this appeal since these proceedings did not involve him in the slightest.