HO HUI LEUNG v. CHEUNG WAI LING AND ANOTHER

CACV 34/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 34 OF 2000

(ON APPEAL FROM HCA NO. 5212 OF 1997)

______________

_______________

J U D G M E N T

_______________

Keith JA (giving the first judgment at the invitation of Godfrey V-P):

Introduction

1. The action to which this appeal relates was tried by Deputy Judge Woolley in the Court of First Instance. The Plaintiff had originally obtained judgment against the 1st Defendant in default of notice of intention to defend, and the action which was tried related only to his claim against the 2nd Defendant. No questions of law were involved. The issues which the judge had to decide were all questions of fact. On those issues, he preferred the evidence of the 2nd Defendant and her witness to that of the Plaintiff. He therefore dismissed the Plaintiff's claim against the 2nd Defendant. It is from the dismissal of his claim that the Plaintiff now appeals.

The parties' respective cases

2. The Plaintiff's claim related to two sums of money which it was common ground had been paid by the Plaintiff to the Defendants: sums totalling $100,000.00 paid in January and March 1994, and a sum of $300,000.00 paid in June 1994. It was common ground that $60,000.00 had been repaid by the Defendants to the Plaintiff in September 1994, thereby reducing the second of the Plaintiff's claims to $240,000.00.

(i) The sums totalling $100,000.00. The Plaintiff claimed the return of the sums totalling $100,000.00 on the basis that they represented loans to the Defendants. The two sums paid in January 1994, which amounted to $50,000.00, were lent to enable them to open up a boutique selling ladies' clothes. A further sum of $50,000.00 was lent to the Defendants in March 1994 because they claimed that they were in financial difficulties.

3. For her part, the 2nd Defendant denied that these sums were paid to the Defendants as loans. Her case was that they had agreed to permit the Plaintiff to use their office and its facilities for a charge of $10,000.00 a month. $50,000.00 of the $100,000.00 paid to the Defendants represented payment in advance of the charges for the first five months of that arrangement. As for the remaining $50,000.00, the 2nd Defendant's case was that that sum was paid for the Defendants to purchase men's suits for the Plaintiff which he would sell through boutiques which he had in Nanning. For purchasing those suits, the Plaintiff agreed to pay to the Defendants 30% of the profits made on their resale. Most of the $50,000.00 was used for that purpose, and in due course the suits were delivered to the Plaintiff. The Plaintiff had not paid the Defendants any share of such profits as he had made on the resale of the suits.

4. The judge found as a fact that the sums totalling $100,000.00 were paid to the Defendants for the reasons which the 2nd Defendant gave. Accordingly, he rejected the Plaintiff's claim that they represented loans to the Defendants. Since the only way in which the Plaintiff's claim for the $100,000.00 had been pleaded was on the basis of the repayment of sums lent, the Plaintiff's claim for the $100,000.00 had to be dismissed.

(ii) The sum of $240,000.00. The background to the Plaintiff's claim for the sum of $240,000.00 was an agreement between the Plaintiff and the Defendants that the Defendants would purchase clothes in France for the Plaintiff's boutiques in Nanning. The capital was provided by the Plaintiff. He paid the Defendants the sum of $300,000.00 to enable them to purchase the clothes. That much was common ground. What was disputed was whether any of the capital was originally to be provided by the Defendants and what the Defendants' share of the profits would be. The Plaintiff's case was that originally it had been planned for the Defendants to invest $120,000.00 in the venture, and that their share of the profits would have been 40%. The 2nd Defendant's case was that the capital was always going to come from the Plaintiff and that the Defendants' share of the profits would have been 30%. The judge preferred the 2nd Defendant's evidence on these topics, though that did not affect why the Plaintiff's claim was ultimately dismissed.

5. The Plaintiff's case was that the Defendants did not use the $300,000.00 to purchase clothes, whether in France or at all. No clothes were ever delivered to him or to his boutiques in Nanning. The Defendants used the money for their own purposes, and apart from the $60,000.00 which was repaid to him in September 1994, he had not got anything for the $300,000.00 which he had paid to them.

6. The 2nd Defendant's case was that the Defendants had spent much of the $300,000.00 on clothes from France and that those clothes had been delivered to the Plaintiff for sale in his boutiques in Nanning. Some of the $300,000.00 had been spent on the 1st Defendant's travelling expenses to France, on the cost of air-freighting the clothes from Paris, and on the cost of delivering them to Nanning. The judge preferred the 2nd Defendant's evidence on these topics. However, that did not account for the whole of the $300,000.00, even when the Plaintiff had been given credit for the $60,000.00 repaid to him. The 2nd Defendant's case as to the balance, which the judge estimated to be about $30,000.00 (once inaccuracies, bank charges and foreign exchange losses had been taken into account), could be accounted for as representing the charges for an additional three months' use which the Plaintiff had of the Defendants' office and facilities. On this topic, the judge said:

"I have to say that this explanation has an attractive logic and, in the absence of any better from the Plaintiff, I am prepared to accept it. It has been a feature of all these dealings between the parties that they have been conducted with an informality which borders on carelessness and a total lack of concern for any regular or precise accounting. That the Plaintiff now has to rely on my impression of his credibility to try to establish his claim is largely his own fault."

And the judge concluded by saying that the Plaintiff

".... may have not had what was due to him to the last dollar and cent, but if anything is now owed, I am satisfied that it is impossible to say with any degree of accuracy what it is, and his claim must accordingly fail."

The grounds of appeal

7. Mr Joseph Chung for the Plaintiff accepts that this appeal involves a challenge to the findings of fact which the judge made. He acknowledges the heavy burden placed upon him, and he is aware of the Court of Appeal's summary in the recent case of Aktieselskabet Dansk Skibsfinansiering v. Wheelock Marden & Co. Ltd. [1998] 3 HKC 153 at pp. 162D-163A of the guidance given by the authorities as to the approach which an appellate court should adopt when faced with such a challenge. But the criticisms which Mr Chung makes of the judgment do not, in my opinion, go anywhere near establishing either (a) that there was no evidence to support any of the critical findings made by the judge, or (b) that any of those findings were contrary to documentary or other incontrovertible evidence which the judge must have overlooked, or (c) that any of those findings could only have been based on a misapprehension of the facts or on some other faulty process of reasoning.

8. It is unnecessary to analyse all the points made by Mr Chung in his skeleton argument or his oral submissions. Many of them are so peripheral that they cannot justify setting aside any of the critical findings of fact made by the judge. It is sufficient, I think, to examine only the principal points advanced. For example, in a number of instances, the evidence given by the 2nd Defendant and the witness called on her behalf is said to be inconsistent with the facts pleaded on her behalf. In my opinion, an examination of those instances show that they are not capable of undermining the critical findings of fact made by the judge:

(i) It was pleaded that it was the Defendants' company which had agreed to purchase the clothes in France, whereas the 2nd Defendant's evidence was that it was the Defendants themselves rather than their company who had agreed to purchase the clothes. However, there was no difference between the Defendants and their company, because what was described as their company was in reality a firm of which they were the two proprietors.

(ii) It was pleaded that the price of the clothes bought in France was Fr. Fr. 180,000.00, whereas the 2nd Defendant's evidence was that their price was only Fr. Fr. 98,708.98. That is true, but the 2nd Defendant's explanation for giving her solicitors the figure of Fr. Fr. 180,000.00 for inclusion in the Defence was that she was referring to the amount which the Defendants were originally intending to spend on clothes in France. As it was, the judge decided not to attach any weight to such differences as there were between the evidence and the pleadings. He said:

"There has been comment from both sides, with some justification, during these proceedings of contradictory statements in evidence, in witness statements and in the pleadings themselves, which might have been more happily pleaded. It is, in my view, further evidence of the nature of the dealings, being confused and informal, together with inaccurate memories of events over five years ago, of which no proper record was kept, and it does not affect my conclusions as to credibility which I have reached above. "

That, in my opinion, was a course which it was open to the judge to take.

(iii) Although the 2nd Defendant claimed that $50,000.00 of the $100,000.00 represented the charges for the first five months of the arrangement under which the Plaintiff was permitted to use the Defendant's office and its facilities, that had not been pleaded in the relevant paragraphs of the Re-Re-Amended Defence. That point is not a telling one. The 2nd Defendant's evidence on the topic had been set out in her witness statement, and the relevant paragraphs in the Re-Re-Amended Defence were added later. If therefore it can be said that this part of the 2nd Defendant's case had not been pleaded, that could not have affected the 2nd Defendant's credibility.

9. All the other criticisms of the judgment fall, I think, into two broad categories. First, there is said to have been no, or no sufficient, evidence to support some of the judge's findings. Having examined each of those complaints, I have concluded that for the most part there was some evidence, whether of a direct or circumstantial kind, to support those of the judge's findings to which this criticism relates. For example, and without making this judgment even lengthier by explaining the relevance of the point, Mr Chung complained that there was no, or no sufficient, evidence upon which the judge could find that the Defendants' counter in Nanning was "not big enough to function as a clothes shop". In fact, an examination of the transcript of the evidence reveals that the 2nd Defendant's evidence was that the counter was simply a counter on which jewellery was displayed, even though there may have been room for clothes to be stored nearby. There may have been a couple of instances where the existence of evidence to support the judge's findings was questionable, but even if there were, those instances related to points which were so peripheral that it is simply not possible to say that they undermined the critical findings of fact which the judge made.

10. Secondly, the judge is said to have placed excessive reliance on certain aspects of the evidence, or the lack of it, in making particular findings of fact. Those complaints again relate to peripheral matters, but in any event, having examined each of those complaints, I have concluded that in each case the reliance which the judge placed on the evidence, or the lack of it, was legitimate and cannot fairly be characterised as excessive.

Conclusion

11. I understand how disappointed the Plaintiff must have been to have lost the case, but I have been unable to detect any acceptable basis on which the judge's findings of fact can be set aside. It follows that in my opinion this appeal must be dismissed.

Rogers JA:

12. I agree. This was an appeal as to fact. Having regard to the basis on which appeals as to findings of fact would lie, the appellant's case appears to have had no chance of success. But I would go further. Having read the transcript of the proceedings, I consider that there is no merit in any suggestion that the judge's findings of fact were anything other than fair and appropriate.

13. In summary, I feel compelled to say that this appeal should never have been brought.

Godfrey V-P:

14. I agree with both judgments. The appeal will be dismissed and we will order that the 2nd Defendant's costs of the appeal be taxed (if not agreed) and paid by the Plaintiff to the 2nd Defendant.