YU KWING CHUEN v. HUANG JIFEN

HCA 21/2018

[2020] HKCFI 367

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 21 OF 2018

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BETWEEN

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DECISION

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1.  This was the appeal of Huang Jifen (“the defendant”) from the decision dated 26 February 2019 of Master Chow granting summary judgment to Yu Kwing Chuen (“the plaintiff”) in respect of a dishonoured cheque in the sum of HK $6 million (“the cheque”).

2.  At the outset of the hearing, Mr Jonathan Chang, counsel for the defendant made it clear that the defendant accepts that the parol evidence rule applies to exclude oral evidence which has the effect of contradicting the terms of the cheque as an unconditional order to pay. Rather, the only defence relied on is one of failure of consideration.  

3.  It is the plaintiff’s case that the cheque represented the defendant’s partial repayment of loans of no less than RMB 12 million owing to the plaintiff on 17 September 2017. The plaintiff’s evidence in summary is as follows:

(i) by February 2016, the amount of loans he had advanced to the defendant stood at RMB 17.5 million;

(ii) since April 2016, the plaintiff had repeatedly asked the defendant for repayment;

(iii) when the plaintiff met the defendant on 17 September 2017 to discuss repayment of the loans, the amount then outstanding was “no less than RMB 12”;

(iv) it was then agreed that the defendant would first repay RMB 5 million to be paid by a cheque in the sum of HK$6 million;

(v) at the meeting, the plaintiff was given a postdated cheque that could be presented for payment on its date, ie 26 September 2017;

(vi) however, when the cheque was subsequently presented for payment on 27 November 2017, it had been countermanded by the defendant and thus was dishonoured.  

4.  The defendant’s version is that the plaintiff requested the defendant to draw the cheque only for the purpose of showing a Mainland bank to whom he owed money that he had resources himself or could obtain help from friends and therefore had the ability to pay the bank so that the bank would not call in the loans immediately. The cheque was not partial repayment of loans from defendant to the plaintiff.

5.  According to the defendant, as at 17 September 2017, “no money was due and owing … to the plaintiff or if any amount was owing, it was significantly less than HK$6,000,000”.

6.  The defendant submitted that she has an arguable case that the alleged debt “of no less than RMB 12 million” (the consideration for the cheque) did not exist.

7.  It was common ground that the parties met on 17 September 2017 when the defendant drew the cheque postdated to 26 September 2017, and the cheque was not presented for payment until 2 months later on 27 November 2017. It was against that background and timeline that the defendant raised the following matters in support of the defence.

8.  First, other than the plaintiff’s assertion in his affirmation, there is no evidence in the form of a written record or document to support the existence of loans to the defendant as of February 2016 totalling an amount of RMB 17.5 million, nor evidence to demonstrate how as of 17 September 2017 “no less than RMB 12 million” remained outstanding.  

9.  Second, on 26 September 2017 (the date of the cheque), the plaintiff sent the following message to the defendant:

“Mrs Su! I get chased after, yelling to kill me, and about to sue me. That’s why I made you would pay me back so urgently. You don’t know my pains. (My) company is about to close down. I waited for you for 2 years and (you) still haven’t paid (me) back. Now (you) said you would overturn the tables?”

10.  It was submitted that this message showed that the plaintiff did not consider that the defendant had made any repayment to him notwithstanding receipt of her cheque on 17 September 2017.

11.  Third, on or about 16 October 2017, the following exchange took place between the plaintiff and the defendant[1]:

“Yu Jiongquan of Kaiping Jinglin Pharmaceutical {Dad}

Mrs Su! What is the status now? Please don’t evade the problem. The problem has to be resolved. We have found a client to take over my company. The proposal is ready. The crucial point is, we have bank loan(s), and therefore, (we) must pay up half of the loan in order to start the transaction. I had not wanted to tell you this, but I must tell you that you must pay me back at least five million these two days! I sent cash to you, and two and a half years lapsed, isn’t it high time to pay (me) back the loan? You said you are a grateful person yourself, now that I am in difficulty but you are ignoring this fact, and (you) are not taking (my) calls. Do you know how we feel? Are you treating me fairly? I had wanted to help you through your difficulty. (I) didn’t realise this is how (you) treat us now!

Yu Jiongquan of Kaiping Jinglin Pharmaceutical {Dad}

I need five million very urgently! Please reply me.

Jin Li

Big brother Yu, I am very grateful towards you and your family. Today, we all focus on handling the monies. Whether (we) could get it done or not, (we) would take out some funds to meet the urgency. If this is to continue, we would all have hard feelings (?), It’s not possible (that I) don’t take (your) calls. I will make full payment of the loan to you

Yu Jiongquan of Kaiping Jinglin Pharmaceutical {Dad}

In fact, (I) need to use the money very urgently now! Can (you) give (it) to me tomorrow? I certainly cannot miss out on this opportunity, because I am losing two hundred thousand a month and (I) cannot afford it. Please speed up processing the matter …”

12.  The defendant submitted that the following matters emerge from those exchanges: (i) on 16 October 2017, the plaintiff was in dire financial straits; (ii) the plaintiff was demanding repayment of at least[2] 5 million in respect of a cash loan[3] he had made to the defendant 2 ½ years earlier; (iii) he “needed to use the money very urgently”.

13.  Despite being in such dire straits, the plaintiff did not cash the cheque although he could have done so easily at any time from 26 September 2017 (some 3 ½ weeks earlier). In fact, he did not do anything about it for a further 5 weeks.

14.  Then, on 21 November 2017, ‘out of courtesy’, the plaintiff called the defendant to give her notice that he would shortly be presenting the cheque for payment. It was after that call and prior to 27 November 2017 that the defendant countermanded payment of the cheque.

15.  Fourth, even after the cheque had been dishonoured, the plaintiff never sought repayment of the entire outstanding loan of RMB 12 million or the balance (after taking into account the amount under the cheque).

16.  Mr Chang submitted that the defendant has an arguable case that the alleged debt did not exist to warrant granting leave to the defendant to defend.  Alternatively, the defendant should be granted conditional leave to defend upon payment of the full amount of HK$6 million into court.

17.  The court was informed that the defendant had already paid HK$3.1 million into court to stop the enforcement of a charging order made against her property. In the event of the been granted, the defendant requested 28 days for payment of the balance of HK$2.9 million into court.

18.  Mr Peter Chiu, counsel for the plaintiff, submitted that the message of 26 September 2017 is entirely consistent with the plaintiff’s case in that even after taking into account the amount of the cheque, there remained at least another HK/RMB $6[4] million outstanding.

19.  That analysis does not sit comfortably with the language used in the message nor is there any answer to the further questions that emerge from the exchange of 16 October 2017.

Conclusion

20.  In this case, the parties have had many dealings in large sums of money over several years. There appears to have been a running account for their dealings inter se but it seems neither has been able to produce anything in writing evidencing the same.

21.  Whilst the tenor of the messages is that the plaintiff has been chasing the defendant for repayment of a loan made apparently 2 or 2 ½ years prior thereto, namely, in or about 2015, the amount of that loan was nowhere stated and it is unexplained why the cheque was not repayment for the loan. No doubt, there is a great deal more than meets the eye.

22.  Taking a broad view of the evidence before the court, and taking into consideration the fact that the defendant is willing to pay the sum in issue into court, I consider that justice would best be achieved by granting the defendant leave to defend conditional upon full payment of HK$6 million into court. As HK$3.1 million has already been paid, leave to defend is granted on the basis that the balance of HK$2.9 million be paid into court within 28 days.

23.  There be an order nisi that costs of and incidental to the plaintiff’s summons be costs in the cause.