XCHRX WELLFINE PROPERTIES LTD. v. BERGER. ROBERT M.

DCCJ 14889/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATION REGION

CIVIL ACTION NO.14889 OF 2000

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JUDGEMENT

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1. The Defendant took out a summons to set aside the default judgement entered against him on 24 November 2000 based on a dishonoured cheque. In the course of hearing this summons, the Defendant applied to have some amendments and that was granted.

The Facts

1.1. By a tenancy agreement dated 27 May 1999, the Plaintiff let a flat to Linkhope International Limited at a monthly rental of $63000 plus $2000 for air-conditioning arrangements for a period of 2 years, commencing from 9 June 2000.

1.2. The rent was payable in advance on the 1st day of each month.

1.3. The Defendant was at all material time a director of Linkhpoe and he and his family members were living at that flat.

1.4. Linkhope did not have any bank account.

1.5. On all the occasions, except two, the Defendant issued his personal cheque to pay rent for Linkhope.

1.6. When the Defendant delivered the cheques to the Plaintiff, he did not specify anything.

1.7. There was unpaid rent accumulated.

1.8. On or about 24 May 2000, the Defendant delivered a personal cheque (no.116605) of $63000 to the Plaintiff, but the cheque was bounced. On or about 27 May, the Defendant delivered another personal cheque (no.116615) of the same amount to the Plaintiff and that was honoured. The Plaintiff treated the later one as a replacement of the earlier one. (According to the statement of account TLMD-8)

1.9. On or about 8 June 2000, the Defendant delivered a cheque (no.116606) of $65000 to the Plaintiff, but that was bounced (the first cheque). On or about 17 June, the Defendant delivered another cheque back dated 21 May (no.125502) of the same amount, but that cheque was also bounced (the second cheque). On or about 26 June, the Defendant delivered a third cheque (no.125504), and that cheque was honoured (the third cheque).

1.10. On 24 October 2000, the Plaintiff sued for the dishonoured cheque no. 125502 (the second cheque). Since Defendant did not file any defence, therefore judgment in default was entered on 24 November 2000.

1.11. On 17 January 2001, the Plaintiff issued High Court bankruptcy petition against the Defendant (HCB 324/2000). The petition had been adjourned for a number of times. At the hearing on 9 July 2001, the hearing was before Madam Justice Kwan who gave the Defendant a last warning that if he did not apply to set aside the default judgment before the next hearing, he would be adjudicated bankrupt.

1.12. On 20 July 2001, the Defendant took out this summon to set aside the default judgment and its execution.

The arguments

2. The Plaintiff sued for the dishonoured cheque no. 125502 (the second cheque). They are saying the first cheque was for payment of rent for May, the second cheque was for payment of rent for June, and the third cheque was a replacement of the first cheque. Therefore the second cheque was still outstanding. From the second affirmation of Ms Edith Tse, the Plaintiff produced internal vouchers (TLMD-17) from their Accounts Department to support their case.

3. The Defendant's version is that the second cheque was a replacement for the first cheque and the third cheque was a replacement of the second, therefore the second cheque had been paid up. The Defendant further stated in paragraphs 5-7 in his second affirmation that when he delivered the third cheque, he clearly stated that it was a replacement of the second cheque.

4. The Plaintiff raised objection for setting aside the default judgment. The Plaintiff raised, inter alia, the Defendant's was incredible, it was a delaying tactics and the Defendant had a history of avoiding paying rent to other landlords. On the other hand, her Defendant, furthermore raised since he was not a party to the tenancy agreement, therefore the second cheque was not supported by any consideration.

Conclusion

5. According to the statement of account prepared by the Plaintiff (TLMD-8), in May 2000, there was a precedent that the Plaintiff had accepted replacement cheque i.e. 116615 to replace 116605. Furthermore, shortly before or on the 17 June, the Defendant himself only owed the Plaintiff one debt (the first cheque), the Plaintiff did not provide any basis, under such circumstances, how they could take the second cheque unilaterally as payment of rent for the month of June instead of a replacement for the first cheque. Having considered the matter carefully, there is clearly a dispute on material facts. I am satisfied the Defendant has a meritorious defence and the case should be left to the trial judge. About the consideration point, that has to be decided with some factual basis, that I cannot decide at this juncture.

6. About the allegation of delay, since the Defendant, at the early stage, was unrepresented, I have to take that into account, having considered all the circumstances, it would cause injustice if I decline him a chance to defence. About the allegation that the Defendant had a history of avoiding payment of rent to other landlords, with the limited information before me, it would be prejudice and unfair to hold against the Defendant.

7. I grant the application and set aside the default judgment entered on 24 November 2000. I grant unconditional leave to the Defendant to defend. I grant leave to the Defendant to file his defence within 14 from the date of this judgment and the Plaintiff, if necessary, to file a reply within 14 days thereafter.

8. I order that cost of this application, including the hearing on 27 July 2001, be to the Defendant in any event and the Defendant's own cost to be taxed according to Legal Aid Regulations. This cost order is nisi and become absolute if no party apply to the contrary within 21 days from the date of this judgment.