ZHONG GANG AO INVESTMENT & TRADING CO LTD v. LEE CHIU YEE t/a WAH TAT INDUSTRIAL CO

HCA 422/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 422 OF 2010

____________

_____________

D E C I S I O N

_____________

Introduction

1.  This is the defendant’s application for an order:-

(a)     restraining the plaintiff from continuing a Mainland proceeding commenced before this action (“the Mainland proceeding”) because the relief sought there could and should be obtained in this action;

(b)    alternatively, staying this action because it and the Mainland proceeding deal with substantially the same question or issue.

2.  At the beginning of the hearing, the defendant (“Lee”) indicated that he no longer seeks the restraint order (para. 1(a) above) and, in relation to the stay order (para. 1(b) above), limits it to the part of the amended statement of claim concerning 3 post-dated cheques drawn by Lee in the total sum of $359,250 (“the 3 cheques”).  This more limited application is called “this application” below.

This Action

3.  Shortly into the hearing, it became apparent the 3 cheques do not form part of the plaintiff’s claim of $1,759,250.  To better understand this, the parties’ pleadings have to be briefly stated.

4.  According to the amended statement of claim, the sum of $1,759,250 is made up of the following:-

(1) a loan of $270,000 (para. 7 and 8 thereof);

(2) a loan of $400,000 (para. 9 and 10 thereof);

(3) a loan of $200,000 (para. 11 and 12 thereof);

(4) a loan of $910,000 (para. 13 and 14 thereof);

(5) repayment of $20,750 (para. 15 thereof).

5.  The plea concerning the 3 cheques appears as para. 17 and 19, amended statement of claim:-

“After repeated requests and demands, on or about early December, 2008, [Lee] delivered 3 post-dated cheques to the Plaintiff in the total sum of HK$359,250. By verbal agreement made between Mr. Wong of the Plaintiff and [Lee] on or about early December, 2008, the 3 post-dated cheques were to be used for partial repayment …

However, the [3 post-dated cheques] were dishonoured upon presentation on their respective due dates”.

6.  In short, therefore, the 3 cheques do not form part of the plaintiff’s claim, but are pleaded as a purported repayment.

7.  On the other hand, Lee’s pleading avers that the 3 cheques were related to a letter of credit which the plaintiff opened for the defendant in favour of one of the Lee’s suppliers (particulars A(a)(i) to (iii), para. 7, amended defence).

8.  However, it is not asserted even in Lee’s pleading that the sum of $1,759,250 itself has anything to do with the goods sold to him by his suppliers.

The Mainland Proceeding

9.  The plaintiff is also the plaintiff of the Mainland proceeding.  Initially the only defendant therein is a Mainland company which in short can be called De Tai (德泰).  In essence, the plaintiff sues De Tai for the price of goods delivered to De Tai.

10.  De Tai earlier succeeded in an appeal which set aside the judgment against it and ordered a re-trial.  Lee joined as an additional defendant therein in the re-trial (on the ground the plaintiff also claims that Lee should be liable for part of the goods delivered).  The parties in the Mainland proceeding are now waiting for judgment to be pronounced in the re-trial.

This Application

11.  By reason of the matters set out above, namely,

(a) the 3 cheques do not form part of the plaintiff’s claim,

(b) there is no basis to think the plaintiff’s claim has anything to do with the Mainland proceeding,

this application must fail.

Other Matters

12.  There has been a brief discussion as to whether the averments in the plaintiff’s pleading concerning the 3 cheques are immaterial averments.  The plaintiff insisted that the averments are relevant: it is claimed that Lee’s conduct of drawing the 3 cheques in purported repayment (they were dishonoured) can amount to an act of admission of part of the plaintiff’s claim.

13.  This application is not concerned with the propriety or otherwise of the parties’ pleadings.  However, by pleading a purported partial repayment of debts (or an act of admission) which was tied to trading activities between the plaintiff and Lee in the Mainland (para. 3(j), amended reply), the plaintiff has in effect put forth a case which is:-

(a) inconsistent with its case set out in para. 3 to 5 above; or

(b) at the very least, confusing.

Conclusion

14.  This application is dismissed.

Costs

15.  By reason of the matters set out in para. 12 to 13 above, this may be a case where it is appropriate to depart from the usual rule that costs should follow the event.

16.  I shall refrain from dealing with the costs of this application until after I have sight of the parties’ written submissions thereon.  For this purpose, the parties are at liberty to lodge with court and serve their written submission within 14 days from the date of this decision.