LO KWOK HANG v. HUI HOP TAK

DCCJ 467/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 467 OF 2012

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JUDGMENT

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1. This is a debt claim.

2. The plaintiff and the defendant were business partners and worked together at Hong Kong City Service Centre Limited (the “company”) during the material period of time - the plaintiff was the chairman of the company whilst the defendant was one of its directors.  A Mr Look Ting Wah (“Look”) was also a business partner of the plaintiff and defendant.

3. The plaintiff’s case is a simple one.  He alleges that between about December 2005 to October 2010, he loaned various sums to the defendant totalling HK$452,500.  In that period, the plaintiff says, the defendant had repaid HK$350,000, leaving a balance of HK$102,500 still outstanding as between them.  The plaintiff provides a table at paragraph 1 of the Statement of Claim (“SOC”) setting out the breakdown of the loans that remain unpaid by the defendant, totalling HK$102,500 (the “Loan”).  It is this amount that the plaintiff claims in this action.

4. The defendant’s case, as pleaded, is a denial that the plaintiff lent to him or he borrowed from the plaintiff the sum of HK$102,500, or any part thereof (paragraph 2 of the Amended Defence) – in the course of the trial, however, the plaintiff agreed that except for Item 1 at paragraph 1 of the SOC in the amount of HK$25,000, he did ask for and receive the Loan from the plaintiff.

5. The defendant also pleaded that in about early 2006 he had verbally reached an understanding/arrangement with the plaintiff whereby the plaintiff would “at his own wish” transfer money to the defendant for the latter’s own use and in return the plaintiff could “at his own wish” take possession of bearer cheques issued by the company to the defendant as “security” which the plaintiff could present (to a bank) provided that the company had sufficient funds to honour the cheque(s) (paragraph 3 of the Amended Defence).  Again in the course of the trial, the defendant resiled from his pleaded position and accepted that it was not the plaintiff that had “at his own wish” transferred sums to the defendant, but that it was he that requested loans from the plaintiff from time to time which led to the plaintiff lending money to the defendant.

6. The defendant then goes on to set out his position in relation to the Loan.

The disputed amounts

7. As pleaded, the defendant denies that the plaintiff loaned HK$25,000 to him on 14 December 2005 (Item 1 at paragraph 1 of the SOC) or that he is liable to pay this amount to the plaintiff.  Alternatively, the defendant pleads that this part of the claim is time-barred under the Limitation Ordinance, Cap 347.

8. As to Items 2, 3, 4, 5 and 6 at paragraph 1 of the SOC totalling HK$77,500, the defendant pleads that these sums have already been repaid to the plaintiff and in fact, “a total sum of HK$115,500 had been reimbursed or otherwise” to the plaintiff.

9. Finally, as to Item 7 at paragraph 1 of the SOC, which is a sum of HK$7,000, the defendant pleads that he has already repaid the plaintiff HK$7,000 in cash on 19 April 2010 (not on 15 April 2010 which was pleaded).

10. The defendant counterclaims for the amount he has said he has overpaid to the plaintiff, which is pleaded as HK$45,000 (made up as HK$115,500 reimbursements, HK$7,000 cash payment on 19 April 2010 less the HK$77,500 which the defendant admits was transferred to him from the plaintiff).

11. The parties have filed an Agreed Statement of Issues in Dispute (the “Statement”).  These are as follows:-

(1) Whether there were loans advanced from the plaintiff to the defendant on divers dates from 14 December 2005 to 27 October 2010 for the total sum of HK$452,500.00 which includes the Loan and “other loans”;

(2) Whether there was a verbal Agreement in early 2006 between the plaintiff and the defendant as alleged in paragraph 3 of the Amended Defence and Counterclaim;

(3) Whether the cause of action for repayment of the sum of HK$25,000 (item 1 of the Loan) is time-barred or statute-barred;

(4) Whether the total sum of HK$115,000 were for the repayment or reimbursement of the Loan as alleged in paragraph 5(2) of the Amended Defence and Counterclaim and as such whether the Defendant had overpaid for the sum of HK$45,000 or were payments for the other purposes.

(5) (a) Whether the subject cheque no. 380604 for HK$7,000 was for the repayment of part of the Loan;

(b) Whether the defendant had paid the sum of HK$7,000 to the plaintiff by cash on 15 April 2010; and

(c) Whether there was any arrangement to return the dishonoured cheque no. 380604.

(6) Whether the total sum of HK$102,500 is due and owing by the defendant to the plaintiff.

12. There are essentially four key points to consider.  Upon resolving these points, I shall answer the issues as set out in the Statement.

(Point 1)  Whether $25,000 (Item 1 at paragraph 1 of the SOC) issued by cheque to the defendant dated 14 December 2005, is owing to the plaintiff.  If so, whether the plaintiff's claim for this sum is time-barred under s 23(3) of the Limitation Ordinance, Cap  347 (“LO”);

(Point 2)  Whether the $7,000 amount (Item 7 at paragraph 1 of the SOC) which the defendant admits was loaned to the plaintiff has been repaid to the plaintiff by cash on 19 April 2010;

(Point 3)  Whether the repayments made by cheque (pleaded at paragraph 5(2) (i), (iii), (iv) and (v) of the Amended Defence) (the “Cheque Repayments”) extinguish the Loan amount;

(Point 4)  Whether repayments made by cash (see paragraph 71 onwards, below) (the “Cash Repayments”) were made to the plaintiff by the defendant which, alternatively, extinguish the Loan amount. 

Point 1 – the HK$25,000 cheque

13. The plaintiff alleges in the SOC that he advanced $25,000 cash to the defendant on 14 December 2005.

14. The plaintiff accepts that, in fact, the sum of $25,000 was not advanced to the defendant as alleged.  However, a cheque in the amount of $25,000 issued by the defendant (the “HK$25,000 cheque”) came to be held by the plaintiff, which arose as follows.

15. In mid November 2005, Look had telephoned the plaintiff and asked him for a loan of HK$50,000 which he needed urgently and which he asked to be deposited into his private bank account.  He promised that he would repay the amount to the plaintiff by the end of November 2005.  On 19 November 2005, the plaintiff deposited that amount into Look’s personal bank account (which in fact was a joint account that he shared with someone).

16. Look duly handed a company cheque to the plaintiff on 1 December 2005 for HK$50,000 but, upon presentation to the bank by the plaintiff, was dishonoured.  The plaintiff immediately confronted Look about the dishonoured cheque.  Look told the plaintiff the HK$50,000 (deposited on 19 November 2005) had in fact been split between Look and the defendant for their own respective uses and that he would arrange for someone to deliver two separate cheques to the plaintiff as repayment.

17. As a result, two personal cheques for HK$25,000 each (one issued personally by Look and the other issued personally by the defendant) were delivered to the plaintiff as repayment for the HK$50,000.  Both cheques were bearer cheques with the payee name left blank.

18. The plaintiff says that at the time he received the two cheques he informed both Look and the defendant that he would be depositing the cheques into the bank but was urged by them not to do so because neither of them had sufficient funds in their respective bank accounts. The plaintiff said that he tried to deposit the cheques many times but was given the same excuse each time.  The plaintiff said that he did not take further action at that time about the defendant’s HK$25,000 cheque (the “HK$25,000 cheque”) as he was aware that the defendant had financial trouble so he would just keep reminding the defendant that he owed him the HK$25,000.  In fact, as is set out below, the plaintiff did loan the defendant other sums of money, which the defendant invariably needed urgently, the majority of which the defendant repaid over time.

19. The defendant’s case in relation to the HK$25,000 cheque is that he himself did not borrow HK$25,000 from the plaintiff – it was Look who had borrowed HK$50,000 from the plaintiff and which had been deposited into his personal account.  As mentioned above, this is accepted by the plaintiff.

20. However, the defendant went on to state that he had come to issue the HK$25,000 cheque because Look had told him that the company was in urgent need of money but that Look told him that the HK$25,000 “may or may not be used”.  The defendant states that he had no idea what had happened to the cheque since it had never been presented and Look had said that he could not remember where he had kept it.  The defendant states that his chequing account was in fact closed in 2006.

21. I have considered all of the evidence.  I prefer the version put forward by the plaintiff.  The plaintiff’s account of events is straightforward and believable.  The defendant’s story is not believable.

22. There is no dispute that the plaintiff was out of pocket for HK$50,000 – that he held bearer cheques issued by both Look and the defendant, which totalled this amount, is also beyond dispute.  I believe that the plaintiff did make enquiries of the defendant in relation to the HK$25,000 – such follow up makes perfect sense given that he was out of pocket for a significant amount.  Indeed, it would have been surprising had the plaintiff not followed up with the defendant in relation to the cheque at the material time.  The defendant’s version - that he did not know where the cheque had gone and did nothing in respect of it – is incredible.

23. The defendant was in financial trouble at this time, a fact that he accepted during his testimony.  Given this situation, I do not believe that he would have taken no action in relation to the HK$25,000 cheque if he really did not know where it had gone: he did not cancel it, nor did he push Look to return it to him.  No doubt he could have used the money to relieve his admitted financial burden if available to him.  I find that he did not do any of these things because he knew from the plaintiff’s enquiries that the latter was holding the HK$25,000 cheque (such sum that the plaintiff was entitled to receive from the defendant).  I also find that the defendant did tell the plaintiff not to cash the cheque because he had insufficient funds in his account.

24. Given that the defendant has admitted that the HK$25,000 cheque has not been cashed, I find that he still owes this sum to the plaintiff.

Limitation Ordinance

25. Even though I find that the HK$25,000 sum remains unpaid, the defendant pleads that the plaintiff cannot claim this amount given that, since the HK$25,000 cheque was issued on 14 December 2005 and the Writ was issued on 14 February 2012, six years have lapsed and as a result the plaintiff’s claim is time barred: section 4(1)(a) LO.

26. Mr Kwan (counsel for the plaintiff) argues that the plaintiff can engage section 23(3) LO:-

“(3) Where any right of action has accrued to recover any debt or other liquidated pecuniary claim, or any claim to the personal estate of a deceased person or to any share or interest therein, and the person liable or accountable therefore acknowledges the claim or makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment.”

27. He states that the plaintiff does not rely on acknowledgment (primarily since an acknowledgment is required to be made in writing under section 24(1) LO) but that the defendant has made part payment in relation to the HK$25,000 amount.

28. To support the contention that part payment has been made, Mr Kwan submits that a personal cheque in the amount of HK$7,000 (Point 2 below) was tendered to the plaintiff on or about 13 April 2010.  I note that it is the plaintiff’s case that the defendant only ever gave to the plaintiff two personal cheques, namely the HK$25,000 cheque and HK$7,000 cheque; the remaining cheques given to the plaintiff were company cheques given to the defendant.

29. Mr Kwan says that the HK$7,000 cheque was tendered to repay part of the sum owing by the defendant under a running account between the plaintiff and defendant.

30. The defendant accepts that there was a running account. However, he denies that the HK$25,000 sum was included in the running account because the plaintiff agreed in evidence that the running account only commenced in March 2006, whilst the HK$25,000 cheque was issued on 14 December 2005.

31. Although I deal with the facts surrounding the payment of the HK$7,000 cheque below, I hold that the sum of HK$25,000 was indeed included as part of the running account between the plaintiff and defendant.  I do not see why such amount should be separated from the later sums simply because it was said to have been incurred before March 2006.  No doubt, as was the evidence of the plaintiff, the plaintiff had around that time still been making enquiries of the status of the HK$25,000 cheque from the defendant.  It does not make sense that this sum should be excluded from the “account” between the defendant and plaintiff even though a more formal tag was given to the loans and repayments between the plaintiff and defendant as from March 2006.

Part payment

32. The plaintiff argues that once the HK$7,000 cheque was tendered by the defendant to him on 13 April 2010, it was at that point that the HK$25,000 debt (owing from 14 December 2005) was deemed to have revived.  As a result, there is no question that the claim for this sum is not time-barred.

33. In support of his contention that the HK$7,000 cheque went towards satisfaction of the then running account Mr Kwan cites In re Footman Bower & Co Ltd [1961] 1 Ch 443:-

Since the enactment of the Limitation Act, 1939, the position is different, for section 23(4) now contains a statutory provision applicable to simple contract debts whereby any payment in respect of a debt will make time start to run afresh in respect of that debt.  There is no longer need to establish a new promise to pay.  In my judgment, however, one must still look at the act and intention of the debtor to see whether the payment is made in respect of the particular debt.  Payment is in this subsection dealt with in close conjunction with acknowledgment.  Just as an acknowledgment can only acquire that character by the act of the debtor or his agent, so also, I think, a payment can for the purposes of the subsection only acquire the characteristic of being made “in respect of” the debt by the act of the debtor or his agent…

“When, as in the present case, there is an account running between the parties which to the knowledge of both parties is of that kind and kept in that way, then, if the debtor makes a payment “generally on account,” it appears to me that he must be taken to be making it on account generally of whatever is owing on the balance of the account.  A payment “on account” imports an acknowledgment of a liability for a larger sum…  When a payment is merely stated to be “on account” without the liability on account of which it is made being specified, one must first inquire what liabilities on the part of the payer to the recipient exist.  If on inquiry it is found that the only liability is in respect of a balance due on current account, the natural conclusion to reach is, in my judgment, that the payment is made on account of that balance generally, not on account of any particular items contributing to that balance…

34. As stated, I accept that there was a running account between the parties. I also accept that the HK$7,000 cheque not being assigned to a particular debt was intended to be made “generally on account… of whatever is owing on the balance of the account,” which, as I have found, included the HK$25,000 owing from 14 December 2005.

35. As to the act and intention of the defendant at the time of giving the HK$7,000 cheque to the plaintiff, the defendant unequivocally stated that he handed it to him with the intention to transfer sufficient funds to his bank account on that date so that the cheque could be met, but which he simply forgot to do.  His evidence was also that he told the plaintiff that he had sufficient monies in his account before handing him the cheque.  I hold that the defendant’s actions do demonstrate that he intended the cheque to be used as repayment on the account.

The HK$7,000 cheque was dishonoured

36. It is relevant to note that the HK$7,000 cheque was dishonoured upon presentation and, on the plaintiff’s own case, the HK$7,000 amount owing remains unpaid to date.

37. Whilst Mr Kwan stated in opening his case that tendering the cheque in part payment of the whole indebtedness was sufficient for time to revive (and Mr Lam, counsel for the defendant, did not appear to argue otherwise), the legal rationale for this was not supported by the authorities submitted by counsel.

38. The starting point from the legislation is that “payment” needs to be made in order to revive the cause of action.  To date, no actual payment has been effected.

39. Second, there is a line of UK landlord-tenant authorities that suggest that a cheque tendered by a tenant to landlord for the payment of rent - which if not paid by a specific time will result in the lease expiring - even if received before the expiry of the lease but presented to the bank after expiry, must be honoured upon first presentation, failing which payment has not been regarded as having been made within time: see Beevor v Mason (1978) 37 P & CR 452 and Day v Coltrane [2003] 1 WLR 1379 at 1383C-E.  However, I cannot derive much assistance from these cases since they are, first, confined to a specific area of the law.  Second, they do not consider the position where there is an underlying debt, such as in this case.

40. Notwithstanding the above, there does not seem to be any dispute from the authorities that the handing over of a cheque in part payment of a debt will revive the cause of action if payment is subsequently honoured. I agree with the reasoning of Farwell LJ in Marreco v Richardson [1908] 2 KB 584:-

“In the more recent case of Felix Hadley & Co v Hadley, Byrne J held that a cheque or a bill of exchange given in respect of a pre-existing debt operated as a conditional payment thereof, and on the condition being performed by actual payment, the payment related back to the time when the cheque or bill was given. That is only expressing the same principle in another form, and I should myself prefer to say that the giving of a cheque for a debt is payment conditional on the cheque being met, that is, subject to a condition subsequent, and if the cheque is met it is an actual payment ab initio and not a conditional one.”

41. A similar approach, however, appears to have been taken by the courts where a cheque has been presented but subsequently dishonoured: see Felix Hadley & Co v Hadley [1898] 2 Ch 680, per Byrne J:-

“Of course, had these bills and cheques not been duly met, then the debts would have revived, and would have been debts due to the vendor.”

42. This echoes the judgment of Lord Campbell CJ in Turney v Dodwell (1854) 3 El & Bl 136:-

“Where a bill of exchange has once been so delivered in payment on account of a debt as to raise an implication of a promise to pay the balance, the Statute of Limitations is answered, as from the time of such delivery, whatever afterwards becomes of the bill.”

43. As to the question of the cheque being subsequently dishonoured, Lord Campbell CJ stated:-

“We do not see why its immediate operation, as an acknowledgment of the balance of the demand being due, is at all affected by its operation as a payment being liable to be defeated at a future time. The statute intending to make a distinction between mere acknowledgments by word of mouth and acknowledgments proved by the act of payment, it surely cannot be material whether such payment may afterwards be avoided by the thing paid turning out to be worthless. The intention, and the act by which it is evinced, remain the same.”

44. Finally, the Court held that “payment,” which is akin to that found in 23(3) LO, would include a cheque which is subsequently dishonoured:-

“We think that the word payment must be taken to be used by the Legislature in a popular sense, and in a sense large enough to include the species of payment in question: and we should think the acknowledgment of liability as to the remainder of the debt not at all altered by the fact of the notes by which it was paid turning out to be forged, or of the coin turning out to be counterfeit. In all these cases the force of the acknowledgment is the same; and the payment is, we think, a sufficient payment (within the words of the legislation).”

45. A recent confirmation of this approach can be seen in Homes v Smith [2000] Lloyd's Rep Bank 139, per Lord Woolf MR:-

“Furthermore, where a cheque was offered in payment, it amounted to a conditional payment which, if accepted, operated as a conditional payment from the time when the cheque was delivered. If the cheque was not met on presentation, the payment was subject to a condition subsequent which meant that the sum which had been due became due once more.”

46. The above citations demonstrate that, where the act and intention of the debtor can establish that he handed over the cheque to the creditor as payment (which appears to be the trigger), it does not matter whether it is subsequently honoured or dishonoured - the underlying debt will revive.

47. As a result, I hold that the HK$25,000 debt was revived at the time of the tendering of the cheque to the plaintiff on 13 April 2010.

Alternative position

48. There is an alternative position.  That is, as the defendant argues, the HK$7,000 was paid by cash to the plaintiff on 19 April 2010.  If I accept this evidence, then this would certainly constitute the part payment envisaged by the plaintiff as a result of which the HK$25,000 debt would revive.  However, as can be seen below, I have agreed with the plaintiff and do not accept that the HK$7,000 has been paid by the defendant to the plaintiff.

49. Nonetheless, on the basis of the above, I hold that the HK$25,000 remains outstanding to the plaintiff and that the claim for this amount is not time-barred.

Point 2 – the HK$7,000 cash payment

50. I have made some observations above in relation to the HK$7,000 amount.

51. In relation to the HK$7,000 sum, the facts are these.  On 13 April 2010, the defendant asked the plaintiff for a loan of HK$7,000 in cash which he needed urgently.  The plaintiff was reluctant to give a loan to the defendant because he states that at that time the outstanding amount owed to the plaintiff by the defendant, under the running account, was “approaching HK$100,000” and a further loan of HK$7,000 would push the amount outstanding above HK$100,000.  

52. At first, the plaintiff said that part of the outstanding amounts due to him would need to be repaid before further sums could be loaned.  The defendant offered HK$7,000 (to be paid by way of a cheque no. 380604).  The defendant said that he was good for the money and that the only reason he was asking the plaintiff for HK$7,000 cash was because he had no time to visit the bank or ATM that day.

53. The plaintiff asked him to repay more money so as to reduce the outstanding debt due at that time, but the defendant said that he would not be able to repay more than HK$7,000.  Reluctantly, the plaintiff accepted the cheque of HK$7,000 – I find that the identical sums of HK$7,000, being the sum loaned and the sum repaid, is coincidental.  The defendant told him that he could proceed to present the cheque to the bank that day because he had sufficient funds in his account.

54. I find that cheque no. 380604 in the amount of HK$7,000 was for partial repayment of the sums owing to the plaintiff, as described by the plaintiff in his evidence.  I accept that the plaintiff had asked the defendant to repay a larger sum so as to reduce the defendant’s overall indebtedness to the plaintiff but that the defendant stated that he was not able to repay any more – this is evident from the defendant’s HSBC Statement of Revolving Credit Facility which shows that on 13 April 2010 he had an overdraft of HK$75,000 and he was HK$6,240.20 from exceeding his overdraft limit, so in actual fact he did not have sufficient funds in the account to honour the cheque.

55. The defendant stated that he had planned to transfer funds into the account on 13 April 2010 so that the HK$7,000 cheque could be met upon presentation but that he had forgotten to do so.  When the plaintiff presented the cheque it was dishonoured (which he only learned of on 15 April 2010).

56. When the plaintiff asked the defendant about this, the defendant said that he would repay HK$7,000 in cash to the plaintiff, which the defendant says he did on 19 April 2010 at the plaintiff’s Kwun Tong office.  The plaintiff says that he never received the HK$7,000 cash from the defendant and, indeed, was not even at the Kwun Tong office on 19 April 2010.  However, the plaintiff’s evidence on this point was not challenged on cross-examination.

57. Mr Lam submitted that the HSBC Statement of Revolving Credit Facility dated 28 April 2010 shows that the defendant withdrew HK$7,000 from his ATM that day, and that this added weight to the defendant’s account, however I find that this is neither here nor there as far as the plaintiff is concerned.

58. I find in relation to the HK$7,000 payment that no evidence has been produced by the defendant to satisfy its burden to prove that such payment was made by cash.  I accept that the defendant withdrew HK$7,000 from his ATM on that day, but that is a far cry from establishing that this money was given to the plaintiff.

59. I am also surprised that the defendant never sought an acknowledgement or receipt from the plaintiff in relation to the alleged repayment.  In any case, after hearing the testimony and reviewing the evidence, I reject the defendant’s version that HK$7,000 cash was paid to the plaintiff on 19 April 2010. I find that the plaintiff is still owed HK$7,000 from the defendant.

Points 3 and 4

60. During the trial, Mr Lam produced a table which purported to set out all the loans made by the plaintiff and repayments made by the defendant since 2005 (Table 1).  The defendant’s case is that (1) it has “over-imbursed” (sic) the plaintiff; (2) that the Cheque Repayments made (paragraphs 5(2)(i), (ii), (iv) and (v) of the Amended Defence) fully satisfy the plaintiff’s claim; further or alternatively (3) the defendant has made Cash Repayments to the plaintiff in the total sum of HK$145,000 which also fully satisfy the plaintiff’s claim.

Cash Repayments and Cheque Repayments

61. As described above, it is not disputed that the plaintiff loaned money to the defendant, in the amount of HK$452,500 save that the HK$25,000 sum (Item 1) is disputed, as set out above.

62. As I have found, by March 2006 the plaintiff was indeed owed HK$25,000 by the defendant.  In spite of this, the plaintiff recalls, he wanted to help the defendant because he had seen the defendant scolded by an employee who had lent him money and he had seen other people come to the office to chase for repayments from him.  He agreed that this was out of mercy but also because the defendant was his business partner.  He noted that he never charged the defendant interest on the amounts he loaned to him.

63. The management of the company convened a meeting whereby the defendant would be allowed to borrow money equal to the amount of his salary or housing allowance from the plaintiff personally but that when this occurred, the defendant would be required to endorse a company Payment Voucher which demonstrated that a cheque (in the amount written on the Payment Voucher) had been received by the defendant.  The repayment could be effected by way of straight cash deposit into the plaintiff’s bank account, alternatively for the salary or housing allowance cheques given to the defendant at the end of the month to be cashed and that money to be deposited into the plaintiff’s account.

64. In reality, the plaintiff would personally advance money to the defendant before the date on the Payment Voucher, the money invariably being needed urgently.  When the company cheque for salary/housing allowance was issued to the defendant, he would hand it over to the plaintiff as repayment of what was then outstanding.  The company cheque was almost always a “bearer” cheque, with the payee name left blank.  Also the cheque required two signatures – the plaintiff’s as well as that of one of the directors.

65. Usually, the plaintiff says, when he received a cheque in this way from the defendant it had already been signed by the defendant (who had signed as one of the two signatories of the company). Apart from adding an entry in the payee section, the plaintiff would add his required signature to the cheque only at the time of presenting it at the bank as he was afraid of losing it if he signed beforehand.

Cheque Repayments

66. As pleaded at paragraph 5(2) of the Amended Defence, the plaintiff alleges that the following were the Cheque Repayments:-

(i) Sum of HK$10,500 on 23 September 2008;

(iii) Sum of HK$30,500 on 19 February 2009;

(iv) Sum of HK$32,000 on 29 October 2009;

(v) Sum of HK$32,000 on 30 July 2010.

67. At the outset, I was attracted by the defendant’s argument simply for the fact that it appeared that it fully answered the plaintiff’s claim.  Why could the Cheque Repayments totaling $105,000 not fully extinguish the plaintiff’s claim of HK$102,500?  Upon further reflection, I found the submission to be artificial.

68. The plaintiff has all along claimed that it is owed $102,500 from the defendant.  Although the plaintiff accepts that the defendant has made the Cheque Repayments as stated above, the plaintiff’s case is that, even taking these four payments into account (being assigned to “other loans”), there remains a further HK$102,500 that has not been repaid.

69. Table 1 demonstrates, and the defendant accepts, that HK$452,500 has been loaned to the defendant by the plaintiff, although the defendant alleges that more than this amount has been repaid.  The plaintiff states that the defendant has repaid HK$350,000, leaving the balance of HK$102,500 (the Loan).

Other loans

70. Mr Lam stated strongly in closing that there were no “other loans” in existence - that the monies loaned by the plaintiff to defendant were not specially categorised but were all part of one loan.  Indeed, the plaintiff agreed with this assessment.  As to this apparent confusion, I am of the view that it is simply a nuance of language.  I hold that the term “other loans” refers to those loans which have already been repaid and do not make up part of the Loan.  The fact that only the Loan remains is neither here nor there.  As is clear, the plaintiff claims for whatever monies are outstanding to him having already taken into account all repayments made.

Cash Repayments

71. The defendant alleges that he repaid the following amounts in cash:-

(a) Sum of HK$10,500 (housing allowance) on 24 October 2008;

(b) Sum of HK$30,500 (salary) on 29 December 2008;

(c) Sum of HK$32,000 (salary) on 25 August 2009;

(d) Sum of HK$32,000 (salary) on 26 January 2010;

(e) Sum of HK$40,000 (Director’s drawing) on 31 August 2010.

72. The plaintiff’s evidence is that he was never repaid by the defendant in cash.

73. If I accept that the Cash Repayments were made, then their total amount results in the plaintiff’s claimed amount being extinguished.  Indeed, any sums overpaid would fall within the defendant’s Counterclaim.  Conversely, if I find in the Cash Repayments were not made then these sums remain owing to the plaintiff.

74. At the outset I take into account the fact (which is undisputed) that neither the plaintiff nor defendant kept written records of the loans made by the plaintiff or repayments made by the defendant.

75. The plaintiff’s reason for this is that he always knew, at least roughly, what was owing to him by the defendant.  When the defendant approached him for a loan/advancement of salary commencing from about 2006 onwards the plaintiff says that he would verbally remind the defendant how much the defendant owed him. These were invariably rounded off figures (to the nearest $500 or $1,000) and he would demand repayment of part of the outstanding sums before he would lend the defendant any further amounts.

76. Whilst the defendant states that the plaintiff would not mention the outstanding amount every time he sought a loan from the plaintiff, he agreed that the plaintiff would state the amount “sometimes”. I am satisfied, and I find, that the plaintiff did tell the defendant how much was owing to him so that the defendant was aware of this running amount.

77. The plaintiff gave a further explanation for not having written records.  He stated that he would only receive cheques from the defendant (and never cash).  As a result, the bank would have any records of repayments received by the defendant by cheque. I accept the plaintiff's explanation.

78. The defendant did not offer any explanation for not having any bank records of his own (save for the HSBC Statement of Revolving Credit Facility dated 28 April 2010).  He stated that he “trusted the plaintiff” to tell him the current amounts owing.

79. It is relevant to note that, save for paragraph 5(2)(ii) of the Amended Defence which the defendant says wrongly pleads payment by cheque instead of cash, the Cash Repayments were not pleaded by the defendant.

80. As can be seen from the defendant’s pleaded case, it was all along its position that the Cheque Repayments fully satisfied the plaintiff’s claim.  No alternative case was pleaded.  One would have thought if such significant sums had been repaid to the plaintiff in cash, which might fully extinguish the plaintiff’s claim, that they would have been raised from the outset, even as an alternative case. But they were not pleaded and only raised late in the day by way of the defendant’s supplemental witness statement filed on 1 August 2013. I have taken this into account in my overall consideration of the evidence on this point.

81. I have set out above what the defendant would do upon receipt of salary or housing allowance cheques from the company and how Cheque Repayments were effected (see paragraphs 64 and 65 above). With the Cash Repayments, the defendant’s evidence was that he would present the particular salary or housing allowance cheque to the bank, cash it and then hand the cash to the plaintiff.  His evidence was the same in respect of all the alleged Cash Repayments itemised above.  The plaintiff strongly denied that this ever occurred.

82. The evidence that the defendant had himself withdrawn cash upon presenting the salary or housing allowance cheques given to him by the company to the bank – copies of the reverse side of the cheques were produced to show that the defendant had received the monies upon presentation at the bank - does not prove that such monies, after receipt from the bank, were actually given to the plaintiff.

83. Although there is no evidence that either the plaintiff or defendant kept formal written records of the amounts owing, it is for the defendant to satisfy the Court that such Cash Repayments have been made as alleged by him. As stated, there is simply no such evidence of this.

84. It is also strange in my view that the defendant, knowing that he owed money to the plaintiff, would not seek the plaintiff’s acknowledgement when such sums were repaid to him.  The defendant admitted that he was poor in keeping track of all the debts that he owed (to the plaintiff as well as to other financial institutions) but this cannot be a defence.

85. Taking all the above into account, I have no hesitation in rejecting the defendant’s assertions that Cash Repayments were made.

The Statement

86. Thus, I answer the Statement as follows:-

(1) Yes – as accepted by the defendant.

(2) No – as accepted by the defendant.

(3) No.

(4) No.

(5) (a) Yes.

(6) (b) No.

(7) (c) No.

(8) Yes.

Conclusion

87. I find that the plaintiff’s claim for HK$102,500 has been proved.  Accordingly, I enter judgment for the plaintiff.  As to interest, I award this to the plaintiff at 1% above prime rate from the date of the writ until judgment and thereafter at judgment rate until payment. The interest award is nisi.

88. I dismiss the counterclaim.

89. There will also be an order nisi that the plaintiff should have his costs of the action, including costs of defending the counterclaim and any costs reserved, paid by the defendant to be taxed on a party and party basis if not agreed.

90. I also grant a certificate for counsel.

91. Lastly, it remains for me to thank counsel for their assistance.