XCHRX SHENZHEN HEJIAFA HAREWARE ELECTRONICS CO. LTD. AND ANOTHER v. ASIA TECHNOLOGY INITIATIVES LTD.

HCA6763/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.6763 OF 2000

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J U D G M E N T

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The issue

1. This is the defendant's appeal against Master Lung's order of granting summary judgment to the plaintiffs on 4 December 2000. At the outset of hearing this appeal, Mr Martin Lee S.C. appearing with Miss Po Wing Kay for the defendant, conceded that on the recent seven affirmations filed by the plaintiffs between 24 and 29 March 2001, the plaintiffs have satisfied the defendant that the two sums of money belonged to the plaintiffs. However, the defendant asked for a costs order in its favour in respect of the appeal. In the present application of the defendant for costs and the plaintiffs' application for costs of the appeal, I shall consider two questions, namely :

1. Was Master Lung correct in granting the Order 14 summary judgment for the plaintiffs in light of the evidence there and then filed by the parties by 4 December 2000?

2. Is the defendant entitled to costs on the recent filing of the seven affidavits of the plaintiffs?

Background

2. The plaintiffs' case is that the 2nd plaintiff had mistakenly deposited two sums of money, namely, $200,000 and $173,602.60 ("the said sums") into the defendant's bank account on 2 June 2000. The 2nd plaintiff's aforesaid deposits were made as price for certain goods sold and delivered by the 1st plaintiff to the 2nd plaintiff. Two affidavits had been filed by the plaintiffs, Mr Xu, for the 1st plaintiff, and Miss Cheung, for the 2nd plaintiff, to the effect that the 2nd plaintiff was given the account number by Mr Xu of the 1st plaintiff by mistake and the said sums were deposited on 2 June 2000. The mistake was discovered in the afternoon and a Mr Peng Tong was contacted by Mr Xu, who happened to be a friend of him. Mr Peng was contacted because he knew the defendant. Mr Peng then informed a Mr Fan Kin Nang of the defendant, and according to Mr Peng, Mr Fan agreed to help in the repayment from the defendant's account back to the 2nd plaintiff.

3. Mr Fan, however, filed an affirmation and deposed that before June 2000, the defendant company experienced an upheaval in the staff deployment in April 2000. As a result of that, several staffs left the company with a number of properties belonging to the defendant which included laptop and desktop computers, fax, files and certain other company documentations. Consequently, the defendant was not sure whether the two deposits belonged to the plaintiffs or to the defendant, and he said that the defendant thought the two sums might be "sales proceeds payable or some form of deposits to the defendant". He also exhibited a fax message from Mr Peng of Shenzhen Yihua Computer Company Limited ("Yihua") and said Mr Peng was in fact through this fax claiming for Yihua and not for the plaintiffs. Mr Peng then filed an affirmation on 27 September 2000, explaining that he was only acting as a middleman for the plaintiffs and not for Yihua. He agreed that the fax message could have been drafted better but he explained that that was so casually drafted because Mr Fan had already promised over the phone to repay the two sums of money. Accordingly, it is not correct, in my view, that there was a competing claim from Yihua.

4. Miss Wong Kam Ying ("Miss Wong") of the defendant also filed an affirmation on 29 November 2000. This affirmation was stated to be in support for the defendant's application for payment of the said sums of money into court pursuant to the Trustee Ordinance, but she also said that it was also filed in opposition to the plaintiffs' application for summary judgment. Mr Louis Chan, counsel for the plaintiffs, submitted that this affirmation could not be used for the Order 14 hearing before Master Lung since there was a previous direction that no further affidavit should be filed without the leave of the court, and no leave had been obtained. This affirmation was apparently used before Master Lung with no opposition. I, therefore, cannot accept that this affirmation is not an affirmation considered by Master Lung in the Order 14 application.

5. Miss Wong has reiterated the defendant's position that its ex-employees have looted the defendant's properties. As a result of that, the defendant was not sure whether the said deposits were related to the defendant's business or was just a mistake of the plaintiffs. She pointed out several suspicious circumstances in paragraph 8 of her affirmation.

The Master's decision

6. However, I am afraid that all these so-called suspicious circumstances raised by the defendant are not sufficient to disclose a defence to the plaintiffs' action. The defendant could not identify how the money actually belonged to it. Mr Peng had already explained his fax message and said Yihua was not claiming anything and he was only acting as a middleman.

7. The other points concerning cash deposit, the original sale and purchase agreement between the 1st and 2nd plaintiffs was for a larger amount and the failure to produce delivery note and invoice were, to my mind, not sufficient to raise any suspicion of the deal between the 1st and 2nd plaintiffs.

8. In my view, Master Lung was perfectly correct in granting summary judgment on the evidence before him there and then. I would only add here that I do not agree with Mr Louis Chan that the plaintiffs and the defendant are strangers and it is not compelling for the plaintiffs to disclose every single thing in detail to the defendant. On the contrary, as the very fact that they are strangers, the defendant is entitled to certain details as to how the mistake was made. However, on those affirmations filed by the plaintiffs, I am satisfied that the plaintiffs had sufficiently disclosed such necessary details to support a case of mistake and unjust enrichment for the purposes of an Order 14 application.

9. In short, if the defendant just appealed on those pieces of evidence as presented to Master Lung, I would have dismissed the defendant's appeal and thus the plaintiffs would be entitled to the costs of the appeal and below.

The appeal with further affidavits

10. However, on 19 March 2001, Miss Wong filed a 2nd affirmation. She said in detail that the two deposits were possibly deposits made through a transaction whereby a Mr Dai was bribed for an amount of US$50,000. She believed what might have happened was that these two deposits were meant to be paid to the said Mr Dai. I do not want to go into details since after this second affirmation of Miss Wong was filed, the plaintiffs filed seven affirmations and basically there were four affirmations between 24 and 26 March 2001 which explained in much more detail as to how the mistake of depositing the said sums into the defendant's account was made. Consequently, the defendant is now satisfied or fully satisfied that this was just a mistake of depositing the said sums of money into the defendant's account.

11. After these four affirmations were filed on 26 March 2001, Mr Chan for the plaintiffs offered to Miss Po for the defendant, on a without prejudice basis save as to costs, that the defendant should return the said two sums to the plaintiffs without interest with no order as to costs, both on the appeal and below, in full and final settlement of the plaintiffs' claim in the action. This was transmitted by fax after 18:00 hours on 26 March 2001 and should have received by the defendant's counsel in the morning of 27 March 2001. On the same date, by a fax transmission message at about 11:14 hours, the plaintiffs' solicitors also wrote to the defendant's solicitors reiterating the same offer on a without prejudice basis, save as to costs, and further affidavit would not be filed until 1 p.m. that day. No acceptance was made by the defendant and the plaintiffs' solicitors withdrew the offer the next day on 28 March 2001 at about 15:16 hours by a fax message. The plaintiffs then filed three further affirmations on 28 and 29 March 2001 correcting certain minor mistakes as to certain figures mentioned by them earlier on.

12. Those four affirmations of the plaintiffs filed between 24 and 26 March 2001 have clearly explained the plaintiffs' case and the defendant should be satisfied that these two sums were mistakenly deposited into its account. The defendant's belief that the sums could possibly be bribe money paid for one Mr Dai could not stand at all. This belief of the defendant was only based on surmise upon surmises as submitted by Mr Chan for the plaintiffs. Counsel for the defendant, at the outset, conceded that they are satisfied that the sums actually belonged to the plaintiffs. Consequently, even without the without prejudice offer, save as to costs of the plaintiffs, the plaintiffs are entitled to succeed in the defendant's appeal when the defendant put forward a new case by Miss Wong's 2nd affirmation on 19 March 2001. This called for further explanation from the plaintiffs to disprove what Miss Wong believed to be the case. In the end, should the defendant proceed on its appeal, it would have lost the appeal on the strength of the plaintiffs' present affirmations filed in opposition to the 2nd affirmation of Miss Wong for the defendant. Thus, the plaintiffs would be entitled to costs of the appeal anyway, even without the without prejudice offer, save as to costs of the plaintiffs. This offer obviously strengthened the plaintiffs' position in the award of costs in their favour on the appeal.

The plaintiffs' amendments

13. Lastly, it could not be said that the plaintiffs' Statement of Claim was defective and thus the defendant should be awarded costs. The defendant only took the point of defective Statement of Claim in that the original allegation of the plaintiffs was the 2nd plaintiff thought it was depositing the sums into the 1st plaintiff's account in Hong Kong. In fact, it was an account designated by the 1st plaintiff since the 1st plaintiff did not have an account in Hong Kong.

14. Upon that point being taken, the plaintiffs' amendment was made obviously just to correct a slip on the part of the pleader and the defendant was already awarded costs of and occasioned by the amendment in any event. The defendant should not be awarded with the costs of the appeal just because of this amendment.

15. Further, the writ was amended in green with leave of the court when amendment to the Statement of Claim was granted. This also tidied up the actual name of the plaintiffs and the defendant. Similarly, the defendant was also awarded costs of such amendments to the writ and, on the same basis, this could not be a ground for awarding the defendant with the costs of the appeal.

Conclusion

16. In the end, I am of the view that the plaintiffs should be entitled to the costs of the appeal and, accordingly, the defendant's appeal is dismissed with costs to the plaintiffs, to be taxed if not agreed.