JOSHI SUNIL v. HO HOI LEUNG

DCCJ 5683/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5683 of 2006

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J U D G M E N T

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Background

1.  The Plaintiff claims against the Defendant the sum $92,000 being the balance of money due and owing from the Defendant arising out of loans of various sums of money from the Plaintiff to the Defendant from 6 November 2004 to about 14 March 2006 totalling $150,000. A sum of $58,000 had been repaid.

2.  Judgment was reserved after a trial lasting 2 days. This is my judgment in the case.

Plaintiff's Case

3.  The Plaintiff and the Defendant were both in the business of selling mobile telephones and their accessories.

4.  Sometime in 2004, they came to know each other. How they came to know each other is a matter of dispute, although it has no bearing on the outcome of this case.

5.  What is not in dispute is that subsequently in early 2005, the Plaintiff, the Defendant and one other person by the name of Jatinder Pal Singh ("JP Singh") became shareholders in a company known as Star Comtrade Limited. ("Star") trading in mobile telephones and accessories.

6.  The Plaintiff's case is that shortly after he came to know the Defendant, they became friends. Sometime in November 2004, the Defendant asked the Plaintiff to lend him some $6,000, which the Plaintiff did by way of a bank transfer.

7.  Thereafter, the Defendant from time to time asked the Plaintiff for various sums as loans, which the Plaintiff provided. By about 14 March 2006, the Plaintiff had lent to the Defendant a total sum of $150,000. All the loans were advanced by way of cash payments, save for the initial transfer of $6,000 and another transfer of $50,000 on 20 December 2004.

8.  The Plaintiff had from time to time requested the Defendant to repay the money owed to the Plaintiff. On each occasion the Defendant had told the Plaintiff that payment would be made soon.

9.  Matters came to a head on 27 April 2006. The Defendant who apparently was in charge of the day to day operations of Star had gone missing and had not returned calls or text messages to his mobile telephone for the previous 2 days.

10.  The Defendant finally turned up at the offices of Star at Hart Avenue in Tsim Sha Tsui. The Plaintiff and JP Singh were also present. During that meeting, the Plaintiff demanded repayment of his loan of $150,000 in total. The Defendant admitted he owed the Plaintiff this sum.

11.  In the end, the Defendant agreed to repay the Plaintiff's loan by first paying the sum of $58,000 to the Plaintiff within one week, and the balance by monthly instalments of $3,000 each. The Defendant signed on a document headed “Receipt and Acknowledgment to Pay” to record the agreement.

12.  During the same meeting, the Defendant agreed to withdraw from Star. The Defendant agreed to resign as director and to pay $18,900 being his share of Star's loss at that time. To evidence this agreement, the Defendant signed a document headed “Resignation and Acknowledgment to Pay.”

13.  The Plaintiff used the video recording function of his mobile telephone to record the conversation between the parties. This was made known to the Defendant.

14.  No threats were made to the Defendant. The atmosphere at the meeting was casual. Thereafter, they went to have dinner in a Chinese restaurant in Tsimshatsui.

15.  After dinner, the 3 of them went to the Tsim Sha Tsui police station apparently because JP Singh wanted to authenticate the Resignation and Acknowledgment to Pay. They were  unable to do so because the police did not provide such a service and they were told to seek legal advice.

16.  Pursuant to this agreement, the Defendant paid the sum of $58,000 to the Plaintiff on or about 6 May 2006. However, the Defendant failed to make any further payments, and the Plaintiff issued the writ of summons on 17 November 2006.

Defence Case

17.  The Defence case is very different. The Defendant denies ever having borrowed money from the Plaintiff. The Defendant's version is that he came to know the Plaintiff while selling mobile telephones as they were both in the same business.

18.  On one occasion, the Plaintiff asked the Defendant to buy a mobile telephone for him to which the Defendant agreed. As a result, the Plaintiff deposited $6,000 into the Defendant's bank account. This was the reason for the first sum of money transferred from the Plaintiff's bank account to the Defendant's.

19.  Subsequently, the Defendant also bought goods from the Plaintiff, or rather the Plaintiff's employer. The value of the goods the Defendant purchased was $8,000 but it appears that this was not paid immediately by the Defendant.

20.  The Plaintiff wished to go into business with the Defendant, and so deposited $50,000 into the Defendant's bank account before any agreement had been reached as to any partnership or joint venture. This accounted for the other bank deposit of $50,000.

21.  Subsequently, the Plaintiff, the Defendant and JP Singh joined together and started the business of Star. The Defendant was responsible for the day to day operations. The Defendant was told to use the $50,000 which the Plaintiff had transferred into the Defendant's bank account, as well as the $8,000 which the Defendant owed the Plaintiff for the purchase of mobile telephones for the use of Star.

22.  Sometime in April 2006, the Plaintiff informed the Defendant that there would be a reorganisation of Star. The Plaintiff would be responsible for purchasing, JP Singh would be responsible for accounting and the Defendant would be responsible for sales. Each of the 3 parties would be responsible for loss attributed to the activity in which he was responsible. This caused the Defendant concern as he realized that the only loss making activity would be sales.

23.  After he had sold off the current batch of goods, he told the Plaintiff and JP Singh that he needed to take 2 days off to think about the proposed reorganisation.

24.  Over the next 2 days, the Plaintiff and JP Singh kept calling him. On 27 April 2006, JP Singh called the Defendant. Over the telephone, the Defendant told JP Singh that the Plaintiff alleged that he (the Defendant) owed the Plaintiff $150,000 when he in fact did not owe the Plaintiff such sum of money. JP Singh told the Defendant to go to the office of Star that evening and JP Singh would help the Defendant. That was the reason why the Defendant went to the office of Star that evening.

25.  At the meeting, the Defendant was threatened, apparently by both the Plaintiff and JP Singh. The video recording only showed a small part of the meeting which lasted some 2-3 hours. The threats were not recorded. The Defendant did not know that the Plaintiff was recording the meeting.

26.  Finally, the Defendant agreed to sign to acknowledge his indebtedness to the Plaintiff in the sum of $150,000, even though he did not owe the Plaintiff this sum of money. He signed because of the threats made by the Plaintiff.

27.  After the meeting, they did not go out to dinner. Instead, they went to an ATM machine where the Defendant withdrew $18,900 to settle his account with the company.

28.  The Defendant mentioned to the Plaintiff and JP Singh that he would like to make a report to the police, whereupon the Plaintiff and JP Singh replied that they knew many people and were not afraid of the police. They then accompanied the Defendant to the police station.

29.  At the police station, the Defendant told the police officer that he had been threatened to sign a document. The police officer said that there was insufficient evidence to support the Defendant's allegation, and told the Defendant to make a report again if and when he had more evidence.

30.  Later, he made payment of the $58,000 to the Plaintiff because those were the sums which he actually owed the Plaintiff. However, he refused to pay any more because he did not owe the Plaintiff anything more than the $58,000.

The Evidence

31.  The Plaintiff gave evidence. Having regard to the serious allegations which were being made, I directed that the witness statements which had been filed were not to stand as evidence in chief.

32.  The Plaintiff gave evidence in a straightforward manner. His evidence was consistent with his witness statement. Cross-examination of the Plaintiff failed to elicit anything to cast doubt on the Plaintiff's credibility.

33.  As part of his evidence, the Plaintiff produced a copy of the video recording which he made of the meeting on 27 April 2006. This video recording was played in Court. I have also carefully viewed the video recording subsequently.

34.  JP Singh was called as a witness on behalf of the Plaintiff. He was more guarded in his answers, and tended towards being argumentative. In general, he did not leave as favourable  impression as the Plaintiff. However, his evidence was generally consistent with that of the Plaintiff.

35.  The Defendant gave evidence on his own behalf. I am afraid that the Defendant did not leave me with a favourable impression at all. At times, he appeared evasive. For instance, when it was suggested to the Defendant in cross-examination that the Plaintiff was still working for someone else when the Company started business, the Defendant's response was to ask "which company" when it was obvious that the only company which the question could have been referring to was Star.

36.  Another instance is when he was asked about the video recording, he was asked to confirm that what the Plaintiff and he were talking about in the video recording was a $150,000 loan. His answer at first was that this was simply what the Plaintiff was saying. When pressed, he finally answered that did not hear clearly as he was touching his head (as shown in the recording).

Analysis

37.  If the matter were purely one of comparison of the testimony of the Plaintiff and his witness against that of the Defendant, it would be fair to say that the Defendant's demeanour and in particular his response to questions in cross-examination was less persuasive than the Plaintiff's.

38.  However, I am mindful that the demeanour of witnesses is not the best guide as to the truth of the matter, and I attach more weight to the more objective pieces of  evidence in the case, as well as the inherent probabilities.

39.  In this regard, the video recording assumes a very important role. In the video recording, the lens is for the most part trained on the Defendant. This by itself casts doubt upon the Defendant's evidence that he did not know the meeting was being recorded.

40.  In the video, the Defendant is seen talking volubly, gesturing and also at times laughing. The Defendant says in effect that this was forced laughter. However, I regard as more important the Defendant's reactions as shown in the video, or more accurately, the lack of the Defendant's reaction when told that he owed the Plaintiff $150,000.

41.  No protestation was made. The figure of $150,000, if the Defendant is believed, was a figure plucked from the air. Yet, the Defendant made no protest about the sum. This is not the reaction to be expected of someone who is falsely accused of owing another a substantial sum of money. The Defendant was not cowering in submission. He took an active part in the conversation, attempting to give explanation at various parts of the recording, bargaining at others. At no time did he say that he had never received $150,000 from the Plaintiff, nor that he did not owe $150,000 to the Plaintiff.

42.  In considering this video recording, I do note that the words "I don't want to kill you" appeared to have been uttered by the Plaintiff. Nevertheless, I am not satisfied that they were uttered by the Plaintiff or understood by the Defendant to be in the nature of a serious threat. Words which are threatening in one context may be perfectly innocent in another, or may be just a 'venting of the spleen'. The reaction, or again, lack of reaction by the Defendant speaks volumes.

43.  Another important aspect is the report to the police and failure of the police to take action. Had the Defendant really told the police officer at the Tsim Sha Tsui Police Station that he had been threatened by the Plaintiff, the police would have at the very least questioned the Plaintiff or conducted investigation. The police would certainly not say that there was insufficient evidence and ask the Defendant to come back when he had more evidence. Oral testimony is powerful evidence, and it is the experience of the Courts that the police do not necessarily seek corroborating evidence before laying charges, much less investigating a complaint. Yet, the response by the police to enquiries from both Plaintiff and Defence respectively was that no crime was disclosed.

44.  Furthermore, the inherent probabilities of the case go against the Defendant. It is inherently improbable that the Plaintiff would have deposited $50,000 into the Defendant's account before any agreement to enter into a partnership or joint venture had even been discussed, let alone concluded. It is also inconceivable that the Plaintiff and JP Singh, having made threats to kill the Defendant, would accompany the Defendant to the police station. The Defendant's payment of the $58,000 to the Plaintiff is also hard to reconcile with his evidence that he had been told by the Plaintiff to spend (and did so) the $50,000 on expenses of Star.

45.  The burden of proving that the Defendant owed the Plaintiff money is on the Plaintiff, on the balance of probabilities. The Plaintiff is able to discharge the burden of proof by his own testimony, and more importantly, the video recording and the “Receipt and Acknowledgment to Pay”. The Defendant seeks to counter the effect of the “Receipt and Acknowledgment to Pay” by alleging that  he was forced to sign under duress due to threats from the Plaintiff and JP Singh. The Defendant bears the burden of proof on duress, also on the balance of probabilities. However, the more serious the act or omission alleged, the more inherently improbable must it be regarded.  And the more inherently improbable it is regarded, the more compelling will be the evidence needed to prove it on a preponderance of probability.[1] 

Conclusion

46.  On the evidence before the Court, and considering in particular the inherent probabilities of the case, I find that the Plaintiff did lend the Defendant the total sum of $150,000.  I further find that the Defendant had acknowledged his indebtedness to the Plaintiff both by his words and conduct at the meeting on 27 April 2006 as recorded on the video recording produced by the Plaintiff, and on the document headed Receipt and Acknowledgment to Pay dated 27 April 2006 and signed by the Defendant.

47.  I find that of the loan of $150,000, the Defendant has repaid $58,000 to the Plaintiff, leaving a balance of $92,000.

48.  The Plaintiff's claim for interest has been withdrawn in its Reply.

49.  I order that judgment be entered against the Defendant for the sum of $92,000.

50.  I will hear the parties on costs.

[1] A Solicitor v. The Law Society Of Hong Kong; [2008] 2 HKLRD 576 at para 116