CHIN WAI KAY, GEORDIE v. LUI WING SHING, RAYMOND

CACV 387/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 387 OF 2006

(ON APPEAL FROM HCSD NO. 30 OF 2006)

______________________

______________________

______________________

J U D G M E N T

______________________

Hon. Yeung JA:-

1.  I shall invite Reyes J to deliver the judgment of this Court.

Hon. Reyes J:-

I. INTRODUCTION

2.  Chin guaranteed a debt by Lui to Chung.  Chin now appeals against Deputy Judge Poon’s refusal to set aside a statutory demand by Lui against him.

3.  Chin’s Notice of Appeal relies on 3 grounds:-

(1)	That Chung had promised to settle with Lui and “might have indeed reached a settlement as evidenced by his paying the first instalment of the judgment debt ... on 14 June 2006”;
(2)	That the judge failed “to consider all the relevant circumstances before dismissing the application”; and,
(3)	That the judge deprived Chin of “the opportunity to properly prepare his application and his right to a fair trial” by not ordering Lui to produce a copy of the guarantee.

II. BACKGROUND

4.  On 19 October 2005 Lui brought an action against Chung and Chin for $1.2 million.  The latter was the outstanding amount due on a loan of $1.5 million made by Lui to Chung in December 2004. Chin had personally guaranteed the loan.

5.  In February 2006, in default of any notice of intention to defend, Lui obtained judgment for $1.2 million plus interest against Chung and Chin.  Lui then issued a statutory demand for $1.2 million against Chin in March 2006.

6.  In May 2006 Chin applied to set aside the default judgment.  Chin alleged that he had not acknowledged service of Lui’s writ because Chung had “told me to leave the whole matter to him”. 

7.  Chin further claimed that he had signed the guarantee without reading it. 

8.  He said that he had not been aware that he would be liable under the guarantee as a primary obligor.  Instead, Chin suggested that he had understood that he would only be liable “if [Chung] failed to repay the money lent by [Lui] ... and only if [Lui] was unable to recover the debt after using all legal means against [Chung]”.

9.  On 13 May 2006, by consent of Lui, Chung and Chin, Registrar Chan ordered that Chung and Chin pay $1.25 million in full and final settlement of the default judgment.  Payment was to be by 5 instalments between 24 May and 12 September 2006.  The Consent Order vacated Chin’s summons to set aside the default judgment.

10.  On 14 June 2006 (some 20 days late) Chung paid the first instalment of $100,000.  Neither Chung nor Chin paid any further instalment.

11.  On 3 October 2006 Lui issued a statutory demand for $1.1 million against Chin based on the Consent Order. 

12.  Chin applied to set aside the demand on 24 October 2006.  Chin contested the debt on the following ground:-

“

...  I do not admit the debt because by the time [I] committed to be the guarantor of [Chung]...  My understanding was only when [Chung] will have received the repayment from Dickson Group Company, I should be responsible to ensure that [Chung] will pay [Lui’s] consideration accordingly but not the repayment of the consideration.  The signed guarantee also confirmed to be custody by [Chung] himself and my involvement was considered a gesture of involvement to monitor the specific transaction between them.  That’s the reason why I do not keep any copies of the guarantee.

In June 2006, I received the demand letter from [Lui] against myself and [Chung], and I have already discussed with [Chung] and he promised to seek for settlement with [Lui] so I considered the case has been settled”

13.  Judge Poon dismissed Chin’s application on 26 October 2006.

III. DISCUSSION

14.  The October 2006 demand which Chin wishes to set aside was issued to enforce the Consent Order. 

15.  When the Consent Order was made, Chin was represented by solicitors.  In fact, the Consent Summons leading to the Consent Order was signed by Chin’s solicitors on behalf of Chin.  Chin ought therefore to have fully known and understood the contents of the Consent Order.

16.  Given the Consent Order, it is not relevant to examine what may or may not have been agreed between Chung and Chin as to who was to settle Lui’s loan.  Chin is simply bound to comply with the Consent Order, which is an order of the Court.  Although the Notice of Appeal suggests that the loan has been fully paid, there is no evidence to that effect.

17.  Similarly, in light of the Consent Order, it is not relevant to consider what the terms of the original guarantee were.  Those terms have been superseded by the Consent Order.

18.  It follows that Judge Poon did not fall into any error along the lines suggested by the Notice of Appeal. 

19.  There was no need to examine whether Chung and Chin had previously reached any understanding on payment as between themselves.  That would not affect the mandatory nature of the Consent Order.

20.  Nor was there any need for Judge Poon to order production of the guarantee.  The terms of that document have no bearing on Lui’s enforcement of the Consent Order.

21.  Consequently, it cannot be said that Judge Poon failed to consider all relevant circumstances.

IV.CONCLUSION

22.  Chin’s appeal fails.  It is dismissed.  There will be an Order that Chin is to pay Lui’s costs, such costs to be taxed if not agreed and to include the costs of the previously adjourned hearing before this Court.

Hon. Yeung JA:-

23.  The appeal is accordingly dismissed with costs as stated by Reyes J.