KINGS CROWN DEVELOPMENT LTD v. BONANZA METALWARE LTD

HCA 1689/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1689 OF 2004

____________

____________

_______________

J U D G M E N T

_______________

1.  This is an appeal from a Master’s decision in an Order 14 RHC application in which she gave the defendant conditional leave to defend the claim, the condition being that to avoid judgment the defendant pay into Court the amount of the claim.  The defendant by this appeal invites unconditional leave to defend.

Background

2.  The plaintiff is a company in Hong Kong whose business includes exchanging Hong Kong dollars for remenbi.  It is its case that its agent Ho Suet Huan conducted a purchase of RMB 1,251,900 from the defendant at an agreed rate of $1 to RMB 1.07.  The plaintiff on 14 April 2004 credited the defendant’s bank account with sums totalling $1,170,000 on the basis that the defendant would pay to the plaintiff on the same day the sum of RMB 1,251,900.  The defendant declined then or thereafter to meet its obligation under the bargain; by writ of 21 July 2004 the plaintiff sued to recover RMB 1,251,900 or $1,170,000.  The Order 14 summons for summary judgment issued thereafter.  The Master made her order from which the defendant appeals on 20 December 2004.

The Hearing Below

3.  Those who filed affidavits were directors of the parties, Lin Yaohuan for the defendant and Yao Yeung for the plaintiff.

4.  As the story emerged the Master was faced with something of a variable tale from the defendant.  Two days after the date on which the plaintiff had credited the defendant’s account with the Hong Kong dollars, that is 16 April 2004, the plaintiff wrote to the defendant for the remenbi.  There was no response.  On 11 May 2004 the plaintiff’s solicitors wrote demanding payment.  On 19 May they wrote again agreeing to withhold legal action until 10 June 2004.  This was apparently the consequence of a telephone call from Mr Lin, in which he asked for time.

5.  Then it was, shortly after that conversation, that Mr Lin told the plaintiff’s solicitors that he had paid the remenbi direct to the plaintiff’s agent, Ms Ho.  The defendant was directed to produce a receipt confirming such payment.  The defendant purported to do so; sending bank deposit slips, both dated 13 April 2004, which revealed RMB 656,800 was paid by Lin Yaohuan to a Mr Ho, and RMB 600,000 was paid by Wah Chi Trading Company Limited to Ming Hing Messages Services Centre.  There is no connection between the parties named in the receipts with the plaintiff; furthermore, the sum total did not tally with the amount due.

6.  Mr Lin in his affidavit advanced that proposition as being the correct version; that such payments were made on instruction of a Mr Ho, purportedly the plaintiff’s agent’s brother, to settle the remenbi debt.  He did not at that point explain why the amount so paid was more than the agreed exchange rate.

7.  Then it was, at the hearing before the Master, that the defendant’s case was put: neither the plaintiff nor the defendant were contracting parties to a currency exchange.  At the hearing the Master queried the amount of remenbi said to have been paid to satisfy the debt, and was told by counsel on instruction that this represented “sundry expenses”.

8.  In her judgment of 2 December 2004 the Master noted that documents produced by the plaintiff were consistent with a contract between the parties in which the amounts and exchange rate were recorded.  In contrast, the defendant’s documents comprising the pay-in slips, gave no connection with the transaction giving rise to the debt, and could have been wholly unrelated.  However, she noted that the amounts were in total close to the debt, and the money was deposited on the day agreement was purportedly struck between the parties.  In the end she professed “to have come very close to giving judgment for the plaintiff”.  This is a classic reason for requiring payment into Court as a condition of giving leave to defend; see the White Book, 14/4/16.  The Master then adjourned the matter to 20 December to give the defendant the opportunity to file evidence of its means to meet such condition she might impose.

9.  On 20 December the defendant sought leave to adduce further evidence; that application was denied and the Master proceeded to make the order now the subject of the appeal.

10.  I note in passing that the defendant failed to comply with the condition and judgment was entered on 18 January 2005.

The Appeal

11.  This is a rehearing.  The defendant was given leave to adduce further evidence and the plaintiff to respond.

12.  An affidavit from Ho Suet Huan, the plaintiff’s purported agent, was to the effect that she was never an agent of the plaintiff and the purported currency exchange never happened.  Mr Lin filed a further affidavit which stated in part:

“	I now have an opportunity to carefully reconsider the whole matter.  The exact exchange rate which I had with Mr Ho was $1 to RMB 1.074.  Therefore, the total sum which I paid was RMB 1,256,580.”

13.  This of course was to answer the criticism that there was no explanation for the discrepancy in the amount of remenbi required and that paid.  The response to that was swift and telling: the exchange rate at 1.07 had been central to the claim from the outset and had not been queried.  Mr Lin had himself referred to that rate in an earlier affirmation.  And this amended exchange rate so-called was directly contrary to the explanation proferred by counsel to the Master when she made the obvious query. (see para. 7)

14.  Mr Lin in his later affirmation denied that he had promised that the remenbi debt would be settled by 10 June 2004.  However there was no adequate explanation as to why the defendant did not go into print when it received the letter of 19 May confirming the purported arrangement and debt due.

15.  The affidavit by Ms Ho to the effect that she had never been an agent of the plaintiff is but five lines long and bereft of detail.  On the matter Mr Yau gave an account of a telephone call from her from China indicating that she was under pressure to cause a cessation of the plaintiff’s action.

16.  There is also yet one more affidavit made by one Hon Chiu Kwong, to counter Ms Ho’s statement that she had never been an  agent for the plaintiff.  He stated that as a businessmen concerned to engage in currency transactions from time to time he had engaged the services of the plaintiff, using the agency of Ms Ho.  In the many contracts successfully pursued, Ms Ho all along represented herself to be an agent of the plaintiff and no other entity.

My Ruling

17.  In my view the Master could not be critized for coming very close to giving judgment for the plaintiff on the evidence that was before her.

18.  I believe on that evidence I would have come to the same conclusion, and made the same order.  As it is, with the additional evidence advanced, the defendant’s prospective defence is by no means further bolstered; indeed, if anything, it has become yet more shadowy, and I think there is ample to suggest that it is a sham.  I am satisfied that the appropriate order was and remains that which the Master made; I dismiss the appeal accordingly.

19.  Costs, nisi at first instance, are to the plaintiff taxed if not agreed.