DCCJ 6960/2019
[2024] HKDC 2105
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 6960 OF 2019
________________________
BETWEEN
Oon Kim KOH, the person appointed to represent
Plaintiff
and
QUEST INVESTMENTS LIMITED
1st Defendant
華輝証劵有限公司
2nd Defendant
________________________
Before:
Deputy District Judge Aidan Tam in Court
Dates of Hearing:
21 May 2024 & 26 June 2024
Date of Judgment:
24 December 2024
________________________
J U D G M E N T
________________________
(I) Introduction
1. In this action, the Plaintiff claims against the 1st Defendant for money owed under a promissory note together with interest and costs.
(II) Plaintiff’s Case
2. The Plaintiff in this action is Oon Kim Koh (“Madam Koh ”), the person appointed to represent the estate of Koh Kim Chan (“Mr Koh ”), deceased (“the Estate ”). There is no dispute that Mr Koh and Madam Koh were husband and wife.
3. The 1st Defendant and the 2nd Defendant were and still are companies incorporated in Hong Kong.
4. On 28 November 2011, the 1st Defendant made and delivered to Mr Koh a promissory note (“the Promissory Note ”) in the sum of SGD$525,000.00 (“the Sum ”). I set out the Promissory Note in full:-
“Quest Investments Limited CR 563455
[Address omitted]
(“Borrower”)
And
Kim Chan Koh
[Address omitted]
(“Promissory Note Holder”)
PROMISSORY NOTE
SGD$525,000.00
For value received the Borrower promises to pay the Promissory Note Holder the sum of SGD$525,000.00 by twenty-five (25) calendar monthly instalments in Australian dollars at the exchange rate applicable at the date of payment equivalent to SGD$21,000 per calendar month payable on the 28th day of each month commencing on 28th December 2011 and ending on 28th December 2013.
Dated this 28th day of November 2011.
_________(Sd.)__________
Chiang Wee Tiong
Director
Quest Investments Limited CR 563455”
5. On or around 28 November 2011, the 1st Defendant directed Mr Koh to advance to the 2nd Defendant the sum of SGD$500,000.00 by way of a cheque numbered 090393 dated 28 November 2011 drawn on Mr Koh’s bank account numbered 1183003033 held with United Overseas Bank Limited (“the Cheque ”). The 2nd Defendant duly presented the Cheque for payment, which was duly honoured on 29 November 2011. This payment to the 2nd Defendant by Mr Koh is supported by the relevant monthly statement of the said bank account of Mr Koh.
6. The Plaintiff’s case is that the 1st Defendant failed to pay any of the instalments due under the Promissory Note, but instead paid Mr Koh the sum of AUD113,300.00 (equivalent to SGD$129,103.57) in instalments on the dates and in the sums appearing in the second and third columns respectively of the table below (see paragraph 6 of the Amended Statement of Claim):-
Item No.
Date
Sum (AUD)
Sum (SGD)
Exchange rate
1
14 Feb 2012
$3,000.00
$4,032.90
1.3443
2
8 Mar 2012
$5,000.00
$6,666.50
1.3333
3
13 Apr 2012
$3,000.00
$3,916.20
1.3054
4
23 May 2012
$5,000.00
$6,222.00
1.2444
5
23 Jul 2012
$5,000.00
$6,529.00
1.3058
6
10 Sep 2012
$2,000.00
$2,587.20
1.2936
7
30 Nov 2012
$2,000.00
$2,553.40
1.2767
8
5 Feb 2013
$3,000.00
$3,855.90
1.2853
9
6 May 2013
$5,000.00
$6,310.00
1.2620
10
30 May 2013
$4,000.00
$4,870.40
1.2176
11
18 Sep 2013
$3,300.00
$3,910.17
1.1849
12
2 Dec 2013
$15,000.00
$17,173.50
1.1449
13
19 May 2014
$5,000.00
$5,834.50
1.1669
14
7 Oct 2014
$10,000.00
$11,231.00
1.1231
15
22 May 2015
$8,000.00
$8,366.40
1.0458
16
9 Jul 2015
$10,000.00
$10,065.00
1.0065
17
5 Nov 2015
$5,000.00
$5,025.00
1.0051
18
17 Jun 2016
$20,000.00
$19,954.00
0.9977
Total
$113,300.00
$129,103.57
7. According to the Plaintiff, the 1st Defendant thereafter failed to pay the balance due under the Promissory Note, which remains due.
8. On 9 July 2016, Mr Koh passed away.
9. On 11 January 2017, the Supreme Court of Queensland, Australia, on the strength of Mr Koh’s will dated 7 September 1999 (“the Will ”), granted probate and appointed Madam Koh as the executrix of the Estate.
10. The Plaintiff, on behalf of the Estate, claims against the 1st Defendant:-
(1) the sum of SGD$395,896.43, being the Sum less SGD$129,103.57, due under the Promissory Note, or its equivalent in Hong Kong dollars;
(2) interest on the sum above pursuant to section 57(a)(ii) of the Bills of Exchange Ordinance (Cap 19) from the date of maturity of the Promissory Note (28 December 2013) at the commercial rate, presently amounting to 5 per cent per annum, and amounting at the date of the Statement of Claim (8 July 2020) to SGD$120,558.60, or its equivalent in Hong Kong dollars; and
(3) interest pursuant to sections 49 and 50 of the District Court Ordinance (Cap 336) (“DCO ”).
11. Further or alternatively, the Plaintiff, on behalf of the Estate, claimed against the 2nd Defendant the sum of SGD$370,896.43 (being the sum of SGD$500,000 advanced by the Plaintiff to the 2nd Defendant at the direction of the 1st Defendant less the sum of SGD$129,103.57 repaid by the 1st Defendant under the Promissory Note), being the sum in respect of which the 2nd Defendant was unjustly enriched at the Plaintiff’s expense. The Plaintiff further claimed against the 2nd Defendant interest under sections 49 and 50 of DCO.
(III) 1st Defendants’ Case
12. The 1st Defendant denied the Plaintiff’s claim and pleaded, in paragraph 8 of its Defence, that any right of action the Plaintiff had against the 1st Defendant (which is denied) is “statute barred” and consequently the Plaintiff is prevented at law, statute and pursuant to the Limitation Ordinance (Cap 347) (“LO ”) from commencing, continuing and obtaining the relief sought.
13. In addition, apart from making no admission as to the Plaintiff’s Grant of Probate by the Supreme Court of Queensland, the 1st Defendant denied the entire Plaintiff’s case and put the Plaintiff to strict proof.
14. In other words, the only positive defence pleaded by the 1st Defendant was one of limitation.
(VI) Plaintiff’s Reply
15. The Plaintiff averred that by letters dated 5 September 2012 (“YCA’s Confirmation 5.9.2012 ”) and 12 August 2013 (“YCA’s Confirmation 12.8.2013 ”) respectively, the auditors of the 1st Defendant, namely YCA Partners CPA Limited, acknowledged on behalf of the 1st Defendant that the debt owed to the Plaintiff pursuant to the Promissory Note was HK$2,871,962 as at 30 June 2012 and HK$2,705,251 as at 30 June 2013.
16. The Plaintiff further averred that by an undated letter, the auditors of the 1st Defendant, Messrs Kenny KY Chan & Co acknowledged on behalf of the 1st Defendant that the debt owed to the Plaintiff was HK$2,688,739.10 as at 30 June 2014 (“KKYC’s Confirmation ”).
17. The Plaintiff contended, in paragraph 4 of her Reply, that her right of action against the 1st Defendant for payment of outstanding amounts under the Promissory Note accrued, under the common law, on the date of the maturity of the Promissory Note, namely 28 December 2013, and the limitation period expired 6 years from that date on 28 December 2019. As the first alternative, by operation of section 23(3) of LO, her right of action was deemed to have accrued on 5 September 2012, 12 August 2013 and/or on an unknown date on or after 30 June 2014 (to be ascertained), being dates on which the 1st Defendant, through its auditors, acknowledged the debt owed to the Plaintiff in writing, and the limitation period ran afresh from the aforesaid dates expiring 6 years therefrom. As the second alternative, by operation of section 23(3) of LO, the right of action was deemed to have accrued on 17 June 2016, being the date on which the 1st Defendant made part payment of the debt owed to the Plaintiff, and the limitation period ran afresh on that date expiring 6 years therefrom on 17 June 2022.
(IV) Procedure
18. On 22 May 2020, pursuant to the Plaintiff’s ex parte application (“Ex Parte Applicationinter alia , that Madam Koh be appointed to represent the Estate for the purpose of carrying on this action as the Plaintiff.
19. On 9 March 2021, Master B. Mak ordered, inter alia , that the Plaintiff’s claim against the 2nd Defendant in this action be wholly discontinued.
20. On 27 April 2022, Master B. Mak ordered, inter alia , that all interlocutory applications, if any, shall be taken out on or before 17 August 2022.
21. At the hearing on 13 September 2022, upon the application of the 1st Defendant by summons filed on 16 August 2022, Master Michelle Soong (as she then was) ordered, inter alia , that unless the 1st Defendant takes out any further interlocutory applications, including the application for security for costs, by 4:00 pm on 16 September 2022, no further interlocutory applications shall be made by the 1st Defendant without leave of the Court. Eventually, no interlocutory application had been made by the 1st Defendant before this trial.
22. At the hearing on 1 March 2023, Master B. Mak, inter alia , set the action down for trial and granted leave to the Plaintiff to give evidence via video conferencing facilities.
23. At the Pre-Trial Review on 14 March 2024, Deputy District Judge Alan Kwong (as he then was) ordered parties to file and serve opening submissions with list of authorities before this trial.
(V) Trial
24. Pursuant to the said Order of Deputy District Judge Alan Kwong, the Plaintiff filed her written opening submissions with a list of authorities. The 1st Defendant also filed its 5-page written opening submissions, but there was no submission on its pleaded case including its only pleaded defence of limitation.
25. As a matter of fact, apart from the words “statute barred”, the 1st Defendant did not state in its Defence as to how the limitation defence operated, and notably there was no allegation of the date of accrual of the Plaintiff’s cause of action or the date of expiration of the relevant limitation period which are crucial to the limitation defence.
26. At trial, I exercised my case management power to request the 1st Defendant to make oral submissions on its pleaded case before Madam Koh’s oral evidence. As a result, Mr Andrew Hart, Solicitor Advocate for the 1st Defendant, made oral submissions on the limitation defence before Madam Koh’s testimony. I shall refer to those oral submissions below.
27. Madam Koh testified in English by video link from Australia for the Plaintiff.
28. Initially, the 1st Defendant intended to call one factual witness only, namely Mr Grant Anthony Robertson (“Mr Robertson ”). Remarkably, Chiang Wee Tiong (“Chiang ”), the director who signed the Promissory Note on behalf of the 1st Defendant as well as the Statement of Truth for the 1st Defendant’s Defence herein, did not provide any witness statement. After the close of the Plaintiff’s case, Mr Hart informed the Court that the 1st Defendant was not calling Mr Robertson. I therefore ordered the witness statement of Mr Robertson dated 19 December 2021 be expunged from the trial bundle and shall not be treated as evidence of this trial. As a result, the 1st Defendant called no factual witness.
(VI) Agreed Issues
29. Pursuant to the Joint Statement of Issues filed on 14 September 2022, the agreed issues are:-
(1) Issue 1 – Whether the Plaintiff’s claim against the 1st Defendant under the Promissory Note is time-barred.
(2) Issue 2 – Whether the 1st Defendant is liable under the Promissory Note and, if so, the amount of principal, and interest (if any), due under the Promissory Note from the 1st Defendant to the Plaintiff.
(VII) Factual Evidence of Madam Koh
30. Madam Koh adopted her witness statement as her evidence-in-chief.
31. Pursuant to the grant of probate by the Supreme Court of Queensland, Australia, Madam Koh became the sole executrix of the Estate. She was also the sole beneficiary of the Estate under the Will. On 20 May 2020, Madam Koh applied for probate with the Probate Registry in Hong Kong, which application was still ongoing.
32. Madam Koh had never had direct communication with the 1st Defendant, but she had been aware of the outstanding sums owed to Mr Koh/the Estate based on the Promissory Note, the Cheque and the said relevant monthly statement of Mr Koh’s bank account, as well as the following documents in her possession:-
(1) Mr Koh’s handwritten note dated 31 January 2012 to Chiang of the 1st Defendant providing his bank account details.
(2) her own manuscript record of the 1st Defendant’s payments to Mr Koh (“Manuscript Record ”). Madam Koh recorded a payment of AUD20,000 on 17 June 2016 from the 1st Defendant, which was made approximately 3 weeks before Mr Koh’s passing on 9 July 2016.
(3) the said confirmations for audit purposes, ie YCA’s Confirmation 5.9.2012, YCA’s Confirmation 12.8.2013 and KKYC’s Confirmation.
33. Mr Koh had never informed Madam Koh of any arrangement to waive any part of the debt under the Promissory Note.
34. After Mr Koh’s passing, the 1st Defendant stopped making payment of the outstanding amount under the Promissory Note. Madam Koh continued to keep track of any further payments in the Manuscript Record until the end of 2018 when she decided to take legal action against the 1st Defendant for the outstanding amount due.
35. Under cross-examination, Madam Koh admitted that she had had no knowledge of Mr Koh’s businesses including his directorship in companies. Mr Koh, Madam Koh and Chiang were good friends. Madam Koh was able to tell the 18 items of partial payments by the 1st Defendant to Mr Koh as pleaded in paragraph 6 of the Amended Statement of Claim from her bank statements and her own record. She updated the Manuscript Record every month when the monthly bank statement was issued.
36. Under cross-examination, Madam Koh testified that the payment of AUD20,000 from the 1st Defendant on 17 June 2016 as stated in paragraph 4 of her witness statement was not the same payment pleaded in paragraph 4(c) of the Reply (ie the second alternative position of the Plaintiff). I accept that Madam Koh might be confused about the question due to her advanced age of 87 years old. The part payment of AUD20,000 is supported by the statement covering 26 May 2016 to 24 June 2016 of the joint bank account of Mr Koh and Madam Koh which recorded “17 Jun, Deposit Quest Rtn Loan, 20,000.00 (Credit)” with the handwritten word “Chiang”. The bank account number matched the one stated in the said handwritten note dated 31 January 2012 from Mr Koh to Chiang. This part payment was also recorded in the Manuscript Record.
37. As set out below, the factual allegations in the Plaintiff’s case are deemed admitted by the 1st Defendant’s pleaded bare denials. In any event, the Plaintiff’s case is supported by contemporaneous documents including the Promissory Note, the Cheque, monthly bank statements, the Manuscript Record and the said confirmations for audit purposes, and Madam Koh’s evidence did not play much role in the fact-finding exercise. Anyway, I find Madam Koh as a credible and reliable witness. In particular, the Plaintiff’s case of partial payments made by the 1st Defendant was supported by the said handwritten note dated 31 January 2012 and the Manuscript Record which, in turn, was partly corroborated by the monthly bank statements.
(VIII) Legal Validity of Promissory Note
38. The Plaintiff has the burden to prove her claim as pleaded on the balance of probabilities.
39. First, I consider the validity of the Promissory Note as a matter of law.
40. Section 89(1) of the Bills of Exchange Ordinance (Cap 19) (“BEO ”) provides that a promissory note is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer.
41. In my judgment, the Promissory Note met the requirements set out in section 89(1) of BEO. The Promissory Note was an unconditional promise in writing made by the 1st Defendant and signed by Chiang as director for and on behalf of the 1st Defendant to Mr Koh, engaging to pay Mr Koh the Sum at a fixed future time, namely 28 December 2013.
42. The engagement of the maker to pay is a contract on the note, and it can be enforced only by a payee who has given valuable consideration for the promise or by a holder for value of the instrument. See Chalmers and Guest on Bills of Exchange, Cheques and Promissory Notes, 18th Edition , paragraph 15-009. Section 27(1) of the BEO, which applies to promissory notes by virtue of section 95, provides that valuable consideration for a promissory note may be constituted by any consideration sufficient to support a simple contract, or an antecedent debt or liability, such a debt or liability being deemed valuable consideration whether the note is payable on demand or at a future time. As set out below, I accept that Mr Koh had given valuable consideration for the 1st Defendant’s promise to pay the Sum.
43. Section 90 of BEO further provides that a promissory note is inchoate and incomplete until delivery thereof to the payee or bearer. Under cross-examination, Mr Hart asked Madam Koh as to when the Promissory Note was delivered, and Mr Sebastian Hughes, Counsel for the Plaintiff, raised his objection on the ground that the 1st Defendant had simply pleaded a bare denial in paragraph 4 of its Defence against the Plaintiff’s plea of the making and delivery of the Promissory Note in paragraph 4 of the Amended Statement of Claim. I allowed Mr Hart to put his question on de bene esse basis, and Madam Koh answered that she did not remember the date of delivery of the Promissory Note but it might have been delivered in the first week of December 2011.
44. The Plaintiff submitted that the effect of the bare denials in paragraphs 4 to 8 of the 1st Defendant’s Defence is that each and every fact pleaded in paragraphs 4 to 8 of the Statement of Claim is admitted under Order 18 rule 13(1) of the Rules of the District Court (Cap.336H, sub.leg.) (“RDC ”), which provides that subject to paragraph (5) thereof, an allegation of fact made by a party in his pleading is deemed to be admitted by the opposite party unless it is traversed by that party in his pleading or a joinder of issue under rule 14 operates as a non-admission of it. Rule 13(3) provides that every allegation of fact made in a statement of claim or counterclaim which the party on whom it is served does not intend to admit must be specifically traversed by him in his defence or defence to counterclaim, as the case may be; and a general denial of such allegations, or a general statement of non-admission of them, is not a sufficient traverse of them. Further, rule 13(4) provides that where an allegation made in a statement of claim or counterclaim is traversed by a denial, the party who denies the allegation shall in his defence or defence to counterclaim state his reasons for doing so, and if he intends to put forward a different version of events from that given by the claimant, state his own version.
45. I accept the Plaintiff’s submission on the legal effect of the bare denials insofar as paragraphs 4 to 7 of the Statement of Claim and the 1st Defendant’s Defence are concerned. By reason of the bare denials:-
(1) the date of making and delivering of the Promissory Note, ie 28 November 2011;
(2) the 1st Defendant’s promise to pay Mr Koh the Sum by 25 equal calendar monthly instalments in Australian dollars at an exchange rate equivalent to SGD$21,000.00 on the 28th day of each month commencing on 28 December 2011;
(3) the last date of payment under the Promissory Note being 28 December 2013;
(4) Mr Koh’s Cheque drawn in favour of the 2nd Defendant at the direction of the 1st Defendant;
(5) the encashing of the Cheque by the 2nd Defendant;
(6) the 1st Defendant’s failure to pay any of the instalments due under the Promissory Note;
(7) the 1st Defendant’s payment of AUD113,300.00 in instalments of different sums on various dates; and
(8) the 1st Defendant’s failure to pay the balance due under the Promissory Note,
were not specifically traversed and were therefore deemed to be admitted by the 1st Defendant. In the premises, I rule that the 1st Defendant was not entitled to cross-examine Madam Koh on the date of delivery of the Promissory Note, and Madam Koh’s answer shall not be admitted as evidence.
46. On the other hand, paragraph 8 of the Statement of Claim did not make any allegation of fact. Instead, the paragraph dealt with liability and relief which were met by the 1st Defendant’s limitation defence in paragraph 8 of its Defence, and therefore there is no admission pursuant to Order 18 rule 13 RDC.
47. The 1st Defendant contended that the Plaintiff only raised the argument of bare denials and deemed admissions for the first time at trial. I do not see any impropriety with the Plaintiff taking the pleading point – after all this Court is entitled to and, indeed, must consider the legal effect of the bare denials.
48. The 1st Defendant went on to submit that paragraph 6 of the Plaintiff’s Reply, being an express joinder of issue, operated to join issue with the denials in paragraphs 4 to 7 of the 1st Defendant’s Defence, such that the Plaintiff’s allegations in paragraphs 4 to 7 of the Amended Statement of Claim were in issue and were to be determined by this Court. I disagree. As I held above, the allegations of fact in paragraphs 4 to 7 of the Amended Statement of Claim were deemed to be admitted by the bare denials in paragraphs 4 to 7 of the 1st Defendant’s Defence. There is no allegation of fact or other issue for joinder in the Reply insofar as paragraphs 4 to 7 of the 1st Defendant’s Defence is concerned.
49. The 1st Defendant further submitted that the allegations in paragraphs 4 to 7 of the Amended Statement of Claim were relevant to its limitation defence pleaded in paragraph 8 of the Defence, and the Plaintiff is required to prove those allegations pursuant to Order 18 rule 13(6). I notice that there is no rule 13(6) in Order 18 RDC, and I suppose the 1st Defendant was referring to Order 18 rule 13(5) RDC, which provides that a party who fails to deal with an allegation, but has set out in his defence or defence to counterclaim the nature of his case in relation to the issue to which that allegation is relevant, is to be taken to require that allegation to be proved. The 1st Defendant did not cite any authority as to how Order 18 rule 13(5) RDC should be interpreted and applied. According to Hong Kong Civil Procedure 2024, Volume 1 , rubric 18/13/11 cited by the Plaintiff:-
“…Reading both rr.13(1) and (3) together, a general denial would be considered a failure to deal with an allegation under [r.13(5)(a) RDC]. The outcome for a general denial or bare denial would therefore attract three possible consequences: (i) if the defendant has set out in his defence in such a way that deals with that particular alleged fact, then that issue will still be required to be proved ([r.13(5)(b) RDC]); (ii) if the defendant does not in his defence deal with that particular alleged fact at all, r.13(1) would deem such fact to be admitted; (iii) if there are ambiguities as to whether the defendant has dealt with that particular fact, it is always possible for the plaintiff to apply to the court for further information from the defendant under r.12(3).
However, practitioners are not advised to always rely on [r.13(5) RDC], as whether [r.13(5)(b) RDC] is engaged is a matter of degree of relevance (see Laerdal Medical Limited v Hong Kong Haocheng International Trade Limited (HCA 2193/2016, [2017] HKEC 1257, HCA 2193/2016, [4]-[9]).”
50. I reject the 1st Defendant’s argument. It is plain that paragraphs 4 to 7 of the 1st Defendant’s Defence are bare denials of paragraphs 4 to 7 of the Amended Statement of Claim. Nowhere else in the Defence did the 1st Defendant dealt with the alleged facts in paragraphs 4 to 7 of the Amended Statement of Claim. The limitation defence in paragraph 8 did not deal with the said alleged facts either. To put it another way, the limitation defence as pleaded was not premised on the determination of the said alleged facts. In the circumstances, the second consequence in the said extract of Hong Kong Civil Procedure 2024 is engaged, namely that the alleged facts in paragraphs 4 to 7 of the Amended Statement of Claim are deemed admitted. I disagree with the 1st Defendant that the Plaintiff failed to take steps such as seeking further and better particulars under Order 18 rule 12(3) RDC or serving a notice to admit under Order 27 rule 2 RDC. There is no ambiguity as the 1st Defendant simply denied paragraphs 4 to 7 of the Amended Statement of Claim without any plea of reason for traversing the same or any plea of its own version of events, and therefore the third consequence in the said extract of Hong Kong Civil Procedure 2024 is not engaged at all. That said, there is nothing barring the 1st Defendant from arguing the limitation defence with the facts in paragraphs 4 to 7 of the Amended Statement of Claim admitted.
51. Moreover, based on the deemed admission of the alleged facts in paragraph 5 of the Amended Statement of Claim by reason of the bare denial pleaded in paragraph 5 of the Defence, I accept that Mr Koh provided valuable consideration for the Promissory Note by advancing, at the direction of the 1st Defendant, the sum of SGD$500,000 to the 2nd Defendant by the Cheque which was duly presented on 29 November 2011.
52. Even if I am wrong on the deemed admission, insofar as the requirement of delivery is concerned, I accept Madam Koh’s evidence that the Promissory Note was in her possession as the sole executrix of the Estate, and this infers that the Promissory Note must have been delivered by the 1st Defendant to Mr Koh.
53. Again, even if I am wrong on the deemed admission, in relation to the requirement of valuable consideration, it is clear from the plain reading of the unchallenged Promissory Note that the 1st Defendant as Borrower had received value for its promise to pay the Sum to Mr Koh as the Promissory Note Holder. Next, both YCA’s Confirmation 5.9.2012 and YCA’s Confirmation 12.8.2013 provided that the outstanding balance owed by the 1st Defendant to Mr Koh was “unsecured, bear 2.5% pa interest due on 28 December 2013”. I accept below that the two confirmations were written at the instruction of the 1st Defendant. On one hand, the sum advanced by Mr Koh to the 2nd Defendant was SGD$500,000. On the other hand, a loan of SGD$500,000 at the interest rate of 2.5% per annum and payable in 2 years yields simple interest of SGD$25,000, and the total amount of principal and interest payable at maturity is SGD$525,000, and such total amount matches the Sum (i.e. SGD$525,000) owed by the 1st Defendant under the Promissory Note to Mr Koh. Therefore, the two confirmations lend support to the allegation that the 1st Defendant directed Mr Koh to pay SGD$500,000 to the 2nd Defendant, while promised Mr Koh, under the Promissory Note, to repay the sum as a loan payable in 2 years with simple interest at the rate of 2.5% per annum. Further, the information in the Annual Returns suggest that the 1st Defendant and the 2nd Defendant were related entities, and it was the 1st Defendant which directed Mr Koh to draw the Cheque in favour of the 2nd Defendant:-
(1) Both the 1st Defendant and the 2nd Defendant had 2 shareholders only, and Chiang was the common shareholder of the two companies.
(2) Chiang was the sole director and secretary of the 1st Defendant. The other shareholder with equal shareholding of the 1st Defendant, namely one Tan Gek Huang (“Tan ”), appeared to be related to Chiang as they shared the same address.
(3) Tan was one of the two directors of the 2nd Defendant.
(4) Both the 1st Defendant and the 2nd Defendant shared the same registered office.
54. I have considered the said evidence, the absence of suggestion of any prior duty, obligation or reason for Mr Koh to draw the Cheque in favour of the 2nd Defendant, as well as the inherent probabilities and improbabilities. I find that Mr Koh paid SGD$500,000 to the 2nd Defendant at the direction of the 1st Defendant.
55. In my judgment, the Promissory Note is a valid promissory note as a matter of law.
(IX) Issue 1 – Time-Barred?
56. It is common ground that pursuant to section 4 of LO, the relevant limitation period in this case is 6 years from the date of accrual of the cause of action. The question is when the Plaintiff’s present cause of action accrued and when the relevant limitation period expired.
57. As stated above, upon my request, Mr Hart made oral submissions on the 1st Defendant’s limitation defence before Madam Koh’s testimony. Mr Hart made three points. First, it was submitted that nothing in the said confirmations for audit purposes, ie YCA’s Confirmation 5.9.2012, YCA’s Confirmation 12.8.2013 and KKYC’s Confirmation, suggested that they were written by or at the instruction of the 1st Defendant, and in any event the first two confirmations were not signed by the auditors and were outside the limitation period. The third confirmation was not signed at all. Secondly, there was a part payment of AUD20,000 on 17 June 2016 which Mr Hart wished to cross-examine Madam Koh on. Thirdly, it was submitted that there was no authority cited to support the Plaintiff’s plea that the maturity date of the Promissory Note was 28 December 2013 under common law.
58. With respect, Mr Hart’s three points were not submissions substantiating the limitation defence but simply further replies to the three alternative positions of the date of accrual of cause of action as pleaded in paragraph 4 of the Plaintiff’s Reply. That said, based on the three points made by Mr Hart, this Court took it that the 1st Defendant’s limitation defence was that the three alternative dates of accrual of cause of action were all incorrect, and in any event the relevant limitation period had expired.
59. Nonetheless, in its written closing submissions, the 1st Defendant, for the first time in this trial, argued that the maturity date, for the purpose of calculating the date from when the limitation period started to run, should not be taken as 28 December 2013 simply because that was the date for payment of the last instalment. Rather, submitted by the 1st Defendant, there were different maturity dates, being the dates upon which each instalment became due and payable. The 1st Defendant further contended that when applying the 6-year limitation period with regard to each of the monthly instalment payments due under the Promissory Note, any claims the Plaintiff might have had in respect of the first 24 monthly instalments from 28 December 2011 to 28 November 2013 were all time-barred, and the only monthly instalment payment which could possibly still be payable within the 6-year period prior to the issue of the Writ of Summons herein on 24 December 2019 was the last instalment for SGD$21,000 payable on 28 December 2013. (“Multiple Maturity Date Argument ”)
60. This Multiple Maturity Date Argument has never been pleaded by the 1st Defendant. Neither was it one of the alternatives pleaded by the Plaintiff in paragraph 4 of her Reply. I agree with Mr Hughes that the Plaintiff was completely taken by surprise as this new point (as well as the various dates of accrual of cause of action and the corresponding limitation periods) had never been pleaded or raised in the written opening submissions or in the course of the trial, and the Plaintiff did not have any opportunity to deal with this point or raise any point of law in response. I rule that the 1st Defendant is not entitled to pursue the Multiple Maturity Date Argument.
61. Turning back to the maturity dates as pleaded in paragraph 4 of the Reply, the Plaintiff submitted, as her primary position, that the date of maturity of the Promissory Note was 28 December 2013 as the last date of payment that was clearly stipulated in the Promissory Note, and so the limitation period expired 6 years from that date on 28 December 2019. According to Chalmers and Guest on Bills of Exchange, Cheques and Promissory Notes, 18th Edition , paragraph 7-056, as a general rule the liability to the holder of the maker of a promissory note payable at a fixed or determinable future time arises on maturity of the instrument, and thus if a promissory note is payable on a fixed date, time will begin to run in favour of the maker against the holder from the date on which the promissory note falls due.
62. In my judgment, the Promissory Note falls within the general rule. Time started to run on 28 December 2013 which was the maturity date of the Promissory Note. The relevant limitation period expired on 28 December 2019. The present Writ of Summons was issued within the limitation period, and therefore this action was not time-barred.
63. This maturity date of 28 December 2013 is supported by YCA’s Confirmation 5.9.2012 and YCA’s Confirmation 12.8.2013. These two confirmations recorded the outstanding balance owed by the 1st Defendant to Mr Koh up to 30 June 2012 and 30 June 2013 respectively, and both of them specified that the outstanding balance was “unsecured, bear 2.5% pa interest due on 28 December 2013”. Moreover, both confirmations were signed, though the person who signed was not identified. Mr Hart argued that these two confirmations were not signed by the auditors and there was nothing to suggest that they were written by or at the instruction of the 1st Defendant. However, in the course of the trial, Mr Hart accepted that the 1st Defendant had never served any notice pursuant to Order 27 rule 4(2) RDC to challenge the authenticity of the two confirmations and require it to be proved at the trial. I reject Mr Hart’s argument that the two confirmations were not written by or at the instruction of the 1st Defendant. In relation to the signature, I notice that both confirmations contained a sentence requesting the recipient to sign at the bottom of the page if the stated outstanding balance agreed with the recipient’s records. On balance of probabilities, I accept that the two confirmations were signed by Mr Koh confirming the outstanding balance owed by the 1st Defendant to him.
64. I have ruled that the 1st Defendant is not entitled to run the Multiple Maturity Date Argument. In any event, the argument would not have assisted the 1st Defendant. The Promissory Note simply set out the method of payment of the Sum by 25 equal monthly instalments until 28 December 2013, but nothing suggested that each instalment had its own maturity date or that the failure to settle one instalment would entitle Mr Koh to sue for that instalment. It is against commercial reality and common sense to suggest that there were 25 maturity dates when, in fact, the 1st Defendant owed the Plaintiff one sum of SGD$525,000 under the Promissory Note but not 25 sums of SGD$21,000 each. Moreover, parties did not dispute that the Promissory Note contained no acceleration clause to the effect that the whole Sum would be due immediately upon the failure to settle any instalment.
65. I have considered the authorities cited by the 1st Defendant. Five of the authorities, namely (a) Chitty on Contracts (35th Edition) , paragraph 30-010, (b) Kallinicos & Anor v Hunt & Ors [2008] NSWSC 149, (c) Equuscorp Pty Ltd v Rigert [2003] VSC 343, (d) Wittersheim v The Countess Dowager of Carlisle (1791) 126 ER 360 and (e) Reeves v Butcher [1991] 2 QB 509 do not concern the ascertainment of the maturity date of a promissory note. In the sixth authority, namely Irving & Anor v Veitch (1837) 3 M&W 90, the defendant owed the plaintiffs certain balance of money for which they held his overdue promissory note. Subsequently, the plaintiffs and the defendant reached a new agreement for the defendant to pay the balance partly in cash and the remainder by annual instalments and by proceeds of certain wines consigned by the defendant to India, while the plaintiffs shall hold the promissory note as a security for the payment of the balance. After making part payment in cash and the first two annual instalments, the defendant defaulted in making any payment. It was held that the plaintiffs were entitled, at any time within six years from the date of default of making the third annual instalment, to sue the defendant on the promissory note, for the balance remaining due. That case is clearly distinguishable from the present case.
66. My ruling that the maturity date of the Promissory Note was 28 December 2013, and hence this action was brought within the relevant limitation period, is sufficient to dismiss the limitation defence. That said, I say a few words on the two alternative positions of the Plaintiff.
67. The first alternative position of the Plaintiff was that by operation of section 23(3) of the LO, the right of action for payment of outstanding amounts under the Promissory Note was deemed to have accrued on 5 September 2012, 12 August 2013 and/or on an unknown date on or after 30 June 2014 (to be ascertained), being the dates of the YCA’s Confirmation 5.9.2012, YCA’s Confirmation 12.8.2013 and KKYC’s Confirmation, through which the 1st Defendant acknowledged the debt owed to the Plaintiff in writing. The limitation period ran afresh from these dates expiring 6 years therefrom. Nonetheless, as accepted by Mr Hughes during the trial and in the written closing submissions, the Plaintiff no longer pursued this alternative position in light of the dates of the first 2 confirmations, ie 5 September 2012 and 12 August 2013, and the fact that the third confirmation was undated and unsigned.
68. The second alternative position was that by operation of section 23(3) of the LO, the right of action was deemed to have accrued on 17 June 2016, being the date on which the 1st Defendant made part payment of the debt owed to the Plaintiff, and the limitation period ran afresh on that date expiring 6 years therefrom on 17 June 2022. As I ruled above, the effect of the 1st Defendant’s bare denials of the Plaintiff’s alleged material facts is that such facts are deemed to have been admitted, and they included the fact that AUD20,000.00 was paid by the 1st Defendant to Mr Koh on 17 June 2016 as pleaded in paragraph 6 of the Amended Statement of Claim. Even if I am wrong, such part payment was recorded in the relevant monthly statement of the joint bank account of Mr Koh and Madam Koh. Hence, if I am wrong on the Plaintiff’s primary position that the maturity date of the Promissory Note was 28 December 2013, I hold that the right of action under the Promissory Note had accrued on 17 June 2016, such that the limitation period ran afresh on that date and expired 6 years therefrom on 17 June 2022.
(X) Issue 2 – 1st Defendant’s Liability under the Promissory Note
69. I have ruled that the Promissory Note is a valid promissory note as a matter of law. Under the Promissory Note, the 1st Defendant owed the Plaintiff the Sum and the maturity date was 28 December 2013.
70. As I ruled above, the effect of the 1st Defendant’s bare denials of the Plaintiff’s alleged material facts is that such facts are deemed to have been admitted, and they included:-
(1) from 14 February 2012 to 17 June 2016, the 1st Defendant having paid Mr Koh a total sum of AUD113,300.00 (equivalent to SGD$129,103.57) only (paragraph 6 of Amended Statement of Claim); and
(2) the 1st Defendant thereafter failed to pay the balance due under the Promissory Note, which remains due (paragraph 7 of Amended Statement of Claim).
71. The 1st Defendant therefore owes the Plaintiff SGD$395,896.43 being the outstanding balance under the Promissory Note.
72. If I am wrong, I turn to the evidence. Interestingly, the 1st Defendant disputed the partial payments which it had made as alleged by the Plaintiff, while adducing no evidence showing its own version of payments made. I would have thought that the 1st Defendant agreed with the alleged partial payments which would reduce the outstanding balance owed under the Promissory Note. In any event, I am satisfied that the evidence adduced by the Plaintiff supports the partial payments made by the 1st Defendant:-
(1) Item Nos 11, 13, 14, 15, 16 and 18 of paragraph 6 of the Amended Statement of Claim are supported by the relevant monthly statements of the joint bank account of Mr Koh and Madam Koh, with entries marked “Deposit Quest Return loan” or “Deposit Quest Rtn loan” or “Deposit Quest Quest” or “Deposit Quest Investment Quest Investments” with the handwritten word “Chiang” denoting such partial payments made by the 1st Defendant. These payments are further supported by the Manuscript Record, which I accept as I held that Madam Koh was a credible and reliable witness.
(2) Item No 17 of paragraph 6 of the Amended Statement of Claim is supported by the statement from 26 October 2015 to 26 November 2015 of the joint bank account of Mr Koh and Madam Koh, where there was an entry described as “Proceeds Overseas Telegraphic Transfer 114400 Chiang Wee Tiong” with the handwritten word “Chiang”. This is further supported by the Manuscript Record.
(3) Item Nos 1 to 10 and 12 of paragraph 6 of the Amended Statement of Claim are supported by the Manuscript Record.
73. I hold that the 1st Defendant is liable to the Plaintiff under the Promissory Note for the outstanding balance of SGD$395,896.43.
74. The Plaintiff sought interest pursuant to section 57(a)(ii) of BEO from the date of maturity of the Promissory Note (28 December 2013) at the commercial rate, presently amounting to 5 per cent per annum, and amounting to SGD$120,558.60 at the date of the Writ of Summons herein. In my judgment, this is an appropriate case to award pre-judgment interest to the Plaintiff from 28 December 2013, ie the date when the Plaintiff has been kept out of the outstanding balance under the Promissory Note, up to the date of this Judgment. However, it is unclear whether the Plaintiff sought commercial borrowing rate of Singapore Dollars or Australian Dollars or Hong Kong Dollars as applicable in Hong Kong or anywhere else. In any event, the Plaintiff adduced no evidence of the prevailing commercial borrowing rate of any currency whether in Hong Kong or anywhere else.
75. In my judgment, taking into account:-
(1) the Sum was supposed to be paid to Mr Koh and Madam Koh’s bank account in Australia in Australian Dollars;
(2) Mr Koh and Madam Koh were, to say the least, Australian residents with no apparent connection with Hong Kong; and
(3) the absence of evidence showing the feasibility of borrowing Singapore Dollars in Australia and, if so, the requisite interest rate,
I exercise my discretion to adopt the commercial borrowing rate for Australian Dollars in Australia for pre-judgment interest. See Chow How Yeen Margaret v Wex Pharmaceuticals Inc [2018] 3 HKLRD 163 (CA) at paragraphs 68 to 74. As there is no evidence in this regard, I direct the parties to agree to such rate or rates from 28 December 2013 until today.
(XI) Capacity to Sue?
76. In its written closing submissions, the 1st Defendant submitted that it was only after a recent court file search that it became aware of the Ex Parte Application for leave to appoint Madam Koh to represent the Estate for the purpose of carrying on this action. As submitted by the 1st Defendant, from the Affirmation of Yue Wing Man filed on 8 May 2020 in support of the Ex Parte Application, it was evident that Madam Koh had not at that time applied for a grant of probate in Hong Kong. The 1st Defendant relied on the case of Nativivat v Nativivat [2012] 3 HKLRD 752 in which Deputy High Court Judge Lok (as he then was) quote the following paragraph from The Conflict of Laws in Hong Kong (2005) paragraph 8.018:-
“A personal representative entitled under foreign law is not entitled to sue in a Hong Kong court in the capacity of personal representative without first obtaining a Hong Kong grant. The only personal representative who may sue in that capacity before a Hong Kong court without a Hong Kong grant is an executor appointed pursuant to a will the essential validity of which is determined by Hong Kong law.”
77. The 1st Defendant went on to submit that this Court, while allowing the inclusion into the trial bundle of three documents namely (a) the Ex Parte Summons filed by the Plaintiff on 8 May 2020, (b) the said Affirmation of Yue Wing Man with exhibits filed on 8 May 2020, and (c) the Court Note of Master Maurice Lam dated 22 May 2020 (collectively “the Ex Parte Documents ”), refused to allow questions to be put to Madam Koh regarding Madam Koh’s application for a grant of probate in Hong Kong and, in particular, if and/or when she had obtained a grant of probate in Hong Kong (“the Capacity to Sue Point ”).
78. Before Madam Koh’s testimony, I ordered the Ex Parte Documents be included in the trial bundle, having regard to all relevant circumstances particularly the fact that the Ex Parte Documents had been referred in Master Maurice Lam’s order dated 22 May 2020, and the just resolution of the disputes between the parties. As Mr Hughes rightly put it, the Ex Parte Documents served to inform about the background of this case only. I expressly stated that no blanket leave was granted to the 1st Defendant to cross-examine on those documents, as I would consider individually each of the questions to be put to Madam Koh.
79. I agree with the Plaintiff that the Capacity to Sue Point was not pleaded in the 1st Defendant’s Defence and was not an agreed issue in the Joint Statement of Issues. A party must raise all the issues he wishes to raise to be dealt with at the trial, and is not entitled to have issues recently thought up dealt with separately and piecemeal. See Sinoearn International Ltd v Hyundai-CCECC Joint Venture (2013) 16 HKCFAR 632, at paragraph 30. In the circumstances, this Court did not allow Mr Hart to cross-examine Madam Koh on the Capacity to Sue Point. During his oral closing submissions, Mr Hart sensibly informed this Court that the 1st Defendant would not push the Capacity to Sue Point further.
80. As the Capacity to Sue Point was not pleaded and did not form part of the agreed issues, I decline to consider the same.
(XII) Disposition
81. By reason of the foregoing, I order that:-
(1) The 1st Defendant do pay the Plaintiff the sum of SGD$395,896.43 or its equivalent in Hong Kong dollars.
(2) The 1st Defendant do pay the Plaintiff its pre-judgment interest on the sum in sub-paragraph (1) hereof from 28 December 2013 up to the date of this Judgment, at the commercial borrowing rate of Australian Dollars in Australia.
(3) The parties do agree to such rates or rates for the said period in sub-paragraph (2) hereof within 14 days from today, failing such agreement each party to file and serve evidence in this regard by affirmation within 7 days thereafter and written submissions within 7 days thereafter, and the court shall determine the rate or rates by paper disposal. For this purpose, there be liberty to apply.
(4) The 1st Defendant do pay the Plaintiff its judgment interest on the sum in sub-paragraph (1) hereof at judgment rate from the date of this Judgment until full payment.
82. Costs should follow the event. I make a costs order nisi that the 1st Defendant do pay the Plaintiff costs of the action including all reserved costs, to be taxed if not agreed, with certificate for counsel.
( Aidan Tam )
Deputy District Judge
Mr Sebastian Hughes, instructed by Munros, for the plaintiff
Mr Andrew Hart (Solicitor Advocate) of Hart Giles, for the 1st defendant