CHEUNG WAI SING JACKIE WALTER v. BILLION CREDIT FINANCIAL CO LTD

DCMP 3325/2018

[2020] HKDC 374

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 3325 OF 2018

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D E C I S I O N

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Introduction

1.  After trial, this court handed down a judgment dated 17 January 2020 (“the Judgment”) ordering a dismissal of the claim of Mr Cheung with costs to the defendant company.

2.  Mr Cheung took out two summonses both dated 13 March 2020 in the wake of the Judgment. One is for leave to appeal pursuant to section 63A of the District Court Ordinance, Cap 336 (“the DCO”) (“the Leave Summons”) and the other one is for a variation of the costs order nisi (“the Variation Summons”). To avoid delay, during the General Adjourned Period (“GAP”), this court gave directions for the paper disposal of the two Summonses with the consent of the parties.

3.  I shall refer to the Judgment for the background facts which will not be repeated here. In this Decision, I shall adopt the abbreviations used in the Judgment except “the Sum” which is, as explained below, in controversy.

4.  I should first dispose of the Leave Summons.

The Leave Summons

5.  The threshold that Mr Cheung has to meet in order to obtain leave to appeal is well-known. Pursuant to section 63A(2) of the DCO, Mr Cheung has to show that his appeal has a “reasonable prospect of success” or there is some other reason in the interests of justice why his appeal should be heard. A “reasonable prospect of success” means an appeal with prospects that are more “fanciful”, without having to be “probable”: SMSE v KL [2009] 4 HKLRD 125 per Le Pichon JA.

6.  Attached to the supporting affirmation of the Leave Summons is a draft Notice of Appeal and it contains 10 grounds. In the written submissions of Mr Wang, for Mr Cheung (here and not at trial), helpfully condenses them into 4 broad grounds as follows:

(1)  I erred in holding that Mr Cheung is liable to pay the total sum of HK$22,750 to the Company and the sum is secured by the Charge. (“the Scope of Charge Point”);

(2)  I erred in construing the loan documents to hold that the Remittance Term must prevail over the Advancement Terms and so the Loan was to be advanced only after the registration of the Charge. (“the Interpretation Point”);

(3)  I erred in holding that the Company had taken not more than a reasonable time in registering the Charge on 19 June 2018 and hence it committed no breach of the implied term. (“The Breach of Implied Term Point”); and

(4)  I had completely ignored the inconsistency and unreasonableness in the evidence of the Company as to its calculation of interests, and failed to take into account necessary considerations in assessing the parties’ evidence. (“the Assessment of Evidence Point”).

7.  Before I assess the merits of the 4 grounds, the following matters are of note so that the grounds could be understood in the proper context. First, in the Amended Originating Summons, Mr Cheung asks for the following declaratory relief: a declaration to the effect that the Loan Agreement was rescinded or discharged by the breach of the Company, that the Charge against the Property has been discharged and that the Charge is not registrable and/or is no longer registrable against the Property. Mr Cheung further asks for an order that the Charge be vacated, the registered or otherwise removed from the registers and damages.

8.  In the written opening submission of Mr Cheung’s former counsel, only the validity of the Charge was called into question on the ground that the Company had repudiated the Agreement. The exact amount of the outstanding indebtedness was not an issue.

9.  The alleged repudiation on the part of the Company is premised upon the prevalence of the Advancement Terms over the Remittance Term as contended by Mr Cheung. I rejected this contention and so his primary case collapsed. In any event, I concluded that Mr Cheung had affirmed the Loan Agreement despite the alleged breach of the Advancement Terms on his own evidence.[1]

10.  I further rejected his allegation that the Company had breached the agreed implied terms relating to its obligation to register the Charge within a reasonable time. Hence, the fallback position of Mr Cheung was rejected.

11.  I concluded that it was Mr Cheung who repudiated the Loan Agreement.[2]

12.  Lastly, in both his opening and closing submissions, Mr Cheung’s former counsel confirmed that Mr Cheung has no evidence to support his claim for damages and at best he was entitled to nominal damages.

13.  In the circumstance, I find it logical and convenient to deal with the Scope of Charge Point only after the other 3 points advanced by Mr Wang.

The Interpretation Point

14.  To start with, this point is academic in light of my finding of Mr Cheung’s affirmation of the Loan Agreement in spite of the alleged breach of the Advancement Terms by the Company.

15.  Mr Wang complains that my interpretation would lead to an absurd and unjust outcome in that the Company would earn interest on the entire Principal Sum from 5 June 2018 and Mr Cheung had to make the first repayment on 5 July 2018 whilst Mr Cheung had to wait until the registration of the Charge to receive the balance of the Loan.

16.  This contention is untenable. As rightly pointed out by Mr Lo, for the Company, the Company only charged interest on the balance of the Loan from 20 June 2018, when the Company asked Mr Cheung to collect the cheque for the balance.[3] This is a factual finding against which Mr Cheung does not appeal.

17.  Mr Wang further submits that my construction would mean that the Advancement Terms together with the other repayment terms merely constituted an agreement to agree and so the Loan Agreement was incomplete and void for lack of certainty.

18.  I agree with Mr Lo’s observation that this submission involves a misunderstanding of my analysis in the Judgment. I only considered a hypothetical situation where the Charge was registered only after the first repayment instalment was due. I came to the conclusion that in such an eventuality, the parties could still agree on any adjustment of the repayment schedules. The essential terms of the Loan Agreement are still certain and Mr Wang does not identify which term he says is uncertain so as to render the Loan Agreement unworkable.

19.  All other arguments made by Mr Wang have actually been made by his predecessor and in my view were sufficiently dealt with in the Decision.

20.  In the premises, I can see no merit in this ground.

Breach of Implied Term Point

21.  This court empathetically rejected Mr Cheung’s allegation that the Company did not register the Charge within a reasonable term and hence breached the implied terms in light of certain factual findings[4].

22.  On this issue, Mr Wang merely asserts that this court placed undue weight on those factual findings. I do not believe that it is a valid complaint.

23.  I also do not understand the complaint of Mr Wang that I did not touch upon the consequence of the breach of the implied terms. I found no breach at all. In any event, as conceded by his former counsel, Mr Cheung suffered no provable loss even if there had been any breach.

The Assessment of Evidence Point

24.  Mr Wang makes a detailed submission on how this court has failed to consider the weakness and inconsistencies of the evidence of the Company. I do not believe it is necessary to set them out. The criticisms about the evidence of the Company were made at trial and lacked cogency. Suffice it to say, I accepted the evidence of Madam Lee and it cannot be fairly said that I have overlooked or misunderstood any particular piece of evidence.

25.  I have given my reasons why I preferred the evidence of Madam Lee to those of Mr Cheung. I found Mr Cheung not to be truthful and some of his allegations are plainly unbelievable in my judgment. I do not think my assessment of their credibility can be faulted and my essential factual findings supporting the dismissal of his claim should be disturbed.

26.  The fictitious character Kelvin Lee is in my judgment a clear example of the untruthfulness of Mr Cheung. I said it was a last minute fabrication made in cross-examination. I have given a full explanation for this conclusion. Nothing in Mr Wang’s submission on this matter can persuade me that I might have made an erroneous evaluation.

The Scope of Charge Point

27.  Curiously enough, this ground has been given remarkable prominence in the written submissions. It is actually academic given my conclusions on the Interpretation Point and the Breach of Implied Term Point. There is simply no basis to challenge the validity and enforceability of the Charge. There was no suggestion that there was no secured indebtedness within the definition of the Charge even if the Company had not repudiated the Loan Agreement. Mr Cheung in fact denies the entitlement of the Company to any interest under the Loan Agreement by reason of its repudiation of the same.[5] It matters not what the exact quantum of the outstanding indebtedness is. My conclusions relating to the key issues in the Judgment are sufficient to justify my dismissal of Mr Cheung’s claim in the Amended Originating Summons.

28.  The former counsel for Mr Cheung in his opening submissions at trial did not ask this court to assess the amount of indebtedness for the purpose of a vacation or removal of the Charge. It was only at the end of his written closing submissions under the heading of “Final Remark” that the issue of quantum was raised[6].

29.  It was submitted that Mr Cheung’s primary relief was a declaration that the Charge has been discharged and its registration should be vacated. Hence, the analysis of whether there was any outstanding interest payable by Mr Cheung under the Loan Agreement was inevitable and so in the event that this court did not accept his case, this court should determine the amount of the outstanding interest payable by Mr Cheung. This court was further invited to make an order that upon payment of such an amount, the Company shall forthwith release and/or discharge the Charge.

30.  I did not accede to this request in the Judgment. The declarations sought by Mr Cheung were clearly predicated upon the alleged breach of the Company. If there was no breach, the declarations should be refused. The proposed order is not within the ambit of the Amended Originating Summons.

31.  Notwithstanding the irrelevance of this ground, now I turn to the specific complaint of Mr Cheung. The starting point is that I erred in holding that the following sums were secured by the Charge:

(1)  an amount of HK$3,500 being 2 months’ interest on the sum of HK$50,000 advanced by the Company to Mr Cheung on 5 June 2018 (“the HK$50,000 Interest”);

(2)  an amount of HK$15,750 being 1 months’ interest on the sum of HK$434,958 accruing from 13 July 2018 onwards (“the Remainder Interest”); and

(3)  an amount of HK$3,500 being the costs or disbursements to be incurred by the Company in discharging the Charge dated 5 June 2018 (“the Costs”).

32.  This ground is based on a misunderstanding of the exact nature of the Remainder Interest. Mr Wang submits that I erred in that I allowed the same though Mr Cheung refused to accept the amount of HK$434,958, which the Company tried to deposit into his bank account and this amount was never transferred to him. I have to make clarifications here.

33.  On the issue of interest, among other matters, I was impressed by Madam Lee as a factual witness and I found her evidence, both written and oral, reliable.  I accepted her breakdown of the interest and the Costs payable by Mr Cheung in paragraph 24 of her 1^st affirmation. I accepted her oral evidence as to why a different figure of interest was given in a pre-action letter issued by the Company’s solicitors. All the amounts of the HK$50,000 Interest, the Remainder Interest and the Costs were taken from the said paragraph. I cannot see any problem with my acceptance of the evidence of Madam Lee in this regard.

34.  I allowed the Remainder Interest in the amount of HK$15,750, which can have no meaningful relationship with the amount of HK$434,958 mathematically, due to my acceptance of Madam Lee’s evidence that it represented 1 month’s interest on the sum of HK$450,000 made available to Mr Cheung on 20 June 2018.[7] The principal was never HK$434,958 and the accrual commencement date was never 13 July 2018.

35.  Mr Wang’s submission is based on my characterization of the amount of the Remainder Interest as 1 month’s interest on the “Sum”[8] and the definition of the “Sum” can be found in paragraph 9(10) of the Judgment as follows:

“On 13 July 2018, the Company caused to be deposited a sum of HK$434,958.00 into a bank account of Mr Cheung (“the Deposit”) being the balance of the Loan (“the Sum”).”

36.  Here comes the debate about the definition of the Sum. Mr Wang submits that the Sum refers to the amount of HK$434,958.00. Mr Lo submits that the Sum refers to the balance of the Loan, i.e. HK$450,000. Mr Lo is correct.

37.  There are two definitions in the said paragraph. “Deposit” refers to the amount of HK$434,958.00 whereas “the Sum” refers to the balance of the Loan in the sum of HK$450,000.00. The Deposit is the Sum after deduction of the first repayment instalment in the amount of HK$15,024. This was explained by Madam Lee to Mr Cheung via voice message on 11 July 2018[9] and this was not challenged at trial.    

38.  In the same paragraph where I explained what the sum of HK$15,750 represented, I said that the Sum was made available to Mr Cheung and interest should accrue irrespective of whether Mr Cheung accepted the Deposit.

39.  I accept that my use and non-use of the definitions of the Deposit and the Sum elsewhere in the Judgment may cause confusion. However, if Mr Cheung understands properly the clear evidence of Madam Lee expressly accepted by the Judgment, he cannot be confused. More importantly, this leads to no significant consequence. There can be no challenge to his liability to pay the HK$50,000 Interest and the Costs in the like amount. It does not alter the fact that Mr Cheung remains liable to pay such secured indebtedness under the Charge. His claim falls to be dismissed.

40.  Thus, I see no merit in this ground too.

41.  In the circumstances, I cannot find any substances in any of the 4 grounds. Mr Wang is unable to persuade this court that Mr Cheung’s appeal has any reasonable prospect of success. There is no suggestion that the appeal is necessary in the interests of justice. I can conclude that Mr Cheung is unable to meet the threshold under section 63A(2) of the DCO.

Variation Summons

42.  By the Variation Summons, Mr Cheung basically seeks a departure from the usual costs order of costs following the event. He asks for the following costs orders in place of the costs order nisi:

(1)  Mr Cheung’s costs before 21 March 2019 (including costs previously reserved and costs of and occasioned by Madam Lee’s late filing of acknowledgement of service and the filing of her 1^st affirmation) shall be paid by the Company;

(2)  costs of the hearing on 22 March 2019 before a deputy judge (“the Hearing”) be to the Company;

(3)  the Company’s costs after 22 March 2019 be paid by Mr Cheung;

(4)  the Company’s costs of trial with certificate for counsel be paid by Mr Cheung;

(5)  all of the foregoing costs be taxed if not agreed.

43.  Mr Cheung further seeks an extension of time to make this application. I do not think it is necessary as he was merely prevented by GAP from making this application within 14 days from the date of the Judgment. Mr Lo takes no issue with the timing of the application too.

44.  There is no affirmation filed by Mr Cheung to explain his proposed costs orders.

45.  Mr Wang submits that the Company, though being a willing party, should be deprived of some costs due to its previous inaccuracies about the outstanding amount in the pre-action letters of its solicitors. He submits that it was not until Madam Lee filed her 1^st affirmation that the Company accepted that Mr Cheung had already made his repayment of the Paid Sum and that the Company alleged that Mr Cheung had to pay outstanding interest and the Costs. It is even submitted, without any evidence, that had the Company clarified the amount payable by Mr Cheung to the Company earlier, Mr Cheung might not have commenced these proceedings at all.

46.  There were indeed inaccuracies about certain figures in the pre-action letters issued by the solicitors of the Company. The Company could not have deliberately concealed the repayment of the Paid Sum in my view. I do not think those inaccuracies mattered at the end of the day given the intransigent stance of Mr Cheung taken at the very outset. He was adamant that the Company had breached the Loan Agreement and so the Charge had to be discharged or vacated. He did not seek clarifications from the Company and make any offer to pay any amount of interest and costs and disbursement by any means though he could have done so. 

47.  Nor did Mr Cheung make any attempt to withdraw his unmeritorious claim after the filing of the 1^st affirmation of Madam Lee. He even continued the prosecution of his claim with the fabrication of Kelvin Lee at the end.

48.  Mr Wang further attributes the adjournment of the trial hearing by the deputy judge at the Hearing to the late filing of the affirmation of the Company. Perplexingly, Mr Cheung offers to pay the Company costs of the Hearing in the Variation Summons. In any event, the order of the deputy judge tells a different story and I do not accept his submission.

49.  In the circumstances, I am not persuaded that there is any valid reason to vary the costs order nisi.

Conclusion and costs

50.  For the reasons given, I conclude that both the Leave Summons and the Variation Summons are devoid of merit. I dismiss these Summonses accordingly.

51.  Costs should follow the event. Mr Cheung must pay the Company costs of and occasioned by the two Summonses with certificate for counsel, to be taxed if not agreed.