XCHRX JAMES CONRAD LOUEY v. WONG YAT SANG

HCA12759/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.12759 OF 1999

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J U D G M E N T

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1. This is an appeal by the defendant ("the appellant") against the decision of Master Poon who, on 3 January 2000, ordered that summary judgment be entered under Order 14 of the Rules of the High Court for the plaintiff ("the respondent") against the appellant.

2. The respondent's claim against the appellant is for the repayment of the balance of a loan with interest pursuant to a loan agreement. At the hearing of the Order 14 summons, the respondent had not filed any evidence. His application for an adjournment to enable him to do so was refused and summary judgment was entered against him. Leave to appeal out of time against that judgment was granted by Sakhrani J on 2 February 2000. On the material before him, Sakhrani J thought that, in his words, "the defendant can raise a defence with real prospects of success". Additional material is now before me.

3. The essential facts on the first two affirmations of the appellant may be summarised as follows. The appellant had introduced a Mr Choi to the respondent and there was a business arrangement between Mr Choi and the respondent under which Mr Choi would arrange for letters of credit to be opened with the respondent as the beneficiary. Leaving out the immaterial details, for this purpose the respondent had to pay $1.15 million to Mr Choi by way of handling charges. This is the amount in the loan agreement.

4. The appellant's version is that the respondent had said to Mr Choi and to him that as he, the respondent, had to pay $1.15 million, he needed some security and requested Mr Choi to sign an agreement stating that the $1.15 million was a loan to him. If, however, the letters of credit were successfully opened, then it would not be necessary for Mr Choi to repay the $1.15 million. The respondent then asked Mr Choi to sign an agreement in English. After Mr Choi signed, the respondent also requested the appellant to sign as a witness, and he noticed that there were some words written in Chinese at the bottom of the English document to the effect that it was Mr Choi who had received the $1.15 million.

5. The appellant's version of events is that he was signing and thought that he was signing as a witness only. He affirms that he does not understand English and that the contents of the loan agreement were not explained to him, nor was a copy supplied to him. The only words he understood were the Chinese words on the document. He is adamant that he did not borrow or receive any money from the respondent nor did he intend to assume any liability under the loan agreement.

6. The words in Chinese towards the end of the loan agreement have been translated as follows :-

"I myself Choi Yuk Lun has now received Mr Louie Siu Kwong HK$1.15 Million only being (the charges) representing Mr Louie to apply to U.B.S. Head Office to open guaranty notice. If within the specified date (the transaction) was completed, the parties agree (that) the aforesaid amount received and the interest should not be repaid."

These words would certainly support the appellant's version that it was Mr Choi and not the appellant who received the $1.15 million from the respondent. Before Sakhrani J, there was no explanation from the respondent as to why the words in Chinese appeared in the English loan agreement and that was the basis of his Lordship's conclusion that the defendant can raise a defence with real prospects of success. If the evidence before Sakhrani J. were the only evidence before me, I would not have had any difficulty in agreeing with Sakhrani J.

7. Mr Wong, for the appellant, says that there is a triable issue, at the very least, of non est factum and despite Mr Yip's very capable submissions on the facts to the contrary, I would not have been able to rule out that and possibly another defence based on misrepresentation on the evidence on affirmations. I was less impressed with some of the other possible defences based on mistake, novation and failure of performance creatively deployed by Mr Wong who also made careful submissions on the effect of the two loan documents now before me, and the law of joint and several promises which clearly depends on construing the relevant agreements and which may, stressed by Mr Wong and I agree, involve difficult questions of fact which cannot be resolved on the affidavit evidence.

8. The additional evidence from the respondent now before me contradicts much of the appellant's version of events and provides an explanation for the appearance of the Chinese words, which explanation is now supported by another witness who claims to have witnessed the signatures of both Mr Choi and the appellant. Clearly these disputed areas of fact I cannot resolve and do not propose to do so.

9. The additional evidence, however, also included two other cheques issued by the appellant to the respondent which the respondent says were to repay the appellant's loan to the respondent.

10. The appellant now accepts that he issued these cheques but says that he never intended to honour them, and that they were issued essentially out of duress. In his first two affirmations, the appellant had mentioned threatening phone calls from a Mr Luk, said to be a representative of the respondent who denies any knowledge of this Mr Luk. The appellant, however, never mentioned these cheques, not even apparently to the police, as we can see from his statement supplied to the police. He merely said he had reported the matter to the police and Mr Luk did not phone again. His later efforts, by way of affirmation, now says that Mr Luk came to his home as well to threaten him. I find this all very strange. It is unclear why these matters were not mentioned to the police or to Sakhrani J. While I accept Mr Wong's submissions that the factual matrix is less than clear, part, at any rate, of the blame must be laid at the door of the appellant.

11. Taken with Mr Yip's submissions on the facts which are succinctly set out in his written submissions and concisely deployed in oral argument, including the telling point that the appellant's signature does not appear to be anywhere near Mr Choi's signature which he is supposedly witnessing, when I ask myself : is what the appellant says credible in the sense of whether his assertions are believable, I find myself having serious doubts and almost, but not quite, able to say that they amount to mere moonshine.

12. In the circumstances, on that assessment, I cannot dismiss the appeal. The proper cause as I see it is for the appeal to be allowed and for the appellant to be granted leave to defend, but conditional on his paying into court within 14 days the sum of $867,633.33 which is the amount claimed in the Statement of Claim. I will now hear the parties as to costs and other matters.

[Submissions from Counsel]

13. I will order that the costs of the appeal be in the cause and I make no order disturbing the order made by Master Poon for the Order 14 application.