LAM YIN LING v. KUBOTA YOSHIAKI

CACV 143/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL 

CIVIL APPEAL NO. 143 OF 2005 

(ON APPEAL FROM hca nO. 3844 OF 2001)

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J U D G M E N T

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Hon Yeung JA (giving Judgment of the Court):

1.  The plaintiff – Ms Lam Ying Ling came to know Madam Tam Sui Ming (the deceased) in 1985 when they both worked in a Nightclub in Kowloon.

2.  Ms Lam only worked at the nightclub for one year and was thereafter financially supported by a boyfriend. However, her relationship with the deceased continued. Ms Lam treated the deceased as her godmother and remained close to her until the deceased died on 22 March 1995.

3.  The deceased’s husband – Mr Kubota Yoshiake was appointed administrator of her estate.

4.  In August 2001, Ms Lam commenced the present proceedings against Mr Kubota, as administrator of the deceased’s estate for a sum of about $3.15 million on the basis that she had advanced that sum to the deceased on divers dates between May 1993 and 8 August 1994.

5.  At the same time, Ms Lam and her mother – Kay Bik Kiu separately commenced proceedings in the District Court claiming against the deceased’s estate for the respective sums of $400,000 and $600,000 also as loans to the deceased.

6.  For the purpose of the present proceedings, Ms Lam principally relied on a document dated 8 August 1994 (the document) headed “Miss Tam Sui Ming” and signed by the deceased in not less than nine places.

7.  The document contained an acknowledgement by the deceased that prior to 8 August 1994, she had received cash, cheques and transfers from Ms Lam of $3.05 million. It also referred to purchase invoices, and other expenses incurred on the date of the document, making up the total sum of $3.15 million.

8.  Mr Kubota, in his defence filed on 3 September 2001, denied Ms Lam’s claim. His case was that the document was just Ms Lam’s investment record in the deceased’s business in Nam Cheong, Guangdong, which was unlawfully taken away by the deceased’s partner after she died.

9.  Mr Kubota further alleged that Ms Lam’s claim was statute-barred.

10.  In her amended Statement of Claim filed on 11 February 2004, Ms Lam, in an attempt to get around the “statute-barred” defence, pleaded that between 3 July 1997 and 25 August 2000, Mr Kubota had made seven payments to her as partial repayment of the debt owed by the deceased.

11.  In her Re-amended Statement of Claim at the start of the trial, Ms Lam also admitted a further payment of $200,000 made by Mr Kubota in July 1995. Ms Lam then reduced her claim to $2,891,672.20 on account of those payments.

12.  In the circumstances, Ms Lam suggested that s 23(3) of the Limitation Ordinance applied and her cause of action was revived by Mr Kubota’s acknowledgement of the debt by the seven payments.

13.  Mr Kubota accepted that he had made the seven payments ranging from $4,000 to $15,000, plus the earlier payment of $200,000 in July 1995 to Ms Lam. However, he denied that those payments were partial repayment of the debt owed by the deceased.

14.  Mr Kubota suggested that those payments were in fact loans to Ms Lam to assist her in meeting her living expenses and the educational expenses of her child.

15.  The case went before Deputy Judge Saunders in the High Court and the hearing lasted two days in December 2004. In the judgment handed down on 27 January 2005, the judge dismissed Ms Lam’s case with costs.

16.  Although the judge found that the deceased was indebted to Ms Lam as claimed, he concluded that Ms Lam’s claim was time-barred.

17.  The judge rejected Ms Lam’s assertion that the payment of $200,000 in July 1995 and the seven payments between 3 July 1997 and 25 August 2000 were partial repayment of the debt owed by the deceased.

18.  The judge accepted Mr Kubota’s evidence that they were in fact loans by Mr Kubota to Ms Lam to assist her in her living expenses and the educational expenses of her child. The judge commented that Ms Lam did not take any steps to prove her debt in the deceased estate despite the invitation by Mr Kubota to do so.

19.  The judge pointed out what he perceived to be undisputed evidence that between July 1995 to August 2000, Ms Lam was not working, had no income and was not being supported by any boyfriend, and would have needed assistance in living expenses and the education of her child.

20.  The implication appeared to be that Ms Lam indeed required financial assistance from Mr Kubota.

21.  The judge doubted Ms Lam’s credibility because she did not initially include in her pleadings the payments by Mr Kubota and claimed to have forgotten about them.

22.  The judge opined that Ms Lam might have forgotten about the seven payments of $4000 - $15,000; but it was difficult to accept that she could have forgotten about the payment of $200,000.

23.  The judge also took into consideration two claims against the deceased’s estate in the District Court by Ms Lam and her mother.

24.  The judge said, as it was Ms Lam who advanced the $600,000 to the deceased, albeit in her mother’s name, she should have pursued the claim in her own name.

25.  The judge also pointed out that as the $400,000 was part of the loan of $3.15 million and there had been a partial repayment of $259,000, Ms Lam had wrongly inflated her total claim against the deceased’s estate by $659,000.

26.  The judge took the view Ms Lam’s two “false claims” against the deceased’s estate in the District Court reflected badly on her credibility.

27.  The judge concluded that the payment of $200,000 in July 1995 and the subsequent seven payments were separate loans made by Mr Kubota personally, and not in his capacity as the administrator of the deceased’s estate.

Grounds of Appeal

28.  Ms Doris To, on behalf of Ms Lam, complains that the judge was wrong in his finding that she needed financial assistance between July 1995 and August 2000. Ms To points out that Ms Lam’s unchallenged evidence was that her boyfriend in fact supported her until 2000 and she was at all material times financially sound.

29.  Ms To emphasizes that the deceased was indebted to Ms Lam for over $3 million and therefore there was no reason for her to ask for loans from Mr Kubota. Ms To further points out that Mr Kubota had never asked Ms Lam for any repayment and therefore the payments by Mr Kubota could not have been loans in his own name to Ms Lam.

30.  Ms To also complains about the judge’s comment that the claims for $600,000 and $400,000 in the District Court were “false claims”; and that the judge had failed to properly consider Ms Lam’s explanations on such matters.

31.  Mr Neal Clough, on behalf of Mr Kubota stresses that the judge’s decision turns on issues of fact. He says there was evidence upon which the judge could have rejected Ms Lam’s claim that the eight payments by Mr Kubota were repayments of the debt owed by the deceased. He says there is no basis for this Court to interfere with the judge’s findings of fact.

32.  The Court of Final Appeal in Ting Kwok Keung v Tam Dick Yuen & Others (2002) 5 HKCFAR 336 laid down the approach of the Court of Appeal in deciding if the findings of fact by a trial judge should be disturbed. Bokhary PJ said at p. 350:

“Where the judgment turns on an issue of fact, the Court of Appeal must have regard to the nature of that fact. And it must have regard to the advantages enjoyed by a trial judge who received the evidence on such an issue at first-hand, in other words, in whose presence the whole of the evidence unfolded in its living state. Such advantages can be, as Lord Shaw of Dunfermline put it in Clarke v Edinburgh Tramways [1919] SC (HL) 35 at p.36, ‘sometimes broad and sometimes subtle’. The question for the Court of Appeal is whether, even though it does not enjoy the advantages enjoyed by the trial judge who received the evidence at first-hand, it is nevertheless satisfied that his conclusion on the facts is plainly wrong. The Court of Appeal should intervene if so satisfied. But if not so satisfied, the Court of Appeal should defer to the trial judge’s conclusion even if in some doubt as to its correctness.”

33.  In so far as the judge found that Ms Lam had “acknowledged” that, during the period from July 1995 to August 2000, she was not working, had no source of income and was not being supported by any boyfriend and therefore would have needed assistance in living expenses and the education of her child, the judge was clearly wrong.

34.  Whilst Mr Kubota, in his witness statement said Ms Lam claimed to be in financial trouble and that she needed some money to cover her daughter’s education and her living expenses, there was no evidence supporting her claims made to him and it could just be Ms Lam’s excuse to ask for the repayment of the loan owed by the deceased.

35.  In his evidence in court, Mr Kubota repeated that Ms Lam told him that she was in financial difficulty and needed money to pay for her daughter’s education in England as reasons for asking money from him, but his evidence did not support the suggestion that Ms Lam was in fact in financial difficulty such that she required loans from Mr Kubota.

36.  In her witness statement, Ms Lam stated clearly that her financial condition was sound and stable. She said she leased out a property for $16,800 per month and there was a net income of about $6,000. She also categorically stated that she was supported by her boy friend financially until 2000.

37.  Mr Clough did not challenge Ms Lam’s evidence on her financial condition at trial. Indeed, under cross-examination, Ms Lam clearly confirmed that she was financially supported by her boy friend until 2000 and thereafter she worked as a part time saleslady.

38.  In the light of those unchallenged evidence and the evidence that Ms Lam owned a flat purchased in 1992 for $1.83 million which she sold in 2001, the judge’s conclusion that Ms Lam had “acknowledged” that she had no income and was not being supported by any boyfriend and must therefore in financial difficulties to the extent that she required loans from Mr Kubota was unjustified.

39.  The judge’s labelling of the claim for $600,000 in the District Court as a “false claim” is somewhat surprising. The use of the word “false” and that fact that the judge relied on it to discredit Ms Lam indicated that the judge somehow considered the way in which Ms Lam pursued the claim against the deceased’s estate involved “dishonesty” on her part.

40.  Such conclusion, in our view, is unsupported by evidence and was too harsh. There was no dispute that the $600,000 advanced to the deceased was Ms Lam’s money and that she advanced it to the deceased through her mother or in her name.

41.  Irrespective of the question who should have been the proper plaintiff in those proceedings which were based on an acknowledgment made in favour of the mother, in fact, Ms Lam did apply to substitute the plaintiff subsequently.

42.  In any event, the full facts were disclosed and we fail to see how the claim for $600,000 could be labelled as a “false claim” and how this could have any adverse impact on Ms Lam’s credibility.

43.  The judge’s attack on Ms Lam’s credibility on the issue of when she remembered the eight payments by Mr Kubota might be justified. The fact that she chose not to waive privilege to support her allegation that she had instructed her solicitors about those payments might be surprising. 

44.  It might be said that Ms Lam could have been trying to inflate the deceased’s total indebtedness to her, although it is difficult to imagine how she could get away with it. Ms Lam, of course, admitted that her claim in the District Court for $400,000 was a duplicate claim. She discontinued the claim in July 2003.

45.  However, even if Ms Lam had lied in order to inflate the deceased’s total debt to her, that would be only one factor to be taken into account when assessing the credibility of her account as to the nature of the eight payments.

46.  The facts of the case do not appear to be consistent with Mr Kubota’s contention that those eight payments were loans to Ms Lam.

47.  The deceased died in March 1995 and Mr Kubota became her administrator and as such was liable for the undisputed debt owed by the deceased to Ms Lam. There was indication that the deceased’s estate had assets to pay the debt or at least part of it.

48.  In such circumstances, even if Ms Lam was in financial difficulty, the natural and logical step for her to take was to ask for the repayment of the debt and not to ask for loans from Mr Kubota. As an excuse for asking for the repayment, Ms Lam could have told Mr Kubota that she needed the money.

49.  If Mr Kubota had the financial ability, he would no doubt repay the debt or part of the debt to Ms Lam, instead of advancing loans to her and then treating such loans as gifts. Mr Kubota might be reluctant to repay the entire debt allegedly owed by the deceased and understandably, he required Ms Lam to prove the debt . However, that did not mean that the eight payments by Mr Kubota were separate loans to Ms Lam.

50.  Mr Kubota’s explanation that he did not press for repayment from Ms Lam because he treated those payments as gifts to Ms Lam was highly unconvincing. Why should he be so generous as to give Ms Lam over $250,000? Why didn’t he use the money as partial repayment of the debt due to Ms Lam?

51.  The judge did not properly consider those matters. The judge was also wrong in making an adverse comment about Ms Lam’s failure to take steps to prove the debt when Mr Kubota clearly said in his evidence that “…it was an agreement between Miss Lam and myself. None of her lending was to be put on the probate.”

52.  The judge’s assessment of Ms Lam’s credibility was based on incorrect premises and/or was erroneous. In so far as his conclusion that the eight payments by Mr Kubota were loans and then gifts to Ms Lam rested on such assessment, it was plainly wrong and we feel obliged to intervene.

53.  On the other hand, the seven payments by Mr Kubota that Ms Lam relied on as acknowledgment of the debt were of small amounts. But Ms Lam’s explanation for not remembering the $200,000 payment was rejected, and her omission of the eight payments in her original claim and her attempt to pursue the further sum of $400,000 are all relevant factors for determining her credibility and the true nature of the seven payments. Those matters should be considered in their proper factual contexts.

54.  We are therefore persuaded that the proper course to take is to remit the case for a re-trial.

Conclusion

55.  Ms Lam’s appeal is allowed. We set aside the judge’s orders. We remit the case back to the Court of First Instance of the High Court before another judge for a re-trial only on the issue of the nature of the seven payments totally $59,000 made by Mr Kubota to Ms Lam between 3 July 1997 and 25 August 2000.

56.  We also make a costs order nisi that the costs of the hearing before the judge to be in the cause of the re-trial and that Mr Kubota, as the administrator of the deceased’s estate, has to bear the costs of this appeal, to be taxed if not agreed.