WONG SUK KUEN v. LEE CHI TING KAREN also known as KAREN LEE

DCCJ 2560/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2560 OF 2013

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J U D G M E N T

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1. The plaintiff (“Wong”) claims to recover the alleged loan advanced to the defendant (“Lee”) during the period between September 2011 and June 2012 in the total sum of HK$935,000. Wong applies for summary judgment on the ground that Lee has no credible defence.

WONG’S CASE

2. The parties came to know each other in July 2011 through the introduction of a mutual friend of the parties.

3. In August 2011, Lee disclosed in a gathering that she was being sued by her former boyfriend (“Tang”) for the return of several landed properties after their break-up (“HCA 920/2009”).  Lee expressed her concern about the legal action and the financial difficulty if she failed.  Whilst being less than satisfied with her then legal representative in that action, Lee hesitated in changing legal representative after having already spent substantial sum on legal fees.  Meanwhile her application for legal aid in June 2011 had also been refused.

4. To help, Wong introduced Lee to a solicitor, Mr Hung Chung Leung (“Hung”) of Messrs Terry Yeung & Lai (“TYL”).  Out of friendship, Wong offered financial help to Lee so that she could proceed with the intended change of legal representative and the further proceedings in HCA 920/2009.  On or about 2 September 2011, it was agreed orally between the parties that:

(1)   Wong would lend to Lee money for defraying the legal fees payable to TYL in HCA 920/2009;

(2)   Payment would be made directly to TYL as Lee’s solicitors for such legal fees from time to time; and

(3)   Lee would repay the amount so advanced, after the trial of HCA 920/2009.

5.  Lee did retain TYL to represent her in HCA 920/2009 and the other ongoing litigations with Tang.  Wong has since also made payments to TYL, of which HK$935,000 were for the settlement of legal fees in HCA 920/2009.  All the payments and receipt of them by TYL were documented.

6.  The trial in HCA 920/2009 took place in April 2012.  Written judgment was handed down on 26 June 2012.  Briefly Lee won some and lost some.  Shortly afterwards, TYL ceased to act for Lee.

7.  After the trial of HCA 920/2009, Wong had tried to contact Lee for the repayment of the money advanced pursuant to their agreement, but to no avail.  Lee had apparently changed her mobile telephone number and could not be contacted.

8.  On 31 May 2013, Wong eventually issued a demand letter through her solicitors to Lee and her current solicitors, demanding the repayment of money, but there was no reply from Lee or her solicitors.

9. On 15 July 2013, Wong commenced the present action.  Statement of claim was filed on 12 August 2013.  The defence followed on 3 September 2013.  Further and better particulars of the statement of claim were provided in December 2013.

10. HCA 920/2009 went on appeal (CACV 163/2012) and was heard in January 2014.  Written judgment was handed down on 21 February 2014.  The appeal was allowed in part in favour of Lee.  As to costs, the Court of Appeal, amongst others, set aside the costs order below and in place of that made a nisi order.  Costs were further argued; and decision on costs was handed down on 7 April 2014.

11. By summons filed on 31 December 2014, Wong applies for summary judgment.

PRINCIPLES

12. The principles are trite.  Whilst it remains the burden of Wong as the plaintiff to prove her claim, it is the burden of Lee as the defendant to satisfy the Court that her defence raises issues that ought to be tried or that the case should proceed to trial for some other reason.  The test at this stage is whether Lee has a credible defence.  It is insufficient for her to put forward bare assertions. Any assertion will be tested against all the evidence disclosed in the affidavit, including contemporaneous documents and undisputed facts.

DISCUSSION

13. All the payments were made by way of cheques drawn by Wong.  Except for one which was drawn in favour of TYL, the rest were drawn in favour of Hung.  In respect of each payment, TYL issued receipt in the name of Lee as their client.  Copies of the documents are produced.  Each receipt from TYL was marked with “SK” on the top right hand corner, which, according to Wong’s information and belief, signified that the payment was made by Wong.  Wong also deposed to her information and belief that the money she paid was also paid into TYL’s client account on the account of Lee’s legal costs in HCA 920/2009.

14. Lee admits the introduction of Hung by Wong.  Other than asserting her freedom to choose legal representative in HCA 920/2009 and to change her mobile telephone number, Lee’s defence, which was prepared by her then counsel, is a mere denial of the allegations contained in the statement of claim.

15. By her affirmation, Lee maintained her denial of the alleged loan.  She claimed no knowledge about the alleged payments by Wong to Hung or the alleged receipt of such money on her account by TYL in connection with the conduct of her case in HCA 920/2009.

16. According to Lee, she had made 4 payments only to TYL at the request of Hung in connection with HCA 920/2009 during the period between September 2011 and August 2012.  The first 3 payments amounted to merely HK$42,000.  The last payment was a lump sum of HK$500,000 in August 2012, which was well after the trial and the handing down of the judgment in HCA 920/2009.  Receipts issued by TYL in respect of such payments by Lee are produced.

17. How Lee managed to maintain her legal representation in HCA 920/2009, TYL and counsel of substantial seniority included[1], with costs on account in the sum of HK$42,000 up to even after the conclusion of a 6-day trial in the High Court is unknown.  But all that need not be left to speculation or suspicion.  Lee should be in the best, if not the only, position to make things clear.

18. TYL ceased to act for Lee after the first instance judgment in HCA 920/2009.  I would be surprised at the lack of a settlement account setting out all the money received on her account and legal costs and disbursement defrayed in connection with that action before TYL and Lee could walk away from each other.  Even assuming that no such final account from YTL had existed, Lee, as former client, could have requested TYL to simply verify her case for the present purpose.

19. In any event, upon her successful appeal, Lee was awarded 70% of the costs of the action in HCA 920/2009.  She was also awarded costs thrown away by the taxation of Tang’s costs of the action, which was now set aside.  All costs were ordered to be taxed, if not agreed.  Whether for agreement or taxation, I would have expected the bill of Lee’s costs of the action to have been prepared, consequential upon the costs order made by Court of Appeal in early April 2014.

20. Any of the above documents would have verified:

(1)   the legal costs and disbursement incurred by Lee in that action until TYL ceased to act for her;

(2)   whether TYL had received any money from Wong, which had been applied towards Lee’s costs on account or settlement of her costs and disbursements in connection with that action; and

(3)   whether Lee had settled all such costs and disbursements by her own money.

21. Lee and her solicitors, who took over from TYL and acted for her in the appeal, are completely silent on the above matters.  Instead, arguments are raised about the circumstances surrounding the alleged agreement, the payment arrangement between Wong and Hung as well as the lack of evidence from Hung to corroborate Wong.  All these, in my view, are offensive laid on the outer ring without hitting the core of the matter.

22. The core questions are whether the payments made by Wong to TYL and Hung, which are proved, were received and applied by TYL towards Lee’s costs and disbursement in connection with HCA 920/2009, as well as whether Lee in fact benefited from the settlement of part of her legal fees by such payments.  If the answers are in the affirmative, the amounts so paid by Wong would prima facie be repayable, in the absence of suggestion and proof that they were gifts to Lee: see Chitty on Contracts, 31^st Ed. Vol. 2 at §§38-259[2].

23. During the hearing, the possibility that the alleged payments by Wong was not a loan or not unconditional was suggested.  There is no pleading or affirmation evidence to base on for a suggestion like that to be made during the hearing.

24. Lee criticizes Wong for delay in taking out the present application.  At the hearing, this point was dropped by counsel.  But how Lee has run this point up to the hearing should not be ignored.

25. Wong explains that at about the end of December 2013, she became aware of the appeal by Lee against the judgment in HCA 920/2009.  She instructed his solicitors to withhold further proceedings in the instant action pending the outcome of the appeal.  It was allegedly hoped that the appeal, if successful, might give Lee more incentive to repay the loan.  Given that Lee succeeded on appeal and managed to recover 70% of her costs in the action, she then instructed his solicitors to resume the proceedings in the present action in May 2014.

26. Specifically proposal on how the repayment might be settled was made by Wong through solicitors by letter to Lee’s solicitors, but no reply had been received.  As to that, Lee deposed to her information (from her solicitors) and belief that there was no settlement proposal from Wong as alleged or at all.

27. In the light of that, Wong produced the abovementioned letter from her solicitors to Lee’s solicitors dated 21 May 2014 by her affirmation in reply.  This met with the objection by Lee’s solicitors on the basis that the same was issued on a without prejudice basis.  Correspondence ensued; and Lee’s solicitors maintained the objection up to the hearing.

28. Had Lee changed her stance and accepted the existence of the written proposal in May 2014, there would have been no need for Wong or the court to refer to the letter at all.  Otherwise there would be no way the court could resolve the dispute without referring to the letter.  Even so, this would be for the purpose of ascertaining the existence of the letter, not its content.

29. Even if one considers the content of the letter, it could be seen that all Wong proposed was to give time to Lee to repay the amount claimed.  No concession on her part, let alone Lee’s part, could be deduced from such a letter, which might have hit the nerve about the possible without prejudice nature of the letter.

30. The existence of the letter is beyond dispute.  It actually bears the time chop of Lee’s solicitors signifying receipt of the letter.  The objection on Lee’s behalf is unwarranted.  By deposing to the effect that her solicitors informed her of the non-existence of the written proposal as alleged or at all, Lee only expects the court’s skepticism.

31. In any event, the court should not dismiss a summary judgment application by reason of the delay in taking out the application, if ordering a trial involving no bona fide defence would only waste court time and costs: Resona Bank Limited v. Lam Sie & Ors, HCA 11870/1999, 26 November 2004, at Para. 22 per Tang J (as he then was).  In my view, this is the kind of case.

CONCLUSION AND ORDER

32. Whether by pleading or affirmation, Lee has failed to raise a credible defence to Wong’s recovery of the money that she had paid as loan towards Lee’s legal fees payable to TYL.  Not overcoming this hurdle at all, Lee cannot be helped by the suggestion that the present action should be tried for some other reason.

33. I therefore give judgment against Lee in the sum of HK$935,000 with interest thereon from the date of writ at 1% above HSBC best lending rate until judgment, and at the judgment rate thereafter until full payment.

34. I make a nisi order that Lee shall pay Wong her costs of this action, including the costs of this application and any costs reserved, to be taxed, if not agreed.  To avoid doubt, I certify the engagement of counsel.  In the absence of application in 14 days to vary, the costs order shall become absolute.

35. I thank counsel for their assistance.