NAN YANG TRADING CO., INC. v. WING LEE WAI LTD.

HCA675/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 675 OF 2001

------------------------

------------------------

------------------------

J U D G M E N T

------------------------

1. This is an appeal by the defendant from the order of the master given in the application by the plaintiff for summary judgment. The plaintiff sues on a judgment of a court of the United States and for a large sum of money arising out of a dispute between the plaintiff company and the defendant company.

2. The two protagonists in the case are Mr Ching of the defendant company and Mr Lau of the plaintiff company. For the purpose of this appeal it is not necessary to go into the details of their relationship, or how it came to be that they fell apart and that the plaintiff company came to sue the defendant company.

3. There is no dispute that judgment was obtained and that there was no payment pursuant to the American judgment. At the hearing before me, the first point that was relied upon in the court below on the non-finality of the US judgment is not insisted upon. At the hearing of this appeal, the sole question relied upon by the defendant to resist the summary judgment and to overturn the master's decision is on the question of fraud.

4. The case that was put by the defendant on fraud, that is to say, that the US judgment was obtained as a result of on fraud practised on the defendant by the plaintiff, is that while there were discussions for negotiation of settlement and when there was an agreement by the plaintiff and the defendant that, during the negotiations or pending negotiations, the plaintiff would not proceed with the US Action and the parties would confine themselves to negotiation for settlement, the plaintiff, in bad faith, went back on that understanding and agreement and proceeded to obtain judgment even though they were negotiating.

5. The case of the plaintiff is of course totally to the opposite and, in fact, they went as far as to say that there was no discussions or negotiations for settlement after the US Action had started.

6. The key, however, to the resolution of today's appeal is not so much as to whether there was negotiation or not or whether there was contact between the parties on negotiation after the action started, but whether there was an agreement after the action started between the plaintiff and the defendant that the plaintiff would hold their hands, so to speak in relation to the US Action -- if one can translate it into the terms of the Vietnam war -- whether there was agreement for a total "cease-fire" while they talked or whether there was no agreement of cease-fire while they talked. The plaintiff says there was no agreement whereas the defendant says there was an agreement of cease-fire while they talked.

7. The key document that is crucial to the determination of the case on fraud, it seems to me, is the letter dated 5 December 1999. It is to be noted that this is a letter written by the defendant to the plaintiff's lawyer in America, which is acknowledged by the plaintiff as having been received. The date of the letter was after the alleged agreement had been made between the plaintiff and the defendant of a cease-fire or, in other words, that the plaintiff would not take action on the US proceedings.

8. The last paragraph of that letter, the translation of which was omitted from the bundle but now produced at the hearing, reads thus :

" Therefore, my company takes the view that it is not suitable to accept the time arrangement being proposed by your firm in the meantime. We sincerely hope that your law firm could follow the time already arranged by the court, so as to strive for continuing the negotiation with Mr. Lau Kwai Leung during this period, to strive for reaching consensus on every issues to accomplish settlement out of court. Thank you!" (signed by Chin Yi Ka, dated 5 December 1999.)

9. It seems to me that the last paragraph cannot possibly be consistent with the defendant's case of an agreement that no step would be taken to advance the US Action by the plaintiff, namely a cease-fire. No one who has reached such an agreement with the plaintiff could have written in that way, and this was the reason given by Master Mak in his oral judgment holding that the defendant has not shown a credible case of fraud. I agree, and in my view the allegation of fraud that has been made although based on affidavit evidence is not sufficiently credible as to raise a triable issue for leave to defend.

10. It seems to me that the master had reached the right decision and the case for summary judgment is rightly made out. The appeal is therefore dismissed with costs to the plaintiff.