HUNG CHUNG CHI JOHNNY v. TANG JIAN

CACV 51/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 51 OF 2008

(ON APPEAL FROM DCCJ 3852 OF 2004)

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REASONS  FOR  JUDGMENT

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Hon Le Pichon JA:

1. I agree with the Reasons for Judgment given by Stone J.

Hon Stone J:

This appeal

2. This was an appeal from the judgment of HH Judge Simon Leung, who by his judgment dated 21 September 2007 dismissed the plaintiff’s claim for repayment of an alleged loan of HK$450,156.16 which was said by the plaintiff to have been made to the defendant, his erstwhile son-in-law.

3. At the conclusion of the hearing of this appeal this court dismissed the plaintiff’s appeal, with costs to the defendant, with reasons to be given later.

4. These are those reasons.

The factual background

5. This is not a complex case.  To the contrary, it is entirely straightforward, and for my part I am at a loss to understand why a case of this nature apparently took 5 hearing days, followed by various written submissions from counsel, so that a trial which commenced on 16 April 2007 was not resolved until the issuance of the judgment on 21 September 2007.

6. Be that as it may.  The plaintiff’s claim against the defendant, whom for a very brief period was the plaintiff’s son-in-law, was in the sum of HK$450,156.16, together with interest accruing thereon, and was based upon what was said to be a personal loan agreement made orally between the plaintiff as lender and the defendant as borrower in November 2003.

7. The background to this claim is somewhat unfortunate.

8. The defendant, Mr Tang, married the plaintiff’s daughter, Jennifer, on 26 May 2004.

9. Unhappily, however, the marriage failed even to survive the night of the wedding banquet; as the judge observed: “after a heated argument involving the two families in the hotel suite following the banquet that evening, the couple virtually broke up”, and thereafter, in early June 2004, the husband and wife employed solicitors and began to put in train relevant arrangements for ancillary relief which involved, in particular, the disposal of the property which had been designated to be the matrimonial home. 

10. It was at this stage that the issue the subject of the present litigation, namely the alleged loan from the plaintiff to the defendant, first raised its head, and in July 2004 the plaintiff issued a demand through his solicitors for repayment of the sum in question; it appears common ground that this sum had been used to finance the down-payment for a property, purchased in December 2003, in which it was envisaged the newly-weds were to begin their married life. 

11. The plaintiff’s claim for repayment was refuted by the defendant, and the present action commenced later in July 2004.

12. The property in question was an apartment in Grand Excelsior in Waterloo Road, Kowloon.  Together with parking space, it was purchased for the sum of HK$4.72 million, completion taking place in December 2003; in fact, it was conveyed into the names of the defendant and his prospective wife, Jennifer, as joint tenants.

13. The sum as now claimed was, as I have said, used as a downpayment for the purchase price of this apartment.

14. As the judge below noted, this figure of HK$450,156.16 was made up of 3 smaller sums which came from the plaintiff and which were deposited into the joint bank account of Jennifer, the plaintiff’s daughter and, at the relevant time, of the defendant, her then financé.  These 3 sums were thus:

(i)	22 December 2003 (cheque deposit)	HK$260,000
(ii)	23 December 2003 (cheque deposit)	HK $40,000
(iii)	9 January 2004 (US dollar deposit)	US$19,360
		HK$150,156.16

15. The marriage was decreed a nullity in July 2005, although the ancillary financial arrangements remain pending in Matrimonial Causes No 1959 of 2005, wherein presumably, absent this action, the issue of entitlement to the property necessarily would have involved judicial characterisation of the sum as now presently claimed by the plaintiff.

16. However, this action as commenced appears to have continued unaffected by the subsequent matrimonial finance proceedings, and now has resulted in dismissal of the plaintiff’s claim against the defendant. 

17. From this judgment the plaintiff was and is aggrieved, and duly appealed: a Notice of Appeal was filed on 14 February 2008, a Respondent’s Notice was filed on 5 March 2008, and a Supplementary Notice of Appeal was filed on 12 March 2008.

The Judgment below

18. In a full judgment his Honour Judge Leung took obvious care with his evaluation of the dispute before him.

19. He correctly isolated (at paragraph 11), the issue in terms of whether the sum in question was the plaintiff’s personal loan to the defendant – he notes that this question was first raised in the inter-solicitor correspondence concerning the ancillary relief arrangements – and recited the manner in which the issue developed, observing (at paragraph 18) that in response to the plaintiff’s claim that the alleged loan became due and repayable in July 2004 (upon the alleged default in payment of monthly interest), that the defendant had pleaded that he had believed that the sum in issue was his wife Jennifer’s “contribution towards the acquisition of the property”.

20. It is clear, therefore, the learned judge did not take his eye off the ‘key issue’, as he termed it, as to whether this was a personal loan from plaintiff to defendant, and with this in mind he rehearsed the evidence of the defendant, who called no other witness, although pointedly (at paragraph 33) the judge refrained “from placing any weight” on the defendant’s evidence as to a so-called (and unpleaded) ‘Shanghai Agreement’ of 11 October 2003, which was said to be a specific inter-family agreement relating to the purchase of the putative family home.

21. Having thus found, the learned judge then proceeded to examine the evidence on behalf of the plaintiff, who not only himself gave evidence, but also called his wife, Emily, and Jennifer herself.

22. At this juncture the judge made two observations with which, with respect, it is difficult to disagree: first, he noted (at paragraph 34) the existence upon the plaintiff of the burden of proof that he had made a legally enforceable loan against the defendant; and second, (at paragraph 35), he saliently observed that in the prevailing circumstances, the context in which it was alleged that such financial assistance was provided “must always be borne in mind”.

23. Thereafter, the judge rehearsed his view/evaluation of the evidence called on behalf of the plaintiff, which included that of Jennifer, whom he characterized (at paragraph 37) as the “precious daughter” of the plaintiff and his wife.

24. He examined the plaintiff’s view of the circuitous manner in which the alleged loan agreement was said to have been made – which appears to have utilized the plaintiff’s wife, Emily, qua intermediary: “the plaintiff eventually gave his consent.  Emily then relayed the plaintiff’s agreement to Jennifer.  Jennifer informed the defendant of the same...” (at paragraph 39), and concluded (at paragraph 40) that “effectively there was no direct contact between the plaintiff and the defendant regarding the making or confirmation of the terms of the loan…” – subsequently noted (at paragraph 41) not only that the plaintiff’s financial assistance was “never merely to enable the defendant to acquire the Property but to assist his daughter and prospective son-in-law to achieve acquiring their matrimonial home”, but also the fact that when the issue of the nature of this sum of money was first raised in the plaintiff’s solicitor’s letter in June 2004, this money was described “as a loan from Jennifer’s parents instead of merely the plaintiff to the defendant”, before further commenting (at paragraph 42) that whilst he was not convinced that the plaintiff intended the money as a gift “specifically to benefit Jennifer”, nevertheless this was to be “a matrimonial home and the Property was indeed held by the young couple as joint tenants”.

25. The judge below also paid detailed attention (at paragraph 43) to the manner of the actual advance of the sum in question, before concluding (at paragraph 44) that “it would be artificial to say that Jennifer drew down the loan so as to trigger the defendant’s liability to the plaintiff, when she was aware that the money would be used for paying for her home too”, whilst he focused also upon the interest payments as were made, specifically finding that the defendant was aware of such payments and that “he did not object” to such payments being made by Jennifer.

26. Also subject of judicial scrutiny (at paragraph 51) was the plaintiff’s acceptance in evidence that he had never asked the defendant, either personally or through his daughter, Jennifer, for interest payments prior to his solicitor’s letter of demand in July 2004.

27. After further considering the pre-action correspondence and documents, the judge came to the view that this material could not be determinative of the key issue before him in terms of whether the financial assistance as undoubtedly rendered “was intended…as if this was a contractual loan to the defendant personally”, and finally concluded (at paragraph 55) that he found that Jennifer’s parents had agreed to provide financial assistance for the acquisition of the property at the request of the defendant, that the sum was advanced by the plaintiff, and that Jennifer and the defendant in fact had made a few interest payments to the plaintiff for the loan, but that he was not satisfied “that there was at the time of the agreement an intention on the part of the parties to create a legal relationship in respect of such financial assistance”, and that whilst no doubt such sum would be accounted for (by which, presumably, he was referring to the extant matrimonial finance proceedings), whether this had to do with the rights of the plaintiff or of Jennifer to the property “are really issues beyond this action”.

28. Thus, in the final paragraph of his judgment, the learned judge dismissed the plaintiff’s claim with the closing observation that “notwithstanding certain factual findings against the defendant, the plaintiff has effectively failed to prove a legal enforceable loan agreement and therefore the basis of his claim”, and ordered costs to follow the event.

The argument on this appeal

29. In my view Mr Maurice Chan, who appeared for the plaintiff in this appeal (but who did not appear at the trial below) was faced with a difficult brief in attempting to overturn the findings of the learned judge, albeit in the course of his argument Mr Chan specifically disavowed any such desire or intention to attack/overturn any factual findings by the ‘seeing and hearing’ court.

30. To the contrary.  His stance on this appeal was, if I may say so, somewhat unanticipated.

31. At bottom, Mr Chan took the view that necessarily implicit in the judgment of HH Judge Leung was the finding that indeed there had been an agreement between the plaintiff and the defendant in the terms alleged, but – and it was here that Mr Chan intended to direct his attack – the plaintiff’s case had foundered before the learned judge solely by reason of a finding of a lack of intention on the part of the plaintiff to create legal relations – hence the authorities produced by Mr Chan to rebut that which he appeared to perceive as solely a contention of law.

32. With respect, I was wholly unable to accept the thesis advanced by counsel that, when read largely and liberally, that by necessary implication the judgment under appeal had made a specific finding of fact as to a loan agreement between the plaintiff, the prospective father-in-law, and the defendant, his prospective (and factually very briefly) son-in-law.

33. When asked by the court to identify those passages within the judgment which justified this stance, I regret to say that Mr Chan was unable to pinpoint any passage which supported his central thesis; to the contrary, some of the material he identified seemed to me to achieve precisely the opposite result.

Basis for the dismissal of this appeal

34. In light of this failure to make good the argument as to any implicit finding of an agreement in terms alleged by the plaintiff, albeit for this only to founder on the ‘intention to create legal relations’ basis, I took the view that for all practical purposes that this was the end of this appeal – a view also shared by the court as a whole, since Mr Charles Chiu, who appeared for the defendant, the respondent to this appeal, in the event was not called upon to respond to Mr Chan’s arguments.

35. It seems to me, both then and now, that notwithstanding what perhaps was an over-complication of an intrinsically straightforward case, essentially the judgment of the learned judge was that the plaintiff had failed in his claim because he had been unsuccessful in discharging the burden of proof upon him in terms of establishing the alleged loan agreement with the defendant. 

36. There was, in my view, no necessity to go any further and to rely upon the concept of intention to create legal relations, which struck me as little more than a diversion from the primary thrust of the decision, which the learned judge neatly had encapsulated in the final paragraph of his judgment (quoted in terms at paragraph 27 above), as to the plaintiff’s failure to prove his case.

37. For my own part I am unsurprised that the learned judge should thus have decided on the facts before him.

38. The negotiation of the alleged oral loan agreement was conducted through intermediaries, namely Emily and thereafter Jennifer, the monies said to evidence the agreement with the defendant alone were paid into a joint account held by the defendant with Jennifer (for reasons which are unclear Mr Chan repeatedly characterised such sums as were paid into that joint account as ‘the defendant’s money’), the property which was purchased in part by the monies in that joint account was conveyed into the joint names of the defendant and Jennifer, the plaintiff’s daughter, and the three interest payments as were made by Jennifer to the plaintiff were made out of that selfsame joint account.

39. Indeed, although the learned judge below neither said so nor so found – to be fair, on the case before him he did not need to go this far – on the basis of such objective indiciae it would seem tolerably clear that if and in so far as any agreement were to be divined from this evidence and on these undisputed facts, any such agreement could only have been between the plaintiff on the one part and Jennifer and the defendant jointly on the other.  However, that was not the case as was put forward, and which was dismissed. 

40. The stark fact remains that this was a disastrous union which disintegrated before it had even begun – indeed, as earlier observed, this marriage was annulled, not dissolved – and I have no doubt that in the plaintiff’s mind (and perhaps also as a matter of ‘face’) he may well have regarded the money as put in by him towards the property purchase as due back to him from the defendant in the unfortunate circumstances as had arisen, notwithstanding that the legal analysis was – and remains – against him on the facts as found by the trial judge.

41. Accordingly, at the end of the day I was driven to conclude that this appeal had no merit.  I further took the view that it was also unfortunate that this matter even was pursued to the appellate level, notwithstanding the tenor of the judgment of the learned judge below, who in my view was correct in coming to the conclusion which he did upon the evidence placed before him.

Hon Lunn J:

42. I agree with the judgment of Stone J.