KAY BIK KIU v. KUBOTA YOSHIAKI

DCCJ13606/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 13606 OF 2001

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Decision

1. I have two summons to be dealt with: (1) the Defendant’s summons dated 18^th April, 2005, in which the Defendant applies for the action to be dismissed or stayed on the ground that it is frivolous or vexatious and/or is an abuse of the process of the Court, and (2) the Plaintiff’s summons dated 13^th May, 2005, in which the Plaintiff applies for the joinder of an additional Plaintiff, and for leave to re-amend the Statement of Claim.  The parties agreed that the Plaintiff’s summons is to be dealt with first.

2. On 28^th August, 2001, the Plaintiff instituted the present proceedings against the Defendant for a sum of HK$600,000, paid to the Deceased by way of a loan on or about 27^th May, 1994.  By her summons, the Plaintiff asked for leave to re-amend the Writ to the effect that Lam Yin Ling (“Lam”) be added as a co-plaintiff.  The re-amendment include assertions that the Plaintiff is the mother of Lam, and that when the advancements of the loans were made, Lam told the Deceased that the loans were advanced by the Plaintiff when in fact Lam was the true lender.  Thus the Plaintiff was the nominee creditor for the said loan of HK$600,000 and the equitable interest under the loan agreement at all material time is still vested with Lam. 

3. On 15^th September, 2003, the Plaintiff issued a summons, seeking to substitute Lam as Plaintiff.  This application was supported by an affirmation dated 10^th September, 2003 by Lam, in which she said that at the time of advancing the loans to the Deceased, the money was lent to her by the Plaintiff instead of herself.  On 17^th March, 2004, the Court dismissed her application.  But no appeal was made against this decision.

4. In paragraph B.4 of her written submission, the Plaintiff’s Counsel submitted that, “Even if the effect of an amendment will be to substitute a new party, it may be allowed if the Court is satisfied that the mistake sought to be corrected was a genuine mistake.”  Mr. John Hemmings, Counsel for the Defendant, contended that there was no “genuine mistake” as to who the appropriate Plaintiff is.  Lam was never under any illusion as to who the maker of the alleged loan is.  Lam stated, in paragraph 7 of her affirmation of 13^th May 2005, “It was my genuine belief that since the written acknowledgement of debt was signed in favour of my mother, she should sue as creditor”.  However, the Plaintiff’s claim against the Defendant was never expressed in this way in her pleaded case.  On the contrary, the Plaintiff had, until 15^th September, 2003 when she sought to substitute Lam as Plaintiff, always maintained that the loans had been made by her.  But the Plaintiff’s stance, from 15^th September, 2003 onwards, was that it was Lam who lent the money to the Defendant, and there is nothing to contradict the said genuine belief although the application to substitute the Plaintiff by Lam was dismissed. 

5. The Defendant submitted that the Plaintiff alleged that at the time of the loans there had been an express oral agreement that the loan was not to be repaid until demanded.  Clearly there could not have been such oral contractual term with the Plaintiff since the Plaintiff now admits that she never in fact lent any money to the deceased.  It is not for me to make at this stage a finding as to whether or not such an oral agreement was made at the material time.  The issue is whether Lam genuinely believed that the Plaintiff should sue as creditor because the written acknowledgement of debt was signed in favour of the Plaintiff.  There is no evidence to contradict that she genuinely had such a belief.

6. The Defendant submitted that the assertion was made in order to counter a defence that the limitation period had expired.  But according to section 23 (3) of the Limitation Ordinance, where the person liable for a debt makes any payment in respect thereof, the right of action to recover any debt shall be deemed to have accrued on the last payment, and any payment of interest shall be treated as payment in respect of the principal debt.  The Plaintiff asserted that the Defendant paid interest of HK$17,826 bi-annually during the period from May, 1996 to November, 2000.  Therefore the right to recover the principal debt shall be deemed to have accrued on the date of the last payment in November, 2000, and not on the date of the loan (27^th May, 1994), and the Plaintiff’s claim, which was instituted in August 2001, is not barred.  The Defendant’s contention fails.

7. The Defendant averred that, notwithstanding Lam’s claims to have a “genuine belief” that her mother and not her should be named as Plaintiff, the Plaintiff was at all material times represented by solicitors, and it is inconceivable that her solicitors would not have advised her otherwise.  It is simply a futile effort to speculate what her solicitors had advised her.  In my judgment it is inconceivable that she would have acted contrary to the advice of her solicitors, to her detriment.  The Defendant contended that since Lam declined the opportunity to call evidence from her solicitors “as to the advice they gave her on the form the action should take, the inference is that they were not instructed as to the true lender” (Paragraph 18 of the Judgment of Deputy High Court Judge Saunders in HCA 3844/2001 handed down on 27 January 2004).  I cannot see how this inference made by the High Court in a case between Lam and the Defendant in HCA 3844/2001 can have any bearing on the issue as to whether Lam had a genuine belief or not.

8. The Defendant contends that the Plaintiff’s claim in these proceedings has been a false claim as Deputy Judge Saunders referred to in the said judgment,namely,  “To pursue the action in the form it was would have required Ms. Lam’s mother to perjure herself should the matter proceed to trial.  …….In this regard the claim …… may properly be described as a false claim which inevitably reflects on her credibility.”  Deputy Judge Saunders did not specifically make a finding that the present District Court case is a false claim.  He simply could not have done that because the case he tried is a High Court case and not the present District Court case.  The reference referred to by the Defendant is simply an opinion and is not binding upon me.  At this stage it is inappropriate for me to decide whether it is a false claim or not.

9. The Defendant stated that the Plaintiff’s summons dated 17^th March, 2004 was dismissed and no appeal was made against the dismissal.  Therefore the Plaintiff attempted to bypass that decision by the present application, without appealing it but instead attempting to achieve her desired result by other means.  It is inevitable that, should the Court allow Lam to be added as a Plaintiff to the present action then the original Plaintiff will withdraw, thus achieving by the back door what she was unable to by the front.  It is pre-mature to predict what the Plaintiff will do.  There is simply no evidence in this regard.  The application on 17^th March, 2004 related to an application to substitute Lam as Plaintiff.  In the present proceedings the Plaintiff’s application is to join Lam as a co-plaintiff.  This is a different application in nature from the application made on 17^th March, 2004.  The Plaintiff is entitled to do that. 

10. What I have to consider is whether it is necessary to join Lam as a co-plaintiff.  The Plaintiff submitted that the Plaintiff’s claim is for the recovery of a loan pursuant to a written acknowledgment of debt signed in her favour.  However, she is only the nominee creditor of the loan and has no equitable interest therein.  At the time of the loan, Lam told the borrower that the loan was advanced by the Plaintiff when in fact Lam was the true creditor.  Interest payments for the loan had been received by the original Plaintiff who held them on trust for Lam.  Hence, the equitable interest under the loan agreement at all material times is still vested with Lam.  The addition of Lam is necessary because the “property” is vested in her in equity and the Plaintiff’s claim in respect of an equitable interest in that “property” is liable to be defeated unless Lam is joined.  Further, the relevant cause of action is vested in Lam and the original Plaintiff jointly and not severally.  No cause or matter shall be defeated by reason of nonjoinder of any party so far as the issues in dispute affect their rights and interests.  These are correct submissions.  I make an order in terms of Paragraphs (1) to (5) of the Plaintiff’s summons.  Since the Plaintiff succeeds in her application, I have to dismiss the Defendant’s summons and I do so accordingly.

11. Costs

I make an order nisi, to be made absolute in 14 days’ time:-
(1)	in respect of the Plaintiff’s summon, the costs of and occasioned by this application be to the Defendant in any event, to be taxed, if not agreed, with certificate for Counsel.
(2)	in respect of the Defendant’s summons, the costs of and occasioned by this application be to the Plaintiff in any event, to be taxed, if not agreed, with certificate for Counsel.