Lau Tung Pui Patrick v Tse Kit Ching

CourtDistrict Court (Hong Kong)
Judgement NumberDCCJ5542/2006
Subject MatterCivil Action
DCCJ005542/2006 LAU TUNG PUI PATRICK V. TSE KIT CHING

DCCJ 5542/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5542 OF 2006

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BETWEEN

LAU TUNG PUI PATRICK Plaintiff
and
TSE KIT CHING Defendant

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Coram : Her Honour Judge H.C. Wong in Court

Dates of Hearing : 28-29 September 2009 and 30 October 2009

Date of Handing Down Judgment : 24 December 2009

JUDGMENT

1. In this action, the Plaintiff claimed against the Defendant for repayment of a loan in the sum of $180,000.00 (“the loan”). The Defendant (“Miss Tse”) denied she is liable to the repayment of the sum claiming that payment of the loan was conditional upon the continuation of the business venture between the Plaintiff and the Defendant in the operation of an internet café (“the business”). As she had ceased to participate in the business, and since the internet café had ceased operation, she claimed she is not liable to repay the said loan.

Background

2. The Plaintiff (“Mr. Lau”) was a friend of the Defendant Miss Tse’s boyfriend Mr. Ho Chun Sang, John. They met when they were working at a Hong Kong trading company between 1978 to 1980, and had become good friends and maintained regular contacts since then. Mr. Lau came to know Miss Tse as Mr. Ho’s girl-friend since the early 1990’s and Miss Tse regarded Mr. Lau as a good-friend. In January 2006, Mr. Lau was assigned back to Hong Kong from Shanghai by his then employer, Steris. Knowing that his contract with Steris was going to end soon, he began to look for business opportunities in Hong Kong. Mr. Lau and Mr. Ho together with Miss Tse then began looking for business opportunities, eventually, they settled on the setting up of an internet café business.

3. In early September, the parties incorporated a limited company named “Meganet International Limited” through which the parties would operate the internet café. They agreed that Mr. Lau would hold one share in Meganet while Miss Tse and Mr. Ho would hold one share in Miss Tse’s name. The estimated initial capital of the business was $700,000.00.

4. On 27 August 2006, Mr. Lau and Mr. Ho jointly signed a provisional tenancy agreement with the landlord for a shop premises located in Jaffe Road, Causeway Bay (“the said shop unit”) for a term of 4 years at a monthly rental of $18,000 commencing on 1st October 2006. The formal tenancy agreement was signed on 2nd October 2006 by Mr. Lau and Miss Tse representing the tenants. As a guarantee under the tenancy agreement, Mr. Lau and Miss Tse each issued 12 post-dated cheques in the sum of $18,000.00 for the benefit of the landlord.

5. The Defendant, Miss Tse, did not dispute that a sum of $180,000 was paid by Mr. Lau to her; that in return, Miss Tse had issued 18 cheques of $10,800 each. The 1st cheque was post-dated to 15 October 2006 and the 2nd to the 18th cheques were post-dated to the 15 day of each subsequent month. It is not disputed that Miss Tse had applied the $180,000 in the refurbishment of the said shop unit in Jaffe Road. It is further not disputed that she spent a further $28,714 for the same purpose.

The Plaintiff’s case

6. It was Mr. Lau’s evidence that originally the parties had agreed to set up Meganet on an equal shareholding basis, that was why the issue of the shares at Meganet was 1 share for each shareholder, namely Mr. Lau and Miss Tse. However, on or about 1 September 2006, Miss Tse informed Mr. Lau that she did not have sufficient cash to pay the required $350,000 capital injection into Meganet and that she can only raise $100,000 cash from her savings. Mr. Lau claimed that Miss Tse and Mr. Ho then invited Mr. Lau to acquire a larger shareholding in Meganet. Consequently, the parties reached an oral agreement that the shareholding in Meganet shall be 60:40 with Mr. Lau holding 60% of the shares and Miss Tse 40%. As Miss Tse only had $100,000 in cash, she asked Mr. Lau for a loan of $180,000. Mr. Lau claimed that he agreed to lend her the loan on the basis that he would charge 8% per annum on the $180,000 and that Miss Tse would guarantee the loan by issuing 18 post-dated cheques of $10,800 each representing the 18 monthly instalments for repayment of the $180,000 loan. Mr. Lau also claimed that should any of the post-dated cheques be dishonoured he would be entitled to demand the return of the outstanding balance immediately. Mr. Lau further claimed that was why he issued to Miss Tse a personal cheque from his account at the Hong Kong Bank on 4 September 2006 for payment of the loan of $180,000 (see page 92 of the bundle). Mr. Lau also produced a handwritten note recording the discussion and agreement between himself, Miss...

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