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Non-no Fashion Wholesale Ltd. v Chung Kam Wing And Another

Judgment Cited authorities 13 Cited in Precedent Map Related
Vincent
Judgment Date08 August 2001
Year2001
Judgement NumberCACV168/2001
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV168/2001 NON-NO FASHION WHOLESALE LTD. v. CHUNG KAM WING AND ANOTHER

CACV000168/2001

CACV168/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 168 OF 2001

(ON APPEAL FROM HCA NO 20335 of 1998)

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BETWEEN
NON-NO FASHION WHOLESALE LIMITED Plaintiff
AND
CHUNG KAM WING and SHU MAN LEE Defendants
(By Original Action)

AND BETWEEN
CHUNG KAM WING and SHU MAN LEE Plaintiffs
AND
NON-NO FASHION WHOLESALE LIMITED 1st Defendant
KWAN SING KWONG 2nd Defendant
LEUNG LAI KUEN 3rd Defendant
(By Counterclaim)

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Coram: Hon Rogers V-P, Woo JA and Le Pichon JA in Court

Date of hearing: 24 July 2001

Date of handing down of judgment: 8 August 2001

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J U D G M E N T

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

Hon Woo JA:

Introduction

1. This is an appeal against the judgment of Cheung J (as he then was) given on 12 January 2001 in HCA No 20335 of 1998. Chung Kam Wing ("Chung") and Shu Man Lee ("Shu") were at all material times the registered owners of the premises known as Workshop B5 on the Ground Floor of Block B, Hong Kong Industrial Centre, Nos.489-491, Castle Peak Road, Kowloon, Hong Kong ("the premises"). The plaintiff by original action, Non-No Fashion Wholesale Limited ("Wholesale Limited"), claimed against Chung and Shu that in February 1996, it together with another company called Non-No Fashion Garment Limited ("Garment Limited") entered into a tenancy agreement ("the 1996 Tenancy Agreement") with Chung and Shu, whereby the owners agreed to let the premises to the companies for a term from 1 March 1996 to 31 December 2003. Wholesale Limited initially sought specific performance of the 1996 Tenancy Agreement. However, this was not pursued at the trial before Cheung J, and instead, damages for breach of the 1996 Tenancy Agreement to be assessed was sought.

2. Chung and Shu denied that they had ever entered into the 1996 Tenancy Agreement with Wholesale Limited or Garment Limited. Their case was that the signature of Chung on the 1996 Tenancy Agreement was a forgery. They counterclaimed against Wholesale Limited, the 1st defendant by counterclaim, Kwan Sing Kwong ("Kwan") the 2nd defendant by counterclaim, and Leung Lai Kuen ("Leung"), Kwan's wife and the 3rd defendant by counterclaim, for practising a fraud on them by forging the signature of Chung and making use of the 1996 Tenancy Agreement to delay the recovery of possession of the premises by Chung and Shu. It was not disputed that Kwan was at all material times a director and shareholder of Wholesale Limited and Garment Limited.

3. The key issue before the Judge was therefore whether the 1996 Tenancy Agreement was a forgery in that the signature on it, purported to be that of Chung, was a forgery.

4. Four witnesses gave evidence before the judge, namely, Chung, Kwan, Professor Cheung Kwong Yue ("Professor Cheung") and Mr Hung Pui Shing ("Mr Hung"). The latter two gentlemen were handwriting experts called respectively by Wholesale Limited on the one hand and Chung and Shu on the other. After assessing their testimonies and all the documentary evidence before him, the Judge found that Chung's signature on the 1996 Tenancy Agreement was a forgery. He gave judgment against Wholesale Limited and Kwan, declaring that the signature was a forgery, with costs on an indemnity basis in respect of both the claim and the counterclaim,. He also granted injunctions to restrain them from occupying the premises, damages for trespassers and other relief based on his findings of fraud and forgery. He, however, dismissed the claim of Chung and Shu against Leung with no order as to costs. Wholesale Limited and Kwan now appeal. They are the appellants and Chung and Shu are the respondents.

The facts

5. Although the issue is simple, the facts relevant for the Judge's consideration spanned over several years and were of some complexity.

(a) The facts not in dispute

6. By a Tenancy Agreement dated 13 September 1991 ( "the 1st Tenancy Agreement") made between Garment Limited and Chung and Shu, the premises were let to Garment Limited for a term of three years from 1 December 1991 to 30 November 1994. The rent was $95,000 per month from 1 December 1991 to 30 November 1993 and $100,000 per month from 1 December 1993 to 30 November 1994. Garment Limited was given an option to continue with the Tenancy for a term of two years from 1 December 1994 to 30 November 1996 at $120,000 per month. The premises were held under government Conditions of Sale. Special Condition (3) provides that except with the consent of the Governor, the premises shall only be used for a factory. Condition (15) permits the government to re-enter and recover possession of the premises in the event that the purchaser fails to observe or comply with the Conditions of Sale.

7. On 26 August 1994, Chung and Shu commenced HCA No A8575 of 1994 ("the 1994 Action") against Garment Limited seeking recovery of the possession of the premises on the ground that Garment Limited had, in breach of the 1st Tenancy Agreement, used the premises as a showroom and not for industrial purpose. By an Amended Statement of Claim, it was further pleaded that Garment Limited had sublet the premises and it was in arrears of rent from 1 September 1994 and also in arrears of rates. The fact that the 1st Tenancy Agreement had come to an end by effluxion of time on 30 November 1994 was also pleaded.

8. In January 1995, there were discussions between Kwan and Chung to compromise the 1994 Action. That resulted in a consent order dated 7 February 1995 made by a Deputy High Court Judge Wong, in the following terms:

"1. Judgment be entered against the Defendant by the Plaintiffs for the following reliefs:-

(i) The Defendant do forthwith deliver vacant possession of the premises known as Workshop B5, Ground Floor, Block B, Hong Kong Industrial Centre, 489-491 Castle Peak Road, Kowloon, Hong Kong ('the said Premises') to the Plaintiffs;

(ii) The Defendant do forthwith pay to the Plaintiffs the arrears of rent and rates in the total sum of $317,528.75;

(iii) An injunction restraining the Defendant whether by itself, its directors, servants, agents, tenants or licencees from using or continuing to use the said Premises otherwise than as a factory, or doing or suffering to be done any act in breach of the Conditions of Sale No 4268 relating to the said Premises;

(iv) Damages for breach of the Tenancy Agreement (as defined in paragraph 2 of the Amended Statement of Claim herein);

(v) The Defendant do pay to the Plaintiffs mesne profits at the market rent of the said Premises from 1st December 1994 until vacant possession shall have been delivered up by the Defendant;

(vi) There be an assessment of the damages and mesne profits referred to in paragraphs (iv) and (v) of this Order;

(vii) Costs of this action including costs of the application for summary judgment be paid by the Defendant to the Plaintiffs."

9. On 8 October 1996, the above judgment was sealed. Thereafter a writ of possession pursuant to the judgment was issued to all occupiers of the premises.

10. On 25 November 1996 Garment Limited commenced an action, HCA No A13493 of 1996 ("the 1996 Action") against Chung and Shu, claiming a declaration that Garment Limited was a tenant under the 1996 Tenancy Agreement, which has been the bone of contention between the parties. On 4 March 1997, Master Chu (as she then was) granted a stay of execution of the judgment entered in the 1994 Action pending the outcome of the 1996 Action.

11. In the meantime, Chung and Shu applied for interim payment from Garment Limited in respect of the use and occupation of the premises. On 3 December 1997, an order for interim payment was made by Master Chung (as he then was) in favour of Chung and Shu. Garment Limited appealed to Sears J who dismissed their appeal on 2 January 1998. Further appeal by Garment Limited to the Court of Appeal was also dismissed on 30 April 1998.

12. On 2 June 1998, Garment Limited commenced another High Court Action, HCA No 8912 of 1998 ("the 1998 Action") against Chung for the return of deposit of $240,000 under the 1996 Tenancy Agreement.

13. On 6 May 1998, Chung and Shu petitioned to wind up Garment Limited on the ground that it had failed to pay the interim payment ordered by Sears J. On 16 June 1998, a winding up order was made against Garment Limited. The Official Receiver decided not to defend the 1994 Action or to proceed with the 1996 Action and the 1998 Action commenced by Garment Limited. On 7 October 1998, with the consent of the Official Receiver, a joint application was made to lift the stay of execution of the judgment of 8 October 1996 on the possession of the premises.

14. On 27 November 1998, Wholesale Limited commenced the instant action against Chung and Shu, relying on the 1996 Tenancy Agreement.

(b) Case of Wholesale Limited and Kwan

15. According to Wholesale Limited, Chung, acting on his own behalf and on behalf of his wife Shu, in around January 1995 represented to both Garment Limited and Wholesale Limited that if Garment Limited consented to judgment in the 1994 Action and if both Garment Limited and Wholesale Limited reimbursed Chung and Shu for all costs incidental to the application for the change of user, Chung and Shu would grant a further lease for a term from 1 March 1996 to 31 December 2003 and would not execute the judgment to be entered in the 1994 Action.

16. In the result, the 1996 Tenancy Agreement was entered into between Garment Limited and Wholesale Limited of the one part and Chung, acting on behalf of himself and Shu, of the other part containing the...

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