Tulsiani Ramesh Jhamandas v. Lalwani Prem Khemchand

HCA 261/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 261 OF 2012

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J U D G M E N T

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I. INTRODUCTION

1.The plaintiff (“P”) and the defendant (“D”) had known each other for over 30 years and had been good friends, but they fell out with each other. I start with the dramatis personae.

2.P lived in Shanghai, Mainland China (“PRC”), D lived in Hong Kong (“HK”), D’s former business partner Sharma Vinod Kumar (“Vinod”) lived in Poland, P’s sister Bharti Rajkumar Shewani (“Bharti”) lived in Pune, India, and P’s brother Ghanshyam (or Sammy) Tulsiani (“Sammy”) lived in Manila, Philippines. P’s son Roshan Ramesh Tulsiani (“Roshan”) studied in Canada during inter alia 2010-2011.

3.P operated a trading company called Engee Roshan Limited (“ERL”). D and Vinod owned a trading business called Citisonic Limited (“Citisonic”), which commenced business in/about 1996/1997. Citisonic employed Jeetender Sharma (“Jeet”), Vinod’s brother-in-law, as export executive in 2000-2001. D and Vinod also owned a custom tailor business called Master Tailor (“MT”) at BCC Building, Tsimshatsui (“BCCB Address”). D’s sons operated Master Tailor (HK) Limited (“MTL”) at Hart House, Tsimshatsui (“HH Address”), and a textile business called Maya Textiles at Tsuen Wan Industrial Building, Tsuen Wan (“TWIB Address”).

4.Since the incorporation of Vee Pee Global Limited (“VPG”) in/about 2003, D and Vinod carried on their trading business through VPG. In 2006, Jeet joined VPG as accounting manager at its HK office. Such office and/or Citisonic’s HK office are referred to below as “HK Office”. Jeet handled VPG’s accounts/book-keeping, and dealt with VPG’s auditors.

5.In November 2006, Jeet was appointed as a director of VPG, and D and Vinod each gifted him 2,500 VPG shares. On 21 December 2007 and 10 February 2010, D and Jeet respectively transferred 25,000 and 10,000 VPG shares to Vinod. On 20 April and 30 July 2010, D and Jeet respectively resigned as directors of VPG. On 16 November 2011, VPG was wound up by court, and Vinod was made bankrupt.

6.Nanik Uttamchandani (“Nanik”) was the elder brother of Ashok B (or Albert) and Hiroo B (“Albert” and “Hiroo”), and had a HK sole proprietorship called SKI International (“SKII”). Albert/Hiroo operated a money lending business in Manila, and Nanik handled some of Albert’s affairs in HK.

7.P owned a commercial property at Star House, Tsimshatsui (“TST Property”), which was mortgaged to Hang Seng Bank Limited (“HSB”). P and his wife owned a residential property at Everwell Garden, Homantin (“HMT Property”), which was last mortgaged to Bank of America (Asia) Limited (“BAA”). P made available the TST Property and later the HMT Property to secure banking facilities by UCO Bank Limited (“UCO”) for Citisonic (“Citisonic Facilities”) and later for VPG (“VPG Facilities”). After the sale of the HMT Property in 2007, HK$6,750,000 out of the sale proceeds was kept under lien as blocked cash deposit with UCO to secure the VPG Facilities (“Blocked Deposit”).

II. P’s CLAIM

8.P claimed that in/about August 2007 he lent HK$8,500,000 (ie the Blocked Deposit and a further loan of HK$1,750,000 (“Further Loan”)) (collectively, “P’s Loan”) to D personally to be repaid upon demand with interest at 8% pa. D repaid HK$1,000,000 in/about May 2009 and another HK$1,000,000 in/about July 2009. On 28 November 2009, D confirmed in writing he still owed P HK$6,500,000 with interest at 8% pa (“2^nd Confirmation”).

III. D’s DEFENCE AND COUNTERCLAIM

9.D claimed P made available HK$8,500,000 to Citisonic/ VPG for securing the Citisonic/VPG Facilities in return for commission/ interest received from Citisonic/VPG:

(a) in 1997, P arranged with Citisonic (i) to make available the TST Property for securing the Citisonic Facilities and (ii) to guarantee such facilities in return for Citisonic’s payment to P of a percentage of its sales as commission;

(b) in/about 1998, Citisonic required additional facilities, and P assisted by (i) replacing the TST Property with the higher value HMT Property and (ii) remaining as guarantor;

(c) in/about 2003, such arrangements were transferred to VPG;

(d) in 2007, due to increase in the HMT Property’s market value and P’s need to provide a dowry for his elder daughter’s wedding,[1] the HMT Property was sold and out of the sale proceeds the Blocked Deposit was held under lien to secure the VPG Facilities, and P lent the Further Loan to VPG;

(e) in 2009, P’s younger daughter planned to be married,[2] so P asked VPG to arrange for partial release of the Blocked Deposit, but UCO refused.

D averred that on 16 April 2010 VPG (by its directors D and Vinod) and P made/signed an agreement that VPG would pay the outstanding principal loan (HK$6,750,000) with interest (6% pa), but any earlier business agreements signed by the parties were null/void and no longer valid (“16/4/10 Document”).

10.D averred he personally lent P a total sum of HK$895,449.50 that was paid to P or to his order on the understanding that P would repay him in full upon request or when any part of the Blocked Deposit was released to P (collectively, “D’s Loan”). D counterclaimed for repayment of D’s Loan with interest, but P claimed such payments were D’s partial repayments (with interest) to P in respect of the Albert Loan.[3]

IV. ISSUES AND EVIDENCE

11.The 2 factual issues were whether (a) P’s Loan was made to D personally or to Citisonic/VPG and (b) the payments for D’s Loan were D’s personal loans or partial repayments to P. In making findings of fact, I will consider events that led up to the alleged loans and/or even subsequent conduct[4] for contextual understanding of the parties’ intentions. In assessing witnesses’ credibility, I bear in mind not only their demeanour in court but also the intrinsic value of their evidence upon considering the totality of their evidence against the chronology of events, the documentary evidence and the inferences based on inherent probabilities and/or undisputed facts.[5] I also note the following matters.

12.First, in respect of allegations of fake/tampered documents, the cogency of the evidence relied upon must be assessed by examining the particular factual matrix and by applying the standard of the balance of probabilities but flexibly taking into account that the more serious the allegation the less likely it is that the event occurred and hence the stronger should be the evidence before the court concludes that the allegation is established.[6]

13.Secondly, Vinod in Poland had no access to his VPG email account[7] (“Vinod E-Account”). D claimed he could not access his own VPG email account[8] (“D E-Account”) outside VPG’s HK Office, but I prefer Jeet’s evidence that he and D could access their VPG email accounts by, say, linking them to their smart phones. Vinod claimed he did not know/author various emails sent and/or he did not read various emails received between 9 December 2009 and 7 July 2010 via the Vinod E-Account, and he did not read an email received via [email protected] on 11 February 2011 (collectively, “Disputed Emails”),[9] but D alleged (a) Jeet would check incoming emails and contact D and Vinod by telephone and (b) D would discuss with Vinod before outgoing emails in Vinod’s name were prepared/dispatched via the Vinod E-Account.I refer to the analysis in Part XXV below, but suffice to say here I find it was D who authored or gave instructions for the Disputed Emails to be prepared/sent via the Vinod E-Account without Vinod’s consent/knowledge of their contents, which conclusion had adverse impact onthe reliability of the Disputed Emails.

14.Thirdly, there was a lot of email traffic among Vinod, P, D and Jeet from 14 August 2008 to 6 July 2012 (“Emails”). But the English language used did not always appear syntactically correct and the linguistic style appeared to be culturally influenced, which gave rise to a rather loose style of expression that at times excel in generality or even error. So one has to view the contents of the emails against the overall factual matrix to ascertain accurately what the senders wanted to say, and not just focus on impersonal superficial meanings of specific words/phrases viewed outside their context.[10] These observations also applied to documents prepared by P, D and/or Jeet.

15.P and D gave evidence, and P called Vinod, Sammy and Jeet as his witnesses. Vinod was asked to give evidence at a very late stage in response to D’s 2^nd witness statement filed shortly before trial. He made no secret of the fact he had other unresolved issues with D, and he thought D was to blame for VPG’s collapse and his bankruptcy, but he did not express his dismay with D by any display of vengeful indignation. Instead, he gave a fully engaged response to cross-examination and was ready to acknowledge some mistakes he made in evidence. I do not find him argumentative, uncooperative and/or evasive. 

16.Jeet gave direct and helpful evidence due to his central day‑to‑day responsibilities for VPG’s books/account. When he joined VPG in 2006, he learnt about the business/finance of Citisonic/VPG and the arrangements between D and Vinod by going through VPG’s accounts and making enquiries with previous accountants. Despite the suspicion by Mr Chain, counsel for D, of Jeet’s familial loyalty to Vinod who had fallen out with D, Jeet did not generally allow his evidence to be marred by defensiveness or prevarication.

17.Sammy was not involved in the money disputes between P and D except for the Albert Loan.[11] Despite his brotherly trust in P, Sammy’s answers to Mr Chain’s searching questions were straightforward and consistent, and did not appear to be a matter of mission motivated by a mere loyal desire to support P’s case.

18.Neither P nor D showed much enthusiasm in engaging with his cross-examiner by providing full/direct answers to questions. They were long-winded and repetitive, but I bear in mind both were mature Indian gentlemen whose way of speaking and whose use of language were coloured by cultural characteristics, and it is important to distinguish such characteristics from evidential unreliability.

19.That said, D was a clever witness who fenced with Mr D’Souza, P’s counsel, with confidence, but he proved to be an unreliable witness. There was hopeless conflict between the gist/detail of his statement and oral evidence, and between his testimony and the picture presented by other evidence. Those conflicts, almost all of which I have found myself compelled to resolve against D, will be apparent from my findings below. I have the distinct impression D’s case had been shaped with the benefit of hindsight to suit his current purpose of diassociating himself from liability for P’s Loan, and had been tailored to avoid other evidence that was against him, which conclusion is reinforced by his poor explanations on various crucial matters. This led me to the conclusion D did not give evidence he knew or believed to be true in respect of the central aspects of his defence and counterclaim. In my view, D’s evidence frequently could not be relied upon where it differed from that of P and his witnesses.

20.P was less sophisticated than D. Even though his recollection of events was less precise and his evidence was sometimes less focused and occasionally a little muddled in face of Mr Chain’s intensive questioning, I find P to be a truthful and, on the whole, reliable witness. He had a conservative and/or reserved approach to loan commitments, and preferred to deal with friends whom he knew based on mutual trust. I am not persuaded P crafted his evidence to suit his purpose, and I am unconvinced his less precise evidence adversely affected his overall integrity. Whilst there were occasions where his recollection was faulty, they did not give rise to concern about his basic truthfulness and reliability as a witness.

V. PARTIES’ RELATIONSHIPS

21.D and Vinod  D and Vinod first met in 1987/1988. Vinod worked for a trading company based in Thailand and developed good customer contacts in Poland. In 1993, he was transferred to HK, and developed good relations with D whom he respected. In 1996/1997, D and Vinod set up Citisonic/MT. In 1997, Vinod moved to Poland whilst D looked after the HK Office. Vinod visited the PRC about 4-5 times a year, and often stopped over in HK.

22.P and D  P carried on trading business via ERL, and used inter alia the TST/HMT Properties to secure banking facilities. In 1994/1995, he moved to live in India and scaled down ERL’s business. When P was not in HK, D acted as authorised signatory for ERL. I do not agree D merely collected/forwarded mail for P. P and D would meet occasionally when P visited HK.

23.P and Vinod  D claimed P and Vinod knew each other before the Introduction[12] because the small temple congregation all knew one another. But this appeared unlikely because before 1993 Vinod only visited HK a few times a year and in/about 1994 P went to live in India. D then testified that after Vinod’s former employer ceased to sponsor his work visa, it was Galaxy International (owned by P’s relative Bhagu Jeswani) that sponsored Vinod. I reject such belated embellishment to bolster D’s suggestion that P and Vinod knew each other well enough for Vinod to have made the Initial Proposal[13] to P. In fact, P was not close to Vinod: (a) they visited HK occasionally and met about 20-30 times throughout the years,[14] and (b) P only emailed Vinod a few times and telephoned him 2-3 times.

VI. CITISONIC’s/VPG’s FINANCIAL OPERATIONS

24.Citisonic/VPG required facilities for issuing letters of credit (“LCs”) to pay suppliers. There was clear division of labour between Vinod and D. Vinod would secure purchase orders, deal with customers and liaise with suppliers (“Vinod’s Duty”). D would supervise staff at the HK Office, handle administration matters and arrange/input necessary capital to finance the business (“D’s Duty”). I accept that in financial matters Vinod usually adopted a supporting role by agreeing with what D suggested.

25.There was no change of parties for the arrangements over the properties/monies that P made available to secure the Citisonic/VPG Facilities despite various changes over the years[15] (collectively, “Changes”). So the discussion below concentrates on the disputed issues rather than on chronological events.

VII. INITIAL ARRANGEMENTS

26.It transpired D had no capital for investing in Citisonic, and had to arrange finance from the “market” for issuing LCs at/about 3% commission (with additional interest). Citisonic could not afford such heavy financial costs, and it also required further banking/trade facilities to grow its business.

27.Initial Proposal In/about May 1997 P invited D home for dinner, and proposed to P to let him use the TST Property[16] to secure banking facilities in return for referral of US$1,000,000 - US$2,000,000 business to ERL with 6% profits of D’s new business (“Initial Proposal”). D introduced P to Vinod (“Introduction”), but there was little business talk over dinner. P agreed in principle to the Initial Proposal before he left for India in July 1997. But D alleged it was Vinod who made the Initial Proposal because (a) P and Vinod knew each other well enough and (b) D knew the dormant ERL could not take on significant business. I disagree. I have found P and Vinod only became acquainted by the Introduction. Further, there was no difficulty in reviving ERL (eg to carry on business in Shanghai as Engee Roshan Trading Shanghai Co Ltd (“ERL Shanghai”)). In view of D’s Duty and P’s close friendship with D, I am unconvinced Vinod made the Initial Proposal to P.

28.Initial Arrangements  P returned to HK a day before the opening of Citisonic’s new office, and had a meeting with D (“IA Meeting”) with Vinod also present. P questioned the Initial Proposal and made clear he did not wish to bear any risk of profit/loss over D’s business. After a private discussion with Vinod, D offered to pay P US$100,000/year. P counter-offered for 1% commission on Citisonic’s sales. I accept it was finally agreed (a) P would make available the TST Property for securing the Citisonic Facilities (treated as loan by P to D) and (b) D would pay 0.5% commission on Citisonic’s sales (“0.5% Commission”) (treated as interest on such loan) (“Initial Arrangements”). P looked only to his old friend D rather than to Vinod (new acquaintance) and/or Citisonic (new company), and he was not interested in Citisonic’s/VPG’s business or profits/losses, which was why he resiled from the Initial Proposal. Pursuant to the Initial Arrangements, the mortgage loan due to HSB for the TST Property (HK$127,000) was paid off, and such payment was to be deducted from the 0.5% Commission. On 19 August 1997, P executed an “all-monies” legal charge over the TST Property in favour of UCO (“TST Charge”).

29.Internal Arrangements  D claimed commission was advanced by Citisonic with Vinod’s consent, and P was told to contact Citisonic’s/VPG’s accounts department (“A/C Dept”) for breakdown of sales (later costs) and commission. The A/C Dept would seek instructions from D who would tell the accountant to pay whatever commission was due to P by Citisonic/VPG. Mr Chain argued that since Vinod agreed Citisonic/VPG had an obligation to pay commission, it meant the Initial Arrangements were between P and Citisonic (but not D).

30.But on balance I find that without prejudice to the Initial Arrangements between P and D personally (varied in due course by the Changes), there was an internal arrangement between D and Vinod that Citisonic/VPG would bear the financial costs (ie the commission that was payable to P) for the benefit/use of the Citisonic/VPG Facilities facilitated by the TST/HMT Properties (and later the Blocked Deposit) P put up at D’s request (“Internal Arrangements”) because such arrangement was cheaper for Citisonic/VPG than to seek finance from the “market” at/about 3% commission (with additional interest). I find on balance Vinod, D and Jeet knew about and operated according to the Internal Arrangements.

31.In 2006, Jeet discovered VPG kept records of commission paid to P (booked as incurred expenses). I accept Jeet was tasked by D to record D’s repayments/commission to P or to P’s order (and D would update Jeet with details of such payments), and to prepare a list of such payments from time to time. But P was not concerned with (a) the Internal Arrangements, (b) how D arranged funds to pay him and/or (c) how Citisonic/VPG operated their business.

32.I also accept Citisonic’s/VPG’s previous accountants and also Jeet paid commission (ie Citisonic’s/VPG’s financial costs for use of the Citisonic/VPG Facilities) to P pursuant to D’s oral authorisation. It was also arranged that D via Citisonic/VPG would pay P a monthly sum of HK$20,000 as advance payment of commission with the balance to be finalised/paid after the sales (or later costs) and deductions were calculated. The net commission was usually more than HK$20,000 per month, but the accounts were not settled in a scheduled manner, so whenever P needed money he would ask D for payment, and D would pay or arrange for Citisonic/VPG/MTL to pay P or to P’s order, which payments would be deducted from the commission payable to P.

33.Relevant Emails  P’s email/letter dated 15 December 2009 (in reply to “Vinod’s” Disputed Email dated 9 December 2009 that was copied to him) (“15/12/09 Email”) stated inter alia that:

“FROM BEGENING I WAS CLEAR, YOU WANT TO GIVE ONE MILLION OR 2 MILLION BUSINESS AGAINST MY PROPERTY AS SECURITY, BUT I WANT STRAIGHT COMMISSION ON TOTAL SALE AND I AM NOT CONCERNED WITH YOUR LOSS OR PROFIT & HOW MUCH U MAKE I AM NOT CONCERNED ……” (my emphasis)

Mr Chain suggested “you”/“your” meant Vinod[17]/VPG were involved in the Initial Arrangements. But it must be remembered Vinod was at the IA Meeting to support D’s negotiations with P, so it was not unnatural for P to refer to Vinod’s supportive stance in his reply email to “Vinod”. More importantly, P rejected the Initial Proposal, and made clear he wanted nothing to do with Citisonic’s profits/losses. I cannot see how this Disputed Email when read as a whole meant the Initial Arrangements were with Citisonic (and in due course, VPG).

34.Next, Vinod’s email dated 9 November 2010 to D stated inter alia that:

“5. …… [P] just injected his property (NO CASH) and he made 3 times profit against that investment, what ever the money he made with us, even in 10 years of our business you or me didn’t made that much money. ……” (my emphasis)

It was said the reference to P having “injected” his property and made “profits against that investment” with “us” meant P invested in Citisonic’s business. But this email was an internal communication between VPG’s business partners Vinod and D under the Internal Arrangements, which was quite different from the Initial Arrangements (as varied by the Changes) from P’s point of view as borne out in an earlier internal email dated 21 October 2010 by Vinod to D:[18]

“Even [P] in front of [Vinod] told [D] in clear words that Prem [ie D] this money I [ie P] gave it to you as a Friend, as a Satsangi brother on your [ie D’s] face value I have [ie P has] nothing to do with the Company and you are [ie D is] responsible to pay me [ie P] this money.”

35.Mr Chain argued P’s reference to “your first proposal” in his email dated 17 November 2010 to Vinod (with copy to D) meant Vinod made the Initial Proposal:

“at that time of your start of business in HK Market if you ask for opening L/C was not less than 3% to prem [ie D] but not to new comers, i had cooperated with prem [ie D] proposal but i was not to be involved in profit or loss.

Final agreed ½% commission on total company sales, i dint want any involvement in your profit or loss from the beginning that reason i backed out your first proposal US$ one to 2millions guarantee sales business to [ERL] with 6%, try to remember the reasons I backed out to avoid future problems” (my emphasis)

But P explained “your first proposal” broadly referred to D and Vinod who were both present at the IA Meeting when P “backed out” of the Initial Proposal. Bearing in mind (a) Vinod was not responsible for D’s Duty and only had a supporting role in D’s negotiations with P, and (b) D and Vinod had a private discussion at the IA Meeting (which was understandable given the Internal Arrangements), I am unsurprised that P loosely referred to the Initial Proposal as “your first proposal” in this email.

36.Mr Chain noted P failed to deny paragraph 5 of Vinod’s email to D dated 9 November 2010 that was copied to him when he replied to Vinod by email dated 17 November 2010. But I accept P was not concerned to make any response to the Internal Arrangements between D and Vinod. Indeed, the focus of P’s response was to emphasise he wanted nothing to do with Citisonic’s profits/losses and/or referral of business to ERL “to avoid future problems”. On reading such email as a whole, it did not support D’s proposition that the Initial Arrangements were between P and Citisonic and/or that P “invested” in Citisonic. P made clear he finally cooperated/agreed with “prem proposal” (ie D’s proposal) that resulted in the Initial Arrangements.

37.In my view, it would be unreal to read too much into or to take a blinkered view of the broad language adopted in the above emails. I find on balance Vinod was not involved in setting up the Citisonic Facilities and not engaged in material negotiations with P as director on behalf of Citisonic.

VIII. 1997 GUARANTEE

38.On 5 November 1997, D and Vinod signed a deed of guarantee in favour of P (“1997 Guarantee”). D and Vinod (ie Citisonic’s directors) as guarantors agreed to (a) pay or procure Citisonic to pay to UCO on demand all sums due under the Citisonic Facilities, and (b) keep P indemnified against all liabilities P might sustain by reason of Citisonic’s failure to perform/observe the terms of the TST Charge.

39.The 1997 Guarantee in fact did not guarantee the obligations under the Initial Arrangements, eg the eventual return of the TST Property or its value to P or payment of the 0.5% Commission to P. Under the “all-monies” TST Charge, both Citisonic (borrower) and P (mortgagor) were liable for all indebtedness under the Citisonic Facilities, yet P had no say over Citisonic’s use of such facilities or Citisonic’s repayments to UCO, so P had reason to seek additional protection against exposure for “all‑monies” liability by asking D (director/guarantor) to ensure Citisonic (borrower) would duly repay UCO.

40.I also find on balance it was D who wanted Vinod to sign the 1997 Guarantee. Such request for Vinod to bear a shared commitment towards P was understandable when Vinod as director also had access to the funds under the Citisonic Facilities. Vinod’s guarantee of Citisonic’s obligations under the TST Charge (corporate matter) did not contradict D’s obligation to pay commission to P (personal matter). P was not concerned with any corporate matter, and he simply appreciated D’s thoughtfulness in procuring Vinod’s guarantee. I accept Vinod thought he was asked to sign the 1997 Guarantee to make P comfortable by assuring him Citisonic would meet its liabilities to UCO under the TST Charge.

IX. HMT PROPERTY

41.By 1998 Citisonic needed more banking facilities, and there was a meeting at the Branto Restaurant. D claimed both he and Vinod told P they would be looking for a new investor/partner because the TST Property could not secure sufficient banking facilities for Citisonic. D further claimed P offered to substitute the HMT Property to support increase of the Citisonic Facilities, and on such basis D and Vinod agreed to pay P 0.75% commission on Citisonic’s sales.

42.In my view, since the Initial Arrangements worked well for the past year, D would not have looked for a new investor without first asking P whether he was willing/able to support an increase of the Citisonic Facilities. I prefer P’s case that P, Vinod (who was in HK for the Guangdong Fair) and D met in April 1998, but P “cannot take words off Vinod”, and it was D who proposed to substitute the HMT Property[19] with promise of 1% commission on Citisonic’s sales (“1% Commission”) after paying 0.75% commission on Citisonic’s sales (“0.75% Commission”) for the first few months.[20] P agreed as D was his good friend and he was satisfied with the operation of the Initial Arrangements.

43.P’s case was consistent with his email to Vinod dated 17 November 2010 (with copy to D) which stated inter alia that:

“Don’t you remember in Mid of 1998 in Branto indian restaurant in Hongkong you and prem [ie D] request me to instead of commercial [TST Property] with lien to [UCO] now to give Residential property [HMT Property] instead, than instead of commission ½% on total sales of company your will give me commission 1% on total sales of company. ( there also your tried to save while making agreement you wanted to give ¾% for few months and than 1% ( but at first you promised 1%) ……” (my emphasis)

One should not read too much into the syntactically incorrect word “your” and also the word “you” in such email. When read as a whole, such email was consistent with the fact that Vinod, who was (a) neither the borrower nor P’s friend and (b) not concerned with the underlying collateral security for the Citisonic/VPG Facilities, would have spoken to support D, but would not have negotiated with P over any detail.

44.The mortgage loan due to BAA for the HMT Property in the sum of HK$1,145,000 was paid off, and such payment would be deducted from the 0.75% and/or 1% Commission. By a legal charge dated 21 July 1998, the HMT Property was charged in favour of UCO to secure the Citisonic Facilities (“HMT Charge”), and between August 1998 and July 1999 the 0.75% Commission was payable to P. But the 1997 Guarantee (which related to the TST Property) was no longer applicable.

X. 1999 DOCUMENT

45.At a meeting of P, D and Vinod at the Gaylord Restaurant on 31 August 1999 (“1999 Meeting”), (a) it was agreed the 0.75% Commission would continue until December 1999 and from January 2000 onwards it would be increased to the 1% Commission, and (b) a document titled “Refresh Details” was signed (“1999 Document”):

46.Mr Chain submitted Vinod signed the 1999 Document because the Initial Arrangements were between P and Citisonic:

(a) the 1999 Meeting was likely to have been pre-arranged, which meant Vinod’s signature as director of Citisonic was necessary, which in turn was consistent with D’s case that he and Vinod had to agree/sign as it was a Citisonic matter;

(b) P’s use of the word “we” in contra-distinction to “Mr Ramesh” was a reference to Citisonic.

47.In my view, although Vinod knew (a) D had asked P to replace the TST Property with a higher value property, (b) P had asked for a higher rate of commission, and (c) there was some set off between the payment made to release the mortgage of such higher value property and the commission payable to P, he did not know (or deal with P on) the details of such Changes. I find the 1999 Document (which made no reference to Citisonic at all) was not inconsistent with P’s case.

48.P explained (and I accept) only D was supposed to sign the 1999 Document, but D wanted/told Vinod to sign it as well. P did not think much of such internal matter between D and Vinod at the time. In my view, the 1999 Document was meant to be a casual record made on restaurant notepaper with P and D in mind, but D wanted Vinod to sign as well to avoid future dispute after Vinod returned to Poland (which was unsurprising given the Internal Arrangements between P and D), and Vinod thought (as with the 1997 Guarantee) he was merely supporting D’s efforts to make P comfortable over P’s personal loan to D that was put to use by Citisonic/VPG. So even though the 1999 Meeting might have been pre-arranged, I cannot conclude D and Vinod signed the 1999 Document as a Citisonic matter.

49.As P said, the word “we” referred to P and D because it was D (not Vinod) who discussed with P the additional use of the TST Property for obtaining future credit facilities. In my view, as far as P was concerned, he did not deal with Citisonic/Vinod but only with his long-time friend D with whom he made the Initial Arrangements.

XI. CHANGE OF COMMISSION BASIS

50.The 0.5%, 0.75% and 1% Commission was based on “Total Sale”. Subsequently (but it was unclear when) it was changed to be based on total costs. Such change was not recorded in writing, and there was no suggestion Vinod was involved.

XII. DIFFICULTIES IN POLAND

51.D and Vinod formed VPG in/about 2003 to carry on Citisonic’s business. D claimed to have found a file that showed ERL sponsored Polish visas for Vinod and other staff to work in Poland, and he suggested P and Vinod must have operated some business in Poland without going through him. D also argued P would not have assisted Vinod (a) to register a company in Poland by the name of Engee Roshan Limited (“ERL Poland”) and (b) to sponsor Polish visas for Vinod and other staff if the Initial Arrangements were not with Citisonic.

52.But I have found P and Vinod did not know each other before the Introduction. In/about 2003, there were some legal problems with a Polish customer, so D and Vinod decided to transfer Citisonic’s business to VPG. P signed papers to allow the HMT Property to secure the VPG Facilities, and D and Vinod also signed personal guarantees. In my view, the Initial Arrangements continued unchanged because P dealt with D personally. But the legal investigations in Poland made it difficult for Vinod and other VPG staff to obtain Polish work visas, so D and Vinod wanted a seemingly independent entity to act as sponsor. D conceived of the idea to seek P’s help by having ERL issue sponsorship letters and set up VPG’s presence in Poland. P agreed out of his friendship with D and not as a matter of business cooperation with Vinod/VPG.

53.VPG therefore used ERL’s name to set up ERL Poland as VPG’s new presence in Poland. D arranged for an account to be opened with the Indian Overseas Bank (“IOB”) under ERL’s name (“ERL Account”) but operated by VPG’s staff Vicky (Victor) Peshwani, and VPG deposited monies in such account to show the Polish authorities. P/ERL signed sponsorship letters prepared by VPG for Polish work visas for VPG’s staff (“ERL Letters”), and the letterheads adopted (a) an email account created by VPG’s staff, (b) MTL’s HH Address, MT’s BCCB Address and/or Maya Textiles’ TWIB Address, and (b) (in 1 draft ERL Letter) PRC telephone/fax numbers. I find it was D who coordinated the ERL Letters by using his contact details so as to avoid reference to Citisonic/VPG. In/about mid-2010, D asked P to sign another ERL letter, but P became concerned over (i) D’s failure to repay P and (ii) D’s disputes with Vinod over their business, and he only signed it on 14 October 2010 when VPG gave written confirmation to indemnify him/ERL from any liability arising from such ERL Letter.

54.The above account, which I accept, clearly showed P assisted VPG at D’s request, and D was not above making up his case to distance himself from P and to shift responsibility to Vinod/VPG.

XIII. MT

55.In/about 2003, D asked Vinod to let his sons take over MT. Vinod agreed on condition that D would (a) reimburse US$200,000 for MT’s operational expenses in 1997-1999 sourced from Citisonic, (b) pay Vinod his 50% share of MT’s accumulated profits for the past 6 years, and (c) pay royalty of HK$10,000 per month. Vinod received a few monthly royalty payments, but they stopped after a while.

XIV. FURTHER REQUEST FOR FINANCIAL ASSISTANCE

56.I find that in 2005-2006 D asked P for further financial assistance. But P did not have ready money at that time, and told D he would lend D money if/when he had funds at his disposal, which, in my view, explained why in due course P granted the Further Loan and 2^nd Further Loan[21] to D (but not to Vinod/VPG). This was supported by 2 emails, ie P’s 15/12/09 Email in reply to “Vinod’s” Disputed Email dated 9 December 2009 that was copied to him, and P’s email to D dated 14 February 2011.

XV. BLOCKED DEPOSIT

57.By UCO’s facility letter dated 21 February 2006, the credit limit of the VPG Facilities increased to HK$30,000,000, and the collateral security included inter alia the HMT Charge and personal guarantee by P “…… to the extent of value of property”. On 23 February 2006, P countersigned his personal guarantee for the VPG Facilities, which UCO required him to re-confirm on an annual basis.

58.In 2006, P moved his family to Shanghai, and was short of money for settling his family there, so he put the TST/HMT Properties up for sale. In August 2007, P was happy with an offer for the HMT Property. UCO agreed to release the HMT Charge for such purpose,and P agreed to retainHK$6,750,000 out of the sale proceeds to secure the VPG Facilities.

59.On 23 August 2007, the HMT Property was sold for HK$10,800,000. On 27 August 2007, the Blocked Deposit (in the joint names of P and his wife but later changed to P’s sole name) was placed under lien with UCO, and the balance of the sale proceeds was released to P. D agreed that other than keeping the Blocked Deposit under lien, UCO dealt with P as the named holder on the interest rate and/or tenor of the deposit. I do not agree the deposit slips were given to and/or kept by the A/C Dept.

XVI. FURTHER LOAN

60.A few days before 27 August 2007, P met D at VPG’s HK Office and Jeet was also present. I accept D asked for and P agreed to grant the Further Loan of HK$1,750,000. D alleged P and Jeet fabricated these allegations since (a) he did not have to borrow money except for certain family occasions, and (b) if the Further Loan was granted to him personally, the cheque for such loan would have been made payable to him.However, I accept it was D who requested for such cheque dated 27 August 2007 to be made payable to VPG because D wanted to use the Further Loan proceeds in VPG.

61.D next claimed the Further Loan was the result of discussion between P and Jeet/VPG (and not D) because he had agreed with Vinod he would retire from VPG, and since mid-2007 he was phasing out of VPG and no longer working at VPG’s HK Office on a regular or day-to-day basis. But for reasons explained in Part XVIII below, I disagree D was phasing out of VPG since 2007.

XVII. VPG’s COMPANY BOOKS/ACCOUNTS

62.Vinod and Jeet said the Blocked Deposit was not recorded in VPG’s books. In my view, the TST Property, HMT Property and/or Blocked Deposit were not “investment” in Citisonic/VPG recorded in their books/accounts as creditor’s loan because they were third party assets for securing the Citisonic/VPG Facilities pursuant to the personal arrangements between P and D.

63.Vinod and Jeet also said (and I accept) the Further Loan was recorded in VPG’s books as director’s loan by D to VPG, which was not an uncommon method for recording other funds D injected into VPG from loans he personally borrowed. Such injection of funds would appear in the audited accounts either as director’s loan or accounts payable unless they were short-term loans repaid during the financial year. None of the entries for “Directors’ Current Account” and “Loan from Director” in VPG’s audited financial statements for 2007-2010 matched the amount of the Further Loan proceeds D injected into VPG, but without the underlying books/spreadsheets Jeet could not tell whether such loan proceeds were recorded as part of the accounts payable.

64.There were also no entries for “sums due from a director” in respect of commission/interest payments made to P because under the Internal Arrangements Citisonic/VPG took up responsibility to pay the financial costs for use of the Citisonic/VPG Facilities, which was recorded in the books as Citisonic’s/VPG’s incurred expenses. I reject D’s suggestion that Jeet was manipulating the accounts, but agree with Mr Chain that VPG’s audited financial statements did not bring the matter much further.

XVIII. D PHASING OUT OF VPG?

65.D’s case  D claimed VPG was doing well in 2007. In July 2007, he told P he was getting old and not in good health, so he agreed with Vinod to phase out of VPG over 2-3 years until Vinod found another investor/partner to replace him. Since mid-2007 D only returned to VPG’s HK Office occasionally to read/answer emails received in the D E-Account.In December 2007, D transferred 25,000 VPG shares to Vinod. After that D kept asking Vinod to let him resign as director, but Vinod kept asking for some more time. D cooperated by remaining as the face of VPG vis-à-vis business contacts. In April 2010, Vinod finally agreed to let D resign as director of VPG, which he did on 20 April 2010. Thereafter, D did not return to VPG’s HK Office, and he no longer had access to the D E-Account.

66.Phasing out?  I do not believe VPG was doing well in 2007 otherwise there would have been no need for D to borrow the Further Loan (and the 2^nd Further Loan[22]) for VPG’s use. I find that by 2007 VPG had cashflow problem, and collection of receivables wasslow mainly due to problems with a customer in Poland called DK Shoes.

67.I also find on balance D did propose to give up his interest in VPG to Vinod in return for Vinod’s surrender of his interest in MT to him. But Vinod refused because of VPG’s cashflow problem[23], and insisted D should pay the sums in paragraph 55(a)-(b) above and repay the monies he had overdrawn from VPG in excess of his entitlements, but pending such payments D and Vinod would carry on as before and as an initial step D would transfer part of his VPG shares to Vinod. This was never fully implemented because D never repaid/paid the aforesaid sums or paid for his share of VPG’s losses.

68.I prefer Vinod’s evidence it was only in late 2009 that D told him he wanted to be out of VPG,[24] and Jeet’s/Vinod’s evidence that D continued to be involved in day‑to‑day management of VPG and to remain in control of its finances until he resigned as VPG’s director in April 2010. I further accept that throughout the years D attended VPG’s HK Office at least 4 days a week and had regular access to the D E-Account, and even after his resignation as director he still liaised with the banks on VPG’s behalf, and he still returned to VPG’s HK Office to, say, draft letters to the banks.[25] Indeed, even D admitted sometimes Jeet would tell him the D E-Account had received some emails (because VPG did not inform others he had resigned/left VPG), and he would attend the HK Office to deal with them.

69.In my view, although D sent email to Vinod (with copy to inter alia Jeet and P) on 1 November 2010 to claim he had been “out of [VPG]” and had not been attending the HK Office since 2007, it was just his poor attempt to distance himself from liability. P’s email dated 9 November 2010 to D made clear inter alia that “[since] last year end only you told me regarding VEE PEE you have resigned, if i knew i never wanted to continue if you are not in a company i only trusted you from the beginning ……” D suggested he might not have received such email sent to the D E-Account, but for reasons explained in paragraphs 13 and 68 above I find he had access to such email account which was kept open even after 20 April 2010.

70.D next claimed P knew he was planning to retire since 2007[26] which was why P often visited D at the HH Address. But according to Jeet, D’s daily routine (even after he resigned from VPG in April 2010) was to attend the HK Office early in the morning for while, go to his office at MTL’s HH Address during the day, and then return to VPG’s HK Office for another hour. I find it unsurprising that P would visit D at the HH Address during the day.

71.MOU  D claimed he and Vinod signed a memorandum of understanding under VPG’s letterhead dated 30 July 2007 (“MOU”):

“	“(M.O.U.)	Aug – 31st
Memo of Understanding		30th July 2007
It is agreed between [Vinod] & [D] (Directors) of [VPG] that here after company’s full power of sales and credits will be handled by [Vinod] and he will take all profits & losses from here onwards.
[D] has volunteered to give up all his shares to [Vinod] and also likes to confirm that until to-day whatever losses if any accured by the company [D] will pay back his share to the company in near future and it is also understand that within 2 to 3 years from today he will be released from all the liabilities and bank’s guarantees and his name will be removed from the directors list of [VPG].
[D] agrees that he will not ask or claim for any royalty what so ever from the company and he also like to transfer all his shares, F.D.R. and property owned by company to [Vinod].
This is all agreed by both party’s without any pressure or threats.

[alleged signature by Vinod]	[signature by D]
[Vinod]	[D]”

72.D claimed (a) he told Jeet what he had agreed with Vinod and asked him to type the MOU, (b) he signed the MOU on 30 July 2007 and returned it to Jeet to arrange for Vinod’s signature when Vinod was next in HK, and (c) about 2-3 months later the original MOU also signed by Vinod was returned to D. But on balance and bearing in mind the nature of P’s allegation, I find Jeet and/or Vinod had never seen the MOU, and the business arrangements mentioned therein never took place.

73.First, D agreed the MOU was important to show he started to phase out of VPG since 2007, but he never disclosed the original despite request by P’s solicitors. He claimed to have kept the original MOU in his desk file, and revealed for the first time in oral evidence he came across it one day but it was too late to show his solicitors. I reject such unreliable embellishment. Even if D had found the original MOU in the course of trial (but he did not say when exactly he found it), he could have told his solicitors as part of his continuing obligation to give discovery.

74.Secondly, Vinod said even though the MOU provided D was not to share any profits of VPG, D in fact took US$100,000 from VPG after 2007.[27] I am unconvinced by D’s assertion that it was legitimate profit‑sharing for 2006/2007, especially when VPG’s relevant audited financial statements showed its profits were retained rather than distributed.

75.Thirdly, Vinod and Jeet also complained D continued to draw salary from VPG until late 2009 or even April 2010, but when it was pointed out that “Vinod’s” Disputed Email to D dated 9 November 2009 referred to October 2008, they fairly accepted they might have been mistaken about the date. But on any account D withdrew HK$40,000/month even after the alleged MOU because D admitted such withdrawals were his mortgage payments “on the property which was kept in bank as security”. However, I find (as Vinod said) D only put up his property when he had no cash to repay monies he took from VPG and it was questionable whether he should have used VPG’s funds to pay for his own liability for mortgage payments. Be that as it may, it was strange there was no mention of the MOU (which on D’s case must have been a complete answer) in such email. Such silence bolstered P’s case that the MOU never existed.

76.Fourthly, although D agreed there was no reason to give a copy of the MOU being an internal document to P, his statement evidence alleged he gave P a copy. I prefer P’s evidence that he had never seen the MOU or been informed of the matters therein.

77.Transfer of VPG Shares  In December 2007, D transferred 25,000 VPG shares to Vinod. Vinod disagreed he received such shares free of charge because D was to phase out and retire from VPG. In my view, such transfer occurred for reasons set out in paragraph 67 above and not due to the MOU.

78.Further investment in VPG  During 2007-2009, D still put some more money into VPG (which contradicted D’s case of phasing out of VPG since 2007) as evident from D’s email to P dated 8 August 2010. D admitted he lent some money to VPG (because VPG was going through financial crisis and Vinod requested for short-term financial help) upon assurance he would be repaid, but in the end VPG did not repay and D submitted proof of debt to VPG’s liquidators. I prefer P’s case that VPG had cashflow problem in 2007 that required the Further Loan (and the 2^nd Further Loan[28]), and the cashflow problem worsened in 2008-2009. I find that during that period D lent more money to VPG in discharge of D’s Duty to financially support VPG.

XIX. NAME-SWITCH FOR BLOCKED DEPOSIT

79.As explained in paragraph 57 above, UCO required P to sign a yearly “guarantee” to re-confirm his support of the Citisonic/VPG Facilities by the TST/HMT Properties and/or Blocked Deposit. The staff of Citisonic/VPG would forward such “guarantees” to P for his signature.

80.In/about March/April 2008, UCO approved VPG’s request for increase in the credit limit of the VPG Facilities to HK$33,000,000, but asked P to sign a “guarantee” which in my view was P’s broad reference to the draft standard form Letter of Lien and Security Over Deposit prepared in P’s name. Clause 2 of the draft Security Over Deposit provided that the depositor would owe “all-monies” liability to UCO, and UCO would have right of recourse to the Blocked Deposit. P did not want to sign such “guarantee”. I accept P suggested (and D agreed) that since he granted P’s Loan to D personally, the Blocked Deposit should be transferred to D’s name for D to handle the “guarantee”, but D would have to sign a written acknowledgment of P’s Loan in his favour.

81.Such requirement for written acknowledgment was borne out by P’s 15/12/09 Email in reply to “Vinod’s” Disputed Email dated 9 December 2009. Mr Chain submitted the words P used in the 15/12/09 Email suggested Vinod (effectively Citisonic/VPG) was responsible for repaying the loan. I have considered various parts of such email in this Judgment, and I am not persuaded that on reading such email as a whole P admitted the loan arrangements were with Citisonic/VPG. Indeed, in the same email, P carefully said “HK$1,750,000 [ie the Further Loan] + 7% ANNUM INTEREST WITH [D] KEPT SEPARATELY SINCE AUG 2007. ……” (my emphasis)

82.D denied he knew/authorised the name-switch from P to D as holder of the Blocked Deposit (“Name-switch”), and claimed (a) he had no interest in the Name-switch as he was phasing out of VPG since 2007, (b) P unilaterally gave instructions to UCO, and (c) it was too late when P told him of the Name-switch in/about November 2009. I disagree since D had not phased out of VPG in 2007/2008, and D and VPG’s staff were involved in making the Name-switch happen.

83.In fact, D instructed VPG’s staff to prepare a letter on P’s behalf to request UCO to effect the Name‑switch, and P amended and signed such draft received via email on 15 April 2008. The signed letter dated 15 April 2008 was sent to UCO. Then P, D and Jeet went to UCO where D signed documents for the Name-switch and a “guarantee” over the Blocked Deposit held under D’s name (which “guarantee” P did not want to sign). In my view, it was D who coordinated and arranged for VPG to prepare the draft letter to UCO, which explained why there was no need to copy the email to him. But D delayed in giving P the promised written acknowledgment of P’s Loan.

84.It was inconceivable for UCO to have allowed the Name-switch without D’s acknowledgment of UCO’s right to have recourse to the Blocked Deposit under his name upon event of default. This was the effect of the draft standard form Letter of Lien and Security Over Deposit which P was supposed to sign but for the Name-switch. The fact D had signed a personal guarantee in favour of UCO was quite different from D as depositor allowing UCO to have recourse to an asset (ie the deposit) held under his name to satisfy the indebtedness under the VPG Facilities.

85.After the Name-switch, UCO issued a fixed deposit slip in the name of “[D], TST. PO Box 9xxxx Kowloon” (ie post-office box of D’s family). I accept UCO regularly sent renewal fixed deposit slips to D (same as UCO previously sent to P). UCO could not have taken instructions from P on, say, the tenor and/or interest rate for the Blocked Deposit as it was no longer held under his name. D’s suggestion that it was UCO’s policy never to send any paper (including bank statements) by mail, and that the A/C Dept would collect and keep such papers and fixed deposit slips was, in my view, a poor attempt to distance himself from liability.

86.P’s above account was borne out by some emails. First, on 15 August 2008, P sent email to D (with copy to Jeet) that indicated he had chased D for written confirmation of P’s Loan:

“The commercial property price from the highest if it is down 30%

and it is still above HK$7 million

……

All the fixed deposits HK$6,750,000 & HK$ 1,750,000 are under your name and i don’t have in writing until now, + can u do needful

I don’t have Bank interest statement on above fixed deposits.”

(my emphasis)

D knew of such email because on the following day D replied by email inter alia that “AS YOU AGREED PROPERTY IN DOWN IN HONG-KONG BY ATLEAST 30% SO IF YOUR [TST PROPERTY] IS 7.00 ML. ……”

87.Secondly, in D’s email to P dated 27 July 2010 sent from the D E-Account, it was stated inter alia that:

“I like to clarify with you that do you remember you had kept a fixed deposit with [UCO] under [the VPG Facilities], but due to avoiding of signing documents you asked me to temporary switch that fixed deposit under my personal name to be kept with the same bank I agreed to help you then but now since I have resigned from the company I like that deposit to be re‑switched back to your name as soon as possible (AS IT WAS KEPT ORIGINAL) I can not take any more responsibility.” (my emphasis)

It was plain D knew of the Name-switch, which supported P’s case of personal loan arrangements between P and D. Mr Chain suggested D could have held the Blocked Deposit under lien to UCO as VPG’s director, but this was not P’s or D’s case. Indeed, Jeet confirmed the Blocked Deposit never appeared in VPG’s books.

88.D claimed he could not unilaterally reverse the Name-switch because P refused to sign any “guarantee”. But interestingly, in reply to P’s emails dated 7 and 9 October 2009 (with copy to Jeet) that P’s bank HSB threatened collection action against P due to delay by UCO “in Releasing our fixed Deposit”, D’s email dated 9 October 2009 (with copy to Jeet) asked P to tell his bank to prepare papers and “our bank’s lawyer will contact them for releasing it” (my emphasis). D did not explain why he would make arrangements for release of the Blocked Deposit (being the only known fixed deposit in respect of P’s monies with UCO) and why ultimately he did not effect such release. I am persuaded D must have liaised with UCO and would not have been ignorant of the Name-switch. D even went further to suggest P could unilaterally reverse the Name-switch because UCO knew the deposit was P’s. I regard this as another specious attempt by D distance himself from liability for the Blocked Deposit. I cannot see how P could do so when he was not the named holder of the deposit and not involved in VPG.

89.Finally, the Blocked Deposit was partially reduced to HK$5,000,000 and further reduced to HK$3,000,000. By now, given VPG’s insolvency, UCO would have had recourse to the whole of such collateral security. In my view, since the Blocked Deposit was held in D’s name, neither Jeet nor P could have given instructions for its disposal, which meant either D as named holder of the deposit gave such instructions or UCO availed itself of such deposit monies based on security documents given by D to UCO.

XX. INTEREST REPLACING COMMISSION

90.By 2009, VPG’s cashflow problem worsened, and Vinod learned from Jeet that P had received about HK$5,000,000 commission (ie Citisonic’s/VPG’s financial costs) over the years, and he told D it should be stopped. There was a meeting in 2009 attended by P, D, Vinod and Jeet, and it was eventually agreed that after March 2009 D would pay P interest at a flat rate of 8% pa on P’s Loan (HK$8,500,000). I accept D told Vinod he would have difficulty in paying P interest, and since D personally borrowed money from P for VPG’s use, Vinod agreed VPG would take care of the interest payments under the Internal Arrangements. So VPG paid interest to P until sometime in late 2009, and thereafter D made some payments to P[29] presumably for interest but P appropriated them as repayment of the Albert Loan.[30]

XXI. ALBERT LOAN

91.P’s demands  I accept Jeet’s evidence that D took personal loans from Albert/Hiroo and used some of such loans for VPG, but D eventually delayed in repaying Albert/Hiroo, who were not happy with D’s credit. I further acceptD tried to borrow more money from Albert/Hiroo, but they refused because D still owed them money, and if D wanted to borrow more money he would have to secure a personal guarantor for the loan.

92.In mid-2009, P needed monies for Roshan’s tuition fees, his personal expenses and monies for his elder daughter’s wedding, so he chased D for (a) repayment of P’s Loan with interest, and (b) the promised written acknowledgment. VPG was in financial difficulties, and D made some reluctant partial repayments. In mid-June 2009, P asked D for loan repayment of HK$1,000,000, but D indicted his monies were stuck in Poland. On 24 June 2009, P emailed Bharti’s address in Pune to Jeet.[31] In late June/early July 2009, P emailed to ask D to deal with the requested sum of HK$1,000,000 as follows: (a) INR4,000,000 to be sent by telegraphic transfer to P’s account with UCO in Pune, (b) INR500,000 to be sent by bank draft or cashier order to Bharti in Pune, (c) INR500,000 to be sent by telegraphic transfer for booking hotel in Goa, India for his elder daughter’s wedding (“Hotel Booking”) as per “details i had sent u and [Jeet] before”, and (d) the balance to be deposited in ERL’s account with HSB. D replied by email to say “our money is stuck in Poland with buyers”, so P should arrange his own funds but “[deposit] for Hotel [INR500,000] I will manage”.

93.Albert Loan  I find D asked P to borrow money from Albert directly, but P told D it was silly/shameful for him to do so when D owed him money. D explained he had exhausted his credit with Albert who would not lend him more money. I further find D promised P that if monies could be borrowed from Albert, he would repay Albert within a short period of time (ie within 45-60 days), and D also suggested asking Sammy to give a personal guarantee for such loan from Albert. P was in need of money, so in/about mid-July 2009 he telephoned to request Sammy to ask Albert for a loan on D’s behalf to be paid into D’s account. He explained D had no more credit with Albert, and a personal guarantee from Sammy might be required. Sammy agreed to talk to Albert/Hiroo which he would not have done but for P’s situation. A few days later, Sammy met Albert/Hiroo who agreed to lend HK$1,000,000 to be repaid by D on condition that Sammy would be responsible for such repayment if D defaulted (“Albert Loan”). Plainly, D authorised P/Sammy to negotiate with Albert/Hiroo for a loan of HK$1,000,000 on the basis D would make repayment in/about 45-60 days. In my view, D knew he was the real borrower of the Albert Loan to be used as partial repayment of P’s Loan, and Sammy facilitated this by becoming a personal guarantor without which D could no longer borrow money from Albert/Hiroo.

94.Sammy Guarantee  On 20 July 2009, the Albert Loan was finalised, and Sammy signed a personal guarantee (prepared by Albert/Hiroo) to guarantee payment of HK$1,000,000 “given to [D] which will be returned in 60 days” (“Sammy Guarantee”), and such guarantee was countersigned by Albert/Hiroo. There was no reason for Albert/Hiroo to countersign the Sammy Guarantee if they had never granted the Albert Loan to D as stated therein.

95.Albert/Hiroo always required the borrower to issue a post-dated cheque as promise for repayment before drawdown of the loan, and it was unsurprising they would require a written guarantee from the guarantor who would not be giving any post-dated cheque. Sammy frankly agreed he felt Albert/Hiroo relied more on the Sammy Guarantee than the identity of the borrower, which was also unsurprising since D had no more credit with Albert/Hiroo who required him to put forward a creditworthy personal guarantor for any further loan.

96.Cheque  Albert/Hiroo arranged for the Albert Loan proceeds to be released through Nanik in HK. Sammy learnt from Albert’s staff that D delivered to SKII a cheque for HK$1,000,000 drawn on D’s bank account with IOB post-dated to 20 September 2009 (“Cheque”) as promise of repayment. But D said the Cheque was not for the Albert Loan. He claimed at about that time he needed money personally for his son’s marriage, so he issued the Cheque to ask Albert for a personal loan, but Albert turned down his request and the Cheque was returned to him.

97.The faxed copy Cheque that P obtained from Hiroo had a fax header date of 20 July 2009 which, in my view, showed the Cheque was issued on 20 July 2009 (which matched the date of the Albert Loan and Sammy Guarantee) and post-dated to 20 September 2009. I find Albert/Hiroo needed the Cheque before drawdown of the Albert Loan as promise of repayment, and not for D’s alleged application for a personal loan from Albert. Indeed, it would be quite impossible to provide a post-dated cheque for the latter purpose when Albert had not yet agreed to grant any loan and/or worked out the tenor of any such loan. I also do not agree with D’s oral testimony that the Sammy Guarantee (disclosed early in the proceedings) was fabricated to match the Cheque (obtained from Hiroo shortly before the trial) by coordinating the repayment period in the Sammy Guarantee dated 20 July 2009 (for 60 days) with the Cheque dated 20 September 2009 (post-dated for 62 days).

98.Loan proceeds  I accept Nanik’s company transferred the Albert Loan proceeds into D’s (and not VPG’s) bank account with IOB in HK on the same or following day.[32] But D claimed the loan proceeds  were received by VPG on P’s behalf because (a) P required urgent INR transfers which could only be done by an Indian bank, (b) P only controlled ERL’s bank account with HSB, and (c) it was impractical for P (a non-resident in HK) to open a bank account with an Indian bank. I reject D’s contentions. ERL did maintain a bank account with IOB as evidenced by an application under IOB’s letterhead dated 9 November 2009 by ERL as applicant to remit US$35,000 to ERL Shanghai and to debit charges to its HK$ bank account.

99.Emails  On 20 and 21 July 2009, P emailed D (which email I find D did receive) to confirm the Albert Loan would be deposited “in your account [IOB] and than u send me money as bellow information”, and to remind D that such loan should be repaid within 45-60 days. P reiterated the disposal of the Albert Loan proceeds in the manner set out in paragraph 92(a)-(d) above and gave details of his account in Pune. At that time, P still asked for total remittance of INR5,000,000.

100.D suggested there were 2 remittances of INR500,000 to Bharti. The Advice for Outward Foreign Cheque dated 22 July 2009 showed D bought a bank draft for INR500,000 (which would convert into HK$80,400 at the exchange rate of 0.160800%), which D agreed was immediately sent to Bharti. D claimed (and P denied) there was another remittance to Bharti by VPG of INR500,000 allegedly out of the Albert Loan proceeds as recorded in Jeet’s email to P and D dated 11 August 2009 in paragraph 103 below.

101.On 23 July 2009, P by email to D confirmed receipt of the transfer of INR4,500,000 (not INR4,000,000 as earlier requested), gave Bharti’s address in Pune, and asked that the balance of the Albert Loan proceeds be deposited in ERL’s account with HSB. Again, P referred to a total remittance of INR5,000,000, but he no longer asked for payment to the hotel in Goa. P explained D did not effect the transfer for the Hotel Booking on time for the wedding scheduled for 31 July 2009, so it was separately arranged, which was consistent with the increase in remittance from INR4,000,000 to INR4,500,000 to P’s account with UCO in Pune.

102.I find D received the Albert Loan proceeds on 20 July 2009 or the following day,[33] which was consistent with the fact that by the time of P’s email of 23 July 2009 INR4,500,000 had been remitted to P’s account with UCO in Pune, which sum I accept came from the Albert Loan proceeds. Hence, D must have immediately sent the bank draft he bought to Bharti’s address given in P’s email to Jeet dated 24 June 2009 (which was different from Bharti’s address given in P’s email dated 23 July 2009), so there must have been communications between D and Jeet in relation to Bharti’s address. In my view, both Jeet and D were referring to the same and only bank draft of INR500,000 for Bharti. When confronted with the above analysis, D tried to explain this away by saying Jeet failed to make remittance to Bharti on time, so he sent the bank draft to Bharti after being told by P to get her address from Jeet, and “maybe [P] has changed his mind next day to be send draft to another address, which was already sent on that address”. But at the same time Jeetalso claimed he had no idea about VPG’s remittance because he had already phased out of VPG. I have found D had not phased out of VPG at that time, and I reject D’s explanations.

103.It transpired D only deposited HK$60,000 into ERL’s bank account with HSB on 10 August 2009. P immediately chased D for the balance of the Albert Loan proceeds, and on 11 August 2009 D promised to send “detailed account of t.t and draft and deposit. Balance amount will be deposited by [VPG] to-day”. I accept D informed Jeet of his utilisation of the Albert Loan proceeds to P or P’s order, and asked Jeet to prepare the “detailed account” which Jeet sent to P and D on the same day:

“Please find below the details of 1MLn. HKD

AMOUNT RECD. FROM ALBERT HKD 965,000.00

LESS: HKD723,775 (TT 4.5 MLN. IRS @ 0.16084)

LESS: HKD 80,450.00 (DRAFT 0.5MLN. IRS @ 0.1609)

LESS: HKD 60,000 DEPOSITED IN [ERL] ON 10.08.2009

BALANCE WITH US HKD 100,775.00 WILL BE DEPOSITED IN [ERL] IN A DAY OR TWO.”

For the payment to Bharti, Jeet said the minor difference in the exchange rate of 0.160800% in the Advice for Outward Foreign Cheque dated 22 July 2009 and the exchange rate of 0.1609% in this email (equivalent to about HK$50) might represent bank charge or typing error, but he confirmed (and I accept) they both referred to the same and only bank draft payable to Bharti in the sum of INR500,000 sent by D and not VPG.

104.On 9 September 2009, P sent email to D by saying “As per your saying we had told to Albert to return him HK$1,000,000 within 45 days or maximum 60 days, and we have to give him the cheque asap …… you just called me and inform me when i come to Hk and give cheque to Mr Albert.” (my emphasis) One should not read too much into the word “we” because P/Sammy told Albert the loan would be repaid within 45-60 days “as per your saying” (ie at D’s instruction/request). In my view, P was anxious for D’s early repayment of the Albert Loan because of Sammy’s liability as guarantor, so he proposed to collect D’s repayment cheque when he returned to HK after his elder daughter’s wedding to forward it to Albert. He just wanted to make sure there would be a cheque in hand. This, in my view, did not mean P was the borrower of the Albert Loan.

105.The above emails made clear it was D (and not P or Sammy) who was primarily responsible for repaying the Albert Loan, and Sammy approached Albert on the basis of D’s promise that he would repay the Albert Loan in/about 45‑60 days. I also find the Albert Loan proceeds were part payment of P’s Loan that D personally owed to P.

106.Enforcing Sammy Guarantee  Interest accrued because D did not repay the Albert Loan, and D urged Albert/Hiroo not to present the Cheque for payment. I accept there was little point in asking Albert/Hiroo to cash the Cheque when D could not even pay interest on time. Albert/Hiroo decided to enforce the Sammy Guarantee, and in December 2009 Hiroo deducted the outstanding loan and interest from the fixed deposit of Sammy’s wife placed with Albert’s company. Hiroo told Sammy D asked Albert’s office for extension of time to repay the Albert Loan by instalments, and Hiroo agreed to Sammy’s request not to tell D of Sammy’s payment (to maintain pressure on D to repay) and to credit the account of Sammy’s wife upon receiving repayment from D.

107.Albert Loan Fax  For further time extension as from December 2009 to repay the Albert Loan, more interest was due as evident from the following (“Albert Loan Fax”):

		“JAN 18th
	[D]
	STATEMENT OF ACCOUNT (SAMMY TULSIANI)

DEC.01 EXT. JUNE 30,2010	211DAYS	HK$250,000.00	HK$30,770.83
DEC.01 EXT.JULY 15,2010	226DAYS	HK$250,000.00	HK$32,958.33
DEC.01 EXT. JULY 31,2010	242DAYS	HK$250,000.00	HK$35,291.66
DEC.01 EXT. AUG. 15,2010	257DAYS	HK$250,000.00	HK$37,479.16

TOTAL VIYAJ HK$136,499.98

VVVVVVVVVVVVVVVVVVVV

	To,
	PETER LALWANI         18/1/2010
	――――――――――――→

		16-APR-2010
Dear MR. Hiroo,
[P] is in in my office we finally have negotiated our difference of Business Contracts and as I have mentioned to you earlier that One Million Borrowed by Mr Sammy Tulsiani we are willing to take Full responsibility of this Loan and we are ready to issue you checks as per mentioned above. Kindly work out on them so we can pay uou principal [illegible] checks + Interest at earliest. Thank You.
	Peter”
(italicised words in manuscript form)

108.I find Albert/Hiroo gave the printed part of the Albert Loan Fax (“Printed Page”) that set out the interest payable for extension of time for instalment repayments of the Albert Loan. P later learnt from Albert D did not repay according to the scheduled extended deadlines, but tried to convince Albert that VPG would repay by writing “16-APR-2010” and the passage at the bottom of the Albert Loan Fax addressed to Hiroo with his signature. But D’s statement therein was incorrect because Sammy was the guarantor and not borrower of the Albert Loan, and P was not concerned with D’s “lookout” in arranging repayment from VPG. In the end, Albert did not agree to D’s proposal.

109.D said in re-examination he had not seen the Printed Page, but said in cross-examination the Printed Page was sent to the A/C Dept because VPG borrowed from Albert/Hiroo, and when VPG was not able to pay on time or VPG’s cheques bounced VPG’s A/C Dept took care of the time extension upon payment of interest as specified in the Printed Page. D further claimed someone tampered with the Printed Page by making the 3 handwritten annotations “JAN 18^th”, “(SAMMY TULSIANI)” and “To, Peter Lalwani 18/1/2010”. D said the first two were in Jeet’s handwriting, but could not explain why Jeet would so annotate the Printed Page.

110.D went further to suggest he wrote the bottom passage (with the date of 16 April 2010 and his signature) on plain paper, and someone manipulated it with the Printed Page to make them appear as a single page of the Albert Loan Fax which he had not seen until trial. But this contradicted his statement evidence that (a) in January 2010, at P’s request, he was willing to contact Hiroo to transfer responsibility for the Albert Loan from P (as original borrower) to VPG, (b) P typed D’s name above “statement of account” on the Albert Loan Fax to put pressure on D or VPG to take up responsibility for the Albert Loan, and (c) D wrote “(SAMMY TULSIANI)” because at that time P led him to believe Sammy was the borrower.

111.In my view, the Albert Loan Fax clearly showed Albert/Hiroo gave extension of time for D to repay the Albert Loan even though they were about to enforce or had just enforced the Sammy Guarantee, which sat well with P’s/Sammy’s evidence that Albert/Hiroo were helping them recover repayment of the Albert Loan from D. D’s evidence on the Albert Loan Fax was wholly inconsistent, and demonstrated he was an unreliable witness who would say whatever he wished to avoid liability.

112.Repaying Sammy  By mid-2010, D still had not repaid the Albert Loan to Albert/Hiroo. P later informed D Sammy had repaid the Albert Loan. On 9 November 2010, P sent email to D to chase for repayment of the Albert Loan “purely upon your request from Mr. Albert you said that he will not give you the loan that reason you wanted my brother to borrow and you will pay back to Mr. Albert in 2 months or may be early in a 1 month” (my emphasis). Mr Chain suggested this showed P (via Sammy) was the borrower of the Albert Loan. But in my view, the account in the above email was consistent with P’s case, ie that D initiated the request for the Albert Loan which was made to Albert/Hiroo via Sammy.

113.On 11 February 2011, P sent a Disputed Email to “Vinod” (with copy to D) saying “ACCORDING TO [D] SUGGESTION [SAMMY] TAKEN MONEY FROM [ALBERT] HK$1,000,000.00 IN JUNE 2009[34] FOR [P]” (my emphasis), and demanding for repayment. In my view, this email when considered against the relevant factual matrix meant Albert/Hiroo granted the Albert Loan at D’s request made via Sammy in order to repay P, so it was D who was to repay Albert. This was made clear in P’s email to D dated 14 February 2011, ie “…… [D] WILL GIVE IT TO [ALBERT] BACK HK$1,000,000 + INTEREST IN MAXIMUM 2 MONTHS TIME MAY BE OR IN ONE MONTH ……”

114.On 8 November 2011, P paid Sammy a sum of about HK$1,198,190. P informed Sammy most of the money came from D and he topped up some to cover the additional interest because he was sorry for getting Sammy involved.

XXII. LOAN REPAYMENTS

115.1997-1999  P did not dispute the breakdown of gross commission payable, deductions to be made, and net commission payable to P from August 1997 to July 1999 prepared by the A/C Dept. In my view, this was consistent with the fact that D asked the A/C Dept to record on his behalf commission/repayments made to P.

116.Settling accounts  D claimed that because he was phasing out of VPG since mid-2007, he had not seen P’s email dated 15 August 2008 to D (with copy to Jeet) that said “for very long we have not done the accounts and when Vinod is coming to settle all the money accounts. 2007 to 2008 I have still not received any accounts”, and he assumed the A/C Dept regularly settled accounts with P. I reject such evidence as I have found D did not phase out of VPG in 2007-2008, and I further find D knew P was chasing him (and not just Jeet) for settlement of accounts which had not been done for a long time.

117.Emails  On 16 June 2009, D sent email to P (“16/6/09 Email”) which stated inter alia that:

“I HAVE SEEN YOUR ACOUNTS AND I SAW YOU HAVE TAKEN ALMOST HK$800,000 EARLIER LAST YEAR THEN HK$300,000 AND LAST WEEK WE HAVE GIVEN HK$600,000 AND ANOTHER HK$100,000 WILL BE DEPOSITED THIS WEEK SO OUT OF UOUR 8.5 ML. YOU ARE ALREADY HAVE TAKEN OUT 2.00 ML. BALANCE IS ONLY 6.5 ML AND NOW YOU ARE ASKING FOR ANOTHER 1.3M1. ……”

On 18 June 2009, P sent email to D to say inter alia that “I NEED THE MONEY SOON AT LEAST ONE MILLION MORE ……” Such request for at least HK$1,000,000 was repeated in P’s email dated 12 July 2009 to D. These emails were sent before the Albert Loan.

118.By the 15/12/09 Email, P replied to “Vinod’s” Disputed Email dated 9 December 2009 inter alia that: “SINCE AUGUST 2007, KEPT CASH IN [UCO] AND YOU DIDN’T COME FORWARD TILL NOW NOV 2009 TO CLEAR THE PICTURE ABOUT THE CASH-KEEPING DIFFERENCE PENDING”. As seen below, I find that in 2008-2009 P received various payments from D or on behalf of D,and in November 2009 P and D settled their accounts of commission/interest and loan repayments.

119.By his email dated 20 January 2011 to D, Jeet set out a table of payments made to P from 16 January 2008 to 31 January 2010, extracts of which were set out below:

GROUP A

GROUP B

GROUP C

GROUP D

For convenience, the above table of payments and the above payments are referred to as “Table I” and “Groups A, B, C and D Payments” below.

120.In mid-2011, D asked Jeet how much VPG owed the banks and how much had been paid to P. Jeet replied by email dated 13 July 2011 to D (“13/7/11 Email”) inter alia that:

“Re: [P]

Commission paid from August-1997 till March-2009 is HJD 5,181,464.15

+ below amounts extra

Apart from the above, you have paid HKD 20k monthly + school fees. Some amount paid by you, i have already taken in the above statement, except School fees and monthly HKD 20k”

For convenience, the above table of payments is referred to as “Table II” below. By that time the Blocked Deposit was reduced to HK$5,000,000 as a result of repayment for some of the VPG Facilities. In respect of P, a total sum of HK$2,820,000 was paid to P from April to December 2009 together with extra payments made by D (details of which had not been given to Jeet for record-keeping). D claimed these extra sums were part of D’s Loan, which relate to D’s counterclaim considered below.

121.The references to “Loan from CSL” in Tables I and II were for principal repayments of loans from P. D believed the average commission payable to P would be around HK$450,000 ‑ HK$500,000 a year, and he once had a discussion with P who told him “I’m making around 50,000 in-between – 40 to 50 thousand a month”.

122.D’s case  D claimed Tables I and II sat well with his account of payments in the 16/6/09 Email and contradicted the 2^nd Confirmation (which D claimed was fabricated). D’s contentions ran as follows:

(a) The sum of HK$800,000 in the 16/6/09 Email was the Group A Payments (HK$802,000), the sum of HK$300,000 was the 3 HK$100,000 payments under the Group B Payments (HK$300,000), the sum of HK$600,000 was the remaining payment under the Group B Payments (HK$600,000), and the sum of HK$100,000 was the Group C Payments (HK$100,000).

(b) The 2^nd Confirmation referred to 2 repayments of HK$1,000,000 each, one between May and June 2009 and the other between the 2^nd and 3^rd week of July 2009.

(c) On 3 August 2009, Jeet emailed P to confirm the Groups B and C Payments constituted the “first” HK$1,000,000 loan repayment. The bulk of such payments made in May to early June 2009 matched the 1^st loan repayment of HK$1,000,000 in the 2^nd Confirmation.

(d) But taking into account the Group A Payments of HK$802,000, a total sum of HK$1,802,000 had been repaid to P. Apart from a discrepancy between such total sum of HK$1,802,000 and the sum of HK$2,000,000 in the 16/6/09 Email, the outstanding principal was about HK$6,500,000.

(e) But if (as P suggested) D borrowed the Albert Loan on 20 July 2009 for loan repayment to P, the total loan repayments would be HK$2,802,000 instead of HK$2,000,000 mentioned in the 2^nd Confirmation.

123.Findings  There was no dispute P received the payments in Tables I and II. But P’s answer was two-fold. First, whilst P had no essential quarrel that the Groups B and C Payments and the Albert Loan proceeds were the 2 loan repayments of HK$1,000,000 each under the 2^nd Confirmation, he took issue over the Group A Payments, the bulk of which he said was for repayment of a short-term loan of HK$1,700,000 that P granted to D in September 2007 (“2^nd Further Loan”). When the HMT Property was sold, the sale proceeds were partly used for the Blocked Deposit and Further Loan, and D intended to reserve the bulk of the remaining sum of about HK$2,000,000 to pay for a property to be purchased in Shanghai. But at D’s request, P lent the 2^nd Further Loan to D on the understanding it would be repaid in a few months with interest for P to complete the purchase of his Shanghai property. Jeet also confirmed P gave D the 2^nd Further Loan which D paid into VPG for VPG’s use, and it was repaid by VPG on D’s behalf. This was not dealt with in P’s or Jeet’s statement evidence because the 2^nd Further Loan had been repaid. P was sure the payment of HK$500,000 on 16 January 2008 under the Group A Payments was for repayment of the 2^nd Further Loan. Mr Chain submitted the 2^nd Further Loan was fabricated.

124.In my view, the fact that the 2^nd Further Loan, which had been repaid and therefore irrelevant to the present dispute, was not mentioned in P’s statement evidence did not mean it was fabricated. P’s evidence in the above paragraph was consistent with his having about HK$2,000,000 cash from the remaining sale proceeds of the HMT Property in/about September 2007. According to P’s email to D dated 14 February 2011, P said inter alia that:

“SOON AFTER FEW MONTHS SINCE I PURCHASED SHANGHAI PROPERTY MID NOV 2007, I HAD TO MAKE A FINAL PROPERTY PAYMENT TO SIGN DEEDS IN MIS FEB 2008

……

I WAS WONDERING IF I WOULD NOT HAVE PRE ARRANGED BANK FINANCE IN SHANGHAI FOR FINAL PROPERTY DEEDS PAYMENTS BY MID FEB 2008, THAN MY ALL ADVANCE PAID PAYMENTS WOULD HAD BEEN FORFEITED, BECAUSE I DIDN’T RECEIVED MONEY FROM YOU OR MR VINOD BY END JAN 2008 AS I HAD REQUESTED. ……”

Further, in “Vinod’s” Disputed Email to P dated 21 January 2010 (with copy to D) which, in my view, was authored by D or made upon his instructions, it was said that:

“Ramesh bhau we have been very honest with you, since the matter with [UCO] was pending and you wanted money for your shanghai house, some how we have managed to arrange HKD1.25mln, for you and when you wanted money for your daughet marriage we had arranged HKD1.00Mln. from our side and HKD1.00 Mln. from Manila, you know how much interest they are charging, to be very honest with you the amount HKD2.00 Mln. which we paid you was also loaned from Manila on heavy interest which we had not even mentioned to you so far. Just to help you out of your requirement, we have taken the loan from Manila, but we never said no to you.”

From these emails and the Group A Payments, it was clear that:

(a) P purchased his Shanghai property in mid-November 2007, and made several part payments pending completion of the purchase in mid-February 2008. P expected certain loan repayment from D by end of January 2010 to enable him to complete such purchase.

(b) D/VPG were to repay HK$1,250,000 to P “for [P’s] shanghai house”, but D/VPG did not make full payment by end of January 2008, so P had to resort to pre-arranged bank finance for such purpose.

(c) Only HK$500,000 out of the Group A Payments was paid before end of January 2008, and the other Group A Payments were made from March to July 2008.

In my view, such emails were consistent with P’s case. Then in P’s email dated 15 August 2008 to D (with copy to Jeet), P stated inter alia that:

“I have taken from my brother several time so that I will return to him asap after I get transfer the [TST property] and get back cash to settle other out standings since i purchased property in shanghai I had only HK$17,000,000 extra kept with you, for the shortfall i had told you at the time of purchase of November 2007. ……

All the fixed deposits HK$6,750,000 & HK$1,750,000 are under your name ……”

Two matters are of note in this email. First, P had “kept [some money] with [D]” at/about the time he purchased his Shanghai property in November 2007. Secondly, this money that P kept with D was separate and different from the Blocked Deposit and Further Loan. Thirdly, although the amount referred to was HK$17,000,000 and not HK$1,700,000, the sum of HK$17,000.000 must have been an error because there was never such high level of funds as between P and D (which if correct would have obviated D’s complaints of lack of funds and cashflow problem), and the only known cash P had right about that time was the remaining HMT Property sale proceeds of about HK$2,000,000. Be that as it may, at least what was clear from the contemporaneous communications was that P granted a loan to D (quite apart from the Blocked Deposit and Further Loan) that was expected to be repaid by the end of January 2008, but in fact was not fully repaid. In my view, P’s evidence in this respect (when viewed against the above communications, Jeet’s corroboration and P’s/Jeet’s overall credibility) had a ring of truth, and I believe him. It was also consistent with Jeet’s email dated 3 August 2009 and the 2^nd Confirmation that regarded the Groups B and C Payments (and not the Group A Payments) as the “first” HK$1,000,000 loan repayment.

125.Secondly, P said the amounts in Tables I and II were internal calculations by Jeet, but the accounts were settled in November 2009 by taking into account such amounts and working out the correct figures. It turned out there was minimal difference between the finalised commission/interest and the advance payments, so P and D did not have to pay any sum to each other. As for the principal loan, the settled accounts concluded that HK$6,500,000 still outstanding, and the 2^nd Confirmation was signed on 28 November 2009 shortly after the accounts were done. I agree with the above, and find it unnecessary to go further into the accounts for commission/interest.

XXIII. 1^st CONFIRMATION

126.P in his email to D dated 9 September 2009 stated inter alia that “[we] should have meeting soon regarding how I should carry on with Mr Vinod ……”, which showed, according to Mr Chain, P had a relationship with Vinod (effectively VPG). But I find P had chased for loan repayment for some time, but D kept telling P his monies were stuck in Poland.[35] I find D pressed P to directly liaise with Vinod to urge for release of the monies stuck in Poland, so P (who was unfamiliar with Vinod) wanted to know how to speak with and put pressure on Vinod. This, in my view, was what P meant by asking D how “[he] should carry on with [Vinod]”.

127.I accept P chased D for written acknowledgment of P’s Loan, and on 5 November 2009, he asked P to sign a home-made written acknowledgment becausehe was getting old and had some health issues so his “family should be secure” (“1^st Confirmation”):

“Deposit was kept in Aug-2007

I, [D] HOLDING HKS ID NO. xxxxxxxxx CONFIRM THAT I HAVE RECEIVED HK$6,750,000.00 PLUS HK$1,750.000.00 as* FROM [P] HOLDING HK ID NO. xxxxxxx AS A LOAN BEARING INTEREST AT THE MUTUALLY AGREED RATE.

THE LOAN WILL BE REPAID ANYTIME AT THE OPTION OF [P] OR HIS LEGAL HEIRS.

[D]

* a depo fixed Deposit in [UCO] under UCO under [VPG] facility

[D’s signature] 5-Nov-09”

(italicised parts in manuscript)

128.Mr Chain submitted the 1^st Confirmation with D’s handwritten annotations merely meant D(who knew of the Name-switch by that time) received the Blocked Deposit in UCO for the VPG Facilities, and the funds thereunder would be repayable to P or his heirs (despite the Name-switch), so the 1^st Confirmation did not impose on D any personal obligation to repay P’s Loan, and by virtue of the 16/4/10 Document the 1^st Confirmation was null and void.

129.But on balance, I prefer P’s case that the 1^st Confirmation was intended to be D’s acknowledgment of personal liability for P’s Loan, and D’s annotations merely identified where the Blocked Deposit was (ie under D’s name at that time). First, despite D’s annotations, he did not alter the description that he (with personal identifier) received the Blocked Deposit and Further Loan as an interest-bearing loan. Secondly, the Further Loan was not a fixed deposit and/or used for securing the VPG Facilities, and was a mere loan of money to D albeit ultimately used for VPG’s business purpose. Thirdly, the fact that the “fixed deposit” was under lien for the VPG Facilities was not inconsistent with the Initial Arrangements as between P and D as varied by the Changes. Fourthly, Vinod did not sign although D agreed he should have been involved in such VPG matter. D tried to justify this by saying (a) P wanted him to sign there and then to make P comfortable about his money in VPG, and (b) when Vinod returned to HK they would sign another paper (which they did in April 2010) to replace the 1^st Confirmation. I do not believe D. If Vinod’s signature on the 1^st Confirmation was expected, surely D would have arranged for it or for Vinod’s separate signed written confirmation without waiting for half a year until April 2010.

XXIV. 2^nd CONFIRMATION

130.Findings  P was not happy with having handwritten annotations on the 1^st Confirmation, so he asked D to sign the 2^nd Confirmation. The best friend of P’s brother introduced P to a law firm, and on 10 November 2009 a female lawyer prepared and gave P a draft written acknowledgment to the effect that D borrowed P’s Loan. It was a courtesy to his brother’s best friend so there was no charge. P left for the PRC, and when he returned to HK, he updated the draft to refer to the Albert Loan which D should shortly repay to Albert and came up with the outstanding principal of HK$6,500,000. P arranged for the 2^nd Confirmation to be typed/printed at the office of his brother’s best friend.

131.On 28 November 2009, P went to D’s office to ask him to sign the 2^nd Confirmation titled “Confirmation of Loan Advanced”:

“To: [P] (holder of HKIC No. xxxxxxx)

To: [D] (holder of HKIC No xxxxxxx)

Date: 28 November, 2009.

CONFIRMATION OF LOAN ADVANCED

______________________________

This is to confirm that in or August, 2007, [P] has, at my request, agreed and advanced to me, two respective loans in the total sum of [HK$8,500,000] at an interest rate of 8% per annum and that the said loans are repayable on demand.

This is to confirm that up to the date of this Confirmation, [P] was repaid by me, a sum of [HK$1,000,000] between May & June 2009, and again another [HK$1,000,000] between July 2^nd or 3^rd week 2009 was repaird by me borrowing from [Albert] and the current outstanding due by me to [P] is [HK$6,500,000] and the interest.

Confirmed and acknowledged by

	[signature]
	[D]
	(holder of HKIC No. *******”

132.After D signed the 2^nd Confirmation, P kept the original and a copy was kept by D. On the same day or 1-2 days thereafter, D gave Jeet (who recognised D’s signature) a copy for record. P later approached the same law firm for advice in early December 2009 on D’s request to P to make available the TST Property to secure banking facilities by Bank of Baroda, and he paid HK$6,000 for legal fees. Upon receiving the legal advice, P decided not to make available the TST Property to D.

133.D’s case  D claimed he had never seen/signed the 2^nd Confirmation. D argued that since he made handwritten annotations to the original form of the 1^st Confirmation, he would not have signed the 2^nd Confirmation that purported to reiterate the terms of the original form of the 1^st Confirmation within the same month when there was no change of circumstances. D believed the 2^nd Confirmation was created because his handwritten annotations to the 1^st Confirmation meant it did not serve P’s intended purpose of making D personally liable for repayment of the Blocked Deposit. I disagree and reiterate my analysis in Part XXIII above. I accept that upon settling the accounts P wanted a more tightly drawn acknowledgment of P’s Loan by D to secure his position as lender, which resulted in the 2^nd Confirmation.

134.Although I have carefully taken into account the fact that P did not give full particulars of the lawyer/law firm concerned and/or any documents from such law firm in relation to the draft, I accept P’s case/evidence. In doing so, I bear in mind the overall credibility/ reliability of P as witness. Further, a study of the wording of the 2^nd Confirmation (including the formal reference to “the said loans”) and P’s loose and often syntactically incorrect language style in his emails and/or the 1^st Confirmation plainly showed P required assistance in preparing the 2^nd Confirmation. Indeed, D pointed out the 1^st and 2^nd Confirmations were printed in different fonts, and P wrote D’s names in different places, so even D himself assumed the 2^nd Confirmation was prepared by someone else, at some other office or by some other computer.

135.D next disputed the authenticity of the 2^nd Confirmation on the following grounds:

(a)  D argued that if the 2^nd Confirmation concerned his personal loan, there was no reason for him to ask (and he did not ask) Jeet to keep a copy.

But as I have found, (i) D all along gave Jeet details of his personal loans from P (used for VPG) and his commission/repayments made to P for record-keeping, (ii) Jeet helped to prepare updates for P and D, and (iii) P and D settled their accounts in/about November 2009 such that P came up with the figures for the 2^nd Confirmation. In my view, there was abundant reason for D to give a copy of the 2^nd Confirmation to Jeet.

(b) D claimed he had a practice of leaving pre-signed blank papers for VPG to print on in case there were documents that required his urgent signature when he was abroad, and he trusted VPG’s staff not to misuse them.

It was unclear whether D contended the signature on the 2^nd Confirmation was forged or the 2^nd Confirmation was printed over his true signature. But I find his explanation of leaving pre-signed papers at the HK Office incredible. First, Jeet denied such alleged practice. Secondly, since Jeet was still a director of VPG at the relevant time (even though he was not an original business partner), Vinod and/or D would on occasion expressly authorise him to sign on behalf of VPG if there was any urgent need. Thirdly, D did not identify any particular instance (apart from a broad reference to possible board resolutions) in which urgent signature by D was actually required when he was out of HK. Fourthly, and more importantly, there was no basis to suggest D somehow had access to VPG’s HK Office to seize any pre-signed paper by P, and there was no suggestion D conspired with any staff of VPG to seize any pre-signed paper.

(c) D also suggested the 2^nd Confirmation was fabricated since it referred to total repayments of about HK$2,000,000, and failed to take into account the Group A Payments.

But I disagree for reasons explained in Part XXII above.

136.I find there was insufficient evidence of commensurate cogency to show the 2^nd Confirmation was not genuine. I find and accept that on 28 November 2009 D signed the 2^nd Confirmation at MTL’s office in front of P to acknowledge he was personally liable to P.

XXV. DECEMBER 2009 TO FEBRUARY 2010

137.November 2009 Towards the end of 2009, VPG’s cashflow problem turned from bad to worse, and VPG suffered loss of about US$3,000,000-US$4,000,000. Jeet said (and I accept) D started to blame Vinod for VPG’s financial problems and to associate Vinod with VPG’s debts and D’s personal loans that were used for VPG. I also accept that at this time D frequently talked to Vinod about his getting out of VPG and Vinod taking over his liabilities with the banks, but Vinod told him to repay/pay the sums in paragraph 55(a)-(b) above. I also accept that around this time D on the one hand told P he wanted to retire to live in the temple in India, but on the other hand he also said he had to work because of losses caused by DK Shoes.[36]

138.Disputed Emails D claimed Jeet would regularly check the D and Vinod E-Accounts, and inform them of emails received from, say, P. D further claimed he and Vinod would talk/discuss by telephone on how to reply, and then (a) D would dictate the email reply to Jeet or send pre-drafted email reply to Jeet for him to dispatch to P, (b) D would tell Jeet the gist of the intended reply and let Jeet prepare/dispatch the email reply and/or (c) Jeet would send a draft email reply to D, who would revise it for Jeet to finalise/dispatch. Such Disputed Emails were dispatched in Vinod’s name via the Vinod E-Account.

139.D claimed he could not have intended to deceive P by “pretending” to be Vinod because the Disputed Emails invited communication/meeting with P. Any “false” email would have been exposed during telephone conversations between P and Vinod in February 2010 and their meeting in April 2010,[37] so it was more likely that Vinod knew of the Disputed Emails when they were dispatched.

140.I find Vinod’s email account in Poland was [email protected] and he did not read, authorise or send the Disputed Emails. Since December 2009, D without discussing with Vinod on how to reply to P’s emails authored (ie drafted by D or prepared by Jeet on D’s instructions) the Disputed Emails, and instructed Jeet by telephone[38] to send the Disputed Emails in Vinod’s name viathe Vinod E-Account. I further find it was against the background of P chasing for repayment, VPG suffering financial problems and D wanting to extricate himself from liabilities that D “pretended” to be Vinod with a view to shift responsibility from D by insinuating P’s personal loan arrangements were with VPG/Vinod. Had Vinod known about and/or wished to reply to P’s emails, it would have been easy to forward P’s emails to Vinod’s email account in Poland for him to read/reply on his own. Save for the matters I accept, I find I am unable to place any reliance or weight on the Disputed Emails.

141.“Vinod’s” Disputed Email dated 9 December 2009 to P (with copy to Jeet and D) was an example of D trying to shift responsibility for his personal loan away from himself:

“Any way to cut the matter short I will not allow [D] alone to take full responsibility of your deposit with UCO against the facility there-fore the paper you made [D] signed please return it and consider null and void and in return we can make fresh new agreement with boths signatures and looking at the world crises and company’s position the best we can offer you is that first we will transfer back the fixed deposit in your name (the one which is currently under [D’s] Name) and later we will clear your account with in 2-3years as promised ……” (my emphasis)

I am not convinced by D’s suggestion that the “paper” referred to the 1^st Confirmation since on D’s case he did not take up “full responsibility” for P’s “deposit with UCO against the facility” by the 1^st Confirmation. In my view, the “paper” referred to the 2^nd Confirmation by which D acknowledged his liability for the outstanding balance of P’s Loan with interest at 8% pa. This meant D (who authored this Disputed Email)knew of the 2^nd Confirmation and its effect, but made an anxious but poor attempt to resile from it.

142.December 2009  In December 2009, some of the VPG cheques payable to P (as arranged by D) had bounced, and P’s own banks were threatening collection action against him. P could not contact D who had gone to India, so on 15 December 2009 he replied to “Vinod’s” Disputed Email with a view to follow up with D when he returned to HK (which P did on 29 December 2009 by emailing the Disputed Emails between P and “Vinod” to D).

143.As explained above, D had told P his monies were stuck in Poland, and P had to apply to Vinod for release of monies,[39] so in the 15/12/09 Email P replied that since Vinod was not happy with him, “I am in a need and I want you to give me back all my money as soon as possible” (my emphasis). I have discussed other parts of this email, so suffice to say that read as a whole it did not lend support to the suggestion that Vinod (effectively Citisonic/VPG) was involved in the original arrangement and was responsible for repaying the loan.

144.January 2010  D “pretending” to be Vinod replied by email on 21 and 26 January 2010, but I am unable to place weight on these Disputed Emails as I find them to be D’s unreliable efforts to distance himself from liability for P’s Loan. Interestingly, P did not reply as he took up liaising with D again after their return from India. On 26 January 2010, P forwarded his email correspondence with “Vinod” to D, and chased D for repayment.

145.February 2010  In my view, as part of D’s efforts to shift responsibility away from himself, on the one hand he told Vinod P was giving him pressure and if P called Vinod should say VPG’s funds were stuck with its Polish customer and steps were being taken to recover the same, and on the other hand D told P UCO would not release the Blocked Deposit until VPG brought back funds from Poland, so there was no point in chasing him for repayment as he was chasing Vinod, and P too should chase Vinod for release of funds from Poland otherwise D would have no money to repay P.

146.P was not used to talking to Vinod about his personal loan to D and did not want to call Vinod, but D urged P to press Vinod to release monies from Poland. By February 2010, P had not received the monthly advance interest payments for several months, some VPG cheques that D arranged to give to P had bounced, and P’s own banks threatened collection action against him. P was desperate, so he telephoned a few times to tell Vinod his problem, but Vinod explained he too had problems (including litigation in Poland) and was unable to help. P only spoke briefly to Vinod because Vinod did not have the money, and they did not canvass the matters in the Disputed Emails of December 2009 and January 2010.

XXVI. 14/4/10 DOCUMENT

147.D signed a handwritten document dated 14 April 2010 (“14/4/10 Document”) as follows:

“1ST APR- 2010	14-4-2010
→ HK$6.75 Ml in [VPG]
_______________________________
Before APR- 1ST 2010
All Account Settled with All Amendments & Excess Paid to you all you take & clear it to “O”
→ [VPG] will pay to Albert 1- Ml & the Int & Your 1.75 Ml will also be cleared. Nothing to Be Paid to [P] (consider 1.75 clear to O)
After clearing 1 Ml By us to Albert
Balance will be 6.75 with [VPG]
[D’s signature]”

148.D claimed he prepared the 14/4/10 Document for P (as there was no point for D to sign an internal document), and such document when read with the 16/4/10 Document would explain why the outstanding loan was HK$6,750,000. Mr Chain submitted that P’s account with VPG was reduced to zero under the 14/4/10 Document by (a) setting off the Groups A, B and C Payments of HK$1,802,000 against the Further Loan of HK$1,750,000, (b) VPG taking up responsibility for the Albert Loan, and (c) clearing any/all accrued commission/interest against all other payments previously made by VPG.

149.I have already explained in Part XXII above why the above reading of the Groups A, B and C Payments was incorrect, which rendered D’s contention in the above paragraph unsupportable. I also find on balance that the 14/4/10 Document was an internal document (ie it was not meant for P).

150.I accept that in early 2010 Jeet was present at a number of internal meetings between D and Vinod that discussed VPG’s financial matters, D’s plan to leave VPG and the terms of D’s resignation as director of VPG. But Jeet and Vinod did not sign the 14/4/10 Document because D merely used such document to explain his idea of how to repay P and how to clear other dealings between D and VPG. I find Vinod agreed to let D resign from VPG on condition D would (a) arrange to maintain the Blocked Deposit he borrowed from P with UCO for as long as he could, (b) deal with demands/queries by banks/creditors on behalf of VPG, (c) waive some of his loans made to VPG, and (d) take care of whatever loans he personally took for VPG’s use (including P’s Loan) save that VPG would take over repayment of the Albert Loan. D suggested (and Vinod agreed) it would not be a good idea to let P know D was actually resigning otherwise P would insist on immediate withdrawal of the Blocked Deposit. Jeet further explained that upon clearing the Albert Loan and P and D in due course resolving (a) the “excess paid” to D by VPG and (b) D’s director’s loan of HK$1,750,000 to VPG that was sourced from the Further Loan D took from P, D’s director’s account would be treated as reduced to zero. But in my view, the internal 14/4/10 Document did not concern P.

XXVIII. 16/4/10 DOCUMENT

151.On 16 April 2010, P, D and Vinod signed a document titled “Terms and Conditions of Loan Agreement” (“16/4/10 Document”) in Jeet’s presence:

“TERMS AND CONDITIONS OF LOAN AGREEMENT.

Dated: 16^th April 2010

1. It has been agreed by all parties that Interest rate on at present loan aount HKD 6.75Mln. will be 6% P.A.

2. It has been agreed that every montn End starting from 1^st April 2010, we will deposit HKD 25,000 towards the 6% Interest and the balance Interest amount wull be paid every year.

3. It has been agreed that we shall pay HKD 1.00 Mln. against the above loan amount during September 2010/ October 2010

4. The balance loan amount will be cleared in installments every three months starting from year 2011 and the entire loan amount will be cleared in 2 years time starting dt. 16^th April 2010

5. The earlier business agreements which were signed by all parties are considered Null & Void and are no longer valid.

6. It is also understood that there will no commission paid on sales as previously done.

7. It has been agreed that Interest will not be paid on the Bank’s FDR.

152.D’s case  D said during the meeting on 16 April 2010 they worked out that HK$6,750,000 was still due to P, and after bargaining they agreed to interest thereon at 6% pa. D and Vinod signed as directors on behalf of VPG. By reason of clause 5 of the 16/4/10 Document, D considered he was no longer bound by the 1^st Confirmation as amended by him and/or the 2^nd Confirmation (even if he had known of it which he denied). But VPG’s situation did not improve as Vinod envisaged, and payments were not made as Vinod/VPG promised.

153.Findings  On 16 April 2010, P (who was due to leave for India the following day for an operation) at D’s invitation went to VPG’s HK Office for a meeting. I accept that the meeting was probably arranged when P and Vinod were in HK, but P did not know before the meeting Vinod would be present. P also did not know D was about to formally resign as director of VPG (and P was so told in writing by D’s email dated 27 July 2010). Indeed, D had told Vinod not to tell P, which suggestion Vinod thought at the time was made in the best interests so as to preserve the Blocked Deposit for as long as possible.

154.Jeet said (and I accept) it was made clear at the meeting that P’s Loan was between D and P, but practically speaking, the terms of repayment had to be acceptable to VPG because D’s source of funds was from VPG under the Internal Arrangements. So P was asked to leave the room at some point during the meeting to let D and Vinod have a private discussion. When P returned to the room, it was discussed that VPG would repay the Albert Loan immediately (which was why such loan was not mentioned in the 16/4/10 Document) and would advance a further sum of HK$1,000,000 to P by September/October 2010, and the balance of P’s Loan would be repaid by instalments within 2 years with no more commission. D proposed to reduce the interest rate to 6% pa, and promised to telephone Albert that very day to repay the Albert Loan. By this time P came to know D and Vinod had some internal understanding that D’s payments to him (including the monthly sum of HK$25,000) would be sourced from VPG, but it was D’s “lookout” and not P’s concern. In my view, all present at the meeting knew VPG had no direct obligation to pay P.

155.D instructed Jeet to type a note for their signature. I accept the main negotiations were between P and D, and Vinod signed in support of D to make P comfortable, and to represent VPG’s interests under the Internal Arrangements to help preserve the Blocked Deposit for the VPG Facilities. As Jeet said, had Vinod signed as director to acknowledge VPG owed P an outstanding loan of HK$6,750,000, Jeet would have prepared the 16/4/10 Document on VPG’s letterhead, signed it himself (as director of VPG) as well and/or affixed VPG’s company chop to the document. Further, from the beginning the Initial Arrangements were between P and D personally, which were distinct from the Internal Arrangements between D and Vinod. It was common ground there was no change of parties throughout the years.

156.In my view, both Jeet and Vinod gave truthful accounts of what happened. Being unaware of the fullness of the internal discussions between D and Vinod, P thought Vinod (with whom he was not close) signed as witness, but in my view he was mistaken. However, I accept P’s evidence that all along D was liable to repay the outstanding P’s Loan (eg under the 2^nd Confirmation), and clause 4 of the 16/4/10 Document merely gave further comfort that the outstanding loan would be repaid in 2 years’ time. As between P and D, the 16/4/10 Document did not remove D’s obligation to repay the outstanding P’s Loan to P.

157.There was no dispute the terms of the 16/4/10 Document had not been complied with and the envisaged payments had not been made. The 16/4/10 Document had not been implemented, and the 2^nd Confirmation was still effective. In my view, this is borne out by the fact that (a) P still maintained that the outstanding P’s Loan was HK$6,500,000 and not HK$6,750,000, and (b) subsequent to the 16/4/10 Document D continued to pay monthly sums of HK$20,000 (as in the past) and not the monthly interest payment of HK$25,000 under clause 2 thereof.[40]

XXVII. POST-APRIL 2010

158.Albert Loan  Immediately after signing the 16/4/10 Document, P chased D on repayment of the Albert Loan. But in the end D only paid P a few sums here and there over a period of time (including most of the payments under D’s counterclaim), which eventually made up the repayment for the Albert Loan, and P in turn repaid Sammy by topping up some to cover additional interest.[41]

159.D’s resignation as director  4 days after the 16/4/10 Document, D resigned as director of VPG. His resignation was notified to the Companies Registry on 28 April 2010. But Vinod told D not to tell anyone as yet. Vinod said Jeet was not used to negotiating with the banks, so he asked D to help out. In the meantime, the banks kept calling D, and the D E-Account remained active for communications with customers/ banks. When Vinod had not informed the banks after a few months, D started to tell others he was no longer the chairman/director of VPG. He wrote to UCO and asked for withdrawal of his guarantee for VPG.On 27 July 2010, D emailed to tell P he had “decided to quit and remove [his] name from [VPG]” and he had “resigned as Chairman & Director”. This elicited an immediate email reply by P the following day, which clearly showed that P all along looked to D for the loan arrangements/ repayments based on his trust in D.

160.There was no dispute that by then VPG was in serious financial difficulties. Jeet had transferred his VPG shares to Vinod on 10 February 2010, and he resigned as director on 30 July 2010. P was given several VPG cheques and some of them had bounced. When P found out D had left VPG, he chased D for repayment of the whole outstanding loan (as evident from his emails to D dated 30 and 31 August 2010). In P’s email to D dated 31 August 2010, he complained “Mr Vinod is saying and you your self told me last year end that you have enough HK$ 50 to 60 Million now you want to get retired and do seva in Beas but due to problems with Mr Vinod you had been confused, later you said till things get cleared you need to work for some time, and cannot get retire now for some time.”

161.By his email reply dated 3 September 2010, D denied he had HK$50,000,000 – HK$60,000,000, and suggested P should find other source for funds. But interestingly, he never referred to the 16/4/10 Document which on D’s case should have been a complete answer by wiping out all past arrangements and constraining P to only look to VPG for any repayment/interest. Such silence was telling, and in my view the 16/4/10 Document did not alter D’s liability to P for repayment of the outstanding P’s Loan. I reject D’s allegation that he supplemented his email by orally telling P that he should deal with VPG directly.

162.D tried to shy away from the above developments by saying (a) after he resigned as director of VPG, (b) after the VPG cheques given to P had bounced and (c) P could not get any response from VPG, P started to send self-serving emails to D to comfort himself or to make D feel bad, and D ceased to bother as there were so many of such emails. I disagree, and find P’s stance of looking towards D for repayment consistent all along.

163.As explained above, the payments under clauses 3-4 of the 16/4/10 Document did not materialise. There were further emails between P and D in 2011. I have carefully considered them, but do not consider it appropriate to place too much weight on them. By that time the parties’ respective position had become entrenched, and it was only to be expected they would insist on their respective stance. However, they do not detract from the veracity of P’s case that he lent P’s Loan to D (and not VPG/Vinod), and he was not concerned with the internal understandings between D and Vinod, or where the money came from to repay him.

XXIX. COUNTERCLAIM

164.P was in urgent need of cash to settle personal expenses from 2008-2009 onwards, and he did receive various sums that constituted D’s counterclaim. In the disclosed documents, there were 2 tables of payments to P in 2010-2011 summarised as follows (“Table III” and “Groups 1, 2, 3 and 4 Payments”):

DATE	PAYEE	MONTH	AMOUNT HK$	CQ NO	BANK
GROUP 1
			20,000		HSBC
			20,000		HSBC
			20,000		HSBC
			20,000		HSBC
			20,000		HSBC
			20,000		HSBC
			20,000		HSBC
GROUP 2
12/10/2010			20,000	166805	UCO ER
17/11/2010			20,000	503209	HSBC
12 13/12/2011	Jan		20,000	583797	HSBC
3/3/2011	Feb		20,000	40357	HSB
4/4/2011	Mar		20,000-	919886	HSBC
14/4/2011	Apr		20,000	919904	HSBC
20/5/2011	May		20,000	920013	HSBC
15/6/2011	June		20,000	235487	HSBC
GROUP 3
6/5/10	[ERL]		200,000	038036	HSBC
GROUP 4
6/10/2010	CARLETON U	CAD9171.43	70,526.53	TT	HSBC
6/10/2010	[ROSHAN]	CAD3500	27,050.25	TT	HSBC
12/1/2011	CARLETON U	CAD5011.31	39,711.67	TT	HSBC
17/11/2011	[ROSHAN]	CAD5000	39,692.50	TT	HSBC
16/6/2011	CARLETON U	CAD6980	55,720.53	TT	HSBC
22/6/2011	[ROSHAN]	CAD4000	32,298.00	TT	HSBC
(italics in manuscript)

165.D claimed that as a friend he tried to help by borrowing from others to give to P because he knew the VPG cheques payable to P had bounced and P was in need of money, but D’s Loan was granted on the understanding that P would repay D which P never did. I disagree. The email correspondence did not suggest P “borrowed” from D; instead it referred to the outstanding loan due to P rather than any new loan by D to P. As explained above, D failed to repay the Albert Loan immediately upon signing the 16/4/10 Document, but P eventually received various payments of about HK$800,000-HK$900,000 from D personally or via MTL (being the payments under D’scounterclaim) that were treated as clearance of the Albert Loan. After clearing the Albert Loan, the outstanding balance of P’s Loan was HK$6,500,000 plus interest.

(a) 8 monthly cheque payments of HK$20,000 each from October to November 2010 and from January to June 2011 (HK$160,000)

(b) 7 cash or transfer payments of HK$20,000 each prior to October 2010 (HK$140,000)

(c) payment of HK$200,000 by cheque on 6 May 2010 (HK$200,000)

166.These are the Groups 1-3 Payments from D or MTL to P. D did not say what these payments were for. In my view, D probably intended them to be monthly advance payment of interest, but P appropriated them as part repayments of the Albert Loan. D admitted he gave particulars of such payments to P for record-keeping and instructed Jeet to prepare the 2 tables of payments summarised by Table 3.But he could not satisfactorily explain why Jeet would keep record of hispersonal loan to P (which, according to him, had nothing to do with VPG) in contra-distinction to D’s repayments of and interest payments on P’s Loan that was used for VPG and on which VPG had to bear the financial costs under the Internal Arrangements.I reject D’s allegations that these heads of counterclaim were part of D’s Loan to P, and find they were partial repayments of the Albert Loan.

(d) 6 bank transfers made between October 2010 and June 2011 for settling Roshan’s school fees (HK$265,999.50)

167.These are the Group 4 Payments for Roshan’s college tuition fees and living expenses paid by D via MTL according to P’s instructions. P requested D to make such transfers (a) in person when P visited HK, (b) over the telephone when P was in the PRC and (c) via various emails.

168.D claimed he made the Group 4 Payments to P as he felt sorry that P did not get enough funds from VPG,but it was expected P would repay D when he received funds locked by VPG. D agreed under cross-examination (a) it was P who asked him to make such payments for Roshan’s tuition/living expenses and who gave him the particulars to effect the transfers, and (b) such payments were not made pursuant to any oral agreement with Roshan. But such evidence contradicted his solicitors’ demand letterdated 14 September 2012 to Roshan that demandedrepayment of the Group 4 Payments on the basis of an oral loan agreement made in 2010 between Roshan and D, and that asserted Roshan had “contractual obligation and liability to repay the loan in [his] personal capacity”. D tried to explain this away by saying when he was not getting repayment from Roshan, he told P “[if P] don’t pay [D]’ll have no choice to send [Roshan] a letter”. But still this did not explain why his solicitors’ demand letter sent on his instructions referred to an oral agreement with Roshan.

169.P replied to say the Group 4 Payments were part repayments of P’s Loan to D, but D did not respond until 17 January 2013 when D’s solicitors sent another demand letter to Roshan on the basis of a loan agreement among D, P and Roshan, and also Roshan’s liability to repay “pursuant to the terms of the Loan Agreement”. D claimed that although such demand letter was addressed to Roshan, it was in fact directed to P and sent to P’s address. Still that could not explain why a demand was made on Roshan on the basis of a tripartite agreement. All D could say was he would pursue “[anyone who can pay [him]”, including Roshan who had use of the Group 4 Payments for his education.However, D’s answer to interrogatories filed on 18 February 2014 asserted differently that the loan agreement was made between P and D, but the loan was repayable by either P or Roshan upon demand. In my view, such evolution of D’s case in this respect amply demonstrated its unreliability.

170.Further, the contemporaneous emails[42] showed P was chasing for repayment of P’s Loan and asking D to make the Group 4 Payments for Roshan’s tuition/living expenses, and D eventually made these payments via MTL as partial repayments of the outstanding loan D owed to P. I disagree with D’s suggestion that these were merely self-serving emails. In my view, the contemporaneous documents did not show another agreement byP to borrow Roshan’s tuition/living expenses from D. The fact that the transfers came from D’s personal funds and/or MTL did not necessarily mean P borrowed from D personally. I find they were loan repayments to P made by D or on his directions.

(e) 2 cash cheques both dated 21 January 2011 of HK$25,000 each given to P (HK$50,000)

171.These 2 cash cheques dated 21 January 2011 were signed by D for MTL. D claimed he was merely helping his friend P as much as he could because P was not getting payments from VPG, but there were no contemporaneous documents to suggest any separate loan from D to P. In my view, P asked D for repayment of his loan to D all along, and D made these part payments which P appropriated as repayment of the Albert Loan.

(f) INR500,000 transferred to Bharti on 22 July 2009 as directed by P (HK$80,450)

172.It was D’s case that the bank draft of INR500,000 he sent to Bharti on 22 July 2009 was not the remittance of INR500,000 recorded in Jeet’s email of 11 August 2009. But P said they were the same and only payment of INR500,000 to Bharti. By reason of the analysis in Part XXI above, I prefer P’s case and reject D’s allegations.

173.Interestingly, on 14 September 2012, D’s solicitors sent a demand letter to Bharti in Pune that alleged an oral agreement in 2009 among Bharti, P and D in which D agreed to lend INR500,000 to Bharti, who was “subject to the contractual obligation and liability to repay the loan in [her] personal capacity”. D could not satisfactorily explain such assertions when he agreed he had never spoken or dealt with Bharti. I find on balance the payment to Bharti was utilisation of the Albert Loan proceeds to repay P. On balance, I find the various heads of D’s counterclaim were loan repayments to P, and reject D’s allegations as to D’s Loan.

XXX. CONCLUSION

174.I conclude that P only dealt with D and not Citisonic/VPG. P’s Loan was a continuation of the Initial Arrangements between P and D personally, and D was liable/responsible for the repayment of P’s Loan. I therefore enter judgment in favour of P against D for the sum of HK$6,500,000 with interest thereon at the rate of 8% pa from 28 November 2009 to the date hereof, and thereafter at judgment rate until payment. I also dismiss D’s counterclaim. There is no reason why costs should not follow event, and I grant a costs order nisi that D shall pay P costs of the action (including costs of D’s counterclaim and all costs reserved if any) to be taxed if not agreed.

Mr Robin D’Souza, instructed by Boase, Cohen & Collins, for the plaintiff

Mr Christopher Chain, instructed by Tanner De Witt, for the defendant