東莞市枝記市場投資管理有限公司 and Another v. Yip Kwok Chi

HCA 1072/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1072 OF 2014

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J U D G M E N T

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Introduction

1.In this action, the plaintiffs (“Ps”) claim against the defendant (“D”) two sums respectively RMB4,000,000 and HKD850,000, said to be debts owing to Ps by D and arising out of Ps’ supply of agricultural produce of mainly vegetables to D.

Brief Background

2.The 1^st plaintiff, formerly known as東莞市横瀝枝記蔬菜有限公司 is a limited company incorporated in Mainland China (“P1”). 

3.The 2^nd plaintiff (“P2”), being the legal representative/legal person, was/is in control of P1 with his son, Xiang Weiguang香偉光.

4.P1’s main business was/is the supply and wholesale of agricultural produce of mainly vegetables (“Produce”) in Mainland China and Hong Kong.

5.At all material times, D ran the wholesale business of the Produce in Hong Kong at a stall at the North District Wholesale Market (“Market”), the stall being called “Chi Kai”志記 (“Stall”).

6.P’s case was that since about 1990s, D had been purchasing the Produce from P1, and in about late 2002, P2 and D orally agreed on a credit agreement whereby D would purchase the Produce from P1 on a daily basis and P1 would give D monthly credit and D would pay P1 on a monthly basis.

7.It was Ps’ case that under the above agreement, D incurred a debt of RMB 5m to P1 between January 2003 and January 2004, and that on about 28 January 2004, P1 and D signed an agreement in Chinese entitled “欠款書” in which D had acknowledged and confirmed his indebtedness of RMB 5m due to P1 and had agreed to repay the same by 50 monthly instalments from 1 March 2004 (“1^st Debt Agreement”). According to Ps, after the signing of the 1^st Debt Agreement, P1 had ceased to supply D with the Produce to D.

8.Thereafter, D turned to P2 for help and orally requested P2 to supply the Produce to him in order to sustain his wholesale business in Hong Kong, and at D’s request, P2 had between the period from early 2004 until early 2005 supplied Produce in the sum of HK$850,000 to D, but D had failed to settle the sum of HK$850,000 despite P2’s repeated requests (“2^nd Debt “).  P2 then ceased to supply the Produce to D since early 2005.

9.It was Ps’ case that from March 2004 to late 2004, D had repaid a total of RMB 1m by 10 instalments to P1 pursuant to the 1^st Debt Agreement, leaving RMB 4m outstanding under the 1^st Debt Agreement (“1^st Debt”)[1].

10.Then, according to Ps, there were the following oral agreements entered into:

(i) In early 2005, in consideration of P1 forbearing to sue for payment of the 1^st Debt, D would allow P1 to occupy and use a portion of the Stall, namely the portion then numbered 9B[2] (“P1’s Portion”) for the purpose of expanding P1’s wholesale business of the Produce in Hong Kong so long as the 1^st Debt of any part thereof remained due and outstanding, and that the 1^st Debt Agreement be varied to the extent that the 1^st Debt should be  due and payable in full upon P1’s demand (“Supplemental 1^st Debt Agreement”);

(ii) D agreed to repay the 2^nd Debt to P2 by 5 monthly instalments starting from late 2006 (“2^nd Debt Agreement”).

11.On the other hand, D’s case was that due to pressure and threat from P2, D was forced to allow P2’s younger brother, and later his daughter, to receive all the proceeds from P1’s Portion at an average amount of about Hk$6,000/HK$7,000 per day for the sale of Produce at P1’s Portion, and a daily amount of HK$2,000 had been deducted therefrom by D as part satisfaction of the 1^st Debt.  D had denied that P1 was allowed or had at anytime occupied or used P1’s Portion[3].

12.As for the 2^nd Debt, P2’s case was that on 3 separate occasions between early 2005 to mid 2009, D requested more time to repay the 2^nd Debt, and on each occasion, D agreed with P2 to repay the 2^nd Debt by monthly instalments and further gave P2 post-dated cheques in purported repayment.  There were altogether 3 batches of post dated cheques sent by D each batch totaling HK$850,000.  D had requested P2 not to present the cheques for payment and promised to work out a realistic schedule for repayment of the 2^nd Debt, but D failed to do so.

13.D simply denied the 2^nd Debt in the D&C and in his witness statement his evidence was that the post-dated cheques were forced out of D as security as P2 was worried that he could not collect sufficient amounts from P1’s Portion for the daily deduction of HK$2,000.

14.Notwithstanding the alleged indebtedness and parties’ respective case as seen above, there seemed to be peace between Ps and D between 2005 until early 2012.  At about the end of 2011, the stall holders of the Market received notice that the Hong Kong Agricultural Fishery Conservation Department (“AFCD”) would be taking over the management of the Market as from 1 April 2012 instead of contracting the management out to a management company called 信立管理有限公司 (“Management Company”) and that there would be a renumbering of all the stalls and all stall holders had to be re-registered.

15.According to P2, D approached him in early January 2012 seeking the return of P1’s Portion from P1.  P2 then told D that if P1 had to leave P1’s Portion, D had to repay the 1^st Debt immediately to P1, but this was refused by D.

16.In about mid March 2012, P2 learnt that AFCD would be starting the new management of the Market with the stalls renumbered as from April 2012.  P2 and D had an argument on about 21 March 2012.  According to P2, during the argument, D suddenly handed to him a handwritten note (“Handwritten Note”)[4], stating that P2 was renting P1’s Portion for HK$2,000 a day[5].  P2 said he had never agreed to P1 renting P1’s Portion for HK$2,000 a day. 

17.The next day 22 March 2012, D made a report to the police accusing P2 and his staff Mr Cheung Wai Kong of criminal intimidation, and further accusing Mr Cheung of being a triad member (“Criminal Complaint”).

18.Thereafter, P2 and Mr Cheung were charged and later convicted on 24 July 2012 after a trial (“Criminal Trial”).  P2 was sentenced next day to 18 months immediate imprisonment under FLCC 600/2012.  The Learned Magistrate had given oral reasons on 24 July 2012 for the conviction of P2 and Mr Cheung (“Oral Reasons”)[6], which were later reduced into writing (“Written Reasons”)[7].  P2 and Mr Cheung later appealed against conviction under HCMA 514/2012, and eventually on 30 January 2013, their appeal was allowed by the then DHCJ Woo, their convictions quashed and they were released forthwith.  The reasons were set out in the Learned Judge’s decision (“Appeal Decision”)[8].

19.In April 2012, P2 was allocated Stall No 15, previously No 9B, and now Stall No 50.  However, due to the Criminal Trial and the conviction, AFCD only agreed to rent the stall to P2 on a monthly basis from 1 April 2012 until March 2013, and that it was only on 22 March 2013, after the Appeal Decision, that AFCD agreed to enter into a rental agreement with a company set up by P2 for Stall No 50, commencing from 1 April 2013 at HK$9,210 per month, and renewable annually[9].  This company was set up on 22 August 2012 in Hong Kong with P2’s wife and nephew as partners, and after P2’s appeal was allowed, he has replaced his nephew as a partner on 1 February 2013.

20.According to Ps, as D had never repaid the outstanding amounts since January 2005, Ps issued the writ herein on 16 June 2014 with the statement of claim endorsed (“SOC”), in which P1 claimed the amount of the 1^st Debt of RMB 4m, and P2 claimed the amount of the 2^nd Debt of HK$850,000, together with interest and costs.

21.D’s defence and counterclaim (“D&C”) was filed on 19 June 2014.  D denied Ps’ claims, and counterclaimed against P2 to account for amounts received by P2 through his younger brother or daughter in excess of RMB 5m from P1’s Portion during 2004 to 2012, and to pay any such excess amount to D with interest.

Agreed List of Issues

22.Counsel Mr Tony Li appeared for Ps during the trial and Mr Philip Wong appeared for D.

23.Mr Li had submitted a list of issues during the commencement of the trial to which Mr Wong agreed.

24.By the time of the trial before this court, D was no longer raising any issue with P1 over its change of name, or any issue over jurisdiction or estoppel, as pleaded in the D&C[10].  

25.The agreed disputed factual issues were as follows:

In relation to the 1^st Debt

(1) The extent of D’s liability to P1 in respect of the 1^st Debt;

(2) The existence and the terms of the Supplemental 1^st Debt Agreement;

(3) The nature of P1’s rights, if any over the Stall at the North District Wholesale Market;

(4) As regards P1’s receipt of a daily sum of HK$2,000 as alleged by D:

(i) Whether P1 did in fact receive such sums;

(ii) If P1 did receive such sums:

•  The nature of such sums; and

•  Whether the receipt of such sums can be used to satisfy any part of the 1^st Debt.

In relation to the 2^st Debt

(5) As regards the 2^nd Debt:

•  its existence;

•  the extent of D’s liability to P2.

(6) As regards the 2^nd Debt Agreement:

(i) The existence and the terms of the agreement;

(ii) If the agreement existed, whether it was later varied; and

(iii) If the agreement was varied, its terms as varied.

(7) The reasons for P2’s possession of 3 batches of post-dated cheques from D

Witnesses

26.Each side called only one witness.  P2 gave evidence for Ps, and D gave evidence for his own behalf.  They had each provided one witness statement in this action.

27.The present case involved mainly factual disputes and it was very much a case of one party’s word against the other.  I have had the opportunity of observing their demeanour in court, but where possible and available, I prefer to rely on contemporaneous documents and/or also previous statements prepared and signed by the parties before the present litigation commenced, to test that their respective evidence against such documents/statements.

28.In this respect, P2 had on 28 March 2012 given a statement to AFCD[11], and D also provided a statement to AFCD on 2 April 2012[12].

29.Further, in connection with the Criminal Complaint, two of D’s statements to the police, namely the one given on 22 March 2012 and the one given on 9 May 2012[13] had been produced.  There was also a transcript of the Criminal Trial (“Transcript”)[14], which D relied on.  P2 had elected not to give any evidence during the Criminal Trial.

The 1^st Debt

30.D acknowledged having signed the 1^st Debt Agreement/欠款書, and that at the time of signing the 1^st Debt Agreement, the outstanding amount was RMB 5m.  Although the agreement referred to an outstanding “loan”, it was not disputed that the amount was in fact the total of the accumulated sums owed and unpaid by D to P1 for the Produce supplied by P1 to him.  It was further  not disputed that D did made a part repayment leaving an amount of RMB 4m outstanding, which Ps referred to as the 1^st Debt in this action.

31.As mentioned earlier, Ps alleged there was the Supplemental 1^st Debt Agreement for P1’s occupation and use of P1’s Portion, the main consideration for which was P1’s forbearance to sue for the 1^st Debt and to allow time for D to settle the amount[15].

32.D however in the D&C and his witness statement denied that he ever agreed for P1 to occupy and use P1’s Portion.  His case was that he was forced by P2 to allow P2’s younger brother and later his daughter to receive the proceeds for the sale of the Produce from P1’s Portion, and that P2 had agreed to a daily amount of HK$2,000 being paid for part satisfaction of the outstanding balance of RMB 5m[16].

33.I have to say at the outset that I do not find either P or D an entirely credible witness, and my reasons are set out hereinafter.

34.I will first of all examine P2’s own evidence. As earlier mentioned, his evidence was that D had repaid RMB 1m by 10 instalments of RMB 100,000 by end of 2014 pursuant to the 1^st Debt Agreement[17].  According to what P2 had said in his witness statement[18], he was pressing D for repayment one day in early 2005, when D came up with the proposal for P1 to occupy and use P1’s Portion, and that in return Ps agreed to withhold temporarily from demanding repayment of the 1^st Debt from D, and that P2 also agreed provided that when Ps no longer needed P1’s Portion or when P1 demanded repayment, D had to repay the 1^st Debt to P1.

35.P2 went on to say in his witness statement that P1 occupied or used a portion of the Stall since January 2005[19].  P2 had in his statement to AFCD said that his occupation and use of P1’s Portion was formally from January 2005 until 20 March 2012, namely “東莞枝記自2005 年 1月起正式進入北區市場經營”[20].  He had also produced a copy of the Handwritten Note to AFCD[21] as evidence of his occupation and use of P1’s Portion from the 1^st day of January 2005[22], although he had denied that he had agreed to any daily amount of HK$2,000 as “rental”.

36.Although D did not really challenge P2 was pressing for repayment, there were inconsistencies in Ps’ own case in that in early January 2005, or on 1 January 2005, D was in fact not yet in default of the 1^st Debt Agreement.  This was because according to Ps’ own case, D had complied with his obligations under the 1^st Debt Agreement in paying the 10 monthly instalments of RMB100,000 until December 2014.  Under the 1^st Debt Agreement, D’s obligation to pay the next instalment would only fall at end of January 2005, and thus there was no cause for P1/P2 to press for repayment of the entire balance of RMB 4m/1^st Debt in early January 2005.

37.Further, although Ps’ own case was that RMB 4m or the 1^st Debt was the outstanding amount, it appears from the Handwritten Note that the part repayment of $1m was in Hong Kong Dollars and not in fact in Renmembi.  Having said this, D did not really dispute the amount of the 1^st Debt.

38.Anyway, as I have said earlier, P2’s pleaded case in the SOC was that P1’s occupation and use of P1’s Portion was in early 2005[23], and from P2’s statement to AFCD his case was that he/P1 had in fact occupied P1’s Portion for 7 years and 3 months, from 1 January 2005 to 20 March 2012[24]. 

39.Whichever, in order for P1 to start the formal occupation and use of P1’s Portion on 1 January 2005 or early 2005, discussions would have taken place prior to that time, namely towards the latter part of 2004 for any such occupation.  Again, as I have said earlier, at that time there was no default yet under the 1^st Debt Agreement, P1’s right to sue would not have arisen yet.  There was also no provision in the 1^st Debt Agreement that if there was default in one instalment, the balance would become payable immediately.  There was no sufficient evidence that the entire amount of the 1^st Debt had become payable by 1 January 2005 or early 2005.

40.There was also no sufficient evidence in P2’s witness statement or during trial to the effect that the 1^st Debt Agreement was varied by agreement for the 1^st Debt to be due and payable in full upon P1’s demand being one of the terms and conditions of the Supplemental 1^st Debt Agreement, as pleaded by Ps in the SOC.  

41.Further, in P2’s statement to AFCD, he did not mention that P1’s occupation and use of P1’s Portion was in consideration of those alleged terms and conditions of the Supplemental 1^st Debt Agreement, as pleaded in the SOC.

42.Although P2 had denied in his statement to AFCD that he agreed to a daily payment/deduction of HK$2,000 as rental, P2 had said that he had paid the Commissions (as explained and defined later in this judgment) attributable to P1’s Portion through D[25].  Thus, it would seem that whatever deductions by D were for the Commissions, even though there was no evidence as to what the Commissions for P1’s Portion amounted to.  In any event, there was never any mention of payment/deduction of the Commissions by P2 when setting out the terms of the alleged Supplemental 1^st Debt Agreement in the SOC or in P2’s witness statement. 

43.For the above reasons, I do not find P2 an entirely credible witness in that what P2 pleaded in the SOC in relation to the terms and conditions of the Supplemental 1^st Debt Agreement was not really consistent with P2’s own evidence.  Further, as pointed out by Mr Wong, Ps’ present case was not consistent with P2’s case during the Criminal Trial.  Although D no longer relied on estoppel, it was D’s main point that P2’s case during the Criminal Trial was quite different from Ps’ present case.

44.During the Criminal Trial, P2’s then Counsel Mr Keith Fung did not put to D that P1 was allowed to occupy and use P1’s Portion under the alleged terms and conditions of the Supplemental 1^st Debt Agreement.

45.What was put to D by Mr Fung during the Criminal Trial was this: - “當時你係用呢個鋪位嘅空間嘅使用權，替代咗嗰四百萬債，賣斷喇……”[26] and later, “……嘅檔位交俾香耀枝使用，個使用權交畀香耀枝，嚟到抵銷你尚未清還嘅四百萬債項。”[27].  That this was P2’s case at the Criminal Trial can also be seen from the Oral Reasons given by the Learned Magistrate when he convicted P2 and the other defendant, during which he had summarized the defence case to be that a portion of the Stall (ie P1’s Portion) was “賣斷” or “sold” to P2 and therefore D had no right to demand P2 to return that portion.  This was also set out in the Written Reasons[28].

46.Later, although P2’s appeal was allowed, there was no criticism of or challenge to what the Magistrate had summarized about P2’s case, which was repeated and set out in the Appeal Decision by DHCJ Woo[29].

47.During the present trial, P2 was cross examined by Mr Wong about his then case of P1’s Portion being “賣斷” or “sold” to him.  P2 first of all said that he did not hear this question during the Criminal Trial due to his own nervousness and anxiety as he had no experience of court proceedings.  When referred to the relevant part of the Transcript in relation to those questions Mr Yeung was putting to D, P2’s answer was that there was no contact between him and Mr Yeung until a few minutes before the Criminal Trial, and that he only contacted a clerk at the solicitors’ firm, and he denied ever instructing Mr Yeung to put such a case to D and further said that there could be a misunderstanding.  In short, P2 denied he had ever told his lawyers for the Criminal Trial that P1’s Portion had been “賣斷”/“sold” to him in satisfaction of the 1^st Debt.

48.As pointed out by Mr Wong, P2’s then case was not only put to D when P2 was present in court, but the Oral Reasons were also read out in P2’s presence.

49.That D would rely on what was put to him during the Criminal Trial should be known to P2 from the outset, as this was clear from the D&C[30], and in fact, as I have mentioned earlier at that time D had pleaded estoppel.  P2 was legally represented throughout these proceedings, and he had had plenty of time to obtain evidence including evidence from those lawyers acting for him in the Criminal Trial to clarify whether there had been any misunderstanding by them.  

50.Mr Li had submitted that neither Mr Yeung nor P2’s then lawyers had been called by D to testify.  This could equally be said of Ps.  In any event, as Mr Yeung or the solicitors were P2’s lawyers, they could raise legal professional privilege.  On the other hand, P2 himself could waive such privilege and call his then lawyers, but he chose not to do so. 

51.There was no sufficient evidence that Mr Yeung had put a case to D during the Criminal Trial without any instructions from P2 or had misunderstood P2’s instructions.  In my view, P2 was not able to give a credible explanation as to why the case put to D at the Criminal Trial was different from and inconsistent with his present case.  This again confirmed my view that P2 was not an entirely credible witness.

52.The burden was on Ps to prove to this court that, on a balance of probabilities, the existence and the terms of the Supplemental 1^st Debt Agreement. Having considered the inconsistencies in Ps’ case and P2’s evidence, I am not satisfied that Ps had discharged their burden.  I do not find there was sufficient evidence to support the existence or the alleged terms and conditions of the Supplemental 1^st Debt Agreement, as pleaded in the SOC.

53.I now turn to consider D’s evidence. D had changed his versions of events several times.

54.First of all, what D had said in his witness statement[31] was that (i) P2 exerted pressure and threat on him to repay  the 1^st Debt as soon as possible, and if he could not repay the same in one go, P2 had threatened to make trouble at the Stall to interfere with his business; (ii) P2 forced D to allow P2’s younger brother and later his daughter to receive all the money and proceeds of sale of the Produce from a portion of the Stall; (iii) P2 said his younger brother and daughter could receive about an average amount of about HK$6,000 to HK$7,000 per day from such portion of the Stall; (iv) P2 regarded a daily amount of HK$2,000 as having been paid for part satisfaction of the 1^st Debt. 

55.When D was cross examined by Mr Li on his above evidence, he said he could only recall one incident of threat by P2 and that was the incident which led to the Criminal Trial in 2012.  When further cross examined by Mr Li regarding what he said about being forced to allow P2’s younger brother and later his daughter to receive all the money and proceeds of sale of the Produce from a portion of the Stall, D’s answer was he could not recall.

56.D had also said that he could not recall when asked about his allegation in the witness statement that P2 said that his younger brother and Daughter could receive an average amount of about HK$6,000 to HK$7,000 from P1’s Portion.

57.D said he only recalled that the daily amount of HK$2,000 was deducted and that this was from 2005 and that in 2012, the 1^st Debt had been repaid in full. 

58.D’s answers were vague and evasive and it is surprising that he could not recall what he had said in his witness statement since the witness statement was signed by him only in March 2015, about 9 months before the trial and was confirmed and adopted by him during examination in chief.

59.In any event, what D said in his witness statement was not consistent with what he had said in his statements to the police, nor with what he had said in his statement to AFCD.  Notwithstanding D’s denial that P1 had ever used or occupied P1’s Portion, D’s 1^st statement to the police clearly showed that Ps had entered P1’s Portion and allowed to occupy and use P1’s Portion with the consent of D, and that according to what he had then said, P2 agreed to the deduction of a daily sum of HK$2,000 as “rental”, towards repayment of debt[32], although in his later statement to the police, D had changed his version, and said that the deduction was not for “rental”, but Commissions[33].  Further, although D had denied P1’s Portion was “sold” to Ps, his evidence in the Criminal Trial was that in consideration of $2,000 daily deduction for Commissions, P2 was allowed to occupy and use P1’s Portion[34].

60.D’s case was that the HK$2,000 daily deduction as repayment was an oral agreement between him and P2.  When put to him during the present trial by Mr Li that P2 never agreed to occupy and use P1’s Portion for HK$2,000 per day, D had responded that as D had to pay rent for the entire Stall, why would he let Ps occupy P1’s Portion free.  D further went on to explain that in those days, for each item of Produce sold, there was a charge of HK$3.80 (later increased to HK$5) depending on the weight, which previously was called “commission” and was paid to the Management Company, namely秤佣費 (“Commission”), for the use of the Stall, which, after AFCD took over the management, is now simply called rent.  In any event, his answers did not support any alleged repayment.

61.D admitted that the Handwritten Note was written by him although he alleged that there were also handwritings of P2.

62.The Handwritten Note appeared to be a record of the payment of a daily sum of HK$2,000  for 364 days respectively[35] for the years 2005 to 2011 inclusive , and then for 80 days in January, February and March 2012 totalling $5,256,000, plus the cash of $1m, making a  total of HK$6,256,000.

63.It was D’s evidence that the words “x 82元” and “人民幣 5199920元” on the Handwritten Note were written by P2, although the rest of the contents of the Handwritten Note were written by D. What D was saying was that it was P2 who wrote the conversion rate for the RMB for the sum of HK$6,256,000 and the amount of RMB5,199,920. This was not admitted by P2.

64.Although those words/numbers which D alleged were written by P2 appeared to be written by a different person other than D, there was no sufficient evidence that they were written by P2 after D had handed him the note.

65.In fact, in D’s statement to AFCD, not only did D deny allowing Ps to occupy and use P1’s Portion since January 2005, he further gave a completely different version in relation to how the daily deduction of HK$2,000 came about, namely that it was an estimate by him for the payment to the farmers on the Mainland[36].  Anyway, he changed his version in the subsequent statement to the police[37], when he said that P2 knew he had “occupied by force” or “霸佔” P1’s Portion, and therefore P2 agreed to pay him the Commissions, and that the daily payment was for the Commissions attributable to P1’s Portion.  Whichever version, the daily deduction was not a repayment of debt.

66.Moreover, Mr Li had put to D that the allegation of the daily deduction of HK$2,000 for repayment of the 1^st Debt was only made by him in March 2012, to which D had agreed.

67.D’s evidence and statements were confusing and inconsistent.  Having considered his various inconsistencies, I do not find him a credible or reliable witness.  I do not find there was sufficient evidence that there was any oral agreement as alleged by D between him and P2 that there was to be a daily payment of HK$2,000 towards repayment of the 1^st Debt.  I also find that there was no sufficient evidence that there was any force of threat exerted by P2 and that it was with D’s agreement that Ps entered into P1’s Portion and started occupation and use of P1’s Portion from 1 January 2005 or in early January 2005.

68.Having considered P2’s and D’s respective evidence, I have come to the view that more probable than not, or the more plausible version of events was P2’s case at the Criminal Trial put to D, namely there was an oral agreement between D and P2 for the “sale” to P1 of P1’s Portion, or in any event an oral agreement between D and Ps for Ps to occupy and use P1’s Portion, in satisfaction of the 1^st Debt.  Further, I find, more probable than not, there were indeed daily deductions by D, from the gross receipts of P1’s Portion, whether the amount was HK$2,000 or not, but such deductions were for the Commissions attributable to P1’s Portion paid to the Management Company and not for repayment of the 1^st Debt. 

69.It follows from what I have said above, P1 had acquired the right to occupy and use P1’s Portion in January 2005.  In fact, as P2 himself had stated, AFCD had accepted that P1 had occupied and used P1’s Portion in January 2005 and AFCD had allocated to Ps a stall and entered into a rental agreement in respect of the same.  In any event, as I have said, Ps have not satisfied this court of the existence and the terms and conditions of the Supplemental 1^st Debt Agreement as pleaded.  I am also not satisfied that the 1^st Debt has remained payable by D.  In particular, Ps seem now to want to both remain in occupation of the stall and demand repayment of the 1^st Debt.  In my view, this cannot be the case even on their alleged terms and conditions of the Supplemental 1^st Debt Agreement.  In the circumstances, P1’s claim against D for the 1^st Debt must fail. 

Counterclaim

70.D’s counterclaim was based on the daily deduction of HK$2,000 for repayment of the 1^st Debt and that Ps had received over payments.  D had sought an account from P2 for amounts received by P2 through his younger brother or daughter in excess of RMB 5m from P1’s Portion during 2004 to 2012, and for an order that P2 to pay to D the excess amount.  As I have said earlier, due to the inconsistencies in D’s evidence, I am not satisfied that there was any oral agreement for a daily payment of HK$2,000 for any repayment of the 1^st Debt.

71.D is therefore not entitled to any account from P2 for any alleged excess amount.  D’s counterclaims must also fail.

The 2^nd Debt

72.P2’s case was that on the same occasion when the 1^st Supplemental Agreement was entered into, he and D had also entered into the 2^nd Debt Agreement, and that in purported repayment of the 2^nd Debt, D had delivered to P2 5 post-dated cheques (“1^st Batch of Cheques”) for settlement of the 2^nd Debt.  However, in about late 2006, D orally requested P2 not to present the 1^st Batch of Cheques for payment as he did not have sufficient funds in his bank account to meet the payment.

73.Then, a further oral agreement was reached between P2 and D in late 2006 at the Stall, that P2 would withhold presentation of the 1^st Batch of Cheuqes and gave time to D to repay the 2^nd Debt, and that in consideration of P2’s agreement of not presenting the 1^st Batch of Cheques for payment, D would settle the 2^nd Debt by 4 monthly instalments starting from mid 2009, to be secured by 4 post-dated cheques (“2^nd Batch of Cheques”).

74.Thereafter, according to P2, sometime in about mid 2009, D approached him and orally requested him not to present the 2^nd Batch of Cheques for payment and P2 agreed to withhold presentation and would give time to D to repay, and in consideration thereof, D was to settle the 2^nd Debt by 7 monthly instalments starting from mid 2011, to be secured by 7 post-dated cheques (“3^rd Batch of Cheques”).

75.P2 said in about mid 2011, D approached P2 at the Stall and orally requested D not to present the 3^rd Batch of Cheques for payment and orally represented to P2 and promised that he would work out a realistic schedule for the repayment of the 2^nd Debt, but D had failed and/or refused to pay the 2^nd Debt or any part thereof.

76.Eventually, P2’s solicitors wrote to D on 3 June 2014 demanding repayment of the 2^nd Debt, but D had failed to repay.

77.In the D&C, D simply denied what was pleaded by Ps in the statement of claim in relation to the 2^nd Debt and the 3 Batches of Cheques.

78.In his witness statement, D said that P2 was worried that he could not collect sufficient proceeds for the daily deduction of HK$2,000 and P2 “forced” D to issue and deliver to him various post-dated cheques including the 1^st Batch of Cheques, so that P2 could present them for payment in case he could not receive sufficient amounts from P1’s Portion.  However, when cross-examined by Mr Wong on how the 2^nd Debt arose, D had at first again said he could not recall but later he then said the amount of HK$850,000 was an accumulation of amounts for the supply of the Produce, or part of a “rolling” account.  He had also said they were many other cheques written by him.

79.What D said about a “rolling” account did not really make sense.  As pointed out by Mr Li, if it was a “rolling” account, why would the amount always be HK$850,000 for each of the 3 Batches of Cheques. Anyway, I do not find D’s evidence in relation to the 3 Batches of Cheques credible.

80.Although P2 did not mention anything about the 2^nd Debt or the 3 Batches of Cheques in his statement to AFCD or during the Criminal Trial, P2 was not cross examined at all by Mr Wong on the 2^nd Debt or the 2^nd Debt Agreement or the 3 Batches of Cheques. 

81.I accept that although the 1^st Debt Agreement was in writing, there was no written agreement in relation to the 2^nd Debt.  However, in my view, the fact that P2 had in his possession 3 Batches of Cheques, each Batch coming to exactly HK$850,000 supported his evidence, and having compared his evidence and D’s evidence, I find P2’s version was the more probable one, and I find that there was the 2^nd Debt of HK$850,000 as evidenced and acknowledged by D by the 3 Batches of Cheques, and that the 2^nd Debt has remained outstanding and unpaid.

82.In the above circumstances, I will allow P2’s claim for the 2^nd Debt.

Conclusion

83.In light of all the above, my order is:

(i) P1’s claim for the 1^st Debt in the sum of RMB4,000,000 is dismissed;

(ii) D shall pay P2 the 2^nd Debt in the sum of HK$850,000 within 28 day hereof with interest from date of writ at 1% over prime rate until date of this judgment, and thereafter , at judgment rate until payment ;

(iii) All D’s counterclaims against P2 are dismissed.

Costs

84.Neither P1 nor D is wholly successful in their claim/counterclaim.  Having considered all the circumstances, I am of the view that there should be no order as to costs, including all costs reserved.  This is an order nisi which shall be made final within 28 days.

Mr Tony C Y Li, instructed by Tso Au Yim & Yeung, for the 1^st and 2^nd plaintiffs

Mr Philip Wong, instructed by Jim & Co, for the defendant