Ding Shu Ju v. Chu Sai Keung
Read the full judgment text of HCA 835/2013 on BabelCite. This High Court CFI judgment was delivered on 11 August 2016.
1. In this action the plaintiff, Ding Shu Ju (“ Madam Ding ”) claims the sum of HK$1,500,000 from Chu Sai Keung (“ Mr Chu ”). She alleges that she lent that money to him on or around 7 June 2011, having first borrowed it herself from Honip Credit Limited (“ Honip Credit ”). She also claims expenses of HK$2,800, being the cost incurred when selling her property against which the HK$1,500,000 was secured when she became obliged to repay Honip Credit at a time when Mr Chu had not repaid her.
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HCA 835/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 835 of 2013 ________________________
________________________ (By Original Action)
________________________ (By Counterclaim)
________________________ JUDGMENT ________________________ 1.In this action the plaintiff, Ding Shu Ju (“Madam Ding”) claims the sum of HK$1,500,000 from Chu Sai Keung (“Mr Chu”). She alleges that she lent that money to him on or around 7 June 2011, having first borrowed it herself from Honip Credit Limited (“Honip Credit”). She also claims expenses of HK$2,800, being the cost incurred when selling her property against which the HK$1,500,000 was secured when she became obliged to repay Honip Credit at a time when Mr Chu had not repaid her. 2.Mr Chu denies that the money paid by Madam Ding was a loan to him, but says that it was a repayment by Madam Ding, made on behalf of Wong Shiu Tong (“Mr Wong”), of money which Mr Wong owed to Mr Chu. Mr Wong is Madam Ding’s husband. Mr Chu also counterclaims against Mr Wong for various sums in renminbi (“RMB”) (namely RMB607,622.05, RMB1,526,153.84, and RMB953,170.57) as monies which Mr Chu says he lent to Mr Wong. Mr Chu also counterclaims the same RMB953,170.57 against Madam Ding on the ground that such sum was lent to both Madam Ding and Mr Wong jointly. 3.In response to the claim by Mr Chu, Mr Wong counterclaims against Mr Chu for HK$1,535,622.66 and RMB251,849.41, which are sums that Mr Wong alleges he lent to Mr Chu. 4.These claims involve, between them, a series of 60 individual transactions between the various parties occurring between 29 September 2008 and 7 June 2012, as well as other more general agreements said to have been reached which are said to explain some of the 60 transactions. In those transactions money passed variously between Mr Wong, Mr Chu, Madam Ding, Mr Chu’s wife, and some commercial organisations. The parties each allege that a different interpretation should be put upon each transaction. Essentially each party contends that when it paid money to another (or to a commercial organisation) the money was a personal loan made to that other party, and when it received money, that was the repayment of a loan by the other party. The counterparty to that transaction alleges, essentially, the diametrically opposite proposition. The corporate and property involvement 5.Unfortunately, the resolution of the dispute is made more complex than simply a tripartite flow of money, by the imposition of at least two main corporate vehicles. 6.First is a company known as Dougguan Advance Coating Tape & Product Company Limited (“Advance Coating”). Advance Coating is a company incorporated in the PRC and is a wholly‑owned subsidiary of a company incorporated in Hong Kong called Advance Coating Tapes & Products Company Limited (“Advance Coating Hong Kong”). Advance Coating Hong Kong is owned as to 65% by Mr Chu, 15% by Mr Wong and 20% by a gentleman called Ho Yu Tang (“Mr Ho”). 7.Secondly is a company known as Everwell Industrial Company Limited. This is a company incorporated in Hong Kong which is owned as to 80% by Mr Chu and 20% by Li Xuefen, who Mr Chu says is his wife. There is also a further company, identified only as “Everbright”, apparently also owned predominantly by Mr Chu. The precise nature of “Everbright” is not entirely clear and nor is its exact ownership structure. Everwell Industrial Company Limited and “Everbright” appear to be operating companies which have their own businesses, although for the purposes of this action it appears that Mr Chu has used either one or the other of them as his own personal corporate vehicle through which money flows regularly. Because of the nature of the evidence in this action it is not possible for me to tell which of either Everwell Industrial Company Limited or “Everbright”, or both, had money flowing into, or out of it. However neither of those companies is a party to this action and, for the purposes of this judgement, I shall treat them as a single unit which I shall call “Everwell”. 8.In or around 2008 Mr Wong, Mr Chu and Mr Ho (who appears to have always lived in the United States of America) entered into a business venture together, through Advance Coatings, by which they manufactured industrial tape products. Mr Chu seems to have managed and run the business of Advance Coatings, whilst Mr Ho and, to a lesser extent, Mr Wong were more silent partners. 9.The business appears not to have been a huge success because, shortly after commencement, Advance Coatings had cash flow problems which are said to have required the injection of capital. The way in which the capital was injected in those early days is not clear, but Mr Chu says in his defence and counterclaim that he injected the money into Advance Coating and such money was treated as a loan made to Mr Wong and Mr Ho for their aliquot share. Inevitably, given the shareholding structure, the aliquot share relates to the percentage of shares which each of those gentlemen held in Advance Coatings Hong Kong, because the PRC company was a 100% subsidiary of Advance Coating Hong Kong. Notwithstanding that, throughout the period to which this action relates, the parties have treated themselves as being direct shareholders of Advance Coatings. I do not think anything turns on this issue for the purposes of this action, and therefore I shall proceed on the assumption that, notwithstanding the legal inaccuracy, Mr Wong, Mr Chu and Mr Ho were indeed shareholders of Advance Coatings, and that anything which they have purported to do as shareholders was indeed legitimately done as a shareholders. 10.On or around 30 June 2010 there was a shareholders meeting of Advance Coatings at which the shareholders agreed to restructure the company, and inject a further RMB4,000,000. Each shareholder wished to inject a different amount of capital, and therefore the shareholding percentages were varied such that after the capital increase Mr Chu would own 65%, Mr Wong 30.47% and Mr Ho 4.53%. The effect of this restructuring agreement was that Mr Wong was required to pay to Advance Coating a sum of RMB1,400,390.59 for his aliquot share of the capital increase. It is not clear from the document which was signed by the shareholders precisely the form in which the capital increase was to be effected. In some of the financial statements that I have seen it is treated as paid up capital, but in others it is treated as shareholders loans. 11.The real difficulty which exists in relation to this action is that the parties have transferred money as between each other without any accurate records of what was transferred or any record of the purpose of that transfer. 12.Mr Chu has, essentially, treated the transfers as transactions which involved one or other, or indeed both, of either Everwell or Advance Coatings, and as a result he has caused various of the transactions to be booked into the accounts of Advance Coatings. The transactions are booked in slightly different manners but the essence of his case is that he had caused Everwell to advance significant sums to Advance Coatings on behalf of both himself and the other shareholders of Advance Coatings. Each time that any money was transferred as between himself and Mr Wong, notwithstanding that the flow of funds was between them personally, he has caused Everwell and Advance Coatings to book those sums as payment, or repayment, of loans either as between Mr Wong and Everwell or alternatively as between Mr Wong and Advance Coatings. The rationale for him taking this approach is that it is his evidence that there was an agreement between him and Mr Wong (and Mr Ho) that they would pay for all the expenses incurred by Advance Coatings. 13.Mr Wong, on the other hand, does not consider that the flow of funds between the various parties has anything to do with Advance Coatings save that he accepts that he owed RMB1,400,390.59 to Advance Coatings pursuant to the Restructuring Agreement. He says that he paid that amount in various different tranches, and he has no further liability to pay the costs and expenses of Advance Coatings. He accepts that the amounts which he paid towards his shareholder’s liability were in fact pay to Mr Chu, for Mr Chu to forward to Advance Coatings, but outside those amounts anything which he paid to Mr Chu, or which Mr Chu paid to him, amount to personal loans as between the two of them. 14.In so far as Madam Ding is concerned, both she and Mr Wong say that the HK$1,500,000 which she lent to Mr Chu was a personal loan given to him because he requested Mr Wong to lend him money for some unspecified purpose. Mr Chu denies that, and says that this sum was paid to him by Madam Ding on behalf of Mr Wong, and formed part of the overall series of transactions by which Mr Wong was satisfying part of his liabilities to Advance Coatings. Mr Chu says that he had paid those liabilities to Advance Coatings on behalf of Mr Wong and that therefore the liabilities were owed to Mr Chu, either directly or through his corporate vehicle Everwell. 15.In addition to the business which was conducted through Advance Coatings, Mr Chu and Mr Wong have entered into at least one property transaction together. In around March 2008 they purchased a flat on the 46th floor of Tower 2 of The Capitol, at Lohas Park. It appears that Mr Chu in fact paid for that (either directly or through his company Everwell), but there was an agreement that it would be shared as to two thirds by Mr Chu and one third by Mr Wong. The property was sold in March 2012. Mr Wong and Mr Chu are agreed as to the appropriate split of the equity in the property, but Counsel for each of them have described the difference between them as being that Mr Wong contends that there was no agreement that he would pay one third of the costs associated with ownership of the property. He says that all such costs should be allocated to Mr Chu and not to him. Mr Chu, on the other hand, contends that the costs of ownership should be split in proportion to the percentage ownership. As will be clear from my own analysis, I am not sure that this is, in fact, the difference between them; or at least if it is, then that is not clear from the evidence. The witnesses and the documents 16.I heard evidence from each of Madam Ding, Mr Chu and Mr Wong, as well as from the financial supervisor of Advance Coatings, Ms Ren. 17.Each witness that was a party essentially gave evidence consistently with their individual cases, albeit inevitably with some minor discrepancies which I shall discuss to the extent necessary below. Ms Ren told me about the method by which various monies were accounted for within Advance Coatings, and how various of the financial statements were prepared. However she accepted that she did not know anything about any personal loans as between Mr Chu and Mr Wong. 18.The two primary pieces of documentary evidence to which the parties continually referred were:
19.I discuss the extent to which I am able to place any reliance on these documents below in the part of this judgment dealing with the overarching agreements. 20.There are various other documents which demonstrate some elements of the fund flow between the various parties; for example bank statements and a cheque. There are also various other spreadsheets and financial statements which purport to show the position of Advance Coatings, and the general ledger between Mr Wong and Mr Chu at various different times. In the scheme of things these other documents are of less significance and far less reliance has been placed upon them by the parties. Where such documents evidence the fund flow, I have considered them in my analysis below. 21.Mr Wong told me that he had kept his own personal records of everything which had been paid as between himself and Mr Chu. Most surprisingly he had not produced these records on discovery and they did not form part of the bundle before me. I am at a loss to understand why such obviously important documents were not discovered as part of the normal process of litigation. No explanation of this has been offered. 22.Ms Siu, acting for Mr Chu, produced a helpful list of all the transactions, based on the latest pleadings and witness statements, called Annexure A to her opening submissions. At my invitation she helpfully revised the document to reflect all the payments, and to ensure that every transaction was listed, with references to the various documents and evidence that addressed it. 23.Unfortunately it became clear during the course of the evidence that some of the transactions referred to in Mr Chu’s statement could not be found in precise terms in the Auditor’s Report. When the discrepancy between Mr Chu’s witness statement, his pleading, and the Auditor’s Report was pointed out to Mr Chu he stressed that the Auditor’s Report was the accurate document and that the court should operate on the basis that it accurately recorded the flow of funds. 24.As a result, counsel for neither Madam Ding nor Mr Wong would accept the schedule prepared by Ms Siu as being correct, largely because it reflected the Auditor’s Report dates and amounts, and not the dates and amounts found in Mr Chu’s statement. The court is therefore left not only with diametrically opposed views as to the nature of each of the 60 transactions, but also no agreement, and in many cases no contemporaneous evidence, as to the precise amounts, dates or indeed currency for many of the transactions. 25.However, having carefully considered the schedule prepared by Ms Siu I am satisfied that it does in fact represent all the transactions which have occurred between the parties that are the subject of this action, and whilst it leaves me to make various decisions as to the precise nature of the transaction, and whether it should be taken into account, and in what amount and in which currency, it is a very helpful guide to the issues which I have to decide. I am grateful for its preparation. I shall hereafter simple call it “the Schedule”. The overarching agreements 26.There are two predominant overarching agreements said to have been reached between the parties, and which will inform the overall position as between them:
27.These two overarching agreements are linked, and I shall identify my conclusions after having considered them both.
28.It is Madam Ding’s case that she was told by her husband, Mr Wong, that Mr Chu was in need of money because of his business cash flow problems. According to Madam Ding, Mr Wong and Mr Chu had discussed the issue and agreed that Madam Ding would mortgage a property which she owned so that she could lend money to Mr Chu. Madam Ding had no direct contact with Mr Chu in the context of agreeing the terms of the loan. As far as she was concerned she thought it had all been agreed between her husband and Mr Chu, and she never discussed the detail with Mr Chu. 29.On 7 June 2011, the day that the loan was taken out she met Mr Chu and went with him to Honip Credit who she had understood from her husband would make the loan when she signed the papers. During the journey they did have a discussion and Madam Ding understood that the loan to Mr Chu would be for a period of three months. In fact when they arrived at Honip Credit she signed a loan agreement which was for six months. Madam Ding was not really able to explain why a six‑month loan had been taken out in circumstances when Mr Chu had asked for a three‑month loan, although she said that it was something to do with the regulations that Honip Credit had, namely that they were unable to give a three‑month loan for the amount requested. She also said that whilst she was at Honip Credit with Mr Chu, Mr Chu agreed that he would be responsible for paying the mortgage, by which I understood her to mean that he would be responsible for paying the monthly payments. 30.It is clear, and the contemporaneous documentation demonstrates, that Mr Chu did in fact pay money to Madam Ding on a monthly basis in an equivalent sum, or in the latter months a near equivalent sum, to the monthly repayments that she was required to make to Honip Credit. 31.On the face of those payments they would appear to support the proposition that Madam Ding contends for. On one view there would be little rationale in Madam Ding paying HK$1.5 million to Mr Chu, but thereafter not having enough money to make the monthly repayments and having to borrow back from Mr Chu an amount to facilitate her payment of those monthly repayments. However Mr Chu contends that Mr Wong owed him the HK$1.5 million, and that therefore the money was paid by Madam Ding on behalf of Mr Wong. Mr Chu says that he was concerned to receive that principal amount, but was happy to lend back to Madam Ding enough for her to make the monthly repayments. 32.Madam Ding says that when the time for repayment of the Honip Credit loan came, Mr Chu did not pay the principal amount. She says that an extension was agreed between Mr Wong and Mr Chu, with the result that she was required to go back to Honip Credit and seek an extension of the loan. They did offer an extension of the loan but the monthly repayments were somewhat higher. She signed the new loan agreement, and then Mr Chu continued to pay the interest payments. 33.It is apparent from the contemporaneous documents that the amounts which Mr Chu paid were not precisely the same as the monthly repayments required to be made to Honip Credit in this latter period. Madam Ding was questioned about this but was not able to give a clear answer as to why the sums were different. Mr Chu relies upon this difference as evidencing his proposition that he was not paying the monthly repayments but was instead lending money either to Madam Ding or to Mr Wong. The difficulty however for Mr Chu is that in relation to the first six‑month period the amounts are exactly the same as the monthly repayments and it was his case that he was in fact making those payments for Madam Ding, albeit by way of a loan. There is no particular reason, even on his case, why the amounts should differ from the monthly repayments during the six‑month period of the extended loan. Consequently I do not see that the difference can be relied upon by Mr Chu to support his version of events. 34.By the time that the second loan from Honip Credit expired Mr Chu had still not paid the principal amount and as a result Madam Ding says that she was obliged to sell her property in order to repay the loan to Honip Credit Ltd. In so doing she has incurred HK$2,800 of expenses which she also re‑claims from Mr Chu.
35.Mr Chu contends that, as a result of the restructuring of Advance Coatings, Mr Wong owed money to him (or Everwell) because he had agreed to inject RMB1,400,390.59 into Advance Coatings, and Mr Chu had made that payment on his behalf. He says that Mr Wong’s practice was to make payment of that amount via his wife, Madam Ding. It is his case, as set out in paragraph 23 of his witness statement that as at 3 May 2011 Mr Wong had paid a total of RMB923,921 of RMB1,400,390.59. Simply as a matter of mathematics that would leave a balance due of RMB476,470 as at that date. 36.Mr Chu then says that the sum of HK$1,500,000, drawn on 8 June 2011, was in partial repayment of the debt owed by Mr Wong to Mr Chu as a result of the payment by Mr Chu to Advance Coatings on behalf of Mr Wong. Taking the exchange rate that Mr Chu used for the purposes of his statement, that payment would amount to RMB1,250,550. It is immediately apparent that on the basis of the restructuring agreement alone, this was more than Mr Wong owed. Mr Chu’s case must therefore involve something more than simply the restructuring agreement. 37.In fact, although it does not appear expressly in his witness statement, I have understood Mr Chu to contend that there was a continuing obligation on the three shareholders to contribute whatever was needed by Advance Coatings in order to run its business. Such a continuing obligation would represent a completely unlimited liability of Mr Ho, Mr Chu and Mr Wong to contribute to a company in the PRC that they were not in fact shareholders of. In addition it would require Mr Ho and Mr Wong to make unlimited contributions to a company which was, as a matter of fact, controlled and operated by Mr Chu on their behalf. Whilst I accept that such an agreement is possible, and indeed could have been entered into, I would expect that the parties would have recorded this agreement in some manner. However there is no record of this further unlimited liability agreement. The only contemporaneous document is the restructuring agreement, which indicates a limited liability to contribute an additional investment of RMB4 million in total. That document is therefore inconsistent with Mr Chu’s case. 38.The only documents which would support Mr Chu’s case are the Auditor’s Report and the underlying data which Mr Chu says was the basis of that report. However there are several difficulties and inconsistencies with those documents:
39.In the light of these difficulties with the Auditor’s Report, none of which have been adequately explained by Mr Chu, I have come to the conclusion that I am unable to rely upon the Auditor’s Report as an accurate representation of the dealings between Madam Ding, Mr Chu and Mr Wong. In reaching this conclusion I decline to go so far as Mr Wong and Madam Ding have suggested, and I decline to reach the conclusion that this report was specifically manufactured by Mr Chu for the purposes of this litigation. To the contrary. I would think it is highly unlikely that Mr Chu prepared, or caused to be prepared, the detailed spreadsheet which he said was the raw data for this report. The only conclusion which I need to reach is whether the Auditor’s Report is reliable for the purposes of resolving this litigation. I do not need to go any further and I do not do so. 40.As a result I do not think that I can rely upon it to support Mr Chu’s case that Mr Wong took on an unlimited liability to pay the expenses of Advance Coatings. 41.The only other contemporaneous document that the parties have brought to my attention is the email attachment to Mr Chu’s email dated 21 August 2012. As mentioned above, the attachment is called “general ledger between Chu and Wong”, and it is a spreadsheet which appears to record the various transactions between them. 42.There is another copy of what appears to be the same spreadsheet attached to a further email from Mr Chu to Mr Wong dated 29 January 2013. The contents of this further attachment are slightly different to the contents attached to the email of 21 August 2012 although the format of at least part of it is the same. This indicates that the spreadsheet was a working document which seems to have been updated as time progressed. 43.There is a degree of difference between the evidence of Mr Wong and that of Mr Chu as to who was responsible for the contents. Mr Chu contends that Mr Wong was entirely responsible for the contents, and as a result he (at least in his evidence) sought to deny the reliability of this document. Notwithstanding that, his counsel sought to use the document both as a tool for cross examination of Mr Wong on the basis that it showed Mr Wong as owing money to Mr Chu, and in her closing submissions, to support Mr Chu’s case. 44.One of the reasons that Mr Chu denied the accuracy of the printed document in the bundle was because it included a date of 30 March 2014 in several places, which would indicate (so says Mr Chu) that it cannot be the attachment to the email sent in 2012. Mr Chu pointed to another version of the same document, this time attached to the email of January 2013, which did not include the date of 30 March 2014, but instead included the date of 31 December 2012 in those places. Mr Wong’s explanation of this was that the cells in which the date 30 March 2014 appeared contained a formula which produced the date on which the document was printed, so it simply meant that the document appearing in the bundle was printed on 30 March 2014. This is a perfectly possible explanation. He was not able to explain why the later version, sent by email in January 2013 used the date of 31 December 2012. However, it seems to me to be perfectly possible that somebody had altered the contents of the spreadsheet to represent the date on which the business ceased operating (31 December 2012) rather than the “current” date. I have no evidence to that effect, and make no findings, but I do not think that the existence of the date of 30 March 2014 inevitably invalidates the general ledger spreadsheet as a useful tool in analysing the position as between the parties. 45.Mr Wong, on the other hand, suggested that it was Mr Chu who was entirely responsible for the content of the attachment, although he did accept that he sometimes informed Mr Chu as to what should be written in the spreadsheet. He used this explanation to explain why there were references to “my wife”, which was clearly a reference to Madam Ding. It appears to me that the reason why Mr Wong was keen to distance himself from the spreadsheet content was because in many instances it showed that he owed money to Mr Chu. 46.Having considered this spreadsheet with some care it appears to me to be likely that both Mr Wong and Mr Chu were to some extent responsible for the contents of individual cells. In my view it was a working document that was updated by whomsoever considered it appropriate to update it. That might on some occasions have been Mr Wong and it might on other occasions have been Mr Chu. 47.The spreadsheet appears to consist of three separate parts, and Mr Chu confirmed this in his evidence. First there is an analysis of the financial position concerning the purchase of the property at Lohas Park. Secondly is the running account between Mr Wong and Mr Chu. Thirdly there is a slightly different type of running account which Mr Wong told me was prepared by the financial controller of Advance Coatings. It is not entirely clear to me whether this was a reference to Ms Ren, but if it was then it is inconsistent with her own evidence, because she confirmed that she had no knowledge at all of any private dealings between Mr Wong and Mr Chu. However the parties have not concentrated on this 3rd part of the spreadsheet and not invited me to draw any conclusions from it. 48.The main focus of the parties’ attention has been on the 2nd aspect of the spreadsheet, namely the running account between Mr Wong and Mr Chu. I shall refer to this part of the spreadsheet as the “General Ledger”. In my view this General Ledger does not assist Mr Chu’s case to the effect that there was an unlimited liability of Mr Wong to contribute to the expenses of Advance Coatings. It is simply a record of the amounts that were paid as between himself and Mr Wong.
49.Having regard to all of the evidence I have heard and considered, Mr Chu has failed to persuade me that the shareholders of Advance Coatings took on an unlimited liability to pay for its expenses. In my view the restructuring agreement that was reached represented the total liability of the shareholders to make a contribution to Advance Coatings. Any further money which they contributed to Advance Coatings was a voluntary contribution made on an ad hoc basis. 50.I am satisfied that Mr Chu did pay Advance Coatings the RMB1.4 million which was Mr Wong’s liability arising under the restructuring agreement. As a result I am also satisfied that as at the date of the restructuring agreement Mr Wong did owe that same sum to Mr Chu as a personal obligation. I shall take this into account when assessing the extent of the money owed by either party. 51.I also have little doubt that as a matter of fact much of the money which was passed between Mr Wong and Mr Chu was actually used for the expenses of Advance Coatings. But I do not accept that this was done as an absolute obligation of Mr Wong, as Mr Chu has contended. I accept that Mr Wong did in fact make loans to Mr Chu, and whilst I have not seen any specific evidence demonstrating this, it may well be that Mr Chu (either directly or through his company Everwell) then made loans to Advance Coatings to pay many of its operating expenses. However given the nature of the obligations which the shareholders owed to Advance Coatings I do not consider that the money paid by Mr Wong to Mr Chu can be considered as the repayment of a loan, to the extent that it exceeded the RMB1.4 million which I have already concluded was lent by Mr Chu to Mr Wong. As a result, I will take all amounts paid as between Mr Wong and Mr Chu to be personal payments made between the two of them and I shall account for them as part of a running account. 52.These conclusions have an effect upon the conclusions that I must reach in relation to the position as between Mr Chu and Madam Ding. In the light of the mathematics which I have identified above, it cannot be said that the HK$1,500,000 which was paid by Madam Ding to Mr Chu represented the repayment by Mr Wong of an amount that he owed to Mr Chu. At the time of that payment the maximum amount which Mr Wong owed to Mr Chu was RMB476,470. 53.Consequently I am satisfied that the HK$1,500,000 did represent a personal loan made by Madam Ding to Mr Chu. In my view it is irrelevant that this loan was made at the behest of Mr Wong, and that it was Mr Wong who made the arrangements. I am also satisfied, having regard to all the evidence, that Mr Chu agreed to shoulder the responsibility of making the monthly repayments, which represented only the interest element on the principal amount. I am very conscious that some of the payments made by Mr Chu to Madam Ding are not in precisely the same amounts as the interest repayments required. As a result when analysing the individual transactions I shall take the payments made by Mr Chu into account as part of a running account as between him and Madam Ding, and I shall also take the precise amount of the interest payments into account. By this means, the end result will that Mr Chu will pay no more than the principal amount together with the monthly interest payments, which is what I conclude he agreed to do. Analysis of the transactions 54.Having regard to those conclusions on the overarching agreements, I must now address each of the 60 transactions that took place and make an assessment of how each of those transactions should be taken into account in the running balance between the various parties. Once I have done that, I will draw the threads together to reach a conclusion as to the amounts that each party may owe to the other, and therefore the amounts of any judgment that I must give. 55.Inevitably this section of the judgment contains a degree of repetition, as a similar analysis applies to many of the payments. I have tried to be consistent in my wording where that is the case, but inevitably some differences will occur. Notwithstanding that similarity of wording, I confirm that I have considered each payment that is alleged, and looked at the proper way to assess it.
56.Mr Wong calls this a Loan, but I conclude that it represents his capital contribution to the Lohas Park Property, as alleged by Mr Chu. It should not form part of the running account balance, and will be addressed as part of the Lohas property account which I shall address separately.
57.Mr Chu has not mentioned this amount in his evidence, but it is mentioned in Mr Wong’s evidence and appears on the General Ledger. I find that this is an amount previously lent to Advance Coatings, and subsequently converted into shareholders equity when Advance Coatings was restructured. It should be taken into account as part of the running balance as between Mr Wong and Mr Chu.
58.There is a difference of opinion as to the amount of this payment, with Mr Chu contending that only RMB142,000 was paid. The amount of RMB200,000 appears in the General Ledger, so I accept that this was paid. I find that this is an amount previously lent to Advance Coatings, and subsequently converted into shareholders equity when Advance Coatings was restructured. It should be taken into account as part of the running balance as between Mr Wong and Mr Chu.
59.There is agreement on the evidence on this amount. I find that this is an amount previously lent to Advance Coatings, and subsequently converted into shareholders equity when Advance Coatings was restructured. It should be taken into account as part of the running balance as between Mr Wong and Mr Chu.
60.There is agreement on the evidence on this amount. I find that this is an amount previously lent to Advance Coatings, and subsequently converted into shareholders equity when Advance Coatings was restructured. It should be taken into account as part of the running balance as between Mr Wong and Mr Chu.
61.There is agreement on the evidence on this amount. I find that this is an amount previously lent to Advance Coatings, and subsequently converted into shareholders equity when Advance Coatings was restructured. It should be taken into account as part of the running balance as between Mr Wong and Mr Chu.
62.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
63.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
64.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
65.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
66.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
67.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
68.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
69.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
70.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
71.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
72.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
73.The parties agree that this amount, in Hong Kong Dollars, was paid by Madam Ding to Mr Chu. Mr Chu says that this is a part of the repayment of the loan that Mr Wong owed to him. Both Mr Wong and Madam Ding say that this was a loan made by Madam Ding on behalf of Mr Wong, to Mr Chu. Madam Ding does not counterclaim this amount. 74.As a result, I have treated it as part of the running account as between Mr Wong and Mr Chu. Beyond that conclusion, I do not need to reach any other conclusions as to the purpose of the payment. The amount will simply be picked up as part of the running account between Mr Wong and Mr Chu so as to reflect the evidence that it was paid on behalf of Mr Wong.
75.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
76.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
77.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
78.The parties agree that this amount, in Hong Kong Dollars (“HKD”), was paid by Madam Ding to Mr Chu. However Mr Chu accounts for it in RMB, and splits it into a total of three payments. 79.There is bank statement evidence of the payment being made in HKD, so I leave the amount in that currency. 80.Mr Chu says that this is a part of the repayment of the loan that Mr Wong owed to him. Both Mr Wong and Madam Ding say that this was a loan made by Madam Ding on behalf of Mr Wong, to Mr Chu. Madam Ding does not counterclaim this amount. 81.As a result, I have treated it as part of the running account as between Mr Wong and Mr Chu. Beyond that conclusion, I do not need to reach any other conclusions as to the purpose of the payment. The amount will simply be picked up as part of the running account between Mr Wong and Mr Chu so as to reflect the evidence that it was paid on behalf of Mr Wong.
82.The parties agree that this amount, in Hong Kong Dollars, was paid by Madam Ding to Mr Chu. However Mr Chu accounts for it in RMB, and splits it into a total of three payments. 83.There is bank statement evidence of the payment being made in HKD, so I leave the amount in that currency. 84.Mr Chu says that this is a part of the repayment of the loan that Mr Wong owed to him. Both Mr Wong and Madam Ding say that this was a loan made by Madam Ding on behalf of Mr Wong, to Mr Chu. Madam Ding does not counterclaim this amount. 85.As a result, I have treated it as part of the running account as between Mr Wong and Mr Chu. Beyond that conclusion, I do not need to reach any other conclusions as to the purpose of the payment. The amount will simply be picked up as part of the running account between Mr Wong and Mr Chu so as to reflect the evidence that it was paid on behalf of Mr Wong.
86.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu for payment of the Shareholders Equity that Mr Wong was due to contribute to Advance Coatings. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
87.Mr Chu’s case, as set out in the Schedule, is that he borrowed this amount from Mr Wong for another company known as Yong Heng Feng. Mr Wong says that he lent Mr Chu an amount of RMB250,000 for Yong Heng Feng, although that was booked as a loan by Mr Wong to Yong Heng Feng directly, which he did not agree with. 88.I find that this amount was lent by Mr Wong to Mr Chu, probably for Yong Heng Feng. It does not appear on the General Ledger, is not referred to in Mr Chu’s witness statement, but appears in an email from Mr Wong dated 14 June 2012. It therefore appears to be agreed in the evidence and submissions. It will be picked up as part of the running balance between them.
89.This is the amount that Madam Ding lent to Mr Chu, and which she borrowed from Honip Credit, which I have assessed as part of the overall agreements above. The evidence of this payment is clear, and it is not disputed. However, Mr Chu contends that this is simply part of the running balance between Mr Wong and Mr Chu. I accept the evidence of Mr Wong and Madam Ding that this is a separate transaction between Mr Chu and Madam Ding. Whilst it is likely that it was made at the behest of Mr Wong, I do not see any reason why Madam Ding, who has sued for the money, should be deprived of it simply because her husband asked her to make the loan. 90.It does appear on the General Ledger, but the monthly repayments do not. I shall pick it up as part of the running balance between Madam Ding and Mr Chu.
91.This is one of the monthly payments made in respect of the HK$1,500,000 loan Advance by Madam Ding to Mr Chu. Mr Chu does not mention it in his evidence. It is a payment of the exact amount that Madam Ding was obliged to pay to Honip Credit on 15 June 2011. I shall account for it as part of the running balance as between Madam Ding and Mr Chu, but will cancel it out overall by allowing, in that running balance, for the interest to be paid to Madam Ding.
92.The only place that this amount appears is in the Auditor’s Report and in the Schedule. Mr Chu does not mention it at all in his witness statement, and neither does Mr Wong or Madam Ding. Given that I have rejected the veracity of the Auditor’s Report as a basis to reach findings of the personal dealings between the three parties, I must also reject this payment as part of the running account between Mr Chu and Mr Wong.
93.This is one of the monthly payments made in respect of the HK$1,500,000 loan Advance by Madam Ding to Mr Chu. Mr Chu does not mention it in his evidence. It is a payment of the exact amount that Madam Ding was obliged to pay to Honip Credit on 15 July 2011. I shall account for it as part of the running balance as between Madam Ding and Mr Chu, but will cancel it out overall by allowing, in that running balance, for the interest to be paid to Madam Ding.
94.This is one of the monthly payments made in respect of the HK$1,500,000 loan Advance by Madam Ding to Mr Chu. Mr Chu says that it was a loan made by him to Mr Wong. I reject that evidence. It is a payment of the exact amount that Madam Ding was obliged to pay to Honip Credit on 15 August 2011. I shall account for it as part of the running balance as between Madam Ding and Mr Chu, but will cancel it out overall by allowing, in that running balance, for the interest to be paid to Madam Ding.
95.There is agreement on the evidence on the amount of this payment. Mr Wong says that it is an amount paid by Mr Wong to Mr Chu as a loan. I need not make any particular conclusions about that, as it will simply be picked up as part of the running account as between Mr Wong and Mr Chu. The precise purpose of the payment is immaterial to the conclusions as between Mr Wong and Mr Chu.
96.The amount of RMB50,000 appears in the Schedule, and appears in the General Ledger as having been paid by Mr Chu to Mr Wong. Mr Wong alleges that the amount should be HK$60,976. I prefer to take the figure appearing in the General Ledger. I need not make any particular findings as to the purpose of the payment. It will simply be picked up as part of the running account between Mr Chu and Mr Wong.
97.This amount appears in the evidence of Mr Chu, but does not appear anywhere else. There is no reference to it in the General Ledger, or in the Auditor’s Report that Mr Chu relies upon. I conclude that Mr Chu has mistakenly double counted a payment already made on 12 September in the sum of RMB50,000, and that his evidence is in error in respect of this second payment. It should be ignored as part of the running account between Mr Wong and M Chu.
98.This amount does not appear in the evidence of Mr Chu, but does appear in the Auditor’s Report, and in a voucher written in Chinese that nobody has given any evidence about. It is not mentioned by Mr Wong. Overall, as I have rejected the Auditor’s Report as a basis to assess the position as between the parties, I must reject this payment as part of the running account.
99.There is agreement that this payment was made by an agent of Mr Wong (known as Wu Yi Qiang) to Mr Chu. It appears as part of the General Ledger and should form part of the running account.
100.There is agreement that this payment was made by an agent of Mr Wong (known as Wu Yi Qiang) to Mr Chu. It appears as part of the General Ledger and should form part of the running account.
101.This is one of the monthly payments made in respect of the HK$1,500,000 loan Advance by Madam Ding to Mr Chu. Mr Chu says that it was a loan made by him to Mr Wong. I reject that evidence. It is a payment of the exact amount that Madam Ding was obliged to pay to Honip Credit on 15 September 2011. I shall account for it as part of the running balance as between Madam Ding and Mr Chu, but will cancel it out overall by allowing, in that running balance, for the interest to be paid to Madam Ding.
102.This is one of the monthly payments made in respect of the HK$1,500,000 loan Advance by Madam Ding to Mr Chu. Mr Chu says that it was a loan made by him to Mr Wong. I reject that evidence. It is a payment of the exact amount that Madam Ding was obliged to pay to Honip Credit on 15 October 2011. I shall account for it as part of the running balance as between Madam Ding and Mr Chu, but will cancel it out overall by allowing, in that running balance, for the interest to be paid to Madam Ding.
103.This is said by Mr Chu to be the reimbursement of a travelling fee, although there is no detail as to what the fee was in respect of, or why Mr Wong should reimburse Mr Chu for that. Mr Wong says that it was a loan that he made to Mr Chu. In my view it is appropriate for this amount to be included as part of the running account between Mr Wong and Mr Chu.
104.This is one of the monthly payments made in respect of the HK$1,500,000 loan Advance by Madam Ding to Mr Chu. Mr Chu says that it was a loan made by him to Mr Wong. I reject that evidence. It is a payment of the exact amount that Madam Ding was obliged to pay to Honip Credit on 15 November 2011 as interest (although she was also obliged to repay the capital amount on that day under the first loan). I shall account for it as part of the running balance as between Madam Ding and Mr Chu, but will cancel it out overall by allowing, in that running balance, for the interest to be paid to Madam Ding.
105.This amount does not appear in the evidence of Mr Chu, but does appear in the Auditor’s Report, and in a voucher written in Chinese that nobody has given any evidence about. It is not mentioned by Mr Wong. Overall, as I have rejected the Auditor’s Report as a basis to assess the position as between the parties, I must reject this payment as part of the running account.
106.There is agreement that this payment was made by an agent of Mr Wong (known as Wu Yi Qiang) to Mr Chu. It appears as part of the general ledger and should form part of the running account.
107.This payment is agreed, although Mr Chu accounts for it in RMB, whereas Mr Wong accounts for it in HKD on the basis that it was made in HKD. I prefer to account for it in Hong Kong Dollars on that same basis. Mr Wong says it was a loan by him to Mr Chu. Mr Chu says it was repayment of a loan by Mr Wong. The particular purpose of the payment is immaterial as far as the running account is concerned. It will just be taken into account as part of that process.
108.This amount does appear in the evidence of Mr Chu, and in the Auditor’s report, and in a voucher written in Chinese that nobody has given any evidence about. It is not mentioned by Mr Wong. Overall, as I have rejected the Auditor’s Report as a basis to assess the position as between the parties, I can only assess this payment based on Mr Chu’s witness statement. Generally he has accepted that his statement is prone to errors (in relation to the amounts), and that he relies upon the Auditor’s Report. Hence I am effectively left with nothing other than the Auditor’s Report, which I have rejected as a reliable basis of assessing the position as between the parties. Consequently, logically I must reject this payment as part of the running account too. 109.I stress that I have not found any other documentary evidence of this payment having been made, and in addition, it is an odd amount for a single payment to be made by way of a loan. I conclude that it should not form part of the running balance between Mr Wong and Mr Chu.
110.There is agreement that this amount was paid by Mr Wong to a chemical company. Mr Chu contends that the payment amounted to part repayment of a loan owed by Mr Wong to Mr Chu, but Mr Wong contends that it is a payment of a loan made by him to Mr Chu. It is recorded in the General Ledger. 111.On the basis that there is agreement that the amount was paid, and represents some form of personal obligation as between Mr Chu and Mr Wong there is no need for me to decide the precise purpose of the payment. It must form part of the running account between them.
112.This amount is mentioned in the General Ledger as having been paid by Mr Wong to Mr Chu. But it is recorded in both this sum of RMB326,400, and in the figure of HK$400,000. 113.Mr Chu says that it is part of a loan repayment made by Mr Wong. Mr Wong says that he was asked by Mr Chu to receive HK$485,840.05 from a friend of Mr Chu’s, and to pay Mr Chu HK$400,000 but to retain HK$85,840.50 as part repayment of the money that Mr Chu owed to Mr Wong. 114.I accept Mr Wong’s version, as set out in his evidence, on this payment. It is in Mr Chu’s favour. The sum of HK$400,000 should not be taken into account in the running balance, as it was received by Mr Wong as Mr Chu’s agent, and simply passed to him, but the amount of HK$85,840.05 will be taken into account as a payment by Mr Chu to Mr Wong as part of the running balance.
115.This amount has not been mentioned in the statement of Mr Wong, but does appear in the General Ledger. It is recorded as being a payment of the wages of Feng Hui. I accept that it occurred, and I also accept that it should form part of the running balance between Mr Wong and Mr Chu, irrespective of its actual purpose. I do not know why Mr Chu was paying Mr Wong in respect of Feng Hui’s wages, but given that it has been recorded in a contemporaneous document as being part of their personal dealings, I accept that it should form part of the running balance.
116.This is one of the monthly payments made in respect of the HK$1,500,000 loan Advance by Madam Ding to Mr Chu. It is in respect of the second loan, and does not represent the precise figure of the monthly payment, and was not paid on exactly the same date as that monthly payment was required to be made by Madam Ding to Honip Credit. It is not mentioned in Mr Chu’s statement, but apparently appears in the General Ledger in the sum of RMB23,060.16 and in a Chinese Journal Voucher nobody has given any evidence of. It does appear in Madam Ding’s statement in the Hong Kong Dollar figure, which I accept. Therefore, it will be accounted for as part of the running balance between Mr Chu and Madam Ding, but with an allowance being made for the fact that Mr Chu was obliged to pay the monthly interest payments that Madam Ding was obliged to pay Honip Credit.
117.This amount is contained in the General Ledger, but is said to have been a transfer from Mr Wong to Mr Chu “by CMB Bank”. In the Schedule it is said to be paid to Advance Coatings. Mr Chu does not mention it in his witness statement, and did not give evidence on it, although in the Schedule, which I am taking as being his case on each payment, it is said to be a repayment by Mr Wong. 118.Mr Wong’s statement said it was transferred to Advance Coatings, and he produces the bank statement which shows a transfer of that amount, but it does not say to whom it was transferred. Although this is a different type of payment, because it was, according to Mr Wong, made to Advance Coatings, and not to Mr Chu directly, I am overall of the view that it should be accounted for as part of the running account between Mr Wong and Mr Chu. This is because both parties are in agreement that it should be treated as part of their private dealings (although subject to their respective cases).
119.There is agreement that a sum of this amount has been paid by an agent of Mr Chu to Mr Wong, although Mr Chu accounts for it in RMB. Given that the amount in RMB that he uses is a figure of RMB113,995.20, I consider it more likely that this amount was paid in the more rounded figure of Hong Kong Dollars. I have also seen Mr Wong’s HSBC bank statement showing that amount entering his bank account. It should be accounted for as part of the running balance between Mr Wong and Mr Chu.
120.There is agreement that this sum has been paid by Mr Chu to Mr Wong. Mr Wong accepts it in his evidence, and it is recorded in the General Ledger as being a cash payment. It should be included as part of the running account.
121.There is agreement that a sum of this amount has been paid, although Mr Chu accounts for it in RMB. I have seen a letter from HSBC confirming that amount as having been transferred out of Mr Wong’s bank account. It should be accounted for as part of the running balance between Mr Wong and Mr Chu.
122.Mr Wong gives evidence of having received this sum in HKD. Mr Chu’s statement says that he paid RMB57,120 as a transfer to Mr Wong’s bank account, but he does not produce the transfer sheet. I accept that the payment was made, but I shall take it as being a payment in the more rounded figure of Hong Kong Dollars. It should be taken into account in the running balance between Mr Chu and Mr Wong.
123.This is one of the monthly payments made in respect of the HK$1,500,000 loan Advance by Madam Ding to Mr Chu. It is in respect of the second loan, and does not represent the precise figure of the monthly payment, and was not paid on exactly the same date as that monthly payment was required to be made by Madam Ding to Honip Credit. Therefore, it will be accounted for as part of the running balance between Mr Chu and Madam Ding, but with an allowance being made for the fact that Mr Chu was obliged to pay the monthly interest payments that Madam Ding was obliged to pay Honip Credit.
124.Mr Chu’s witness statement says that an amount of RMB24,480 was transferred to Mr Wong’s bank account, in RMB. I have no documentary evidence of the payment. It does not appear in the Auditor’s Report or the General Ledger. 125.Mr Wong says in his witness statement that this amount was paid by Mr Chu (although he does not say to whom) and that it was part payment of the monthly payments in respect of Madam Ding’s loan from Honip Credit. Mr Wong says however that the payment was HK$30,000 and I accept that this more rounded figure is likely. However, Madam Ding does not address this in her witness statement and was not cross examined on it. In those circumstances I cannot take it as part of the interest payment received on her behalf, and I must take it as part of the running account between Mr Wong and Mr Chu.
126.This is one of the monthly payments made in respect of the HK$1,500,000 loan advance by Madam Ding to Mr Chu. It is in respect of the second loan, and does not represent the precise figure of the monthly payment, and was not paid on exactly the same date as that monthly payment was required to be made by Madam Ding to Honip Credit. 127.It is approximately twice the amount that was payable on a monthly basis. Madam Ding gave evidence to the effect that her daughter was ill at that time and needed an operation, so Mr Wong asked Mr Chu to help by lending some money to pay for the hospital bills. As a result Mr Chu transferred HK$60,000. I shall take this amount as part of the running account between Madam Ding and Mr Chu but with an allowance being made for the fact that Mr Chu was obliged to pay the monthly interest payments that Madam Ding was obliged to pay Honip Credit.
128.This is one of the monthly payments made in respect of the HK$1,500,000 loan advance by Madam Ding to Mr Chu. It is in respect of the second loan, and does not represent the precise figure of the monthly payment, and was not paid on exactly the same date as that monthly payment was required to be made by Madam Ding to Honip Credit. Therefore, it will be accounted for as part of the running balance between Mr Chu and Madam Ding, but with an allowance being made for the fact that Mr Chu was obliged to pay the monthly interest payments that Madam Ding was obliged to pay Honip Credit.
129.There is agreement that this amount was paid by Mr Chu to Mr Wong. It will form part of the running balance between them.
130.This is one of the monthly payments made in respect of the HK$1,500,000 loan advance by Madam Ding to Mr Chu. It is in respect of the second loan, and does not represent the precise figure of the monthly payment, and was not paid on exactly the same date as that monthly payment was required to be made by Madam Ding to Honip Credit. Therefore, it will be accounted for as part of the running balance between Mr Chu and Madam Ding, but with an allowance being made for the fact that Mr Chu was obliged to pay the monthly interest payments that Madam Ding was obliged to pay Honip Credit.
131.There is agreement that this amount was paid by Mr Chu to Mr Wong. It will form part of the running balance between them. Overall conclusions on the running account 132.The conclusions from the above analysis are set out in tabular form in the appendix to this Judgment. They are further summarised as follows:
133.In addition to those amounts, it is necessary to made provision for the overarching agreements that I have identified above, and the various liabilities that arise as a result of those agreements. 134.As a result of those agreements:
135.Therefore, excluding the Lohas Park property and the other more minor claims, the amounts owed by each party to others are:
Lohas Park Property 136.There is agreement between the parties that Mr Wong and Mr Chu purchased Lohas Park Property together at a total price of HK$4,633,000. The immediate cash outlay was HK$1,552,889, with the balance being paid by way of mortgage borrowings. Mr Wong contributed an amount of HK$531,401.48 to that immediate cash outlay, which gave him an entitlement to a one third share of the property. The balance of the immediate cash outlay was paid by Mr Chu. 137.There is also evidence that Mr Wong paid an amount of HK$6,812.70 in respect of some costs of ownership. In the spreadsheet attached to Mr Wong’s email of 21 August 2012 that amount is said to be a management fee. 138.The property was sold for HK$4,488,000, and after deduction of the sale expenses and repayment of the mortgage, the amount left was HK$1,760,246. That amount is identified in the spreadsheet attached to Mr Chu’s email dated 21 August 2012, and I accept it as accurate. 139.Mr Wong pleads his entitlement, and that same assessment is contained in his evidence. It is not seriously challenged by Mr Chu, who simply puts Mr Wong to proof of the pleading, and alleges that all Mr Wong is entitled to is HK$314,100.42. However Mr Chu provides no details of this amount in his pleading and does not address the matter in any more detail in his witness statement. The issue was not explored at all in cross examination. Mr Wong pleads his entitlement as follows. 140.Total expenses in relation to purchase and ownership (excluding the Mortgage borrowing and repayment, but taking into account the monthly mortgage payments) are:
141.One third of that amount is HK$693,760.31, which represents Mr Wong’s share of the total cost of purchase and ownership, excluding the principal amount of the mortgage loan which was both borrowed and repaid. He has already paid a total of HK$538,214.18 of that amount, so he must pay an additional HK$155,546.13 towards the cost of ownership. 142.The net proceeds from the sale were HK$1,760,246.52, of which he would be entitled to HK$586,748.84, being one third of the proceeds. However, from that amount he must deduct his additional liability to contribute HK$155,546.13 to the costs of ownership. Therefore he is entitled to HK$431,202.71. 143.On the basis of this pleading, and his evidence, which confirms the pleading, and having checked the mathematics, I am satisfied that Mr Wong has proved his entitlement to this amount. I accept that it has not been paid by Mr Chu. I am unable to reach any conclusion on the amount stated by Mr Chu in his pleading, about which he gives no evidence. Mr Wong is entitled to have this amount added to any Judgment to which he is entitled. The costs of selling Madam Ding’s Saddle Ridge Property 144.Madam Ding claims against Mr Chu for the cost that she incurred in selling the Saddle Ridge Garden Property when she sold it to pay off the Honip Credit loan. She says that as Mr Chu had not repaid the loan she was forced to sell the property, and that the costs of her doing so should be borne by Mr Chu. The costs have been crystallised, and evidenced, in the sum of HK$2,800. 145.In my view it is not a direct consequence of Mr Chu failing to repay the principal amount of HK$1,500,000 on time, that Madam Ding sold the property. Indeed, the first time that Mr Chu failed to pay the loan off, the property was not sold, and the Honip Credit second loan was taken out. 146.As a result, I take the view that the decision to sell the property was one that Madam Wong was entitled to take, but not a decision that she can charge the costs of to Mr Chu. In my view her claim in respect of this amount fails. Interest 147.Both Madam Ding and Mr Wong claim interest on the amounts that they are owed pursuant to section 48 of the High Court Ordinance, in such sum as the court considers just. 148.There is no evidence of the parties having agreed any interest rate between them on any of the money that passed between them as loans. The only evidence of interest being payable is that Mr Chu was responsible for the interest payable to Honip Credit Limited, and the General Ledger, and spreadsheet relating to Lohas Park, contains some calculations of interest. However, no witnesses have given any evidence of any interest being payable. 149.Given the nature of the loans freely made as between the parties, and the lack of any agreement as to any terms, including as to interest, I do not consider that it is appropriate now to impose interest on those amounts as part of a discretionary exercise by the court. If the parties were prepared to lend money without any agreement for interest being payable, then they must take the consequence that no interest is indeed payable. As a result, I decline to award any interest on any amounts up to the date of this Judgement. Costs 150.Ms Siu, for Mr Chu suggested that I should award costs to follow the event of each claim and counterclaim. Mr Ma for Madam Ding, and Mr Poon for Mr Wong, suggested that I should take an overall view as to costs, and make a percentage award in my discretion having regard to the result that I ultimately arrive at in my judgment. None of the parties have suggested that there is any reason why I should not award costs at the same time as handing down Judgment. 151.I prefer the approach suggested by Mr Ma and Mr Poon, and I shall adopt it. 152.From the figures that I have arrived at above, it is clear that Mr Wong and Madam Ding have been almost entirely successful in their claims, and Mr Chu has been almost entirely unsuccessful. As a result, in the exercise of my discretion, I find that Mr Chu should pay the costs of Madam Ding and Mr Wong, to be taxed if not agreed. I do not consider it appropriate that there should be any reduction in recovery. Disposition 153.In all the circumstances I give judgment as follows:
154.I invite the parties to agree the appropriate form of an order to reflect this Judgment. The parties may consider that a balancing Judgment is appropriate as set out above, or they may consider that a separate Judgment for each claim and counterclaim is appropriate, leaving it to the parties to effect the necessary set offs. In the event that the parties are not able to agree the form of the appropriate order within 21 days of the date of this Judgment, they are each to file, within 28 days of the date of this judgment, written submissions with the court, setting out the form of the order that they suggest should be made, and the reasons for that. The court will then determine the form of the order.
Mr Billy Ma, instructed by Tam, Pun & Yipp, for the plaintiff (by original action) and the 2nd defendant (by counterclaim) Ms Rachael Siu, instructed by Lim & Lok, for the defendant (by original action) and the plaintiff (by counterclaim) Mr Billy Poon, instructed by Choi, Leung & Associates, for the 1st defendant (by counterclaim) Appendix
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