劉嘉華 v. 浩天會計事務所有限公司

DCCJ 3802/2016

[2020] HKDC 1002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3802 OF 2016

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Before: Deputy District Judge Jonathan Wong in Court

Date of Hearing: 14 November 2019

Date of Judgment: 18 November 2020

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JUDGMENT

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A. Introduction

1.The plaintiff is the owner of Flat J, 15/F, Block 6, Fullview Garden, 18 Siu Sai Wan Road, Hong Kong (“Property”).  Fullview Garden is a housing estate developed under the Private Sector Participation Scheme of the Hong Kong Housing Authority (“HKHA”).

2.The HKHA has put in place a policy to be followed where refinancing is sought in respect of subsidized sale flats including those developed under the Private Sector Participation Scheme.  In short, owners of subsidized sale flats shall not mortgage their flats without payment of the premium unless with prior approval of the Director of Housing who may impose such terms and conditions as he thinks fit [216].[1]

3.On 14 November 2015, the plaintiff entered into a written agreement with the defendant (“Agreement”) [156].  Under the Agreement, the plaintiff engaged the defendant to provide consultancy and referral services in respect of her intended loan application.  It is the plaintiff’s case that she was misled by the defendant, in that the defendant had represented to her that the mortgage (on the Property) to be obtained would bear low interest.

4.On 24 November 2015, through the arrangement of the defendant, the plaintiff executed a deed of loan with AEasy Credit Hong Kong Limited (“AEasy”), by which an unsecured loan in the sum of HK$800,000 was granted to the plaintiff (“AEasy Loan”) [163].  As the AEasy Loan was unsecured, the applicable interest was 22.93% per annum.

5.Thereafter on 12 January 2016, the plaintiff obtained another unsecured loan in the sum of HK$600,000 (“Smart Team Loan”) from Smart Team Finance Limited (“Smart Team”) [183].  According to the plaintiff, she obtained the Smart Team Loan at the suggestion of 怡泰豐集團企業有限公司 (“YTF”), who had offered to assist the her to apply for a mortgage on the Property.  It is the plaintiff’s case that she was defrauded by YTF and lost the HK$600,000 she deposited with YTF.  Whilst the plaintiff has reported the matter to the police and has commenced DCCJ 3497 of 2016 for the recovery of the sum of HK$600,000, she holds the defendant partly responsible for her loss.

6.By the Re-Amended Statement of Claim dated 12 December 2017 (“RASOC”) [56], the plaintiff seeks (1) rescission of the Agreement (and the associated documents), (2) essentially a post-judgment Mareva injunction and (3) damages. 

7.The heads of damages claimed in the RASOC include (1) HK$50,000 being the fee paid by the plaintiff to the defendant under the Agreement, (2) HK$98,553 being part of the instalments paid to AEasy, (3) HK$93,090 being part of the instalments paid to Smart Team, (4) legal fees in the sum of HK$8,000 paid to Messrs Tung Ng Tse & Heung in respect of the AEasy Loan and (5) HK$12,075.41 for mental distress.  In her witness statement dated 3 May 2018 [109], the plaintiff explains that the sums claimed in respect of the payments made to AEasy and Smart Team are intended to be the interest portion of the instalment payments. She further reduced her claim for mental distress to HK$10,357.

8.The plaintiff did not engage lawyers throughout these proceedings.  It is therefore understandable that the RASOC is not the most lucid document.  The thrust of the plaintiff’s allegations is as follows:-

(1)  prior to the execution of the Agreement and its associated documents, she was told by Mr Patrick Chan,[2] a director, of the defendant that the interest on the mortgage loan to be obtained would be around 2-2.5% per annum;

(2)  she engaged the defendant on that basis and executed the Agreement and its associated documents in reliance of Mr Patrick Chan’s representation;

(3)  at the time when she executed the Agreement and its associated documents, she did not carefully read the terms and she only discovered later that the loan contemplated under the Agreement was not a (low-interest) mortgage loan but an unsecured loan at much higher interest;

(4)  when she sought to cancel the Agreement (over the phone and via Whatsapp), Mr Patrick Chan behaved in a threatening manner and she felt intimidated;

(5)  after she obtained the AEasy Loan, she paid HK$50,000 to the defendant on the basis that the defendant would continue to provide service in respect of her mortgage application under the Agreement;

(6)  as the defendant did not do so, she reluctantly engaged YTF (as a replacement) but was defrauded;

(7)  it is on the foregoing basis that she seeks to hold the defendant partially responsible for loss caused by YTF’s fraud.

9.The defendant denies that the plaintiff was misled in any way or that it was in breach of the Agreement.  The defendant counterclaims for legal costs and quantifies the sum at HK$100,000 in its Defence and Counterclaim dated 15 March 2018 [64].[3] In gist, it is the defendant’s case that as the plaintiff was in cash needs and as no approval for refinancing of the Property was initially obtained, the defendant recommended, and the plaintiff accepted, that she would first obtain an unsecured loan and her mortgage application would be processed later.  The AEasy Loan was obtained pursuant to the foregoing proposal. 

10.At the trial, the plaintiff and the defendant each called one factual witness, respectfully the plaintiff herself and Mr Patrick Chan.

B. The applicable principles

11.As the credibility of the witnesses assumes significance in the resolution of the disputes in the present case, I remind myself of the following propositions set out in Hui Cheung Fai & Anor v Daiwa Development Limited, unreported, HCA 1734 of 2009, 8 April 2014 (at paragraphs 77-80):-

(1)  generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2)  in deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3)  in determining a witness’ credibility, importance is attached to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence and the latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement;

(4)  the court should caution itself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses.

12.The plaintiff’s factual allegations give rise to the consideration of a number of issues, namely misrepresentation, non est factum and intimidation.

13.As far as misrepresentation is concerned, the RASOC does not state specifically whether the alleged misrepresentation was made fraudulently, negligently or innocently.  Irrespective of which “mental state” of the representor was involved, in order for the plaintiff to succeed, she must demonstrate: (1) that there was a representation of fact made by words or conduct, (2) that the representation was false, (3) that she as the representee was entitled to and did actually rely on the false statement before executing the Agreement and its associated documents. 

14.Further, whichever remedy is sought for misrepresentation, it will be necessary to establish an adequate link between the statement and the consequence from which the representee claims to be relieved.  If the claim is for damages, the question is whether the statement caused the loss.  If the claim is for rescission of a contract, the inquiry is as to the causal link between the statement and the claimant’s entry into the contract: Misrepresentation, Mistake and Non-disclosure by Cartwright (4^th Ed) at §3-50.

15.As regards non est factum, it must be emphasized that the plea is not lightly allowed where a person of full age and capacity had signed a written document embodying contractual terms.  The key elements for a successful plea of non est factum may be summarized as follows (Chitty on Contracts (33^rd Ed) at §3-049 to 052):-

(1)  the belief of the signer that the person is signing a document of one character or effect whereas its character and effect were quite different;

(2)  the need for some sort of disability which gives rise to that state of mind;

(3)  the plea cannot be invoked by someone who does not take the trouble to find out at least the general effect of the document.

16.As stated at Tort Law and Practice in Hong Kong (3^rd Ed) §16.094-16.111, the requisite elements for a two-party intimidation are: (1) D makes a threat to P to do an unlawful act affecting him, unless P acts in a certain way, which D intended should cause loss to P (or ought reasonably have foreseen was likely to cause loss to P) and (2) P complies with the threat, by acting in the required way, with the consequence that P suffers loss.  Unlawful acts for the purposes of intimidation include not only criminal actions, but also breach of contractual and tortious duties.

C. Background

17.The matters set out in this section are either not disputed or gleaned from the documentary evidence.

18.The plaintiff graduated from university in 1998 with a degree in business administration.  She worked at an executive secretary at an investment bank from 1998 to 2010.  In 2010, she became unwell and stopped working. According to a reference letter issued by Pamela Youde Nethersole Easter Hospital dated 5 October 2016 [194],  she has a history of heart problems and underwent operation in 2011.  She suffered from severe post operation pain, dysthymia and anxiety order and has regular follow up in psychiatric clinic. She has insomnia and is dependent on medication.

19.In August 2015, at her friend’s recommendation, the plaintiff took up a part time accounting job with China Hua Nong Agricultural Funds Company Ltd (“China Hua Nong”).  In evidence there are two employment letters issued by China Hua Nong, both dated 1 August 2015 and set out different monthly salaries [209-210]. She confirmed that her monthly salary was HK$25,000.

20.According to a credit report of the plaintiff compiled by Transunion Limited (“Credit Report”) dated 17 November 2015 [211],[4] prior to entering into the Agreement, the plaintiff had in October and November 2015 applied for unsecured instalment loans from respectively Hang Seng Bank Limited (“Hang Seng Bank”) (in the sum of HK$300,000) and HY Credit Company Limited (“HY Credit”) (in the sum of HK$700,000).  The Credit Report does not state that any indebtedness was in fact owed by the plaintiff to either Hang Seng Bank or HY Credit.

21.The Credit Report also states that, amongst other credit cards, Standard Chartered Bank (HK) Limited had issued a Platinum and Infinite & Highly Positioned Visa Card to the plaintiff with a credit limit of HK$374,000.  As at 31 October 2015, the outstanding balance was HK$287,461 (“Standard Chartered Indebtedness”).

22.As stated above, the plaintiff and the defendant executed the Agreement on 14 November 2015.  Under the terms of the Agreement:-

(1)  it was contemplated that the Property would be used as the mortgage property and an application for a mortgage loan in the sum of HK$1,000,000 would be made;

(2)  the defendant would charge a service fee of 7% of the loan amount (ie HK$70,000), but only upon a successful loan application (“Service Fee”);

(3)  the plaintiff acknowledged that she understood that she had the absolute right to decide whether to accept the terms to be offered by banks or financial institutions referred to the plaintiff by the defendant.[5]

23.The Agreement was executed at the defendant’s place of business. Contemporaneous with the execution of the Agreement, the plaintiff also signed a number of associated documents including a declaration (“Declaration”) [157], a set of interview minutes (“Minutes”) [159], an authorization letter (“Authorization”) [160] and a confirmation letter (“Confirmation”) [161] (collectively “Associated Documents”).

24.The Declaration states, inter alia, that the engagement period had a long-stop date of 14 May 2016 (ie six months from the date of the execution of the Agreement) and that during the engagement period, if the plaintiff cancelled the Agreement, she undertook nevertheless to pay the Service Fee.

25.The remark section of the Minutes records that the plaintiff accepted that the interest rate of the loan to be arranged by the defendant would be 20-22%.  The entry (“Entry”) reads as follows:-

“客人劉嘉華…接受浩天會計代辨的貸款利息為年息20-22厘。參考每月供款19500，分120個月。借貸銀碼100萬。”

26.In addition to signing the Minutes at the bottom of the document, the plaintiff specifically signed next to the Entry.

27.The Authorization authorizes the defendant to obtain the plaintiff’s credit report.  I understand that the Credit Report was obtained by the defendant pursuant to the Authorization.

28.The Confirmation reads as follows:-

“本人(等)確認於聘用浩天時，浩天及/或其僱員或代理并沒有就其服務的質素作出陳述，本人(等)確認於聘用浩天時已作充分考慮并有權自行獲取獨立專業意見，本人(等)明白浩天之服務或所提供資料不能被視同或用作財務上之意見，亦不可用作為任可投資、貸款及交易決定之依據。本人(等)明白并同意自行判斷應否使用或依賴浩天之服務及所提供資料并自負風險，以及在根據該等資料而引致的任何直接、間接、附帶、特別或相應而生的損失、損害賠償、費用申索或要求。

客戶聲明：

本人(等)已細閱并清楚明白及同意上列之收服務費及條款，本人(等)承諾該收費需於財務機構放款當天以現金/支票全數支付。如有拖延或欠付浩天之服務費用，此文件將成為有效值香港特別行政區法律詮釋之文件證明並清楚明白及同意如本人(等)毀約浩天有權採取一切合法行動(包括但不止於法律行動)追討上述服務費用，一切訴訟及追討行動費用均由本人(等)全數支付。

本人/吾等現聲明及確認本合約具法律約束力并根據香港特別行政區法律詮釋及執行。”

29.As stated above, the plaintiff executed the loan documents in respect of the AEasy Loan on 24 November 2015 [163].  Under Schedule 2 of the Deed of Loan [169]:-

(1)  the loan amount was HK$800,000;

(2)  the interest rate was 22.93%;

(3)  the loan was to be repaid by 120 consecutive monthly instalments in the manner as stated in the fourth Schedule;

(4)  the loan was unsecured.

30.The fourth Schedule of the Deed of Loan contains a repayment schedule [171]. The monthly instalment was in the sum of HK$16,536 and, for each payment, there is a breakdown as to how the monthly payment is apportioned between interest and repayment of principal.

31.Contemporaneous with the execution of the AEasy Loan documentation, a completion statement was issued by Messrs Tung Ng Tse & Heung [176]. According to the statement, part of the loan was used to settle the Standard Chartered Indebtedness and legal fees to the firm in the sum of HK$8,000.

32.On 26 November 2015, the plaintiff paid HK$50,000 to the defendant.

33.On 2 December 2015, the HKHA issued an approval letter in respect of the plaintiff’s application for refinancing of the Property [216].  The amount of refinancing was capped at HK$700,997.30 and a condition was imposed such that the refinancing loan obtained must be used for settlement or personal loans owed by the plaintiff and the contribution of the insurance (ie the purpose stated in the plaintiff’s application form for refinancing).

34.On 12 January 2016, the plaintiff executed the loan documents in respect of the Smart Team Loan [183].  The loan amount was in the sum of HK$600,000.  The loan bore interest at 36% per annum and the monthly instalment was HK$18,000. The Smart Team Loan documents expressly provides that the plaintiff had requested to mortgage the Property and that the relevant mortgage documents would be prepared.  In other words, pending the execution of the relevant documents, the Smart Team Loan was unsecured.

35.On 15 June 2016, the plaintiff made repayments by cheques to AEasy (in the sum of HK$621,090) and the Smart Team (in the sum of HK$532,409).  It is the plaintiff’s case that the foregoing repayments, along with payments made in the interim, constituted full repayments of the two loans.  I note that the drawer of the two cheques [192-193] was not the plaintiff but Messrs KB Chau & Company.  The plaintiff has not explained the source of funds but it is more likely than not that the plaintiff had obtained another loan.

D. The plaintiff’s evidence

36.In her witness statement dated 3 May 2018[6] [109], the plaintiff gave evidence to the following effect.

(1)  On 14 November 2015, the plaintiff received a call from one Mr King Chan who she believed was an employee of Hang Seng Bank.  Mr King Chan persuaded her to engage the defendant to apply for a mortgage on the Property, as the interest rate would be as low as 1.5-2%.

(2)  The plaintiff then went to the defendant’s place of business and was received by Mr Patrick Chan.  Mr Patrick Chan explained that a mortgage on the Property would attract an interest rate between 2-2.25% and that the terms of the Agreement reflected the low interest rate (“Representation”).  In reliance on the Representation, she signed the Agreement and the Associated Documents.  As she was under medication and was tired, she did not read the Agreement and the Associated Documents carefully at the time of execution.

(3)  The plaintiff later read the documents carefully at home.  It is her evidence that the terms of the Agreement and the Associated Documents were at odds with the Representation, specifically because the proposed interest was 20-22% (ie the Entry) and not 2-2.5%.  She said that the Entry was handwritten in such a way that the numerical figures (20-22) resembled 2-2.5.

(4)  The plaintiff was also advised by her friend that an accounting practice would normally trade as a partnership, not a limited company.  She therefore had reservations about the propriety of the defendant.

(5)  On 23 November 2015, the plaintiff called Mr Patrick Chan to cancel the Agreement.  In response, Mr Patrick Chan threatened her that he would engage debt collector, which was repeated in a Whatsapp message [162].  She was frightened and made a report to the police.

(6)  On 24 November 2016, the plaintiff executed the AEasy Loan documents.

(7)  Thereafter, on 26 November 2016, the plaintiff had a recorded telephone conversation with a Mr Cheng of the Defendant.  The plaintiff adduced the recording and the transcript as evidence [178].  In that telephone conversation, Mr Cheng explained that it would take some time to apply for a mortgage loan and the plaintiff should treat the high interest AEasy Loan as a temporary “investment”.[7] Following the telephone conversation, the plaintiff paid to the defendant HK$50,000.

(8)  However, the plaintiff was unable to contact Mr Cheng or Mr King Chan afterwards.  Until the longstop date of 14 May 2016, the defendant did not take any steps to apply for a mortgage loan for her.

(9)  In January 2016, the plaintiff received a call from a Ms Chan, who professed to be the auditor of AEasy.  Ms Chan referred the plaintiff to YTF and told the plaintiff that YTF was very experienced in mortgage loan applications.  Ms Chan also said that the defendant would no longer process the plaintiff’s application for a mortgage loan.

(10)  The plaintiff then visited YTF and was received by a Mr Jeff Chan.  On 10 January 2016, Mr Jeff Chan told her that Wing Hang Bank Ltd had approved the application but required HK$600,000 asset proof.  The plaintiff told Mr Jeff Chan that she did not have so much cash and it was in those circumstances that she accepted Mr Jeff Chan’s suggestion to obtain the Smart Team Loan.  She apparently deposited the loan proceeds with YTF”s lawyers.

(11)  On 25 February 2016, Mr Jeff Chan informed the plaintiff that her mortgage loan application was unsuccessful and that she should go to YTF to collect her HK$600,000.  However, the offices of YTF were empty and she was unable to collect the HK$600,000.  She reported the matter to the police and commenced DCCJ 3407 of 2016 to recover the said sum.

37.The salient points of the plaintiff’s viva voce evidence may be summarized as follows.

(1)  The plaintiff at all material times did not have any need for a loan. She was only interested to obtain spare cash due to the low interest rate envorinment.  The Standard Chartered Indebtedness, although under a visa card account, was in fact a credit line bearing only 2.5% interest.

(2)  The plaintiff confirmed that she understood that any refinancing of the Property required HKHA’s approval.

(3)  In addition to the telephone conversation on 26 November 2015, she also had another telephone conversation with Mr Cheng before she signed the AEasy Loan documents on 24 November 2015.  Mr Cheng had explained to her that the AEasy Loan was a temporary arrangement, as time was required to obtain a mortgage loan.

(4)  It was put to the plaintiff that the defendant had tried to contact her to process the mortgage loan but she did not respond.  She disagreed.

E. The defendant’s evidence

38.Mr Patrick Chan’s witness statement [199] may be summarized as follows.

(1)  When Mr Patrick Chan first met the plaintiff on 14 November 2015,[8] the plaintiff told him that she was in need of cash.

(2)  Mr Patrick Chan then informed the plaintiff that the defendant would first process her loan application and the mortgage would be processed at a later stage.

(3)  The defendant was informed by AEasy that a loan in the sum of only HK$800,000 (as opposed to the intended HK$1,000,000) would be extended.  Mr Patrick Chan then obtained confirmation from the plaintiff that she would still proceed with the loan application.  He originally offered to the plaintiff to charge a reduced fee of HK$56,000 (ie 7% of HK$800,000) but, upon the plaintiff’s request, he accepted a further discount and agreed to a fee of HK$50,000.

(4)  Thereafter, the plaintiff informed Mr Patrick Chan that she had executed the AEasy Loan documents.  He told her that further documents were required from her for the purpose of processing her mortgage application.

(5)  The defendant was subsequently provided with the approval letter from the HKHA.  Mr Patrick Chan was of the view that the approval letter required amendment, on the basis that the plaintiff’s indebtedness exceeded the sum approved by the HKHA.  The plaintiff was, however, not responsive despite repeated requests.

39.Mr Patrick Chan’s viva voce evidence may be summarized as follows.

(1)  He had explained to the plaintiff that the mortgage application would take 6 to 9 months.

(2)  He was adamant that the fee paid by the plaintiff was only in respect of the unsecured loan granted by AEasy and that the defendant would charge further for processing the mortgage.

(3)  He disagreed with the plaintiff’s case that the defendant had never contacted her after the approval letter from HKHA.

(4)  He disagreed that he behaved in a threatening manner to the plaintiff and asserted that he was only seeking to recover what the defendant was entitled under the Agreement.

(5)  He disagreed that he knew or was in any way associated with Ms Chan, YTF, and Smart Team and denied any involvement in the plaintiff’s loss of the HK$600,000.

F. Analysis and findings

40.Given the plaintiff’s education background and work experience, the plaintiff must have appreciated that an unsecured loan would ordinarily be subject to a higher interest rate than a mortgage.

41.I am prepared to accept that the Standard Chartered Indebtedness was not subject to the usually high credit card interest rate but was an instalment plan granted under the credit limit of the credit card.  In my experience, such instalment plan enjoys a lower interest rate than that applicable to an outstanding credit card balance.  But I certainly do not accept the plaintiff’s evidence that the interest rate was as low as 2.5% per annum.

42.I have difficulty in accepting the plaintiff’s evidence that she was not in any financial needs when she approached the defendant on 14 November 2015.  The HKHA approval letter dated 2 December 2015 [216] refers to the plaintiff’s application made on 28 October 2015 (ie before incurring the AEasy Loan) and the reason given by the plaintiff was that the refinancing loan was to be used for settlement of her personal loans.  In addition, as set out in the Credit Report, just prior to the entering into the Agreement, the plaintiff had applied for unsecured instalment loan from Hang Seng Bank and HY Credit.

43.On the evidence, at the time when the Agreement and the Associated Documents were executed on 14 November 2015, the plaintiff had not obtained approval to refinance the Property from the HKHA.  The approval from the HKHA only came later on 2 December 2015.  Therefore, any loan taken up by the plaintiff prior to the HKHA approval letter would necessarily be an unsecured loan and would ordinarily bear higher interest.

44.The Representation consists of two parts. 

(1)  The first part represents that the interest rate on the mortgage to be obtained would be 2-2.5%.  I have no doubt that Mr Patrick Chan had made a representation to the plaintiff to that effect on 14 November 2015.  The plaintiff had approached the defendant on the basis that she wanted to mortgage the Property and it is only likely that Mr Patrick Chan would indicate to the defendant the applicable range of interest rate.

(2)  But I also do not believe that it can be said that the first part of the Representation is false.  As I understand it, the best lending rate in 2015 was 5% per annum and it was not unusual for mortgages to be subject to an interest rate of around 2.5% lower than the best lending rate.[9]

(3)  The second part represents that the Agreement reflected the low interest rate.

(4)  I have some difficulty in accepting that Mr Patrick Chan made the second part of the Representation.  As stated above, the plaintiff had signed next to the Entry.  The Entry was not a standard term but was handwritten specifically for the Agreement and the plaintiff’s attention was especially drawn to it. The numerical figures of “20-22”, contrary to the plaintiff’s contention, were not written in a manner which bore resemblance to “2-2.5”.  In any event, the Entry also contains a reference to “19500” monthly payment for 120 months (ie a total repayment of HK$2,340,000 for a loan of HK$1,000,000) which, on any simple calculation, would reveal that the interest rate was much higher than 2-2.5%  per annum.

(5)  In any event, as the plaintiff fairly accepted, she knew that the HKHA approval was required before a mortgage loan on the property could be processed.  At the time of the execution of the Agreement, the pre-requisite of obtaining a loan bearing a low interest rate simply had not arisen.

45.For the foregoing reasons, I find against the plaintiff’s misrepresentation claim.  Whilst I have disposed the plaintiff’s claim for misrepresentation on the facts, I am cognizant that there might be other defences available to the defendant (eg the attempt to exempt liability by the Confirmation).  However, as the defendant did not seek to rely on it, it would not be appropriate for me to express any further views.

46.I also do not believe that the plea of non est factum is available to the plaintiff.  On the plaintiff’s own evidence, she was merely tired, allegedly due to her medication, and therefore did not read the terms of the Agreement and the Associated Documents carefully.  Accepting the foregoing to be true, those factual premises still fall far short of being sufficient for a plea of non est factum.

47.I accept that defendant’s evidence that Mr Patrick Chan had informed the plaintiff that the loan to be granted by AEasy (HK$800,000) was lower than that intended in the Agreement (HK$1,000,000) but the plaintiff nevertheless agreed to proceed with it.  I also accept that the plaintiff and Mr Patrick Chan had reached an agreement to reduce the fee payable to HK$50,000.  As set out in the transcript of the telephone conversation between the plaintiff and Mr Cheng on 26 November 2015 [178], the plaintiff expressed no disagreement on the correctness of HK$50,000 being the fee payable to the defendant.  The only issue discussed in relation to payment was whether the plaintiff should pay the fee in one go or in two instalments, as the plaintiff was desirous with make only a partial payment to ensure that the defendant would continue to process her mortgage application.

48.Turning to the event on 23 November 2015 (ie the day before the plaintiff obtained the AEasy Loan), I find that the plaintiff’s allegations do not amount to intimidation.  The Whatsapp [162] records that the plaintiff wanted to cancel the Agreement and Mr Patrick Chan stated that he would engage debt collectors.  The plaintiff merely stated that Mr Patrick Chan was apparently[10] threating her.  I do not believe the allegation of intimidation is made out on the facts, as Mr Patrick Chan was only seeking to recover what the defendant was entitled under the Agreement.  Under the Agreement, the defendant’s fee entitlement would accrue as long as it had arranged a bank or a financial institution to provide financing and, upon that event, the plaintiff was liable for the defendant’s fee even if she chose to cancel the Agreement.  An indication by Mr Patrick Chan that he would engage debt collectors, without more, does not amount to an unlawful act.

49.In any event, I do not believe that the exchange between the plaintiff and Mr Patrick Chan on 23 November 2015 was causative of any loss allegedly suffered by the plaintiff.  There was no reference in the Whatsapp that Mr Patrick Chan had uttered anything to the effect that the plaintiff must take up the AEasy Loan on the following day.  As stated above, the defendant’s fee entitlement was not dependent on the plaintiff actually taking up the AEasy Loan arranged by the defendant.  Further, the fee was paid by the plaintiff three days later on 26 November 2015 after another discussion with Mr Cheng.

50.As explained in the plaintiff’s viva voce evidence, prior to her taking up the AEasy Loan, Mr Cheng had already explained to her that the AEasy Loan was a temporary arrangement, as time was required to obtain a mortgage loan.  Indeed, on the plaintiff’s own evidence, Mr Cheng’s explanation was entirely consistent with Mr Patrick Chan’s evidence as to what he outlined to the plaintiff on the day of the execution of the Agreement on 14 November 2015.  I find that the plaintiff’s taking up of the AEasy Loan was not procured by any unlawful action or inaction on the part of the defendant.

51.I have some reservation on Mr Patrick Chan’s viva voce evidence that the defendant had a unreserved right to charge another fee for processing the plaintiff’s application for a mortgage under the Agreement, especially when the Agreement had been varied by the parties.  Mr Patrick Chan’s viva voce evidence is at variance with his witness statement, in which he stated that the defendant had started to process the plaintiff’s mortgage application upon payment of the fee of HK$50,000 and provision of supporting documents by the plaintiff.  I do not believe, however, it is essential to make a finding on this issue.

52.However, what is important is whether the plaintiff is correct in saying that the defendant had failed to process her mortgage application.  One must bear in mind that the longstop date under the Agreement and the Associated Documents was 14 May 2016.  Yet, as early as January 2016, the plaintiff had already sought assistance from YTF and took up the Smart Team Loan on 12 January 2016.

53.In these proceedings, the approval letter from the HKHA dated 2 December 2015 was only disclosed by the defendant [202].  It must therefore be the case that the approval letter was provided by the plaintiff to the defendant.  It seems to me quite clear that unless and until the HKHA approval was obtained (ie a pre-requisite for refinancing), there was only limited scope for the defendant to advance the plaintiff’s mortgage application.

54.In his witness statement, Mr Patrick Chan explained that the plaintiff’s indebtedness exceeded the sum approved by the HKHA.  It appears to me that the foregoing statement must be true, as (1) the approval was made pursuant to an application made by the plaintiff on 28 October 2015 (ie before the taking up of the AEasy Loan) and (2) as at 2 December 2015, the outstanding balance of the AEasy Loan plainly exceeded HK$700,997.30.  According to Mr Patrick Chan, the defendant had tried to contact the plaintiff as regards the foregoing issue but to no avail. 

55.Conversely, the plaintiff’s evidence as to why she engaged YTF well before the expiry of the longstop date under the Agreement and the Associated Documents is unsatisfactory.  According to the plaintiff’s police statement made on 24 August 2017 [195], she was unable to contact Mr Cheng or Mr Patrick Chan after 26 November 2015.  This, coupled with the fact that she was told by a Ms Chan that the defendant would no longer follow up on her mortgage application, caused her to engage YTF.

56.There are a number of inexplicable features in respect of the YTF arrangement.  According to the completion statement of the AEasy Loan [176], HK$480,539 was made available to the plaintiff, after settling the Standard Chartered Indebtedness.  As noted above, the Standard Chartered credit line was HK$374,000 and would then have been available to the plaintiff in its entirety.  It is therefore unclear as to why the plaintiff had to obtain HK$600,000 from Smart Team, and at a much higher interest rate (36%) than AEasy (22.93%) and Standard Chartered (according to the Plaintiff 2.5%) at the suggestion of YTF.

57.I accept Mr Patrick Chan’s evidence.  The assertion that the defendant would no longer follow up on the plaintiff’s mortgage application is a bare allegation and there is no reliable evidence to show that the defendant was in any way related to Ms Chan, YTF or Smart Team.  I find that the defendant was unable to further the plaintiff’s mortgage application because the plaintiff did not provide the necessary cooperation or information, in particular when she had already engaged YTF by January 2016.

G. Conclusion

58.The plaintiff’s claim based on misrepresentation fails.  The first part of the Representation, namely that a mortgage loan would interest rate of 2-2.5% per annum, although made, was not false.  I find as a fact that the second part of the Representation, namely that that the terms of the Agreement reflected the low interest rate, was not made.

59.I also find that the plea of non est factum is not available to the plaintiff.

60.The allegations relating to intimidation are not factually made out and in any event not causative to any of the losses claimed by the plaintiff.

61.I also find that the defendant was not in breach of the Agreement and the Associated Documents for failing to progress the plaintiff’s mortgage application.

62.In any event, I have reservations about the quantification of the plaintiff’s claim.  The plaintiff seeks to recover all of the interest paid to AEasy and Smart Team without taking into account that she would have had to pay interest even under a mortgage. 

63.Further, I do not regard the claim in respect of her alleged mental distress as a recoverable head of damages in the context of the nature of the transaction between the parties.  In addition, the plaintiff accepts that she has not adduced any documentary evidence to support her claim.

64.Although I sympathize with the plaintiff’s misfortune of being defrauded, the foregoing conclusions enjoin me to dismiss the plaintiff’s claim and I so order.

65.I make no order on the defendant’s counterclaim, as the counterclaim for costs is adequately dealt with by the costs order.

66.There is no reason why costs should not follow the event.  I therefore grant a costs order nisi that the plaintiff do pay to the defendant the costs of the action, including all costs reserved, to be taxed if not agreed.[11]

H. Interpretation

67.I direct the Court Interpreter to attend the handing down of this judgment for interpreting it into punti to the plaintiff and representative of the defendant, if so required.

The plaintiff was not represented and was acting in person

The defendant being represented by its director Mr Chan Lai Pan