Tang Kai Ming Kenneth and Others v. Lau Man Sang James

HCA 1462 & 1567/2012, HCA 1228/2013
(Heard together)

[2021] HKCFI 415

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1462 OF 2012

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1567 OF 2012

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1228 OF 2013

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Before: Hon Lok J in Court

Dates of Trial: 17-18, 21-25, 28-30 October, 4 November 2019

Date of Judgment: 22 February 2021

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JUDGMENT

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1.This is a trial involving 3 actions, HCA 1462/2012, HCA 1567/2012 and HCA 1228/2013, which have been ordered to be heard together.

2.The causes of action in HCA 1462/2012 and HCA 1228/2013 are based on a settlement agreement signed and executed by the parties on 29 October 2010 (the “Settlement Agreement”).  As stipulated in Clause 8.8 of the Settlement Agreement, the Defendant, Mr Lau Man Sang James (“James”) was indebted to the Plaintiffs, Mr Tang Kai Ming Kenneth (“Kenneth”), Mr Tang Kai Shun Cyril (“Cyril”) and Mr Hui Pak Kong (“Hui”) for a sum of HK$9,836,594 to be repaid in 60 monthly instalments commencing from November 2010.  It is the Plaintiffs’ case that James had failed to make the repayments in breach of the Settlement Agreement.  In HCA 1462/2012, the Plaintiffs claim for the 1^st to 21^st instalments in the total sum of HK$3,360,000.  In HCA 1228/2013, the Plaintiffs claim for the 22^nd to 60^th instalments in the total sum of HK$6,476,594.  I refer these two actions as the “Settlement Agreement Actions”.

3.In HCA 1567/2012 (the “Loans Action”), Kency Brothers Limited (“Kency Brothers”), which is a company controlled by Kenneth and Cyril, claims against James for money due and owing together with compound interest thereon at the contractual agreed rate of 1% per month under 4 loans (the “Loans”).  The total amount of the claim under the Loans Action is HK$6,949,404.70.

BACKGROUND

4.Kenneth and Cyril are brothers (the “Tang Brothers”).  They and James were secondary schoolmates in the United Kingdom in the 1970’s and they became close friends and acquaintances since then.  After they graduated from secondary school, Kenneth and James continued to study in the United Kingdom in accounting and business respectively, while Cyril returned to Hong Kong to read construction engineering.

5.After the Tang Brothers and James returned to Hong Kong, James first worked in Hutchison and then a company engaging in Mainland trade business.  He later started his own trading business in 1984.  The Tang Brothers started to invest in various businesses and operated a group of companies using the name of “Kency” (the “Kency Group”), the offices of which were located in Kency Tower, a building the Chinese name of which was named after their father.  Kency Brothers is a member of the Kency Group.

6.Hui came to Hong Kong from Guangzhou in the 1970’s.  He was a renovation contractor when he met the Tang Brothers.  Through the introduction of the Tang Brothers, James came to know Hui.  Hui also started his own plywood trading business.

7.In 1980’s, James was involved in mushroom and monkey trading business using his own company “Vanny Hong Kong Limited”.  At that time, James came to know that Hui could obtain banking facilities from Kam Shing Bank which could facilitate his mushroom trading business with overseas customers.  They then formed “Vanny Longyan Mushroom (HK) Company Limited” (“Vanny Longyan”) to carry on the mushroom trading business together.  Hui held his shares in Vanny Longyan through his company “Kar Kwong Development Limited” (“Kar Kwong”).

8.In 1987, Hui experienced financial difficulty. Kenneth provided financial assistance to Hui and Hui assigned some of his shares in Kar Kwong to the Tang Brothers.  Since then, these four persons started their business relationship and carried on different businesses together through different companies.

9.In general, the mode of operation between the parties involved the Tang Brothers providing financial support to the companies, including capital injections and loans, while James was responsible for the daily operations of the various businesses.  There is no serious dispute that important decisions relating to the companies, such as distribution of dividends, expansion of business and variation of share capital, would have to be made by the shareholders of the business.

10.In about 1991, Vanny Resources Holdings Limited (“Vanny Holdings”) was set up.  As the mushroom trading business slowed down, they started to invest in James’ monkey trading business.  In about 1992, James was able to obtain from his Japanese customer a profitable contract for the supply of rabbit skin.  With the technical know-how from Japan, they started their own factory in the Mainland for the production of rabbit shin for pharmaceutical use.  They also started to construct a monkey farm in Vietnam to breed and to raise monkeys for export (the “Vietnam Business”).  The business, which was run under a group of companies (the “Vanny Group”), achieved considerable success. According to the documentary records, over HK$186 million of dividend was distributed between 1997 and 2006.

11.A major client of the monkey trading business was a United States company known as “Covance Research Products Inc” (“US Covance”), which had signed exclusive contracts with the Vanny Group for the supply of monkeys to the United States.  Later, Vanny Group also obtained an exclusive contract with US Covance’s related company in Germany, Covance Laboratories GmbH (“German Covance”), for the supply of monkeys to Germany.

12.They also invested in a hotel project in Dongguan in the Mainland (the “Hotel Project”).  It was a project started by Cyril and it is fair to say that James did not participate very much in this investment project.

13.According to the evidence, James was very much involved in the sales and actual operation of the rabbit skin and monkey trading businesses.  Kenneth was involved in financial matters, including the provisions of capitals and loans from time to time.  Hui was busy in running his own plywood business, and Cyril was seldom involved in the operation of the businesses under the Vanny Group.  In order to operate the various businesses, James had to travel frequently.  Since the businesses were actually operated by James, it is the Plaintiffs’ case that the financial accounts of the Vanny Group had to be submitted to James for approval, and he had full knowledge of the financial conditions of the Vanny Group from time to time.

14.Regarding the bank accounts of the Vanny Group, the bank mandate required two signatories to issue a cheque and four of them were the authorised signatories.

15.James relied on the staff of the Vanny Group to take care of his personal expenses, in particular Mr Chan Fook Yu, also known as Victor Chan (“Victor”), who was the financial controller of the Vanny Group since 1993.  Throughout the years, the arrangement was that the funds of the Vanny Group would be used to pay for various personal expenses of James. Amongst the four, James was the only director who was paid a monthly salary by the Vanny Group.  It was HK$30,000 in the early 1990’s which was later increased to HK$100,000 in the late 1990’s.

16.The parties subsequently decided to expand the monkey breeding business to Cambodia.   It was anticipated that the size of the investment in Cambodia would be 4 times as that of the investment in Vietnam.  Due to such expansion, no dividend had been distributed since 2007.  There was then disagreement between the parties relating to the running of such business in Cambodia (the “Cambodia Business”).  In particular, the Plaintiffs complained that James had managed the Cambodia Business as if it was his own, and wasted money on unnecessary expenses.  In late 2009, the parties started to negotiate to split the business of the Vanny Group into two on a roughly 50:50 ratio, with the Tang Brothers and Hui (collectively the “Plaintiffs”) on one camp and James on the other.

17.The parties discussed the separation in the board meetings on 23 December 2009 and 9 February 2010.  After the negotiations, the parties decided that, as from 1 April 2010, the Vietnam Business would be operated by the Plaintiffs while the Cambodia Business would be operated by James.  The parties signed a joint announcement dated 26 March 2010 about the separation (the “Joint Announcement”) which would take effect from 1 April 2010.

18.Since 1 April 2010, Victor became the financial controller of the “KHI” group of companies (the “KHI Group”) which took over the Vietnam Business, whilst the Cambodia Business would continue to be operated by James under the Vanny Group.  For the purpose of settling the various accounts, the parties signed the Settlement Agreement on 29 October 2010.

19.The first draft of the Settlement Agreement was prepared by Victor.  After receiving the draft, James sent the same to his lawyers from Fairbairn Catley Low & Kong (“FCLK”) for advice and comment.  The comments of FCLK were incorporated in the revised draft sent to the Plaintiffs.  After several revisions and further discussions, the parties signed the Settlement Agreement on 29 October 2010.

20.The Chinese title of the Settlement Agreement is “和解協議”, which can literally be translated as “settlement agreement”.  The effect of the Settlement Agreement is the main dispute in the Settlement Agreement Actions.

21.As the Kency Group provided financial support to the Vanny Group which paid the personal expenses of James from time to time, these accounts need to be settled at the time of the division of the business.

22.For such purpose, the Settlement Agreement sets out various figures, including: (i) the amounts owed by James to the Vanny Group (as seen in Annexure 2); (ii) the amounts owed by Vanway Pharmaceutical Holding Limited (“Vanway”), which was a company engaged in pharmaceutical business owned by James, the Plaintiffs and other shareholders, to the Vanny Group (as seen in Annexure 3); and (iii) the amounts owed by the Vanny Group to the Kency Group (as seen in Annexure 4).  Amongst other things, it was stated therein that James owed the Vanny Group about HK$34 million by the end of March 2010 and the Vanny Group owed the Kency Group about HK$13 million by the end of August 2010.  Upon calculations, it was stated at Clause 8.8 that James owed the Plaintiffs a total sum of HK$9,836,594, which was to be paid in 60 instalments.

23.Item 8 of the table in Clause 8B (the “Clause 8B Table”) provides that bank and cash balances are to be dealt with in accordance with Clause 9.  Clause 9 stipulates that after the distribution of assets and liabilities of the Vanny Group in accordance with the Settlement Agreement, if there are any “remaining assets”, the Plaintiffs on the one hand and James on the other would, before 31 December 2010, entitle to half of such assets.  The original text of clause 9 reads as follows:

“如果在此協議各方本文之條文處理有關資產及負債後,"威龍集團"尚有餘額及資產, 各方同意於2010年12月31日以前, 由甲乙雙方各取一半.”

24.Clause 18 provides that any alternation, addition and amendment of the Settlement Agreement can only be effected by written agreement signed by all parties.

25.Clause 20 is an entire agreement clause.

26.Despite that the Settlement Agreement was signed on 29 October 2010, the business was split on 1^st April 2010 and the separated businesses had been operated independently ever since.

27.James had failed to pay the instalments under the Settlement Agreement, and so the Plaintiff commenced the Settlement Agreement Actions against James claiming for the unpaid instalments.  It is the Plaintiffs’ case that the Settlement Agreement contained the final accounts agreed by the parties.

28.On the other hand, James disputes that the Settlement Agreement contained the final accounts.  He claims that Kenneth and Victor had made a promise or representation to him that the accounts in the Settlement Agreement were not final and the same were subject to adjustments. In particular, he claims that he is entitled to half share of the profits up to 31 December 2010 arising from the contracts with US Covance and Germany Covance which were made before the division of the business (the “2 Contracts”).  He also claims that he had shown a valuation (the “June Valuation”) of the hotel in Dongguan (the “Hotel”), which was the subject matter of the Hotel Project, to the Plaintiffs in June 2010, and they agreed that there would be adjustment to the valuation of the Hotel Project upon obtaining further valuation reports.  Further or in the alternative, James asks for rectification of the Settlement Agreement on the ground that there was mutual mistake of fact between the parties.  These are the main issues that I have to determine in the Settlement Agreement Actions.

29.For the claim in the Loans Action, there is no dispute that Kency Brothers advanced the Loans to James.  However, James alleges that he had fully repaid the Loans in 2003 and 2004 and there was even an over-payment of HK$40,000.  James claims that the Loans were interest free.  In the counterclaim, James also claims for a sum of HK$96,120 which Kency Brothers allegedly held as constructive trustee for him under 2 sums of US$64,600 allegedly paid by one Mr Chow Fat Kow (“Chow’) to Vanny Holdings.

30.Ms Lan, counsel for James, confirms that James would not pursue the said counterclaim in the sum of HK$96,120, and hence the only issue in the Loans Action is whether Kency Brothers is entitled to charge 1% interest per month on the amounts due under the Loans from time to time.  If Kency Brothers is not allowed to do so, the Loans have been fully repaid and the claim in the Loans Action has to be dismissed.  If Kency Brothers is entitled to charge such interest, the quantum of the claim in the Loans Action is agreed in the sum of HK$6,507,776.76.  Hence, the court does not need to bother with the calculation of the exact amount of interests due under the Loans.

WITNESSES AT THE TRIAL

31.This case turns on the credibility of the witnesses.

32.There are 5 factual witnesses at the trial: Kenneth, Cyril, Hui and Victor for the Plaintiffs’ case and James for the Defendant’s case.

33.It is clear that the main witnesses are Kenneth, Victor and James.  As mentioned above, Cyril was not very much involved in the business of the Vanny Group and Hui was busy running his own plywood business.

(i)      Victor’s evidence

34.Victor is an important witness.  He previously worked for the Tang Brothers from 1987 to 1991.  In about July 1993, he met James and James invited him to work in the Vanny Group as financial controller.  He worked closely with and under James ever since.  As part of his work, he had to take care of the various financial matters of the Vanny Group. On occasions, he was responsible for making arrangements for the payment of the personal expenses of James.

35.When the parties decided to spilt the business in 2010, James did not ask Victor to join him to continue to work in the Vanny Group.  Victor frankly admits that he felt a little bit unhappy about that.  He later joined the Plaintiffs to work in the KHI Group.

36.As the Kency Group would provide financial support to the Vanny Group from time to time, Victor was familiar with the various accounts relating to the Vanny Group, including the amounts owed by the Vanny Group to the Kency Group and the amounts owed by James to the Vanny Group.

37.After the splitting of the business, the financial accounts and books of the Vanny Group were left in the office of the Vanny Group.  As the books would have to be transferred to the Vanny Group after the separation, it was important for the parties to finalise their accounts before that.

38.Victor confirms that Kenneth was mainly responsible for arranging the financial support for the Vanny Group.  All the Plaintiffs did not take active part in the daily operation of the Vanny Group. James was the one responsible.

39.For the bank accounts, the cheques were usually signed by Kenneth, Hui and James.  If James was not in Hong Kong, the cheques would be signed by the others.  If there were documents for the attention of James, Victor would usually leave them in James’ office if he was not in Hong Kong.

40.In fact, there were monthly statements sent to shareholders each month stating the amounts owing by that particular shareholder to the Vanny Group, and it was expressly stipulated in these statements that there would be interests charged on the amounts owing at the rate of 1% per month.  It used to be 1% compound interest per month but it was changed to simple interest more than 10 years ago.

41.As Victor was familiar with the financial accounts relating to the Vanny Group, he was the one who prepared the first draft of the Settlement Agreement.  He then sent the draft to the Plaintiffs and James for comment.  He later received from James a revised draft Settlement Agreement incorporating the amendments suggested by his lawyers FCLK.  After further discussions between the parties, Victor put down the final figures agreed by them.  Whilst there were minor revisions in the subsequent drafts, the final draft was substantially based on the revised draft provided by James.  He also adds that all the relevant documents had been supplied to the parties in August 2010 for them to verify the figures and the contents of the Settlement Agreement.

42.At the trial, he also explains the various figures and calculations contained in the Settlement Agreement.  In particular, he explains to the court the calculation of the indebtedness of James as contained in Annexure 2.  The starting balance of the liabilities owed by James to the Vanny Group is HK$34,828,09.05.  It includes simple interests charged at 1% per month.  Items 2 and 3 are the bonuses for the Vietnam Business and the Hong Kong operation which were issued only to James.  After further taking into account the figures in respect of the land in Sanya and the office in Guangzhou, James owed a sum of HK$34,266,401 as stated in item 6.  Item 8 refers to the liabilities between the Vanny Group and the Kency Group which are stated in Annexure 4.

43.For Annexure 4, the starting balance is HK$13,097.412.  It is worth noting that the figure expressly includes interests (again at the rate of simple interest of 1% per month).  Regarding the liabilities between the Vanny Group and the Kency Group, the deposit for the US Covance contract in the sum of US$1 million and the valuation of the Hotel Project in the sum of HK$10 million were taken into account.

44.Victor denies the making of any promises or assurances as alleged by James.  When he was working in the Vanny Group, he would supply all the books and financial accounts to James for perusal.  As James was responsible for the daily operation of the various businesses under the Vanny Group, he had to obtain approval from James on related financial matters including the payment of particular expenses.

(ii)     Kenneth’s evidence

45.The Plaintiffs’ second witness is Kenneth.  He tells the court how he came to know James, and ever since they had become close friends and business partners.  He testifies as to the reason why there was later disagreement between the Plaintiffs and James relating to the operation of the business, and how the parties negotiated for the separation arrangement and the final accounts under the Settlement Agreement.  According to Kenneth, Victor was familiar with the accounts within the Vanny Group, the accounts between the Kency Group and the Vanny Group and the accounts between the Vanny Group and James.  It was Victor who prepared these accounts when the parties negotiated for the separation arrangement and the final accounts under the Settlement Agreement.

46.Kenneth confirms that the figures in the Settlement Agreement were the final accounts agreed by the parties as part of the separation arrangement.  He denies the making of any promises or representations as alleged by James, or that James had shown him the June Valuation of the Hotel.

47.Kenneth explains that the valuation of the Hotel Project as stated in Annexure 4 of the Settlement Agreement had been agreed at the meeting on 31 August 2010.  During the meeting, it was agreed that RMB¥60 million be adopted as the value of the Hotel, where amount would be adjusted by the outstanding bank loan of about RMB¥21.97 million, shareholders’ loan of about RMB¥7.64 million, current assets of about RMB¥3.07 million and current liabilities of about RMB¥3.51 million.  Since the Vanny Group only had 28.8% interest in the Hotel Project, the value of the Vanny Group’s interest should be about RMB¥8.62 million, equivalent to about HK$10 million.  Kenneth claims that the management of the Hotel Project had provided management reports and accounts to the Vanny Group from time to time and James would have received those documents.

48.According to Item 2 in Annexure 4, the deposit of US$1 million paid by the customer under the US Covance contract was applied to repay the debt owed by the Vanny Group to the Kency Group.  Regarding the Germany Covance contract, Clause 8.2 of the Settlement Agreement states that the sum of US$200,000 receivable would be applied to repay a packing loan from Dahsing bank in the sum of US$120,000 (the “Dahsing Loan”).  Victor claims that the balance of US$80,000 was applied to repay various liabilities set out in the table on the same page.  After taking into account the provision for tax, the table in Annexure 4 states that each side should be entitled to a sum of HK$1,836,606.50.  The round-off figure of HK$1,836,607 was then applied to the calculation of James’ liability as stated in Annexure 2.  Upon giving credit to the sum of HK$5,460,000 payable by the Plaintiffs to James for the monkey breeders sent from the Cambodia Business to the Vietnam Business, the final figure came to HK$9,836,594 which is the total amount claimed under the Settlement Agreement Actions.

49.Annexure 3 of the Settlement Agreement relates to the liability owed by Vanway to the Vanny Group, which does not directly affect the amount owed by James to the Plaintiffs.

50.Kenneth also testifies as to how Kency Brothers had advanced the Loans to James throughout the years: the 1^st loan in the sum of HK$500,000 in about January 1995, the 2^nd loan in the sum of HK$300,000 in about February 1995, the 3^rd loan in the sum of HK$200,000 in about September 1995 and the 4^th loan in the sum of HK$400,000 in about November 1995.  Every time James told Kenneth that he was in financial difficulty and so he required financial assistance from Kenneth. The 3^rd and 4^th loans were paid to Chow whom Kenneth believes was one of James’ creditors.  The Loans agreements were made orally and it was agreed between James and Kenneth that the Loans would carry compound interests at 1% per month.

51.Kenneth also tells the court the circumstances under which Kency Brothers advanced the 5^th loan to James in June 2006.  By that time, James made a guarantee to Kenneth that he would repay all the outstanding amounts under the Loans in 2007.  No such repayments were made in 2007.  In a meeting on or about 23 September 2009, James made a promise to Kenneth that he would make full repayments of the Loans within 6 months after the separation of the business, and Kenneth on behalf of Kency Brothers agreed to extend the time for the repayment of the Loans.

52.Kency Brothers had made a separate claim for the outstanding 5^th loan against James in the District Court, i.e. DCCJ 2143/2012.  In the judgment dated 8 January 2013, Deputy District Judge S Lo (as he then was) held in favour of Kency Brothers on the 5^th loan together with interests accrued thereunder at the agreed interest rate. Applications for leave to appeal were refused by the said Deputy Judge and the Court of Appeal.

53.According to Kenneth, the outstanding principal amounts under the Loans with interests accrued at the agreed interest rate were clearly stated in the monthly loan statements issued by Kency Brothers to James since the advancement of the 1^st loan up to May 2012 (the “Monthly Loan Statements”), a period of more than 17 years.  There were even some occasions that, when the parties met for some discussions or meetings, Kenneth personally handed over some of the Monthly Loan Statements to James.  The last statement was attached to the Settlement Agreement as well.  Throughout the years, James has never disputed the figures in these statements.

54.Kenneth also clarifies the mistake made by his accounting staff in charging a lesser interest rate in the period from 24 January to 31 October 1995 in respect of the 1^st to 3^rd Loans. For the purpose of the present case, Kency Brothers is prepared to charge the interest at such lesser rate for the said period.

55.According to Kenneth, James was in control and had full knowledge of the financial situation of the Vanny Group.  Kenneth was only concerned with the financial condition of the Vanny Group in a macro sense, but the daily operation of the financial matters was taken care of by Victor under the supervision of James.  James even required reports of daily bank balances.  All cheques over the amount of HK$100,000 had to be signed by James first.  If James was not in the office, the cheques would be left on his desk awaiting his return.  Except for petty cash expenses, all other funds movement required James’ approval.

56.Regarding the liabilities between the Vanny Group and the Kency Group, there were monthly loan statements about these liabilities.  Kenneth testifies that, which is corroborated by the evidence of Victor, these loan arrangements were made with the approval of James. 

(iii)    Cyril’s and Hui’s evidence

57.As mentioned above, as Cyril and Hui were not heavily involved in the actual management, they know very little about the daily operation of the Vanny Group.  However, since they were the then shareholders of the Vanny Group, they were involved in the negotiation and the finalization of the accounts under the Settlement Agreement.  Their evidence basically corroborates that of Kenneth and Victor.

(iv)     James’ evidence

58.James is the only witness in support of his own case.  He gives the court his account about the relationship between the parties throughout the years.

59.He provides the court with his account of the events leading to the separation of the business.  During the negotiation for the separation of the business and the settlement of the final accounts, the parties had agreed that: (i) further valuation would have to be done to determine the value of the Hotel Project; and (ii) James would be entitled to half of the profits of the 2 Contracts up to the end of 2010.   He also claims that, as he was busy in the daily operation of the businesses, he did not pay attention to the details of the various financial accounts.  Before the parties signed the Settlement Agreement, Victor assured him that the figures in the draft Settlement Agreement were correct.

60.According to James, he actually obtained the June Valuation of the Hotel and showed it to the Plaintiffs in June 2010. According to the June Valuation, the Hotel had a value of about RMB¥ 82 million.  As he claims that the Vanny Group had 1/3 interest in the Hotel Project, Vanny’s share should amount to about RMB¥ 27 million.  James denies that there was any meeting held on 31 August 2010 in which the parties agreed the valuation of the Hotel Project in the sum of HK$10 million.

61.When he asked Victor whether the Settlement Agreement had catered for the two specific agreements mentioned in §59 above, Victor told him that Clause 9 provided for those agreements.  Believing in the Plaintiffs’ promises about the future adjustments and Victor’s assurance that the figures in the Settlement Agreement were accurate, James signed the Settlement Agreement.  At the trial, James also claims that he signed the Settlement Agreement under some sort of duress or pressure exerted by the Plaintiffs and Victor.

62.James says that he did not possess all the accounting documents of the Vanny Group after the separation.  He was only able to retrieve some accounting documents in 2013 with the assistance of his staff.  According to James, the records were not complete and some of the accounts, ledgers and computer records were missing.

63.According to James, these incomplete records show that the figures in the Settlement Agreement were not accurate.  Some of the “mistakes” he identifies include, inter alia: (i) inaccurate balances; (ii) no charging of interest on overdue amounts; (iii) inclusion of bonuses unheard of; and (iv) wrongful charging of payments for the Guangzhou office.  Some of the other “mistakes” identified do not affect the final liabilities between the parties.  However, James admits at the trial that he does not really know whether most of the figures in the Settlement Accounts are accurate or not.  He is only asking the court to order an account and inquiry into those accounts.

64.For the Loans, James claims that it was agreed between Kenneth and himself that no interest would be charged on the outstanding amounts owing under the Loans from time to time, and so he had fully discharged his repayment obligation.  He denies having received any of the Monthly Loan Statements.

ASSESSMENT OF THE EVIDENCE AND RELEVANT FINDINGS

(i)      Credibility of the Plaintiffs’ witnesses

65.On the whole, I accept that all the Plaintiff’s witnesses are truthful and reliable witnesses.  Their evidence is well supported by the documentary evidence, including the express terms and calculations contained in the Settlement Agreement and its annexures and the express inclusion of interests in the Monthly Loan Statements.  Their evidence has remained unshaken after lengthy cross-examinations.

66.I find Victor to be an honest and reliable witness.  His answers are clear and direct and there is no hint of any evasiveness on his part.  As compared with the other interested parties, he is a relatively independent witness.  Though he is now working for the Plaintiffs or may even have some shares in the KHI Group, he does not have any direct interest in the outcome of the present proceedings as the parties here are the Plaintiffs and not the KHI Group.

67.I also do not find him to be the kind of person who would have fabricated evidence to advance the interests of his existing employers.  In fact, he had been working under James for a long period of time and their relationship was very close by then.  This may explain why Victor felt a little bit unhappy when James did not ask him to remain working in the Vanny Group in 2010.  Victor has nothing to hide about his relationship with James, and I do not find that there is any hatred between them so that he would have lied about the past events with a view to hurt his previous “boss”.

68.I also find Kenneth to be a credible and reliable witness.  He is a serious businessman who expects returns from the financial supports he provides to others.  Kenneth is able to give clear and straightforward answers to all the questions put to him and his evidence has remained unshaken after cross-examination.  The same applies to the evidence of Cyril and Hui.  Though they did not involve very much in the daily operation of the business, they had first-hand knowledge of the negotiations leading to the finalisation of the accounts under the Settlement Agreement, and their evidence corroborates with the accounts given by Kenneth and Victor.

69.Ms Lan attacks the accuracy of the final accounts by referring to a few matters, such as the vehicles expenses, the fruits expenses, booking of loans to other companies in the Vanny Group and borrowings and repayments within a short period of time.  She also relies on some accounting ledgers allegedly retrieved by James’ staff in 2013 to challenge the accuracy of the accounts.  I do not find any merit in these challenges.

70.Firstly, as the parties had agreed on the finality of the accounts, they should not be allowed to lodge a new attack on the figures and the calculations.  The reopening of the issues simply undermines the object of the Settlement Agreement which was to give effect to the finality of the accounts agreed by the parties at that time.  In fact, the finalisation of the accounts involved a lot of different figures and calculations and the use of particular accounting practices, and that was why the parties need to agree on the final figures by then in order to bring finality to the separation arrangement.  In particular, the Plaintiffs were obliged to hand over the books and accounts of the pre-separation business to the post-separation Vanny Group.

71.Secondly, there is nothing to suggest that the documents allegedly retrieved by James’ staff in 2013 were the complete records of all the relevant accounts.  Without knowing the whole picture, it would be dangerous to rely on these piece-meal documents to challenge the accuracy of the final accounts.  In fact, James admits that he has no personal knowledge as to whether most of the figures in the Settlement Agreement were correct or not.  Hence, James has simply failed to discharge the burden of proving the inaccuracy of the final accounts.

72.Thirdly, I accept Victor’s explanation about the “accounting practices” that had developed throughout the years.  It is clear from the evidence that there might not be sufficient cash in the bank accounts of the Vanny Group to make various payments from time to time.  Over the years, certain accounting practices had been developed to deal with these scenarios. The most important thing is that the financial accounts of the Vanny Group had all along been handled transparently and had been been presented to James from time to time.  It would be extremely difficult for me to accept that James, being the person responsible for the daily operation of the Vanny Group, was ignorant about these matters.

73.Even with the long lapse of time and the lack of accounting materials which had been passed to the James’ camp after the separation, Victor is quite impressive in the sense that he is able to give a relatively clear and detailed explanation of the accounts.  It is not surprising that the parties might have made some mistakes in the final accounts.  For the mistake in respect of the calculation of the vehicles expenses, the Plaintiffs, quite fairly, concede to reduce the claim by an amount of HK$410,987.60.  This is the case irrespective of the finality of the accounts agreed by the parties in the Settlement Agreement. 

74.Ms Lan also complains that the Plaintiffs’ witnesses have added new materials in the witness box which have not been included in their witness statements.  This is not a fair criticism.  Many so-called “new” materials actually come out during cross-examination, in particular the details about the calculations of the figures in the accounts and the related matters.  Without knowing beforehand the precise challenges to be lodged by James, it is simply too much to expect the witnesses to have covered all these points in their witness statements.  After all, the figures had been calculated and finalized many years ago.  The Plaintiffs’ witnesses have been asked questions on matters which supposedly had been settled long ago.  Under such circumstances, I am satisfied that the Plaintiffs’ witnesses have done the best they can in order to recall the details of the calculations and the finalization of the accounts under the Settlement Agreement.  For these reasons, I do not find that these piece-meal challenges can take James’ case any further.

75.I also do not find it unreasonable that the Plaintiffs and Victor would have required James to approve the expenses of the Vanny Group other than petty cash expenses.  Despite that James would have to travel most of the time, only James would have been in the position to say whether certain expenses should be made or not.  There is no serious dispute that James was the only shareholder who knew about the daily operations of the Vanny Group.  Without knowing the relevant backgrounds, Kenneth would not have been able to approve the expenses.  It is also an exaggeration to say that requiring James’ approval for the expenses or James’ signatures on the cheques would paralyse the operation of the Vanny Group.  Even if James had to travel frequently, Victor could have contacted James through different means, and there is no suggestion that all the expenses of the Vanny Group had to be paid right the way without any delay or credit allowance.  Hence, I accept the evidence of Kenneth and Victor about James’ role in the management of the financial accounts.

76.There is also an issue as to whether the minutes of the meetings on 23 December 2009 and 31 August 2010 were accurate.  Ms Lan points out that, contrary to contents of the minutes, Cyril did not attend the meeting on 23 December 2009 and the minutes of the meeting on 31 August 2010 had not been signed by the parties.  However, the Plaintiffs do not even need to rely on these minutes to boost the credibility of their case.  As explained by Victor, only the main points discussed in the meetings were meant to be recorded in the minutes.  The contents as to what were actually discussed in the meeting on 23 December 2009, which was in the early stage of the negotiation, are quite immaterial to the case.

77.For the meeting on 31 August 2010, I accept that such meeting was in fact held for the parties to discuss the finalisation of the accounts.  If such meeting had not been held, I wonder how the parties eventually came to sign the Settlement Agreement which contained detailed figures and calculations for the finalisation of the accounts.  There is also nothing surprising that the minutes of that meeting was not signed.  There might be a lot of administrative reasons as to why the parties had neglected to sign on the document.  The most important thing is that the agreement as to the final valuation of the Hotel Project was eventually confirmed in the final accounts contained in the Settlement Agreement signed by all the parties.

78.For these reasons, I accept the evidence of the Plaintiffs’ witnesses as the truth.

(iv)     Credibility of the defence case

79.On the other hand, I have great difficulty with the case put forward by James, in particular his allegation about the promise or representation made by Victor or Kenneth that the figures in the Settlement Agreement were not final and the same were subject to adjustments in the future.

80.Firstly, the allegation does not sit well with the express terms in the Settlement Agreement.  The Settlement Agreement contains clear figures agreed by the parties for the settlement of their final accounts, and it provides for payments of outstanding liability by specific instalment arrangement.  If the parties had agreed for further adjustments to be made, one would wonder why the parties would have to provide for such specific payment terms in the Settlement Agreement.

81.James should have known that the Settlement Agreement was an important piece of legal and binding document, otherwise he would not have engaged a reputable firm of solicitors to advise on the draft. James should also have known that the alleged promise for the sharing of profits under the 2 Contracts and the agreement for further adjustment of the valuation of the Hotel Project were important terms of the separation arrangement.  Under such circumstances, I cannot understand why James, being an experienced businessman, would not have insisted to include such crucial terms in the Settlement Agreement.  Being too busy in engaging in other affairs is hardly a good explanation, in particular the negotiation had lasted for a considerable period of time and the parties had covered a lot of other minute details in the final draft for the finalisation of the accounts.

82.Further, Clause 18 of the Settlement Agreement clearly provides that any alternation, addition and amendment of the Settlement Agreement can only be made by way of subsequent written agreement signed by all the parties and not by way of oral agreement.  There is also an entire agreement provision in Clause 20.  I do not propose to discuss whether these clauses would have the legal effect of barring James from advancing a positive case on the alleged promises and assurances.  It suffices for me to say that, having read these terms and having been advised by his lawyers on the draft, there is no good reason as to why James had not insisted to put down the alleged promises and assurances in writing.

83.One must bear in mind that the Settlement Agreement also provides for specific payments by instalments.  If it was agreed by the parties that there would be further adjustments to the final accounts, such as sharing of profits and adjustment to the valuation of the Hotel Project, I wonder why the parties did not defer the making of the payments arrangement until the adjustments were made.  After all, these adjustments, according to James’ case, might substantially reduce his liability.  No matter what was the excuse given by the Plaintiffs or Victor, James should not have agreed to such payments arrangement if the accounts were not meant to be final.

84.James claims that there was a specific agreement on the profit sharing under the 2 Contracts, and he also relies on Clause 9 of the Settlement Agreement to support such contention.

85.In my judgment, this cannot be right.  The parties had expressly stipulated as to how to deal with the deposit under the US Covance contract in the sum of US$1 million in Annexure 4 of the Settlement Agreement.  In respect of the receivable sum of US$200,000 under the German Covance contract, there was also specific arrangement as to how to deal with such sum of money as provided for in Clause 8.2 of the Settlement Agreement. In fact, in the draft sent by Victor on 27 August 2010, the same Clause 8.2 provided for the equal sharing of the sum receivable under the German Covance contract after the repayment of the Dahsing Loan, but such provision was expressly deleted in the final version.  From all these circumstances, one can see that the parties had, during the negotiation, touched on minute details as to how to deal with the payment and the sum receivable under the 2 Contracts.  If the parties had made an agreement to share the profits under the 2 Contracts up to a specific date of 31 December 2010, it is difficult to imagine why the parties had not expressly provided for the same in the final version of the Settlement Agreement.

86.There is no serious dispute that it was James who secured the 2 Contracts for the Vanny Group in the first place.  Despite that, it was expressly stipulated in the Settlement Agreement that, as from 1 April 2010, the Vietnam Business would be operated and taken over by the Plaintiffs under the KHI Group.  Furthermore, apart from the Joint Announcement by the parties to the then customers of the Vanny Group about the separation, there were also Addendum to the Exclusive Agreement between Vanny Chain Technology (HK) Ltd[1], KHI Bioservices Ltd[2] and Us Covance dated 1 April 2010 and another Addendum to the Exclusive Agreement between Vanny Biomedical Resources Ltd[3], KHI Bioservices Ltd and German Covance dated 24 June 2010 for the assignment of the interests under the former contracts from the Vanny Group to the KHI Group.  Under such express arrangement, it must mean that the rights under the 2 Contracts had passed to the KHI Group after the separation.  If the parties had intended to share the profits under these 2 assigned contracts, there should have been express term to that effect in the Settlement Agreement.

87.Further, item 8 of the Clause 8B Table expressly provides that only bank and cash balances are to be dealt with in accordance with Clause 9.  As explained by Victor, it was only if there was any cash balance after the settlement of the pre-separation debts that Clause 9 would kick in.  In other words, this would be a “catch all”(包底) provision for cash balance only.  Clause 9 did not apply to other matters such as profit-sharing on contracts.  As the 2 Contracts had been transferred to the KHI Group after the actual separation on 1 April 2010, James would not be entitled to any further sharing of profits under such contracts.

88.I also find it extremely difficult to believe that James had the June Valuation and showed it to the Plaintiffs before the signing of the Settlement Agreement.  If that was the case, James should have known that there might be further dispute about the valuation of the Hotel Project for the purpose of the separation arrangement.  In fact, the value of the Hotel as stated in the June Valuation (taking only into account the share of the Vanny Group) was about 2.7 to 3 times the value of HK$10 million (for the Hotel Project) as stated in the Settlement Agreement.  With such significant difference between the parties, I wonder why James had not insisted to defer the signing of the Settlement Agreement pending the resolution of the dispute.

89.Further, James, being the managing director of the Vanny Group, should have known that the Hotel had been mortgaged for a bank loan of RMB¥ 30 million and the shareholding of the Vanny Group had been reduced to 28.8%.  Such information was clearly stated in the management report of the Hotel Project dated 26 July 2010 and the report concerning the affairs of the Hotel Project dated 11 May 2009.  Though James denies knowledge of these documents, his denial lacks credibility as he was an experienced businessman and was the managing director of the Vanny Group at the material time.  Though his participation in the Hotel Project was not substantial, I still find it unbelievable that he was so ignorant about the affairs of the Hotel Project which was also a significant investment of the Vanny Group.

90.In fact, Kenneth gives a convincing account as to why the parties came to agree on the figure of HK$10 million for the valuation of the Hotel Project.  His account is supported by the documentary evidence including the report about the Hotel Project in July 2010.

91.In trying to explain why he signed on the Settlement Agreement despite the alleged incorrect figures, James explains that, as he was busy running the various businesses, he relied on Kenneth and Victor to take care of the financial matters.  At the time of the signing of the Settlement Agreement, he was busy taking care of the project in Cambodia. Coupled with death of his brother-in-law, he did not pay attention to the details of the Settlement Agreement when he signed it.  He just relied on the assurances given by Victor and Kenneth.

92.I agree that James had to travel frequently and as a result he might have to rely on Victor to take care of the details of the financial matters.  However, it still cannot explain why James, being an experienced businessman, had not made any attempts to verify the accuracy of the figures when he signed the Settlement Agreement.  It is clear from the evidence that serious efforts had been made between the parties to settle the final accounts.  The whole negotiation lasted for a period of time, and James should have known that the final Settlement Agreement was an important piece of legal document as he had asked his own lawyers to advise on the same.  Under such circumstances, he cannot simply rely on the trust allegedly misplaced on others to explain why he proceeded to sign the legal document without verifying the contents.

93.Another purported justification given by James is that the Plaintiffs and Victor had not handed over all the relevant documents to him after the separation.  Again, this is only a lame excuse.

94.There is simply no reason for Victor to have withheld the documents.  Under the separation arrangement, the Cambodia Business would continue to be operated by James under the Vanny Group.  When the parties made the separation arrangement and settled their final accounts, their relationship was not bad at all.  The Plaintiffs’ camp was obliged to hand over the documents to James and so there was no reason for them to withhold the documents, in particular the Plaintiffs and Victor would have known that James would engage his own staff to take care of the financial matters.  If the documents were not complete, James’ staff would certainly have alerted James to make the necessary requests for the documents, which there was none in the present case.

95.Ms Lan argues that Victor must have taken away certain documents other than copies of the loan statements as alleged by him. As there were subsequent amendments over the drafts of the Settlement Agreement, for example the amount for the provision of tax, Victor must have kept certain documents to enable him to make these amendments.

96.When Victor is cross-examined on such issue, he frankly admits that he cannot remember exactly which documents he possessed as the basis for making the amendments.  In re-examination, he clarifies that he had copied some computer files before he left the Vanny Group, but he maintains that he had not taken away the physical documents.

97.There is no reason for me to doubt the genuineness of Victor’s explanation.  As I have mentioned above, it would have been quite impossible for Victor to withhold the relevant documents.  Having considered the evidence and the relevant circumstances, it was likely that Victor had taken copies of certain documents to enable him to finalise the accounts, but it would be too much to expect Victor to remember exactly all the copies of documents he possessed years ago.  In particular, the parties expected that the final accounts had been settled by the written Settlement Agreement, and so it was quite unnecessary for Victor to remember all the minute details.  I also reject Ms Lan’s criticism that Victor has been evasive when he is asked about his visits to the Golden Mansion, the building which the office of the Vanny Group was situated.  Unless Ms Lan is suggesting that Victor had returned to the office of the Vanny Group for some improper purposes, which I can think of none, there is simply no reason for Victor to be evasive about such issue.  Being cautious in answering the questions is not the same as being evasive.

98.Secondly, I cannot quite understand, if Kenneth or Victor had made the alleged promises or assurances, why the same had not been mentioned in the reply letter by James’ solicitors dated 21 May 2012.  As the Plaintiffs through their solicitors were demanding the payment of the instalments under the Settlement Agreement, even a layman would have mentioned the alleged agreement for the sharing of profits under the 2 Contracts and the agreement for further adjustment of the valuation of the Hotel Project in the reply letter.  This should have been the most natural response to the Plaintiffs’ demand.  Miscommunication between James and his solicitors is hardly a satisfactory explanation for the absence of these allegations in the reply letter.

99.Thirdly, James’ stance on his signing of the Settlement Agreement is far from consistent.  On the one hand, he alleges that there was an express collateral agreement, representation or promise, and so he signed on the Settlement Agreement knowing full well that further adjustments would be made.  In other words, the figures in the Settlement Agreement were not final.  But at the same time, he also claims that he signed the Settlement Agreement under mistake as to the final accounts, and he maintains that Victor had told him that the figures were correct.  At the trial, James even suggests that he had signed the Settlement Agreement under some kind of duress.

100.It is always open to a defendant to plead alternative defences, but there should only be one version of true fact.  If the figures were correct as told by Victor, which is the basis for the claim for mistake of fact and rectification, there would not be any need for further adjustments.  In a way, the plea of mutual mistake of fact is inconsistent to the plea for misrepresentation.  After hearing James’ evidence, it is far from clear as to whether he signed the Settlement Agreement under mistake or under misrepresentation made by Victor or Kenneth.  Indeed, according to the final answer given by James, the reason for him to sign was half due to the pressure or duress and half due to “he knew that was incorrect”.  In other words, his final version is that he knew the figures were inaccurate, but he was compelled to sign nevertheless.  Surprisingly, the allegation of duress, which is not substantiated by any convincing particulars, has never been mentioned before. Hence in my judgment, this “new” allegation is another lame excuse made up by James to explain why he had signed on the Settlement Agreement.

101.Further confusion arises from James’ evidence when he testifies in court that the Settlement Agreement is just a memorandum, contrary to his pleaded case that it is a legal agreement.  By asking for rectification of the Settlement Agreement, James has simply acknowledged that the Settlement Agreement is a binding contract between the parties.  It is only in cross-examination that James eventually accepts that the Settlement Agreement is a legal agreement.

102.James’ evidence on the Loans also lacks credibility.  It is clear from the Monthly Loan Statements that Kency Brothers had all along been charging James interests on the amounts owing under the Loans. Such practice was also consistent with the arrangements for the provision of loans by the Kency Group to the Vanny Group and by the Vanny Group to James himself.  As the same practice had all along been adopted across the board, I accept the evidence of Kenneth that James had agreed to pay interests on the amounts due under the Loans.

103.Though James denies having received the Monthly Loan Statements and the other statements showing the charging of interests by the Kency Group and the Vanny Group, I find it extremely difficult to believe that James had not received these statements for such a long period of time.  One must bear in mind that James was by then responsible for the daily management of the Vanny Group.  As the relationship between the parties had all along been good, there was no reason as to why the Plaintiffs and indeed his subordinate Victor would have had to hide these statements from James.  James’ explanation is simply unconvincing.

104.Further, James, for the first time at the trial, tells the court that he was just a guarantor of the 3^rd and 4^th Loans and the actual borrower was Chow.  He has maintained this position throughout his oral testimony, and it is only in re-examination that he finally accepts that, though Chow was the person in financial difficulty, he was the one responsible for the repayments of the 3^rd and 4^th Loans.  I would imagine that for most lay person like James, if the loans were indeed advanced to someone other than himself, he would have provided the full background of the loans in his pleadings or witness statements with a view to lessen his responsibility.  James, being an experienced businessman, should have appreciated the difference between a borrower and a guarantor.  Though James finally accepts in his oral testimony that he is the borrower, I am still puzzled as to why James has not revealed his full story earlier.  This certainly undermines the credibility of his evidence.

105.Ms Lan submits that it does not make sense for James to have borrowed from the Vanny Group or the Kency Group had interests been charged on such borrowings.  Even if he was in financial difficulty, he might not need to rely on such expensive way in raising finances, in particular the payment of interests on compound basis.  Ms Lan also refers me to the monthly statements of James, which show that James advanced salaries on the first day of every month and was charged interests because the salaries were only due in the end of the month.  According to Victor, he had reminded James that such advanced payments did carry interest.  Further, if the Vanny Group was short of cash and had to borrow from the Kency Brothers, it might mean that interests would have to be charged on 2 levels: interests charged by the Kency Group against the Vanny Group and the Vanny Group against James.  Ms Lan submits that such kind of arrangements do not make sense.

106.I cannot agree with these submissions.  It is clear from the evidence that the parties had adopted a particular mode of operation throughout the years.  The evidence also shows that the parties had received handsome dividends for a considerable period of time and James did not seem to care about payment of interests which appeared across the board in all the accounts.  After all, despite some repayments made by James in 2003 and 2004, the Loans had remained unpaid for a substantial period of time, and I do not accept that Kenneth would have agreed to provide financial assistance free of charge for so long.  In fact, it was the norm or practice within the Vanny Group that interests would be charged on loans.  Even back in 1987, the Tang Brothers obtained shares in Kar Kwong for the financial assistance they provided to their friend Hui.

107.As James was responsible for the daily operation of the Vanny Group and the Vanny Group had been paying his personal expenses on his behalf, it is quite unbelievable that James had not perused the monthly statements of the ledgers between the Vanny Group and him throughout the years.  If he had not done so, it would be very difficult to explain why he did not care about the amounts that he owed to the Vanny Group for his personal expenses over such a long period of time.

108.For these reasons, the charging of interests is consistent with the attitude of the Tang Brothers in expecting returns for the financial assistance they provided to others including friends, and there is nothing insensible about the whole arrangements.  There is also no basis for James to say that he had to pay interests on 2 levels.  Undoubtedly, James had to pay interests to the Vanny Group for the loans advanced by it, but it was the Vanny Group which was responsible for the payment of interests in respect of the loans advanced to it by the Kency Group.

(iii)    The shareholding of Vanny Resources Holding Limited

109.There is a side issue as to whether James and one Mr Albert Cheung (“Albert”) were holding some of the shares in Vanny Holdings on trust for others.  Both sides agree that such issue is not relevant to the subject matters of the dispute.  It only goes to the credibility of the witnesses.

110.Since this side issue is not directly relevant, I do not find it necessary to resolve this particular issue.  But if I have to make a finding, I prefer to accept the Plaintiffs’ evidence in this regard.

111.Firstly, the instrument of transfer and bought and sold note clearly support that 5% shares of Vanny Holdings were held by James for Hui.  There are also documentary evidence showing that the respective entitlement of the dividends was made in accordance with such arrangement.  The explanation given by James is that since Hui begged him for the additional 5% dividend, he gave the same to Hui since 1993.  Apart from the fact that such explanation has never been mentioned in his pleading and witness statements, I find it difficult to accept that James would have given up his 5% dividend so easily for such a long period of time.  It does not make much sense.

112.As for the 5% shares held by Albert who was one of James’ staff, James’ allegation that Albert was holding such shares on trust for him is contrary to the contents of the minutes of Vanway, which clearly stipulated that such shares were held on trust for Vanway.  Further, James in his own evidence admits that he had used HK$3.4 million of dividend to acquire the 2% shares held by Albert.  There was no reason for him in doing so if the shares were held on trust for him, and I do not accept James’ explanation that it was paid by way of off-setting the account between Vanway and Vanny Holdings.

CONCLUSIONS

113.Both sides have also called expert evidence on the valuation of the Hotel.  For the reasons given above, it is not necessary for me to resolve the differences between the experts.

114.In fact, it is not appropriate for me to make a finding at this stage.  According to Ms Lan, James is asking the court to order an account and inquiry in respect of the final accounts between the Plaintiffs and himself.  In her final submissions, Ms Lan agrees that in ascertaining the final accounts between the parties, the court needs to know all the accounts of the Hotel Project and not just the valuation of the Hotel itself.  James’ legal advisers had never informed the court before the trial that that there would be a two-stage hearing.  If the court were to rule in favour of James on the Settlement Agreement Actions in the first-stage hearing, there will still be a second-stage hearing for the account and inquiry.  Obviously, the value of the Hotel or the Hotel Project would have to be determined by then. 

115.As I find in favour of the Plaintiffs on all these actions, I grant judgment in favour of the Plaintiffs (in the Settlement Agreement Actions) and Kency Brothers (in the Loans Action) in the respective sums of HK$3,360,000 in HCA 1462/2012, HK$6,065,606.4 (the sum of HK$6,476,594 less the amount of concession of HK$410,987.60 as mentioned in §73 above[4]) in HCA 1228/2013 and HK$6,507,776.76 in HCA 1567/2012.

116.Though the Plaintiffs have persuaded me to grant one judgment for both Settlement Agreement Actions, I consider it more appropriate to grant separate judgments in two actions.  After all, the subject matters of the claims in the two actions are different.

117.For the Settlement Agreement Actions, there is no dispute that there would be interest at the rate of HSBC prime rate plus 1% from 8 July 2013[5] to judgment and thereafter at judgment rate.  For the Loans Action, there is also no issue that there will be compound interest at 1% per month on the judgment sum from 31 August 2012 which was the date of the writ of the Loans Action.  Despite the agreement of the parties, I only allow compound interests to be paid up to judgment, and after that interests would be paid on judgment rate.

118.The parties also agree that costs should follow the event.  I therefore order that the costs of all 3 actions be to the Plaintiffs.

Mr James Tse, instructed by Gary Lau & Partners, for the Plaintiffs in all 3 actions

Ms Gekko Lan and Mr Michael Chai, instructed by Lam and Lai, for the Defendant in all 3 actions