Yung Wai Man v. Leung Kwok Pong
Read the full judgment text of HCA 315/2020 on BabelCite. This High Court CFI judgment was delivered on 8 April 2021.
1. There is before this court the Plaintiff’s application by summons dated 9 November 2020 (“ Summons ”) for summary judgment under RHC O14 r 1 for the outstanding sums due by the Defendant under a written Chinese Agreement “股票抵押及現金貸款協議書” (“ Agreement ”) dated 11 October 2019 signed by the Plaintiff as lender and by the Defendant as borrower. There is no dispute that the Agreement was signed by the Plaintiff and the Defendant on the date stated.
Cited by 4 cases · Cites 2 cases
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HCA 315/2020 [2021] HKCFI 896 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 315 OF 2020 _________________ BETWEEN
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________________ J U D G M E N T ________________ Introduction 1.There is before this court the Plaintiff’s application by summons dated 9 November 2020 (“Summons”) for summary judgment under RHC O14 r 1 for the outstanding sums due by the Defendant under a written Chinese Agreement “股票抵押及現金貸款協議書” (“Agreement”) dated 11 October 2019 signed by the Plaintiff as lender and by the Defendant as borrower. There is no dispute that the Agreement was signed by the Plaintiff and the Defendant on the date stated. 2.In gist, the Agreement provided that:
3.The Plaintiff’s claim is straightforward. 4.Prior to October 2019, he had advanced various loans to the Defendant. At the Defendant’s request, the secured loans were used to purchase over 24 million shares in PTI, a listed company, on behalf of the Defendant but these shares were purchased in the names of the Plaintiff and his relative a Ms Chow. The Defendant failed to repay the loans other than a partial payment of HK$150,000 of the Unsecured Loan thereby reducing the cash advance from HK$600,000 to HK$450,000. In return for the Plaintiff granting additional time to the Defendant to repay, the parties executed the Agreement on 11 October 2019. 5.By 31 October 2019, the Defendant failed to make the repayment as per the Agreement. The Plaintiff’s solicitors then sent a letter dated 11 February 2020 to the Defendant demanding repayment in accordance with the Agreement. It is not in dispute that the Defendant had failed to do so. The Plaintiff therefore commenced this action against the Defendant. Procedural Background 6.On 13 March 2020, the Plaintiff obtained an ex parte Mareva Injunction restraining the Defendant from removing or in any way disposing of his assets in Hong Kong up to HK$15,389,135. The Mareva Injunction was continued on 20 March 2020. 7.On 9 October 2020, the Mareva Injunction was further extended by Linda Chan J until trial or further Order but the monetary limit was reduced to HK$9,389,135, the reason being that the Plaintiff was holding the PTI shares as security with an estimated market value of HK$6 million. Linda Chan J ordered the costs of and occasioned by the Plaintiff’s summons to continue the Mareva Injunction be the Plaintiff’s costs in the cause on the basis that the Defendant should not have opposed it. 8.In her Reasons for Decision dated 19 October 2020 (“Reasons”), Linda Chan J rejected the Defendant’s submission that the Plaintiff had no good arguable case. At [11] to [14], the learned Judge commented on the parties’ cases in the following terms.
Deliberation 9.The approach of the Court to an application for summary judgment is well established. DHCJ Lisa Wong SC (as she then was) had succinctly summarized it in Lau Chun Kam v Lai Tak Shing, unrep, HCA 2126 of 2007, 9 December 2008 at [12][2]. For ease of reference, they are reproduced below.
10.In his Defence at paragraph 19, the Defendant originally adopted a “scattered gun” approach and pleaded a host of alleged defences to the Plaintiff’s claim. Mr Cheung, however, has very sensibly whittled them down at the opening section of his skeleton submissions to the following two:
Ground 1 11.Ground 1 is essentially a denial that the Defendant had borrowed any money from the Plaintiff. Instead, the Plaintiff was a mere intermediary between the Defendant as borrower and Lee as lender[3]. If there is any outstanding payment to be made by the Defendant, it should be paid to Lee instead of the Plaintiff. 12.The evidence in support of Ground 1, especially the status of the Plaintiff as a mere intermediary, has been set out in the Defendant’s 2nd affirmation (“Leung 2”) from paras 16 onwards. Essentially, the Defendant’s case was that in around April 2019, the Plaintiff introduced Lee to him. Lee had agreed to lend, originally, HK$10 million to the Defendant at the monthly interest of 3% and with shares of PTI as security. By 3 June 2019, the Defendant owed a sum of HK$20 million to Lee and a total of 39,914,000 PTI shares had been transferred to Lee as collateral. The Defendant’s repayment to Lee had been piecemeal so he asked the Plaintiff to assist in negotiating with Lee for better terms, in particular a deferral of repayment. As an incentive, the Defendant agreed to pay the Plaintiff a commission of HK$300,000. He issued a cheque dated 18 September 2019 to the Plaintiff but the cheque bounced. The Defendant said he then issued another cheque to the Plaintiff in the sum of HK$150,000 and paid another HK$150,000 to the Plaintiff in cash. The Defendant emphasised that apart from the intermediary arrangement between the Plaintiff and the Defendant, there was no other business or commercial relationship between the two. 13.Pausing here, it seems to this court that the Defendant’s evidence on Ground 1 is so inherently improbable and so inconsistent with contemporaneous documents that it is just not capable of being believed. 14.First, the Defendant’s evidence is nothing more than his own bare assertion. He has not been able to adduce any documents, contemporaneous or otherwise, in support of his case. This is quite extraordinary given inter alia the amount of money he had borrowed from Lee, the substantial number of PTI shares he had allegedly transferred to Lee as collateral and his reliance on the Plaintiff to act as a go-between with Lee. It is surprising that there were no written communications evidencing the Defendant’s instructions to the Plaintiff or the Plaintiff’s report to the Defendant about the progress of whatever he was instructed to do. What the Defendant needs to produce but has failed to is some proof of the Plaintiff’s status as merely his intermediary eg a one-page document acknowledging that the Plaintiff, since a particular date, has been acting on the Defendant’s behalf to negotiate with Lee about repayment of the Defendant’s indebtedness in return for the alleged HK$300,000 commission. Email messages or WhatsApp messages between the Plaintiff and the Defendant would also shed light on the true relationship between the two and may corroborate the Defendant’s case. But there are none. Lastly, there is no corroborative evidence from Lee. 15.Second, the fact that the Defendant had borrowed from Lee is not proof that he had never borrowed from the Plaintiff. The one simply does not follow from the other. 16.Third and most importantly, the Defendant had admitted signing the Agreement which clearly contains an acknowledgment of his indebtedness to the Plaintiff. The fact that the Plaintiff signed the Agreement as lender and the Defendant signed it as borrower speaks volume against the Defendant’s case. Ground 2 17.Ground 2 is that the Agreement is liable to be rescinded on the ground of misrepresentation by the Plaintiff as to the true nature of the Agreement[4]. 18.The Defendant’s evidence, consisting of a handful of paragraphs in Leung 2, is essentially this. 19.Against the backdrop of the unsatisfactory progress of repayment by the Defendant to Lee, and the sliding share price of PTI and hence the sliding value of the shares as collateral, the Plaintiff told the Defendant that Lee would like him to make up for the drop in the value of the collateral. In October 2019, the Plaintiff presented some documents to the Defendant for his signature, representing to him that such documents functioned as the Defendant’s promises to make up for the drop in the value of the collateral in favour of Lee (“Representation”). The Defendant trusted the Plaintiff as his “helper” and relying on the Representation, he signed the documents without checking them or engaging solicitors for advice. Although the Agreement was in Chinese and not difficult to understand, the Defendant was a busy businessman, reposing substantial trust and confidence in the Plaintiff, and did not spend any time to verify and understand the contents of the Agreement. 20.Again, it seems to this court that the Defendant’s evidence on Ground 2 is vague and is also inherently improbable and so inconsistent with contemporaneous documents that it is just not capable of being believed. 21.First, as accepted by Mr Cheung, there is no contemporaneous documentary evidence in support of the Defendant’s version of events. In other words, the Defendant is simply making a bare assertion and hopes the court will find it believable. 22.Second, while it is the Defendant’s case that the Plaintiff had presented some documents to him for his signature, he is unable to produce to the Court or even give some indication in his affirmation what documents were presented to him other than the Agreement. 23.Third, as commented by Linda Chan J in the Reasons, the Agreement is a 1-page document in Chinese and its title aptly described its nature. Even the Defendant admitted on oath that the Agreement is not difficult to understand. It is therefore very hard to believe the Defendant could have been and was actually misled by the Plaintiff as to what the Agreement was about. 24.Fourth, regarding the Defendant’s claim that he was a busy businessman and had reposed substantial trust and confidence in the Plaintiff, it is again difficult to accept that, however busy the Defendant might claim to be, he could not find a few minutes to read the Agreement before signing it. This is especially amazing given that the Defendant claims to be a Hong Kong-based businessman who has been holding the entire or major shareholdings of several private companies for operating different businesses, including inter alia investment and trading, innovative technology products and services, business consultation etc. He also claims to have been investing in listed securities, as well as real properties. On his own portrayal, the Defendant is a savvy businessman/investor with considerable experience in handling business documents. Why would someone like him sign a document containing an acknowledgment of indebtedness to the Plaintiff if in fact he did not owe the Plaintiff anything? And why would the Defendant repose substantial trust and confidence in the Plaintiff when they got acquainted with each other only in early 2019 through the introduction of a friend? 25.Fifth, once the Defendant discovered the true nature of the Agreement that he had signed, one would expect him to be shocked and to have taken steps to complain to the Plaintiff about the alleged misrepresentation made by him. Yet, there is no evidence of that happening. Conclusion 26.To conclude, for reasons set out above, this court is firmly of the view that the Defendant’s evidence is not capable of being believed. The Defendant has therefore failed to show there is a fair or reasonable probability of having a real or bona fide defence to the Plaintiff’s claim. There must be summary judgment in favour of the Plaintiff. 27.Mr Cheung has fairly submitted to this Court that the Defendant does not dispute the arithmetic calculation of the figures set out at paras 61-63 of the Plaintiff’s skeleton submissions. On the other hand, the Plaintiff has very properly attached to his supplemental submissions a table setting out the revised calculation of the Secured Loan after giving credit to the Defendant for the sale proceeds of the PTI shares which have been completely sold by March this year. The recalculation will form the basis of the judgment granted to the Plaintiff in this application. Disposition and costs order nisi 28.This court hereby grants the following judgment and makes the following orders in favour of the Plaintiff:
Mr Roy Lau and Ms Lisa Lam, instructed by Yu Hung & Co, for the Plaintiff Mr Tommy Cheung, instructed by Hon & Co, for the Defendant [1] ie a cheque issued by the Defendant to the Plaintiff for HK$300,000 on 18 September 2019 which could not be cleared: Reasons at [7]. [2] Recently adopted by DHCJ Raymond Leung SC in Charm Master Enterprises Ltd v Grand TG Gold Holdings Ltd [2020] HKCFI 2820 at [17]. [3] Para 19(a) of Defence. [4] Para 19(c) and (d) Defence. | |||||||||||||||||||||
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