Rich Profit Creation Ltd v. Ko Chung Lun and Others

HCA 1207/2017 & 1865/2017
(consolidated)

[2022] HKCFI 1946

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1207 of 2017 AND 1865 of 2017

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BETWEEN

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(Consolidated by Order of Master Ho dated 1^st March 2019)

Before:  Hon Mimmie Chan J in Court

Dates of Hearing:  25-27 and 29 April 2022

Date of Judgment:  27 June 2022

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J U D G M E N T

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Background

1.The Plaintiff is a company incorporated in Hong Kong.  In August 2010, it entered into a joint venture with a Mainland company (“Mainland Shareholder”), to form a joint venture company (“HJV”)  for development of a property on the Mainland (“Project”). The Plaintiff was the 49% shareholder and the Mainland Shareholder was the 51% shareholder of the HJV. A Joint Venture Agreement was signed between the Plaintiff and the Mainland Shareholder on 6 August 2010, to govern the operations of the HJV. Clause 9 of that agreement required the Plaintiff to inject RMB 49 million into the Project.

2.The Plaintiff was initially used as an investment vehicle company by Mr Ng Kwun Wan (“Ng”)  and Mr Choi Siu Pang (“Choi”).  In around 2011, Ng and Choi invited the 1^st Defendant Mr Ko Chung Lun (“Ko”)  to participate in the joint venture Project, and Ko agreed. Ko nominated the 2^nd Defendant (“Dignity”), a Hong Kong company the shares of which were wholly owned by Ko’s sister, the 5^th Defendant Madam Ko Yu Man (“Sister”), as the vehicle to participate in the Project.  The Sister was at all material times the sole shareholder and director of Dignity. On their part, Ng and Choi nominated a Hong Kong company Target Well Investment Development Limited (“TW”)  to be their participating vehicle. Dignity became the 43.5% shareholder in the Plaintiff, with TW holding the remaining 56.5% of the shares.

3.A Shareholders’ Agreement (“SHA”)  was signed between TW and Dignity on 17 January 2011. According to the SHA, each of TW and Dignity agreed to advance RMB 15 million as an interest-free shareholder’s loan to the Plaintiff, and Dignity was to procure external borrowing of a further RMB 19 million for the Plaintiff. The “external borrowing” of RMB 19 million was made by the 3^rd Defendant, Kota International Limited (“KIL”)  (“KIL Loan”), but the Plaintiff claims that unbeknownst to it, KIL was in fact beneficially owned and controlled by Ko’s wife, Madam Yeung Ying who is the 4^th Defendant (“Wife”).

The claims made

4.The Plaintiff’s claim is that since the inception of the Project from about August 2010, funding was required to be injected by the Plaintiff into the Project from time to time. After Ko’s involvement in 2011, according to the Amended Consolidated Statement of Claim (“SOC”): it was agreed amongst the Plaintiff, TW, Dignity and Ko that when payments were required to be made to the HJV or other Mainland entities pursuant to the Project, Dignity and/or Ko (or their nominees)  would first receive the funds from the Plaintiff, and then would transfer the same to HJV or other Mainland entities as may be directed, for and on behalf of the Plaintiff, as trustees of the funds received, or alternatively as agents for the Plaintiff (“Funding Agreement”). The Plaintiff claims that it was implicit in the Funding Agreement that when payments were made pursuant to the joint venture Project by HJV or other Mainland entities to Dignity and/or Ko (or their nominees)  for the benefit of the Plaintiff, Dignity and/or Ko (or their nominees)  would first receive the funds for the Plaintiff, and then would be obliged to transfer such funds to the Plaintiff (paragraph 6D SOC).

5.On about 24 August 2011, the HJV entered into an agreement with a Mainland entity (“HCT”), pursuant to which HJV had to pay RMB 30 million to HCT within 20 days of the signing of the agreement. The Plaintiff as the joint venture partner of the HJV was accordingly required to contribute RMB 30 million by way of a shareholder’s loan to the HJV for the property development project and as working capital. According to the SOC, it was agreed between Ng and Ko, Ng acting on behalf of the Plaintiff and Ko acting for himself and on behalf of Dignity, that the Funding Agreement would be applied to the injection of the RMB 30 million into the HJV. The Plaintiff claims that the agreement was made through telephone conversations and emails exchanged.

6.On the Plaintiff’s pleaded case, the Plaintiff transferred to Ko’s nominee, the 6^th Defendant Best Cheer Development Limited (“BC”), on 23 May 2011 a sum of RMB 3 million (“1^st Sum”); and to the joint account of Ko and the Wife on 14 September 2011 a further sum of RMB 30 million (“2^nd Sum”). The 1^st Sum and the 2^nd Sum were transferred to BC and Ko/Wife pursuant to the Funding Agreement, as money required for HJV, were received by BC, Ko and the Wife as trustees/agents, and were to be held by Ko/Dignity and BC (as Ko’s nominee)  to hold as trustees for the Plaintiff, for the purpose of advancing and transferring the same to HJV, and to hold any repayment when received from the HJV.

7.The Plaintiff claims that by virtue of the Funding Agreement and their receipt of money from the Plaintiff, BC, Ko/Dignity owed duties as trustees to the Plaintiff, to apply the 1^st Sum and the 2^nd Sum (“Trust Funds”)  pursuant to the Funding Agreement, to safeguard the Trust Funds and not to dissipate them, and not to use the Trust Funds for an improper purpose (paragraph 10, SOC). The Plaintiff further claims that by reason of the Funding Agreement, Ko’s shadow or de facto directorship in the Plaintiff, and the agency relationship between the Plaintiff as principal and BC, Ko and/or Dignity as agent, BC, Ko and Dignity owed to the Plaintiff fiduciary duties: not to place themselves in positions of conflict with the Plaintiff; not to profit from their position as fiduciaries; to act in the best interests of the Plaintiff in good faith; to keep the Trust Funds in safe custody for the Plaintiff and to account for the same to the Plaintiff; to act in accordance with the terms of their authority, which is to advance the Trust Funds to the HJV for and on behalf of the Plaintiff; and upon receipt of money for the Plaintiff as principal, to pay over or account for that money at the request of the Plaintiff (paragraphs 11 and 11A, SOC).

8.The Plaintiff alleges that instead of advancing and transferring the 1^st Sum and the 2^nd Sum to the HJV, on behalf of the Plaintiff and pursuant to the Funding Agreement, Ko, BC, Dignity, the Sister (who was the sole director and shareholder of Dignity), the Wife and KIL (which is a company incorporated in Hong Kong of which the Wife is the sole shareholder and director)  all conspired together with the intent to injure the Plaintiff by unlawful means. As opposed to advancing the Trust Funds received from the Plaintiff to HJV, as agents and trustees of the Plaintiff, Ko (representing Dignity, and on his own behalf)  represented to HJV that Ko and/or Dignity were the providers of the 1^st Sum and the 2^nd Sum and hence were the creditors of HJV.

9.At a board meeting of the HJV held on 21 May 2015, which was attended by Ko as a director, the HJV’s board resolved to return the 1^st Sum and the 2^nd Sum to Ko and his nominees, instead of to the Plaintiff. The money was received by Ko, who refused to account for the same to the Plaintiff or to return same to the Plaintiff.

10.The Plaintiff claims that by representing to the HJV that the Trust Funds were advanced to the HJV by Ko and/or Dignity, BC and/or Ko and/or Dignity had misapplied the Trust Funds, were in breach of the trust over the Trust Funds and in breach of their fiduciary duties owed to the Plaintiff.  In receiving the 1^st Sum from the Plaintiff on 23 May 2011, and representing to the HJV that it was advanced by Ko and/or Dignity, the Plaintiff claims that BC, Ko and Dignity were in breach of their fiduciary duties as trustees and agents, by putting themselves in a position where their interests conflicted with those of the Plaintiff, had not acted in the best interests of the Plaintiff, and were in breach of their authority as agents of the Plaintiff.  The Plaintiff alleges that Ko, Dignity and BC all had knowledge of the falsity of the representations to the HJV, that it was Ko and/or Dignity which had advanced the 1^st Sum and the 2^nd Sum to the HJV, and that the money should be repaid to Ko/Dignity instead of the Plaintiff. The Plaintiff claims that Ko’s knowledge was to be attributed to Dignity and BC, which are both nominees of Ko.

11.The Plaintiff claims that the money received from HJV should be held by BC, Ko/Dignity on trust, as constructive trustees for the Plaintiff. It further claims that Ko, Dignity, BC, the Sister, the Wife and KIL had conspired to injure the Plaintiff and to cause loss to the Plaintiff by unlawful means, namely by BC/Ko/Dignity acting in breach of trust and in breach of their fiduciary duties, and that they had all acted in concert and carried out their conspiracy, and had deprived the Plaintiff of the Trust Funds.

12.On the Plaintiff’s case, the Wife was a party to the conspiracy and had assisted Ko/Dignity’s breach of trust and/or breach of fiduciary duties by firstly, receiving the 2^nd Sum in her bank account held jointly with Ko, and failing to return the 2^nd Sum to the Plaintiff, and further, by procuring KIL (of which she was the sole shareholder and director)  to commence legal proceedings and obtaining default judgment against the Plaintiff for recovery of the loan of RMB 19 million.

13.The Plaintiff’s claims against the Sister were on the basis of her being a party to the conspiracy and her assistance in Ko/Dignity’s breach of trust/fiduciary duties by “carrying out all relevant corporate acts of Dignity”, and further, by procuring Dignity to commence proceedings on the Mainland to seek recovery of the loan due from the Plaintiff.

14.KIL (controlled by the Wife)  was alleged to be a party to the conspiracy by commencing proceedings in Hong Kong, obtaining default judgment against the Plaintiff in respect of the loan due from the Plaintiff, and bringing winding up proceedings against the Plaintiff.

15.As against the Sister, the Wife and KIL (referred to by the Plaintiff as “Accessories”), the Plaintiff only pursued the claim of conspiracy at trial, having abandoned the pleaded claims of dishonest assistance and undue enrichment against them.

16.In these proceedings, the Plaintiff seeks by way of relief: declarations that BC and/or Ko and/or Dignity held the 1^st Sum and its traceable proceeds on trust, and that Ko and/or Dignity held the 2^nd Sum and its traceable proceeds on trust, for the Plaintiff; orders that Ko, the Sister, Dignity, BC and the Wife account to the Plaintiff for the Trust Funds; orders for the Defendants to return the Trust Funds to the Plaintiff; and alternatively, damages.

Whether Funding Agreement or Loan Retrieval Agreement

17.Ko and Dignity deny that there was a Funding Agreement as alleged. They claim that funds for the HJV/Project were only required since May 2012, and that there had been no need for funds in 2011.

18.In relation to the transfer of the 1^st Sum (of RMB 3 million)  from the Plaintiff to BC, Ko denies that it was transferred from the Plaintiff to him (via BC)  pursuant to the alleged Funding Agreement, claiming instead that this was the “1^st Loan Reduction”. According to Ko, there was no progress in the Project at the relevant time, and the funds injected by Ko into the Plaintiff together with the KIL Loan had not been employed.  On Ko’s case, Ng and Choi suggested, and Ko agreed, that the shareholders’ loans should be reduced by RMB 1.5 million each, totaling RMB 3 million (“1^st Loan Retrieval Agreement”). On the Defendants’ pleaded case, it was pursuant to the 1^st Loan Retrieval Agreement that the 1^st Sum of RMB 3 million was paid by the Plaintiff to BC on 18 May 2011.

19.On this pleaded case, there are already inherent inconsistencies.  If there was indeed an agreement made amongst Ng, Choi and Ko, that the shareholders’ loans (from TW and Dignity)  should be reduced by a total of RMB 3 million, that cannot explain why there should be a payment of RMB 3 million from the Plaintiff to Ko’s nominee, BC, or to Ko’s camp. If there should be reduction of Ko/Dignity’s loan as a shareholder to the Plaintiff, it should be a payment of RMB 1.5 million. There was no explanation as to why there should be a payment of RMB 3 million to Ko /Dignity, or BC on Ko’s behalf.

20.As Counsel for the Plaintiff pointed out, there was no reason at all why the 1^st Loan Reduction, as alleged by Ko, could not have been paid directly to the shareholders, namely TW/Ng and Choi on the one part and Dignity/Ko on the other part, but had to be paid to Ko’s camp, for “distribution” by Ko to Ng’s camp, as Ko sought to explain in his witness statement. The payment of HK$3,580,380 to BC (equivalent to RMB 3 million)  was made to BC’s bank account in Hong Kong (as was the 2^nd Sum), so no question arose as to any need to make payment in RMB currency or on the Mainland, and hence there was no need to make payment to Ko’s camp first.

21.The assertion of the 1^st Sum being paid as a loan reduction and pursuant to the 1^st Loan Retrieval Agreement is also inconsistent with the contemporaneous documents. The transfer from the Plaintiff and the payment of HK$3,580,380 to BC (equivalent to RMB 3 million)  into BC’s bank account was on 23 May 2011, as evidenced by the bank withdrawal and deposit slips.  These documents contradict Ko/Dignity’s claim, that the 1^st Loan Reduction was made on 18 May 2011.

22.On the Plaintiff’s case, the 1^st Sum was required as a shareholder’s loan for HJV’s working capital, and it was transferred to BC/Ko pursuant to the Funding Agreement for onward payment to the HJV. This is evidenced by an email from Ng’s secretary to Ko and the Sister, by which the latter were asked to arrange for the transfer of RMB 3 million into the account of HJV on the Mainland, and it was stated in the email that Ng would arrange for the Plaintiff to transfer the Hong Kong dollar equivalent into the account of Ko as designated. The transfer of HK$3,580,380 to BC followed, on 23 May 2011.

23.Although Ko claimed in his witness statement that the entire sum of the alleged 1^st Loan Reduction of RMB 3 million was paid to BC, and that he had distributed half of the amount received to Ng’s camp, there are no supporting documents, and no particulars whatsoever as to when and how the alleged distribution was made.

24.As for the 2^nd Sum, the pleaded defence is that this was paid as a result of the suggestion made by Ng and Choi in September 2011, that there should be a further reduction of the respective shareholders’ loan by RMB 5 million each, totaling RMB 10 million, since there was still no progress in the Project. The suggestion was accepted by Ko (“2^nd Loan Retrieval Agreement”). According to Ko, loans would be made to the Plaintiff again, when circumstances called for same.

25.At paragraph 36 of the Amended Consolidated Defence (“Defence”), it is pleaded that of the 2 loan retrievals, Ng and Choi asked Ko to have custody of the sum of RMB 6.125 million, representing TW’s reduced loan, and that this was to facilitate Dignity’s dispatch of money for the use of Ng and Choi on the Mainland.

26.Ko also claims (at paragraph 37 of the Defence)  that at the same time as the 2^nd Loan Retrieval Agreement, Ko proposed, and Ng and Choi agreed, that the Plaintiff should lend RMB 20 million to Ko, for Ko to apply the money for “other gainful use”, and that the loan would be repaid by Ko as and when HJV required working capital (“Ko Loan Agreement”).

27.It was pursuant to the 2^nd Loan Retrieval Agreement, and the Ko Loan Agreement, that (on the Defendants’ case)  the 2^nd Sum (of RMB 30 million)  was transferred by the Plaintiff to Ko, into Ko’s bank account (which was subsequently revealed to be a joint account of Ko and Wife).

28.Again, Ko’s assertion of the 2^nd Loan Retrieval Agreement is unsupported by any evidence, and is as incredible as the 1^st Loan Retrieval Agreement. When the SHA between TW and Dignity had only been signed in January 2011 for Dignity’s participation in the HJV, it is incredible that the parties would have agreed shortly thereafter, in May 2011, for their shareholders’ loans to HJV to be reduced. It is particularly incredible that the parties would have agreed on a loan reduction in September 2011, when there is evidence that the HJV had signed an agreement with HCT on 24 August 2011, under which HJV had to make payment to HCT of RMB 30 million on a property investment within 20 days of the signing of the agreement, such that the Plaintiff would be required to provide funding for the HJV in September 2011.

29.The Plaintiff’s case for payment of the 2^nd Sum is supported by the contemporaneous correspondence.  On 9 September 2011, Ng had emailed Ko, referring to the property development agreement signed by HJV, and pointing out that the HJV had to make payment of RMB 30 million before 13 September 2011. Ng set out the payment arrangement in the email, for the Plaintiff to arrange for RMB 30 million to be transferred to the account of the HJV, to enable HJV to make payment to HCT. Ko was requested in the email to arrange for payment of the RMB amount into the HJV account, and it was stated that the Plaintiff would arrange for an equivalent amount of Hong Kong dollars to be paid into Ko’s designated account. A sum of US $4,728,132 was then deposited into Ko and the Wife’s account with HSBC in Hong Kong on 14 September 2011.

30.I agree with the criticism made by Counsel for the Plaintiff, that Ko’s explanation for and account of the 1^st Sum, the 2^nd Sum, and how they are allegedly related to the 2 loan reductions, are convoluted, confusing and hence unreliable and unbelievable.

31.On Ko’s case, the total amount under the 1^st and 2^nd Loan Retrieval Agreement should be RMB 6.5 million. Perhaps to explain why the loan reductions which were supposedly proposed by Ng and Choi had never been paid directly to them, the original and pleaded case was that Ko was asked by Ng and Choi to keep the loan reductions on their behalf, pending Dignity’s dispatch of money for their use in the Mainland in the future. However, the pleaded defence is that Ko was asked to keep RMB 6.125 in his custody, instead of RMB 6.5 million. He never explained the difference, and how RMB 6.125 million was calculated, only maintaining that RMB 6.125 million had been returned to Ng and Choi.

32.In relation to the alleged repayment of the RMB 6.125 million (representing on Ko’s case at least part of the 2 alleged loan reductions)  Ko pleaded in the Defence that he had returned RMB 1 million to Ng on 11 May 2011, and RMB 1.45 million to Choi on 19 September 2011, and that the balance had been “subsequently returned”, without any particulars or documentation in support.

33.Again, the pleaded case is itself riddled with inconsistencies.  On the one hand, it was claimed that the RMB 6.125 comprised the loan reductions agreed in May and September 2011. On the other hand, it was claimed that repayment of the RMB 6.125 million Ko held in custody for Ng and Choi had been paid back to Ng in part, on 11 May 2011, in the sum of RMB 1 million. As Counsel for the Plaintiff pointed out, this is inherently improbable, in fact impossible, as the alleged repayment preceded the payment of the 1^st Sum on 23 May 2011.

34.It is therefore readily apparent that Ko’s account of the 1^st Sum and the 2^nd Sum as loan reductions, which had been fully paid to Ng and Choi, is a convoluted concoction, and totally unreliable to be accepted by way of defence.

35.Ko repeatedly claimed, at paragraph 42 of the Defence and in his evidence and testimony in Court, that he had made loans of RMB 33 million to the HJV, and that the sum he had received as repayment by the HJV, and the RMB 33 million claimed by the Plaintiff, represented money he had advanced from his own sources. However, there have never been any particulars of Ko’s alleged loans, when and how they were made, and the amounts lent. There is no counterclaim made by Ko against the Plaintiff in relation to any sum said to have been advanced by him to HJV on behalf of the Plaintiff, or otherwise payable by the Plaintiff to Ko in respect of the advances made. Without any evidence in support, Ko’s claims ring hollow.

36.To add credence to his claim that the 2^nd Sum included a loan of RMB 20 million, Ko sought to rely on his purported repayment of RMB 10 million to the Plaintiff on 21 May 2012, and RMB 10 million to the Plaintiff on 7 June 2012.  However, the contemporaneous emails from Ko’s assistant (Ida)  of 23 May 2012 and 7 June 2012 contradict Ko’s evidence. The email of 23 May 2012 referred to the payment of HK$11.85 million (corresponding to RMB 10 million)  as the Plaintiff’s “investment sum”, and the email of 7 June 2012 likewise referred to the Plaintiff’s “second investment sum” of HK $12 million (corresponding to RMB 10 million). Ko’s excuse, that his assistant referred to all his payments into the Plaintiff’s account as “investments”, and that she had been mistaken about the true nature of the payments, is not at all convincing.

37.On the Plaintiff’s case, there was no Ko Loan Agreement, and the 2 payments made into the Plaintiff’s account on 21 May and 7 June 2012 were further injections of capital contribution required for the Joint Venture Agreement between the Plaintiff and the Mainland Shareholder.

38.The other excuses and reasons put forward by Ko, that the RMB 30 million under HJV’s agreement with HCT was required by the HJV, and not by the Plaintiff; that money had to be remitted to HJV on the Mainland and that the funds in the Plaintiff’s account in Hong Kong were useless because they could not be remitted to HJV; that the Plaintiff did not have any bank account on the Mainland, and that the money for HJV had to be provided by Ko’s companies on the Mainland; do not constitute a defence to the claims made by the Plaintiff under the Funding Agreement. The suggestion of illegality was never pleaded. All the reasons put forward by Ko actually support the existence of the Funding Agreement, as it was precisely because money had to be paid to the HJV on the Mainland, in RMB, that the Funding Agreement was made on the terms alleged.

39.Having considered the contemporaneous documents, and the evidence adduced by Ng and Ko, I accept that there was a Funding Agreement made, on the terms claimed by the Plaintiff, and that the 1^st Sum and the 2^nd Sum were paid by the Plaintiff to Ko and his nominees, for the purposes of forwarding same to the HJV for and on behalf of the Plaintiff.

40.Under and by virtue of the Funding Agreement, BC, Ko/Dignity received property (namely funds)  from the Plaintiff not in their own right but for the Plaintiff, and they assumed control and power over the funds, for the designated purposes of making payment to HJV on the Plaintiff’s behalf. Not only were BC, Ko/Dignity put in a position whereby they were able to exercise control and to abuse their power over the funds to the detriment of the Plaintiff, but Ko, his nominees and Dignity agreed to assume duties as to how the funds were to be used.  BC, Ko and Dignity were clearly trustees in respect of the money received, whether under an express trust, or as constructive trustees liable in equity to account for the trust assets as if they were trustees (Williams v Central Bank of Nigeria [2014] AC 1189).

41.As such, Ko and Dignity owed fiduciary duties in terms of those pleaded in the SOC, and by representing to HJV that the 1^st Sum and 2^nd Sum paid over to the HJV represented funds of Ko and his nominees, rather than of the Plaintiff, and by failing to account to the Plaintiff and to pay over to the Plaintiff the repayment received from HJV, Ko, BC and Dignity had clearly acted in breach of their fiduciary duties.

42.Even if Ko had himself made advances from his own resources to the HJV (which has not been proved by any evidence adduced in this case), it does not detract from the fact that he had received money from the Plaintiff/Ng and Choi for forwarding to the HJV, on terms agreed, which placed him under duties of trust and confidence to exercise his powers over the money received, for the purposes received, and not to put himself in a position of conflict, whereby he can deal with money repaid by HJV and put in his control as he considered fit and in his own interests only, without accounting to the Plaintiff.

43.Ko did not dispute at trial that Dignity and BC were his vehicles, and were nominees under his control at least for the purposes of or in relation to the HJV.

44.BC was the recipient of the 1^st Sum, and Ko’s knowledge of the terms of the Funding Agreement, and of his acting in breach of the fiduciary duties imposed on him and Dignity thereunder, are to be imputed to both Dignity and BC. BC had received the 1^st Sum, and is liable to account to the Plaintiff and to repay the trust money to the Plaintiff as constructive trustee.

45.On my findings, Ko, Dignity (as Ko’s nominee)  and BC (as Ko’s nominee and as recipient of the 1^st Sum)  were in breach of trust and of fiduciary duties owed to the Plaintiff and are liable to account, and to repay to the Plaintiff the 1^st Sum and 2^nd Sum.

Liability of KIL, Wife and Sister

46.As stated above, the Plaintiff only pursued it claims of unlawful means conspiracy against KIL, the Wife and the Sister.

47.There is no dispute that the KIL Loan was made by KIL to the Plaintiff, and that the Plaintiff had had use of the KIL Loan, whether or not it was an “external borrowing”. There was nothing unlawful or improper for KIL to take steps and institute proceedings against the Plaintiff for recovery of the KIL Loan when it was not repaid.

48.Even if KIL can be said to be party to the alleged scheme to injure the Plaintiff by taking steps to seek recovery of the KIL Loan, on the evidence available, it is more likely than not that KIL, and the Wife behind KIL, had been procured to act as they did by Ko.

49.Nor is there any or any sufficient evidence to show that the Wife and the Sister had knowledge of any facts regarding the Funding Agreement, and the agreed manner of use of the 1^st Sum and the 2^nd Sum, to suggest to them that Ko/Dignity were acting in breach of their fiduciary duties owed to the Plaintiff, Ng and Choi. There is no evidence that the Sister had attended the meeting at which it was resolved to return the RMB 33 million to Ko and his associates or nominees, or that she had represented to the HJV that the 1^st Sum and the 2^nd Sum were advanced by Ko and not the Plaintiff/Ng/Choi, such that the payment to and receipt by Ko of the money received from HJV was in breach of trust.

50.Although the Sister was the shareholder and director of Dignity, it is more probable that she had acted on the directions of Ko and that it was Ko rather than the Sister who was the directing mind of Dignity.

51.On the whole, there is no evidence to prove that KIL, the Wife and the Sister, in taking the steps they did and as complained of by the Plaintiff, had the intention to injure the Plaintiff by any unlawful means.

52.Although neither the Wife nor the Sister had turned up at trial to give evidence, and the Plaintiff had invited the Court to draw adverse inferences against them, I am not satisfied that there is sufficient evidence to find that the Plaintiff has discharged its burden of proof so far as the liability of KIL, the Wife and the Sister are concerned.

Disposition

53.On the basis of my findings of breach of trust, the Plaintiff’s claims for relief against Ko, Dignity, and BC are allowed in terms of the prayer to the SOC, including an order that they should pay to the Plaintiff the costs of the action.

54.No orders are made against KIL, the Sister and the Wife.

Mr Vincent Chiu, instructed by Foo, Leung & Yeung, for the plaintiff

Mr Kevin CW Wong and Mr Victor KH Chiu, instructed by Li, Chow & Company, for the 1^st to 6^th defendants