Lip Chung Shek v. Lee Wai Kwan Edmund

DCCJ 4867/2023

[2025] HKDC 103

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4867 OF 2023

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DECISION

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A.  INTRODUCTION

1.This is the Plaintiff’s appeal against the decision of Master B. Mak dated 6 June 2024 dismissing the Plaintiff’s application dated 15 February 2024 for summary judgment in the sum of HK$1,480,700 against the Defendant.

B.  THE PARTIES’ CASES

B1.  The Plaintiff’s case

2.It is the Plaintiff’s case that:

(1)  Between February to October 2015, the Plaintiff lent a total sum of HK$7,200,000 to the Defendant at an interest rate of 24% per annum which is payable on demand. Of this HK$7,200,000 loan, HK$2,000,000 was paid to a company called Apple Finance Company Limited, HK$500,000 to the Defendant’s wife and the remaining HK$4,700,000 to one Mr. Leung Chun Ming Jimmy (“Leung”) who is said to be the Defendant’s business partner;

(2)  From August 2015 to April 2016, the Defendant repaid a total principal sum of HK$1,500,000 to the Plaintiff, leaving an outstanding balance of HK$5,700,000. Between February 2015 and April 2016, D also paid an interest of HK$1,081,300 to the Plaintiff (“Interest”);

(3)  In April 2016, the Defendant promised to repay HK$3,000,000 (out of the outstanding balance of HK$5,700,000) in due course and requested the Plaintiff to reduce the interest rate on the remaining balance of HK$2,700,000 from 24% to 5% per annum. The Plaintiff agreed resulting in an oral agreement between the parties (“2016 Oral Agreement”);

(4)  On 1 May 2016, the Plaintiff and the Defendant entered into a written loan agreement (借款合同) whereby the Defendant agreed to repay the loan of HK$2,700,000 by August 2019 and the interest rate on the said HK$2,700,000 was 5% per annum (“2016 Written Agreement”);

(5)  From May 2016 to December 2016, the Defendant repaid a total of HK$967,451 and RMB1,732,000, in full and final settlement of the HK$3,000,000 indebtedness pursuant to the 2016 Oral Agreement;

(6)  However, the Defendant failed to repay the HK$2,700,000 or any part thereof pursuant to the 2016 Written Agreement;

(7)  On 23 July 2019, the Defendant signed a note promising to repay the outstanding balance of HK$2,700,000 by 7 instalments before October 2021 (“2019 Written Note”);

(8)  However, the Defendant still failed to repay the HK$2,700,000 or any part thereof pursuant to the 2019 Written Note;

(9)  On 29 July 2022, the Plaintiff and the Defendant met in the MacDonald’s in Yuen Long Plaza. Also present was a Mr. Wong (“Wong”), a mutual acquaintance who acted as a middleman to help them negotiate for a settlement. At the meeting, the Plaintiff gave a summary setting out the breakdown of loans, repayments and the total amount of interest received to the Defendant for verification;

(10)  On 18 August 2022, the three of them met again in Yuen Long. After negotiation, the Plaintiff and the Defendant reached an oral agreement (“2022 Oral Agreement”) whereby the Plaintiff agreed to treat the Interest as a payment of principal, thereby reducing the outstanding balance to HK$1,618,700[1] (“Settlement Sum”), and the Defendant agreed to pay it by 12 monthly installments, with each installment no less than HK$10,000. The 2022 Oral Agreement is evidenced by a written note dated 29 July 2022 signed by the Plaintiff, the Defendant and Wong (“2022 Written Note”) which contains the following:

“於7月29日在元朗廣場麥當勞商議三人（黃先生、聶先生、李先生）取得協議以港幣 $150萬元另加 $118,700元作還款借款整數，另利息$1,081,300合共$2,700,000。經商議後作出決定減去利息$1,081,300。

備註：現在決定以12個月攤還，每月還款不可少於壹萬，總數以期票作承擔 $1,500,000及 $118,700”

(11)  On 25 August 2022, the Defendant attended the Yuen Long District Office of Home Affairs Department to make a declaration confirming the truth of, inter alia, the 2022 Written Note[2] (“Declaration”);

(12)  In breach of the 2022 Oral Agreement, the Defendant only repaid HK$138,000 and the Plaintiff now claims for the outstanding balance of HK$1,480,700.

B2.  The Defendant’s case

3.It is the Defendant’s case:

(1)  Of the alleged loan of HK$7,200,000, the Defendant admits that he should be responsible for HK$2,500,000 (which consists of the HK$2,000,000 paid to Apple Finance Company Limited and the HK$500,000 paid to his wife);

(2)  As for the remaining HK$4,700,000 paid to Leung, the Defendant says that Leung was his friend and the said HK$4,700,000 was the personal dealings between the Plaintiff and Leung. The Plaintiff should claim against Leung directly for the repayment of the said sum;

(3)  From August 2015 to April 2016, the Defendant paid HK$3,434,622 to the Plaintiff (instead of HK$1,500,000 as alleged by the Plaintiff) and another sum of HK$501,300 to the Plaintiff’s wife upon the Plaintiff’s request. The Defendant further alleges that, between February 2015 and April 2016, he paid a total sum of HK$4,134,922 to the Plaintiff (instead of HK$1,081,300 as alleged by the Plaintiff);

(4)  The Defendant challenges the legality and validity of the 2016 Written Agreement, the 2019 Written Note and the 2022 Written Note on the following grounds:-

(a)  He signed the 2016 Written Agreement under the Plaintiff’s misrepresentation and his mistaken understanding of his indebtedness to the Plaintiff[3];

(b)  He signed the 2019 Written Note under the Plaintiff’s misrepresentation[4];

(c)  He signed the 2022 Written Note when he was misled about his total indebtedness and duress of the Plaintiff and Wong[5]; and

(d)  He made the Declaration on 25^th August 2022 under duress of the Plaintiff and Wong[6];

(5)  The Defendant alleges that he paid a total of HK$8,620,963 to the Plaintiff from February 2015 to December 2016 and denies that he is still indebted to the Plaintiff;

(6)  The Defendant counterclaims against the Plaintiff for the amount that he has overpaid which is to be assessed.

C.  LEGAL PRINCIPLES

4.The legal principles for summary judgment are well-settled and are summarised in Hong Kong Civil Procedure 2025 as follows:

(1)  The machinery of Order 14 works on the basis that if the plaintiff’s application is properly constituted, he is prima facie entitled to judgment unless the defendant shows cause to the contrary or the application is dismissed. The burden then shifts to the defendant to satisfy the Court why judgment should not be given against him: see §14/4/1.

(2)  For unconditional leave to be granted, the defendant must show that there are triable issues or that he has a real or bona fide defence. If he makes an allegation, it must be credible or believable in the light of the evidence placed before the Court. Whether the defendant’s assertions are believable is a question to be answered by taking them in the context of so much of the background as is either undisputed or beyond reasonable dispute: see §14/4/9.

(3)  The defendant’s affidavit must “condescend upon particulars” and should as far as possible deal specifically with the plaintiff’s claim and affidavit, and state clearly and concisely what the defence is, and what facts are relied on to support it: see §14/4/4.

5.Further, an appeal from a master’s decision to judge in chambers is a de novo hearing, and the judge will deal with the matter in question as if it comes before him or her for the first time. The judge will of course give the weight it deserves to the previous decision of the Master; but he is in no way bound by it; Hong Kong Civil Procedure 2025 §58/1/2.

6.Ms Choy for the Plaintiff refers to Time Rich 08 Limited v DBE (HK) Limited & Others [2018] HKCA 404 in which the Court of Appeal held at §5.2 that:

“…in deciding whether a plaintiff is entitled to summary judgment the relevant test is whether the defendant has raised credible triable issues. If there are, the matter should go to trial. If not, judgment should be entered against the defendants. In considering whether there are triable issues, the Court will not take the defence on its face value but test it against the evidence disclosed in the affidavit including matters such as contemporaneous documents, whether the alleged defence is inconsistent with the defence previously put forward or whether the defence is only recently raised despite opportunity being given to the defendant to respond earlier. The Court will also consider the inherent probability of the defence but what the Court should not do is to conduct a mini-trial on complicated factual issues.” (emphasis added)

7.Ms Wong for the Defendant agrees to the above principles and supplements the following:

(1)  The plaintiff must in the first place demonstrate that the defendant has indeed no defence; Ju Yan Di Emperory Genesisy v Yau Wai Han [2015] 1 HKLRD 822 at §14;

(2)  The court must not fall into the danger of focusing solely on what the defendant has said without consideration at the same time of the basic premises of the plaintiff’s claim or its inherent strength and weaknesses; Ju Yan Di at §14;

(3)  So long as there are doubts or suspicion as to the validity of the plaintiff’s case, such doubts detract from the plaintiff’s right to summary judgment; Billion Silver Development Ltd v All Wide Investments Ltd [2000] 2 HKC 262 at 268C-D, 269E-F;

(4)  The defendant need not show a complete defence, but merely an issue to be tried. It may be sufficient for the defendant to show that he has an arguable defence based on set-off, whereby the plaintiff’s case might be extinguished. Where a defendant has a cross-claim so closely connected with the plaintiff’s claim that it would be manifestly unjust to enforce one without regard to the other there may be a right of equitable set-off justifying a refusal of summary judgment; Esso Petroleum Co Ltd v Milton [1997] 1 WLR 938 at 950D;

(5)  The court is not in a position to resolve issues of fact on affidavit evidence. It follows that where there is a genuine factual dispute the court should not embark on a “mini-trial” on affidavit evidence, but should grant leave to defend so that factual issues can be resolved at full trial. The standard is whether those assertions by the defendant are believable not whether they are to be believed; Ng Shou Chun v Hung Chun San [1994] 1 HKC 155, 158G-H;

(6)  It is not appropriate for the court to make “findings” on affidavit evidence; reasons for refusing summary judgment need only consist of a few words why the plaintiff has not satisfied the court that there is no defence; Man Earn Ltd v Wing Ting Fong [1996] 1 HKC 225, 230 §14.

D.  DISCUSSIONS

8.Ms Choy submits that this is a simple and straightforward case. The Plaintiff’s claim is premised on the 2022 Oral Agreement which is evidenced by the 2022 Written Note. The crux of the matter is whether the Defendant has breached the 2022 Oral Agreement. Ms Choy considers that the Defendant’s defence can be categorized into the following 2 points:

(1)  The 2022 Written Note was signed upon under misrepresentation and/or duress (“Duress Point”);

(2)  The calculations as to the sum owed by the Defendant to the Plaintiff are not correct (“Calculation Point”)

9.Ms Wong does not disagree with Ms Choy’s categorization of the Defendant’s defence.

D1.  The Duress Point

10.Ms Choy submits that the Duress Point in not credible:

(1)  Firstly, there is a complete lack of particulars regarding the alleged misrepresentation or duress;

(2)  Secondly, as a matter of law, it is no longer open to the Defendant to run the Duress Point because he subsequently acted upon and affirmed the Oral Agreement 2022;

(3)  Thirdly, the Defendant’s allegation is wholly incredible and inherently improbable because the Defendant went to Yuen Long District Office one week later to confirm the content of the 2022 Written Note under oath.

11.I agree with Ms Choy’s submissions.

12.Firstly, the Defendant has failed to provide any particulars on the alleged misrepresentation or duress as required by Order 18 rule 12(1)(a) which provides that:

“Subject to paragraph (2), every pleading must contain the necessary particulars of any claim, defence or other matter pleaded including, without prejudice to the generality of the foregoing—

(a) particulars of any misrepresentation, fraud, breach of trust, wilful default or undue influence on which the party pleading relies” … (emphasis added)

13.It is stated at Hong Kong Civil Procedure 2025, Vol 1, Part A, §18/8/12 that:

“Duress—A claim or a defence raising duress must be specifically and carefully pleaded. It should contain full particulars of the facts and circumstances relied upon as to where, when, by whom, over whom and in what way duress was exercised.” (emphasis added)

14.It is further said at §18/8/27 that:

“Misrepresentation and undue influence—Where a party to what would otherwise be a valid contract wishes to advance a case based on lack of consent, such as by reason of misrepresentation or undue influence, he must make this abundantly clear in his pleadings” (emphasis added)

15.In the Defence, save for the bare allegation of “誤導” and “脅迫”, there is a total lack of particulars on where, when and how the misrepresentation and duress were made by the Plaintiff and/or Wong.

16.I appreciate that the Defence was drafted in Chinese by the Defendant when he was acting in person. However, the Defendant is legally represented in this application but he still fails to provide any particulars of the alleged misrepresentation or duress in his affirmation in opposition. The only reference to misrepresentation is a one-sentence statement at §11 that “The so called Written Agreements entered between the Plaintiff and I was made on the misrepresentation of Plaintiff of concealing his calculation of the debts including the amounts of money provided to Leung” and the Defendant has not even repeated the bare allegation of duress in his affirmation.

17.Ms. Wong very fairly accepts that she is bound by the content of the Defence and the Defendant’s affirmation, and there is nothing that she wishes to further submit.

18.Apart from the problem of lack of particulars, there is a legal problem in the Duress Point.

19.It is trite law that a contract entered into under duress is voidable and not void. Consequently, a person who has entered into a contract under duress may either affirm or avoid such contract after the duress has ceased; and if he has voluntarily acted under it with a full knowledge of all the circumstances, he may be held bound by the contract on the ground of ratification, or if, after escaping from the duress, he takes no steps to set aside the transaction, he may be found to have affirmed it; Chitty on Contracts, 35^th edition, volume 1, §11-077. See also Mir Abdul Rehman v Mir Heena, CACV 10/2012, 21^st March 2013, §§59-60; Chen Zhixuan v Fung Man Kwong, HCA 172/2013, 29^th October 2013, §§26-27. Ms Wong does not disagree with these principles.

20.It is the Plaintiff’s evidence that, after entering into the 2022 Oral Agreement, the Defendant repaid him HK$10,000 each month from September 2022 to September 2023 and HK$8,000 in October 2023, totaling HK$138,000. As shown in the exhibits produced by the Plaintiff, some of these payments were made by direct transfer from the Defendant’s account (number ending “211”) to the Plaintiff’s account.

21.In his affirmation, the Defendant is totally silent on the repayment of HK$138,000 from September 2022 to October 2023. There is no explanation on the circumstances under which these payments were made. There is no allegation from the Defendant, whether in the Defence or in his affirmation, that he made any of these repayments from September 2022 to October 2023 under duress.

22.Having regard to the principles set out above, I am satisfied that the Plaintiff has established by evidence that the Defendant has by his conduct affirmed the 2022 Oral Agreement. Once again, Ms Wong very sensibly indicates that she has no further submissions on this point.

23.By reasons of the aforesaid, I am of the view that the so-called Duress Point cannot even get off the ground and the Defendant has not raised any triable issue on this point of defence.

D2.  The Calculation Point

24.For the Calculation Point, it is Ms Choy’s submissions that:

(1)  Firstly, the Calculation Point only seeks to challenge the events prior to the 2022 Oral Agreement without addressing the 2022 Oral Agreement itself. Thus, it is wholly irrelevant to the Plaintiff’s claim and Order 14 application. The fact that the Duress Point is not made out and that the Written Note 2022 remains to be valid proof of debt would already justify judgment in the Plaintiff’s favour;

(2)  Secondly, even if the Court is to take into account the indebtedness prior to 2022, it is clearly evidenced in other documents such as the 2016 Written Agreement and the 2019 Written Note.

25.With respect, I do not agree with Ms Choy that the events prior to the 2022 Oral Agreement are irrelevant and the Court should only focus on the validity of the 2022 Oral Agreement.

26.The alleged indebtedness of HK$1,480,700 is not the result of a stand-alone transaction. As admitted by the Plaintiff, financial dealings between him and the Defendant dated back to at least February 2015. The said alleged indebtedness is the result of numerous transactions between the parties (or allegedly made on behalf of the parties) and several agreements after negotiations from 2015 to 2022. In the Statement of Claim, the Plaintiff has pleaded in great detail the previous dealings and the agreements between him and the Defendant. I do not consider that all these matters should be regarded as merely “background information” as suggested by Ms Choy.

27.Insofar as Ms Choy’s submissions that the indebtedness prior to 2022 was also evidenced in other documents such as the 2016 Written Agreement and 2019 Written Note, the Defendant raises a query. Whilst denying that he had made the promise to repay the HK$3,000,000, the Defendant says that “It was unreasonable that I was only required to sign the HK$2.7 million Written Agreement 2016 without referring anything about the HK$3 million that I had not yet settled with the Plaintiff when that Agreement was signed”. I think there is a point in the Defendant’s query.

28.Ms Choy attempts to explain that the reason why the 2016 Written Agreement did not cover the full indebtedness of HK$5,700,000, but only the HK$2,700,000, was because the Defendant had already promised to repay HK$3,000,000 and therefore it was not necessary to include the said HK$3,000,000 in the 2016 Written Agreement.

29.With respect, Ms Choy’s explanation is not supported by any evidence. In his affirmation, the Plaintiff only says that the Defendant offered to repay HK$3,000,000 of the said HK$5,700,000 “soon” and requested him to reduce the interest rate on the remaining balance from 24% to 5% per annum. The Plaintiff agreed and they signed the 2016 Written Agreement on 1^st May 2016 to “put on record what we had agreed in relation to the said remaining amount of HK$2,700,000”. It is not the Plaintiff’s evidence that the 2016 Written Agreement did not include the HK$3,000,000 because the Defendant had already promised to repay “soon”.

30.In any event, Ms Choy’s explanation defies common sense. If the parties were happy to leave the 2016 Oral Agreement in oral form, it would not be necessary for them to take the trouble to sign the 2016 Written Agreement a few days later. But if the parties wished to reduce the 2016 Oral Agreement in writing, it is peculiar that they only included part of deal (ie the Plaintiff’s promise to reduce the interest rate of the remaining HK$2,700,000 from 24% per annum to 5% per annum) but omitted the other significant part of the deal (ie the Defendant’s promise to repay HK$3,000,000 “soon”), not least when the Defendant’s promise to repay the said sum “soon” formed the consideration of the Plaintiff’s agreement to reduce the interest rate.

31.Apart from challenging the 2016 Written Note, the Defendant in his affirmation includes a list showing 69 payments which he paid to the Plaintiff from 25^th February to 10^th December 2016 in the total sum of HK$8,620,963 (“List of Payments”).

32.The Plaintiff does not dispute that he did receive these 69 payments. However, the Plaintiff says in his affirmation in reply that some of them are “completely irrelevant” and “have absolutely nothing to do with the present dispute / claim”. According to the Plaintiff, 13 of them (which involve a total sum of HK$3,091,422) are irrelevant because:

(1)  6 payments were received upon the Defendant’s requests to pay some third parties including 陳坤如, 鄧麗, 文慶東;

(2)  3 payments were related to “other dealing” or “prior dealing” between them but no further elaboration is given;

(3)  2 payments were irrelevant but due to the lapse of time the Plaintiff cannot locate the relevant proof;

(4)  1 payment was for a separate loan which the Defendant has repaid; and

(5)  1 payment was for the exchange of HKD to RMB.

33.On the other hand, the Plaintiff admits that the remaining 56 payments were payment of principal (in the total sum of HK$4,428,241) and interest (in the total sum of HK$1,101,300). The Plaintiff gives an explanation as to why the amount of interest paid by the Defendant is different from the amount pleaded in the Statement of Claim.

34.Ms Choy urges me to accept the Plaintiff’s explanations on these payments.

35.It is important to bear in mind that this is an application for summary judgment and the Court should not attempt to conduct a mini-trial on affidavit evidence. There is no dispute that the Plaintiff did receive these 69 payments. Whether any of them is irrelevant to the Plaintiff’s present claim and whether the inclusion or exclusion of any of them would affect the Defendant’s overall indebtedness to the Plaintiff are issues that cannot be resolved in an application for summary judgment. They should best be left to trial.

36.But on the other hand, I find the Defendant’s defence on the Calculation Point shadowy.

37.It is the Defendant’s case that, out of the alleged loan of HK$7,200,000, he should only be responsible for HK$2,500,000 and he has paid the Plaintiff over HK$8,000,000 from February 2015 to December 2016.

38.According to the List of Payments, the Defendant had paid HK$5,672,722 before signing the 2016 Written Agreement. On any view, this is not a small sum and is more than double the loan of HK$2,500,000. Even taking the Defendant’s case to the highest, it is hard to believe that the Defendant could possibly be misled by the Plaintiff’s misrepresentation (there is no allegation of duress) and be mistaken that he still owed Plaintiff HK$2,700,000, which is even more than the “original” loan of HK$2,500,000, when he signed the 2016 Written Agreement on 1 May 2016.

39.The same query applies to the 2019 Written Note. According to the List of Payments, the Defendant had paid HK$2,948,241 to the Plaintiff since the signing of the 2016 Written Agreement on 1 May 2016 up to December 2016. Once again, this is not a small sum and is more than sufficient to repay the alleged debt of HK$2,700,000 stated in the 2016 Written Agreement. It is ever more difficult to believe that the Defendant could once again be misled by the Plaintiff’s misrepresentation (there is also no allegation of duress) and be mistaken that he still owed Plaintiff the full sum of HK$2,700,000 without any repayment when he signed the 2019 Written Note.

40.As for the 2022 Written Notice and the Declaration, the Defendant has not even repeated the allegation of duress in his affirmation. There is also no explanation as to why he paid the Plaintiff HK$10,000 per month from September 2022 to September 2023 which, on the face of it, consistent with the terms of the 2022 Oral Agreement (ie to pay by 12 monthly installments, with each installment no less than HK$10,000).

41.More importantly, despite the Defendant’s allegation that he has overpaid the Plaintiff and the existence of counterclaim, the Defendant is unable to say the exact amount of overpayment. Instead, the Defendant alleges that the overpaid “amount is to be ascertained after the Plaintiff has put to his strict proof on the exact amount of the loan that I owe him”. This is really puzzling when, apart from the HK$2,500,000, there is no suggestion from the Defendant that he owed the Plaintiff any sum.

CONCLUSION

42.I have considered all the evidence and the submissions. It appears to me that the present case is not as simple and straightforward as presented by Ms Choy.

43.The Defendant’s explanation on his signing of various documents (including the 2016 Written Agreement, 2019 Written Note, 2022 Written Note, the Declaration) is unsatisfactory and difficult to believe. Whilst I have doubt over the Defendant’s defence on the Calculation Point, I cannot at this stage determine whether the amount claimed by the Plaintiff is correct or not because there are matters (such as the allegedly irrelevant payments, the relationship between the Plaintiff, the Defendant and Leung, etc) that cannot be resolved in this summary judgment application.

44.In the end, I am of the view that this is an appropriate case to grant conditional leave to defend.

DISPOSITION

45.By reasons of the aforesaid, I allow the appeal and set aside the Order of Master B Mak dated 6 June 2024. I grant leave to the Defendant to defend, conditional upon payment into Court the sum of HK$1,480,700 within 28 days from the date of this Decision.

46.If the Defendant fails to satisfy the condition, the Plaintiff shall have leave to enter judgment against the Defendant for the amount of HK$1,480,700. In such event, I would award the Plaintiff interest on the said sum at the conventional rate of prime + 1% from 18 August 2023, being the last day on which the Defendant should repay the said sum pursuant to the 2022 Oral Agreement, to the date of the judgment and thereafter at judgment rate. I would also order that the Defendant do pay the Plaintiff’s costs of the action, including the costs of the application for summary judgment, to be taxed if not agreed, with certificate for counsel.

47.At the end of the hearing, I discuss with Ms Choy and Ms Wong about the costs orders they would ask for based on different outcomes of this appeal. They agree, inter alia, that, if the Court is minded to grant conditional leave to the Defendant, the costs of the present application, including the costs below and the costs of appeal, be in the cause with certificate for counsel. I therefore make an order nisi on costs in such term.

48.Lastly, it remains for me to thank Ms Choy and Ms Wong for their assistance to the Court.

Ms Alison Choy, instructed by Pansy Leung Tang & Chua, for the Plaintiff

Ms Hilda Wong, instructed by Mohnani & Associates, for the Defendant