Wong Wai Kai v. Loh Yiu Keung (also known as Dennis Loh)

DCCJ 5175/2021

[2025] HKDC 853

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5175 OF 2021

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JUDGMENT

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A.  Introduction

1.The plaintiff owned various racing horses in Hong Kong and Macau over the years. He now seeks to recover HK$1,962,750.00 from the defendant, representing the outstanding balance of the purchase price he paid for a racing horse in January 2019 called “Holy Legal”[1].

2.The defendant set up his business in racing horse trading in 2016. He denies that he has to repay the plaintiff such outstanding balance. Further, he counterclaims the plaintiff US$6,573.06 and HK$35,312.01 as contributions for the maintenance of Holy Legal.

B.  Holy Legal

3.Holy Legal is a mare. The evidence does not show her date of birth, but she was described to be 5 years old in documents created in January 2019. I think it is incontrovertible that Holy Legal turned 6 some time in 2019, even if she was not yet so by January 2019.

4.There is no dispute that Holy Legal had an excellent track record prior to January 2019. According to the information downloaded from the Internet[2] by the defendant, she entered into 12 races in Uruguay in 2018. She won 7 races, came second in 3, and third in another[3]. Indeed, Mr Yau Sing Fai (“Mr Yau”), who gives evidence for the plaintiff, describes Holy Legal as a queen horse from Brazil, and he heard of its name before.

5.The parties give different accounts as to how Holy Legal was sold to the plaintiff. It is necessary to set out the parties’ respective cases in turn to understand what separates them.

C.  The plaintiff’s case

6.The plaintiffs pleads the following in the Statement of Claim:-

6.1  In January 2019, the defendant approached Mr Yau to offer to sell Holy Legal.

6.2  Mr Yau was authorized by the plaintiff to buy racing horses. During the negotiations between the defendant and Mr Yau, the defendant made the following representations (“the Representations”):-

6.2.1  Holy Legal was 6 years old, and won numerous races;

6.2.2  Holy Legal was invited to participate in the renowned Dubai World Cup[4] races for 2019; and

6.2.3  Upon payment of the full purchase price, Holy Legal would be wearing livery showing the plaintiff as the owner during the Dubai World Cup.

6.3  In late January 2019, there was a phone call between the plaintiff and the defendant, with Mr Yau present as well. The plaintiff and the defendant entered into an oral agreement for the sale and purchase of Holy Legal (“the Oral Agreement”), with the following terms:-

6.3.1  The plaintiff shall pay the defendant HK$1 million plus US$250,000.00 (totaling around HK$3 million) for the purchase of Holy Legal;

6.3.2  Upon full payment, the ownership of Holy Legal would be transferred to the plaintiff; and

6.3.3  In the event that Holy Legal was not invited to participate, or for whatever reason could not participate in the Dubai World Cup, the purchase price would be refunded to the plaintiff in full.

6.4  Pursuant to the Oral Agreement, the plaintiff paid the defendant (i) HK$500,000.00 by way of a cheque on 25 January 2019; (ii) US$250,000.00 by way of telegraphic transfer from Madam Ieong Wai Chan (“Madam Ieong”)[5], Mr Yau’s wife, on 28 January 2019; and (iii) HK$500,000.00 by way of a cheque on 2 February 2019.

6.5  In March 2019, the plaintiff found out that Holy Legal was never invited to participate in the Dubai World Cup.

6.6  Upon discovering that the Representations were false, the plaintiff orally rescinded the Oral Agreement in April 2019, and demanded refund of the purchase price. The defendant refunded HK$1 million, leaving US$250,000.00 outstanding.

7.The plaintiff claims that the defendant was guilty of fraudulent misrepresentation, as he knew, or was reckless as to the falsity of the Representations. Further, and/or in the alternative, the plaintiff argues that the defendant was in breach of the Oral Agreement, as he failed and still fails to refund the purchase price in full. The plaintiff hence claims US$250,000.00, or HK$1,962,750.00 as damages.

8.When she opened her case, Ms Lilian Ip, counsel for the plaintiff, submits that the focus of the plaintiff’s case for the Representations centered on the defendant’s statement that Holy Legal was invited to participate in the Dubai World Cup. This must be right, as I do not think the plaintiff can have any claim regarding the statement about the basic information of Holy Legal (as it is not disputed), and the statement regarding the wearing of livery concerned future conduct, which in my judgment is not actionable.

D.  The defendant’s case

9.In the Defence and Counterclaim, the defendant says:-

9.1  In early January 2019, Mr Yau (representing the plaintiff) approached the defendant and requested him to identify a suitable horse to participate in the Dubai World Cup.

9.2  Upon some research, the defendant was informed by Mr Ricardo Colombo (“Mr Colombo”) that Holy Legal was available for sale. Mr Colombo told the defendant that he was the trainer of Holy Legal, which was owned by Mr Hara Belmont (“Mr Belmont”). The defendant was further told that Holy Legal was invited to participate in Dubai World Cup because of her spectacular performance.

9.3  On 10 January 2019, the defendant told Mr Yau of the availability of Holy Legal, and the information that she was invited to participate in the Dubai World Cup.

9.4  In mid-January 2019, Mr Colombo clarified with the defendant that Holy Legal was only nominated to participate in the Dubai World Cup, as opposed to having received the invitation. The result of the nomination was still pending.

9.5  On 20 January 2019, the defendant informed Mr Yau that Holy Legal was only nominated to participate in the Dubai World Cup, with the result still pending. Despite this, Mr Yau still maintain his interest in purchasing Holy Legal.

9.6  On 22 January 2019, Mr Yau (representing the plaintiff) and the defendant (representing Mr Colombo) agreed on the sale and purchase of Holy Legal (“the 22 Jan Agreement”), with the following terms:-

9.6.1  The plaintiff shall pay Mr Colombo US$250,000.00 for the purchase of Holy Legal;

9.6.2  The plaintiff shall pay HK$1 million for Holy Legal’s eligibility to participate in the Dubai World Cup. The HK$1 million shall be first paid to the defendant for safekeeping pending the result of the nomination.

9.6.3  If Holy Legal did not receive the invitation to participate in the Dubai World Cup, the defendant would return the HK$1 million to the plaintiff.

9.7  Pursuant to the 22 Jan Agreement, the defendant procured Mr Colombo to transfer the ownership of Holy Legal from Mr Belmont to the plaintiff.

9.8  On 28 January 2019, Madam Ieong (on the plaintiff’s behalf) remitted US$250,000.00 to RBC Cotne Ltda, an entity nominated by Mr Colombo and/or Mr Belmont to receive the purchase price. The plaintiff also paid a further HK$1 million, which the defendant deposited into his bank account.

9.9  On 18 March 2019, Mr Colombo informed the defendant that Holy Legal was not invited to the Dubai World Cup; the defendant informed Mr Yau on the same day. Mr Yau and the defendant agreed that the defendant should refund the HK$1 million to the plaintiff. The defendant did so on 19 March 2019.

9.10  Since the 22 Jan Agreement, the defendant had been paying the expenses of Holy Legal on the plaintiff’s behalf. On 30 April 2019, the plaintiff and the defendant agreed that the defendant shall be reimbursed by being transferred part of the ownership in Holy Legal (“the Joint Ownership Agreement”). The split in ownership was agreed at 58.5% for the plaintiff, and 41.5% for the defendant. They further agreed that they should contribute to Holy Legal’s expenses from then on according to their respective ownership.

9.11  In June 2019, the plaintiff and the defendant agreed to put Holy Legal on sale at an auction in United Kingdom to be held on 31 July 2019. The reserve price was set at £270,000.00. Unfortunately, Holy Legal was not sold.

9.12  In November 2019, the plaintiff and the defendant again agreed to put Holy Legal on sale, this time at an auction in Kentucky, USA. They agreed not to set a reserve price. On 13 January 2020, Holy Legal was sold at the auction for US$20,000.00.

9.13  Since then, the plaintiff requested the defendant to refund the US$250,000.00 he paid for Holy Legal. In view of threats and intimidation made by strangers, demanding him to repay the plaintiff, the defendant made a report to the police on 8 July 2020.

10.The defendant argues that, based on the terms of the 22 Jan Agreement, the plaintiff was not entitled to claim back the US$250,000.00, or any part thereof. Further, since he was only acting as an agent under that agreement, he is not personally liable to the plaintiff’s claim.

11.As set out above, the defendant counterclaims the plaintiff for the expenses incurred by Holy Legal since the Joint Ownership Agreement up to the date she was auctioned off in Kentucky.

E.  The defendant’s summons to adduce additional documents

12.At this juncture, I think it is convenient for me to set out the reasons for my dismissal, after hearing counsel on the 1^st day of trial, of the defendant’s summons taken out on 6 November 2024.

13.By that summons, the defendant seeks to file and serve a 2^nd Supplemental List of Documents. In so doing, the defendant seeks to discover a 1-page document, which appears to be a screen capture of 2 WhatsApp messages. Mr Ray Kwan, counsel for the defendant, submits that the document is relevant to show that Mr Colombo told the defendant that the transfer of ownership in Holy Legal was done on 22 January 2019.

14.Of the 2 WhatsApp messages, the first one is a screen capture of an email from Mr Colombo to Ms Aimee Grieve of the Dubai Racing Club[6] on 22 January 2019, in which Mr Colombo informed Ms Grieve that the plaintiff became the new owner of Holy Legal. This email has in fact been included in the trial bundles[7].

15.The second one appears to address to the defendant, stating that, after reviewing all documentation, the email was proof that the ownership of Holy Legal was changed to the plaintiff as at 22 January 2019. I note that it is unclear from the face of the document as to the date this message was sent to the defendant; the defendant is also not suggesting that the plaintiff was thus notified of the change of ownership in Holy Legal.

16.There is no dispute that the defendant’s application is late. Re Cao Zhong [2021] HKCFI 3143 (Recorder William Wong, SC; 27 October 2021), which followed Parsad v Great Wealthy Engineering Co Ltd [2012] 3 HKLRD 705, set out the legal principles on a late application for leave to adduce a witness statement, which I find applicable to the present application as well.

17.When I ask Mr Kwan as to the justification for the delay in taking out the application, he submits that it was due to a change of solicitors and inadvertence of the defendant’s legal representatives in leaving out this document earlier on. Both justifications are clearly not enough to excuse the delay.

18.In my judgment, the defendant has not demonstrated that the document was so relevant and probative that I should allow it to be adduced despite the lateness of the defendant’s application. The defendant can seek to prove the same factual allegation without this new document. Given there is no challenge to the authenticity of the email purportedly sent by Mr Colombo to Ms Grieve, the email already included in the trial bundle can serve to prove that Mr Colombo informed the Dubai Racing Club of the plaintiff’s ownership in Holy Legal on 22 January 2019. Whether the defendant was so notified afterwards is beside the point; the lack of any date stamp on the new document makes it even less relevant.

19.Because of the above reasons, I dismissed the defendant’s summons. The plaintiff shall have the costs of this application, to be taxed if not agreed, with a certificate for counsel.

F.  The state of the documentary evidence

20.Ms Ip reminds this court the trite principles concerning the evaluation of evidence given by a witness, as summarized in Lee Chi Hang & Wong Ying Kit Eddie being the executors of the estate of Wong Wai Chun, deceased & Ors v Well Done Garment Factory Limited & Anr [2021] HKCFI 1835 (Deputy Judge M K Liu; 25 June 2021):-

“40. In respect of evaluating the evidence given by witnesses, a valuable guidance can be found in Hui Cheung Fai and another v Daiwa Development Limited[8], in which DHCJ Eugene Fung SC said:

“77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce) ……

78. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: e.g. Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).

79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.

80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36-37 (Bokhary PJ)), or from the assessment of the witnesses’ character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)).”

41. Similar guidelines can also be found in Lee Fu Wing v Yau Po Ting Paul[9], in which DHCJ Au (as he then was) said:

“53. In assessing the credibility of a party’s case on a particular issue, I accept the submissions of [counsel] that the Court should take into considerations the following: -

(1) Whether the party’s case is inherently plausible or implausible.

(2) Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable.

(3) Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment of his overall credibility.

(4) The demeanour of the witnesses.”

…

43. In respect of lies told by a factual witness on a central issue, the reminder given by Sir John Dyson in MA (Somalia) v Secretary of State for the Home Department[10] has to be borne in mind:

“31. ....... where a claimant tells lies on a central issue, his or her case will not be saved by general evidence unless that evidence is extremely strong. It is only evidence of that kind which will be sufficient to counteract the negative pull of the lie. But much depends on the bearing that the lie has on the case……

32. Where the appellant has given a totally incredible account of the relevant facts, the tribunal must decide what weight to give to the lie, as well as to all the other evidence in the case, including the general evidence……

33. ...... where the appellant tells lies on a central issue in the case, the [tribunal] may conclude that they are of great significance……It will be a matter for the [tribunal] to decide whether the general evidence is sufficiently strong to counteract what we have called the negative pull of the appellant’s lies.”

44. Where there is a long passage of time between the events and the trial, contemporaneous documentation is of particular importance. In Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd [11], Stock JA (as he then was) said:

“…… Comparison with contemporaneous documentation is always an aid to reliability of oral testimony, unless there is reason to believe that the documentation is contrived or materially incomplete; but where the passage of time between events and trial is as long as it was in the present case, and where there is such a host of contemporaneous documentation, as there was in this case, the documentation must, I would have thought, assume a special importance. ……

I would venture to suggest that the truth, in so far as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct than not, can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one would expect it to have been created, as well as to inherent probabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known. This is particularly so in a case such as the present, where events have taken place so long before trial and where there exists a mountain of contemporaneous documentation that can be used to point the way. This is not to say that the documentation should have been treated as if it stood on its own, not to be explained, contradicted or supported by oral testimony. It is however to say that in this case the approach adopted to assessment of the facts placed far too much emphasis on character impression and too little upon what was suggested by the documentation and by the inherent probabilities in their historical context. That documentation, as well as conflicts within the evidence, inherent probabilities, and a study of how matters were originally pleaded and asserted in witness statements – these are the factors which in a trial such as this, so long removed from the time of the events in question, were likely to be of particular use in assessing the facts ……”

(Emphasis as in original)

21.I would like to preface my analysis of the evidence with a general observation about the status of the documentary evidence.

22.As can be seen from the parties’ respective case above, much of their exchange was done orally. But they have also sent messages to each other on WeChat from time to time. In the trial bundles, the screen captures of 2 groups of such WeChat messages are included: (i) WeChat messages in a group containing the plaintiff, the defendant, and Mr Yau; and (ii) WeChat messages between the defendant and Mr Yau.

23.Whilst these messages are contemporaneous to the dispute and, in an ordinary case, should be given due weight as to the truth, I do not think the same can be said with respect to the WeChat messages in the present case without qualification. The screen captures of the WeChat messages show that the plaintiff, Mr Yau and the defendant often sent audio messages, screen captures, and/or photos to each other. For example, on 29 January 2020[12], the defendant sent out, in the 3-person chatgroup, 3 photos or screen captures, together with a message that Holy Legal was only sold for US$20,000.00 on 13 January 2020. Mr Yau responded with a video clip on 30 January 2020 at 3:54 pm; later at 4:02 pm and 4:04 pm, he sent out 5 audio messages. Unfortunately, none of these audio messages was transcribed; the screen captures and photos sent between the 3 were not blown up separately in the trial bundles. Thus, the written messages do not provide the full picture of the conversation between the plaintiff, the defendant, and Mr Yau. One may risk taking a written message out of context if he does not pay heed to the possibility that some information is lost through the unavailability of the audio messages, screen captures and photos. In this Judgment, I shall caution myself about such risk, and will only arrive at factual conclusions based on these WeChat messages after I am satisfied the risk does not affect the analysis.

G.  General view of the credibility of the witnesses

24.I think it will be useful to state my general impression of the witnesses.

25.The plaintiff has called the following witnesses, in sequential order:-

25.1  Mr Wayne Smith: he was a jockey in Macau for a number of years, and was Mr Yau’s friend. He claims to be present on 24 January 2019 when the plaintiff and the defendant entered into the Oral Agreement. I find him to be generally credible; his answers are spontaneous and logical. However, the value of his evidence may be limited, as he only understood the conversation between the plaintiff and the defendant based on what Mr Yau interpreted to him.

25.2  The plaintiff: he was 73 years old by 2019. There is no doubt that he was a successful businessman, based on the number of racing horses he owned in Hong Kong and Macau. But I do not find him to be sophisticated and meticulous. He cannot recall details when asked. Whilst I do not find his evidence incredible, I do not think I can readily rely on his evidence without corroboration.

25.3  Mr Yau: he was also a trader in racing horses. Whilst I think his evidence is overall credible, I again do not think his evidence can be relied upon without corroboration; for whatever reason, and I shall further elaborate below, his evidence has left out much of his dealings with the plaintiff and the defendant.

25.4  Madam Ieong: she was also present on 24 January 2019 when the Oral Agreement was formed. I find her evidence credible; her answers are straightforward and spontaneous.

26.The defendant is his only witness. He is obviously more sophisticated; his answers are crafted and considered. However, I do not think his evidence has the ring of truth. I do not prefer his evidence on matters that involve a direct comparison of credibility between him and the plaintiff’s witnesses.

H.  Events leading to the purchase of Holy Legal

27.The WeChat messages sent by the defendant to Mr Yau[13] from 10 January 2019 onwards are the earliest in time documenting the negotiation between them.

28.The defendant relies on these messages to show that the plaintiff and the defendant entered into the 22 Jan Agreement for the sale and purchase of Holy Legal, rather than the Oral Agreement.

29.I reject the defendant’s argument; I find that these messages tend to support the plaintiff’s case.

30.These messages were discovered by the defendant. But it is apparently unknown whether the defendant has put before me all the messages he and Mr Yau sent to each other between 10 and 21 January 2019. I am only given an incomplete set of messages the defendant sent Mr Yau on 10 January 2019 introducing Holy Legal; and on the next page, there were 2 messages sent by the defendant before 12:44 pm on 21 January 2019 with no time stamp. Based on the screen captures of all the WeChat messages in the trial bundles, messages would normally be archived with time stamps. This shows that there must have been messages undiscovered between the 2 pages of messages now seen in the trial bundles. The same can be said with respect to the second and third pages of those messages as well. Therefore, the messages cannot simply be understood superficially as the context might have been hidden away in the undisclosed part of the messages.

31.I find Mr Yau’s evidence credible when he says that he and the defendant were dealing with more than 1 racing horse at that time, so that the messages the defendant sent before 12:44 pm on 21 January 2019 were not related to Holy Legal:-

31.1  In those messages, the defendant said “at that time I received 2.9 m; you and Mr Wong gave me in 3 tranches” and “inclusive of commission, insurance and livery charges. If you would like to amend it, please let me know”[14]. The alleged payment by the plaintiff and Mr Yau would have taken place prior to those messages, ie at least before 21 January 2019.

31.2  Thus, those messages do not even fit the defendant’s own case regarding the 22 Jan Agreement, in terms of price and time. They also contradict the defendant’s evidence under cross examination that when he telephoned the plaintiff on 23 or 24 January 2019, he was negotiating the method of payment with the plaintiff.

31.3  In the group chat, and in response to the defendant’s message that Holy Legal would be sold at an auction in Kentucky on 13 January 2020, and Mr Yau’s comment that the matter should be rounded up, the plaintiff commented on 26 November 2019 that the same happened with the 2 in Hong Kong[15]. This tends to show that indeed the defendant sold other horses to the plaintiff apart from Holy Legal at around the same time.

32.In my judgment, the defendant’s police statement taken on 8 July 2020 also tends to undermine the defendant’s credibility:-

32.1  In the police statement, the defendant’s description on Holy Legal’s eligibility to participate in the Dubai World Cup was vastly different from what he alleges in the present case – there was no mention that he was firstly told the wrong information by Mr Colombo, and Mr Colombo clarified in mid-January 2019. Instead, the defendant claimed that the plaintiff asked him in mid-January 2019 to confirm whether Holy Legal could participate in the Dubai World Cup.

32.2  Holy Legal’s purchase price was stated to be HK$3 million, unlike what the defendant insists in the present case as US$250,000.00, plus HK$1 million as the sum payable for Holy Legal’s eligibility to race in the Dubai World Cup. The defendant further stated in the police statement that the vendor only confirmed the purchase price could be US$250,000.00 after it was confirmed on around 15 March 2019 that Holy Legal could not participate in the Dubai World Cup. This, again, is contradictory to the terms of the 22 Jan Agreement.

32.3  The defendant emphasized in the police statement that, pending the confirmation that Holy Legal could participate in the Dubai World Cup, he recommended the plaintiff not to transfer the purchase price to the vendor. But the plaintiff acted against such recommendation and transferred US$250,000.00 to the vendor before there was any confirmation. This is plainly inconsistent with the purported terms of the 22 Jan Agreement.

32.4  I do not accept the defendant’s explanation under cross examination that he was too scared of the intimidation from strangers that he failed to accurately set out the dealings with the plaintiff. His relationship with the plaintiff turned sour way before July 2020. He was well aware the basis of the plaintiff’s demand. It was non-sensical for him to come up with a different account when he made the police report; otherwise, the police might form a dim view of his case if they decided to investigate in the matter. In my view, the only reasonable inference is that the 22 Jan Agreement is simply the defendant’s afterthought in the present case to delay justice.

33.Secondly, I reject the defendant’s case that he clarified with Mr Yau by mid-January 2019 that Holy Legal was only nominated to participate in the Dubai World Cup, instead of already having the invitation to join the races:-

33.1  On 22 January 2019 at 9:13 am, the defendant sent the following message to Mr Yau:-

“現報名兩場三月三十日賽，Golden Shaheen不用跑入圍賽，另一場同日草地1200米則要參加三月九日的入圍賽，所以馬匹要在二月八日抵達杜拜，為三月九日的預賽做準備。如果佢不打算參加三月九日的預賽，佢可以選擇三月廿五日才飛去杜拜。直接參加三月三十日的Golden Shaheen.”

33.2  In the above message, Holy Legal’s participation in the races was not said to be conditional upon her nomination being approved by the Dubai Racing Club. Rather, with respect to the Golden Shaheen race, the message appears to suggest that Holy Legal could freely enter at the plaintiff’s choice – implying that she was already eligible for that race.

33.3  Mr Kwan lays emphasis on the fact that the defendant used “報名” (apply), in contrast with Holy Legal being “邀請” (invited) to join the Golden Shaheen race the defendant stated in his message to Mr Yau on 10 January 2019. He therefore submits the court should infer that the defendant and Mr Yau understood, by 22 January 2019, that Holy Legal did not yet have the “admission ticket” to join the Dubai World Cup.

33.4  I disagree with Mr Kwan. There is no dispute that Holy Legal’s eligibility to race in the Dubai World Cup was core to her price. If it were true that the defendant was informed by Mr Colombo that Holy Legal’s nomination was still pending, and the defendant thought that this should be clarified with Mr Yau and/or the plaintiff, one would expect the defendant to have worded the message he sent on 21 January 2019 in no uncertain terms about the status of the nomination. The fact that he did not seek to do so tends to support the inference that such clarification never happened.

33.5  I am not shown, say, ay WeChat messages before 22 January 2019 that may support the defendant’s interpretation of his messages. Hence, I have to construe that message according to its natural meaning.

34.Thirdly, I agree with Ms Ip that an adverse inference should be drawn against the defendant’s case with respect to clarification allegedly made by Mr Colombo in mid-January 2019, and in turn by the defendant, regarding Holy Legal’s eligibility (or rather, the lack of it) to participate in the Dubai World Cup[16]:-

34.1  Under cross examination, the defendant accepts that he usually communicated with Mr Colombo by WhatsApp messages. In fact, he preferred that as Mr Colombo’s spoken English was poor.

34.2  If so, the defendant ought to be able to retrieve the previous messages confirming that Mr Colombo did clarify with him that Holy Legal was only nominated to join the Dubai World Cup; or he could ask Mr Colombo to send him messages to confirm the same, even if Mr Colombo was geographically distant to become a witness for him.

34.3  But when he is cross examined on the absence of direct evidence from Mr Colombo, the defendant claims that he never attempted to ask Mr Colombo to be a witness. He explains that legal fees were already high, and Mr Colombo was a globetrotter and thus difficult to pin down. He further claims that he did not maintain contact with Mr Colombo since 2020; nor can he recall whether he actually checked the WhatsApp records between him and Mr Colombo during the interlocutory stage. Moreover, as set out above, in his belated application to file the 2^nd Supplemental List of Documents, he sought to adduce a screen capture showing WhatsApp messages purportedly sent by Mr Colombo.

34.4  In my view, the defendant has failed to demonstrate that he was disabled, during the preparation for trial, from obtaining evidence from Mr Colombo to support his case. He singularly fails to show that he is disabled from adducing his WhatsApp messages from his phone. Mr Colombo was clearly not incommunicado; and there ought to be no insurmountable difficulty to arrange him to be a witness at this trial. I find that the defendant has consciously chosen not to collect any evidence from Mr Colombo.

34.5  As such, I think the only reasonable inference is that Mr Colombo’s evidence would, in fact, show that he did not wrongly inform the defendant about Holy Legal’s eligibility to participate in the Dubai World Cup, and he never sought to clarify with the defendant by mid-January 2019. All these were made up by the defendant after the event.

35.In support of the defendant’s case, Mr Kwan points to Mr Colombo’s email to Ms Grieve on 22 January 2019, reporting that the plaintiff became the new owner of Holy Legal. He submits that this shows that the sale and the purchase of Holy Legal must have been concluded on 22 January 2019; otherwise it did not make sense for Mr Colombo to send out the email.

36.I do not find the email weighty in light of the countervailing evidence. The defendant appears to accept that there was no central registration in the world for ownership in racehorses; it all depended on owners reporting their ownership to each racing club. Hence, Mr Colombo’s email is not a necessary proof that the change of ownership in Holy Legal to the plaintiff was completed. No direct evidence is available from Mr Colombo to explain what he knew by then, and why he did it. Mr Kwan’s submissions are, in blunt terms, conjecture.

37.Mr Kwan next argues that Mr Yau’s evidence should not be believed. He points to §8 of Mr Yau’s witness statement:-

“可是，在這裡本人說明，王先生購買申請法律的前提是已確認神聖法律得到杜拜賽馬嘉年華2019的入場券。當時，在通話中，王先生詢問被告人神聖法律是否已得到澳門賽馬嘉年華2019的入場券，而被告人表示確認。”

38.It is Mr Kwan’s submissions that, because 申請法律 was altogether a different thing from 神聖法律; and 澳門賽馬嘉年華2019 was again a different event from 杜拜賽馬嘉年華2019, Mr Yau’s evidence does not support the plaintiff’s case that the defendant did make the Representations. Mr Yau also does not clarify this confusion when he is given the opportunity to do so in his examination-in-chief.

39.I find Mr Kwan’s submissions so tenuous that it must be rejected outright. Obviously, 申請法律 is phonetically close enough 神聖法律 to show that it is only a typographical error in Mr Yau’s witness statement; 澳門賽馬嘉年華2019 is also a clear misnomer for the Dubai World Cup. Mr Yau (or rather, the plaintiff’s legal representatives) might have been sloppy in the preparation of his witness statement; but this is clearly miles away from being incredible.

40.With respect, the tenuousness in Mr Kwan’s submissions is exposed fair and square when he quotes the plaintiff’s cross examination in his written closing:-

“Q: 咁即係24/1/2019冇傾過如果退款後點處理隻馬。

A: 推款後隻馬係佢嘅，因為佢退左錢比我。”

(Emphasis added)

41.It seems to me unfair if Mr Yau’s evidence is to be considered unbelievable because of the typographical error in his witness statement, when a similar error is also made by the accuser.

42.The cumulative effect of the evidence as a whole shows that, on a balance of probabilities, the 22 Jan Agreement actually did not exist. I also find that the defendant did represent to Mr Yau, some time before 24 January 2019, that Holy Legal was invited to participate in the Dubai World Cup, in the sense that she already got the “admission ticket” to the races. This statement was obviously intended by the defendant to induce the plaintiff to purchase Holy Legal; but it was false.

43.It is my further judgment that the plaintiff has not shown that the defendant made the misrepresentation fraudulently. With respect, the plaintiff’s case on fraud is defective from the start, because Ms Ip did not include any particulars to allege knowledge or recklessness in the defendant when he made the misrepresentation, in §11 of the Statement of Claim that she settled. Given the seriousness of the allegation, I am not comfortable to conclude that the defendant made the misrepresentation fraudulently, in the absence of direct evidence from Mr Colombo showing what the defendant might know at the relevant time. I am also of the view that the circumstantial evidence does not allow me to draw any inference regarding the defendant’s knowledge one way or the other.

44.Ms Ip seeks to rely on section 3 of the Misrepresentation Ordinance (Cap 284), and argues that the defendant carries the burden to prove that he made the misrepresentation innocently; otherwise, the plaintiff is still entitled to remedies as if the misrepresentation was made fraudulently. I agree.

45.I find that the defendant has failed to prove that he made the misrepresentation innocently. Since he consciously decided not to adduce any evidence from Mr Colombo, I draw adverse inference against him, to the extent that there were reasonable grounds for him to ascertain the true status of Holy Legal’s eligibility to participate in the Dubai World Cup, but he did not do so.

46.Subject to what I shall say below regarding the possible argument that the plaintiff might have affirmed the Oral Agreement, I agree with the plaintiff that he is entitled to HK$1,962,750.00 to compensate his loss flowing from the misrepresentation.

I.  The Oral Agreement

47.As stated above, the defendant accepts under cross examination that he did have a telephone conversation with the plaintiff on 23 or 24 January 2019.

48.The plaintiff’s evidence as to the formation and the terms of the Oral Agreement is corroborated by his witnesses.

49.It is Mr Smith’s evidence that he was accompanied by Mr Yau and Madam Ieong to pay a visit to the plaintiff’s residence in the afternoon of 24 January 2019, so that Mr Yau could introduce him to the plaintiff, and ask the plaintiff to help him to kick start his trainer career. It was during this visit that the defendant called the plaintiff, and the conversation was put on speaker phone for everyone to hear. He understood the conversation through Mr Yau’s interpretation. Of course, his understanding must be partial because Mr Yau did not interpret the conversation verbatim.

50.Madam Ieong heard that the defendant was recommending Holy Legal to the plaintiff. She heard the plaintiff ask the defendant whether Holy Legal was indeed invited to race in the Dubai World Cup, and the defendant confirmed so. She further said that the plaintiff and the defendant agreed that, if Holy Legal could not participate in the Dubai World Cup, the defendant would refund the plaintiff the purchase price in full.

51.Mr Yau essentially gives the same evidence as Madam Ieong.

52.On matters surrounding the Oral Agreement, I do not find the respective credibility of the plaintiff’s witnesses dented in any way by Mr Kwan’s cross examination[17]. With respect, Mr Kwan essentially asks them to freely recount what happened on 24 January 2019. The cross examination does not, in my judgment, single out any contradiction or inconsistency in their respective evidence. Whilst the weight of evidence is not proportional to the number of the witnesses called, and I am acutely aware that none of the plaintiff’s witnesses can be said to be truly independent, it is my judgment that their evidence reflects the truth.

53.I find that the plaintiff and the defendant entered into the Oral Agreement for the sale and purchase of Holy Legal at US$250,000.00 and HK$1 million. The plaintiff would become Holy Legal’s owner upon payment of the full purchase price. The defendant promised to refund the purchase price in full if Holy Legal did not participate in the Dubai World Cup.

54.Although the parties have given different evidence as to how it was discovered that Holy Legal was ultimately not invited to the Dubai World Cup, they agree that this was known by mid- March 2019. I do not find the details on this relevant or necessary to resolve the disputes.

55.In my judgment, the defendant breached the Oral Agreement as he failed to refund the plaintiff the purchase price in full.

56.I do not accept the defendant’s argument that he is not personally liable because he contracted with the plaintiff as the agent for the vendor of Holy Legal:-

56.1  Strictly speaking, this does not arise for determination, because this argument was pleaded in the Defence and Counterclaim, settled by Mr Kwan, in relation to the 22 Jan Agreement only; there is no alternative case if, contrary to the defendant’s plea, the court finds that the Oral Agreement was in fact the one the parties contracted.

56.2  Based on my finding above as to the terms of the Oral Agreement, the defendant made the promise to refund the plaintiff the full purchase price in his own right, and is thus liable personally.

56.3  In any event, I accept Ms Ip’s submissions that the defendant would be liable as an agent because his principal was undisclosed. On the plaintiff’s case that I have found as facts, the defendant never disclosed to the plaintiff for whom he might have been acting.

57.It is then necessary to consider whether the parties’ rights and obligations were changed by their subsequent conduct. The defendant says they were so changed because he and the plaintiff entered into the Joint Ownership Agreement in April 2019.

J.  The Joint Ownership Agreement

58.It is regrettable that the defence based on the Joint Ownership Agreement is defective from the start.

59.In §§4.16 and 4.17 of the Defence and Counterclaim, particulars are lacking as to the form of the Joint Ownership Agreement, save and except that it was entered on around 30 April 2019.

60.The defendant’s witness statement at §§28-29 is equally opaque as to how he entered into the Joint Ownership Agreement with the plaintiff. It seems that it was entered on 15 April 2019 the earliest, because he claims to have complained to the plaintiff and Mr Yau at that time that he was paying for the maintenance of Holy Legal for a few months. But evidence then becomes scanty as to how and when the Joint Ownership Agreement came about.

61.In his examination-in-chief, the defendant gives 15 April 2019 as the date the Joint Ownership Agreement came into being. But under cross examination, he claims to be unable to recall how agreement was reached. He claims that there was 1 face-to-face meeting, followed by telephone exchanges; the exact split in ownership was not agreed at that meeting, but later in mid to late April 2019.

62.I find the defendant’s evidence on the formation of the Joint Ownership Agreement incredible and unreliable, and must be rejected.

63.In addition, I think the evidence shows, on a balance of probabilities, that the Joint Ownership Agreement never existed.

64.The WeChat messages show that the plaintiff was dissatisfied with the fact that Holy Legal was only auctioned off for US$20,000.00. He thought that her value should be much higher because she could at least become a broodmare. Mr Yau also said that the plaintiff thought he was scammed by the defendant.

65.On 6 February 2020 at 5:45 am, the defendant sent the following message in the group chat:-

“… 本身Holy Legal 是屬於王生全權擁有的，但由於王生只付了1,950,000 HKD (即25萬美金)，原馬價3,000,000 HKD), 所以本人把總數1,100,000 HKD) 之馬價及佣金分別退回王生和丘生。因此，馬匹權益由一開始為1,950,000 (王生) 對1,100,000 (本人)。即63.9% (王生) vs 36.1% (本人)”

66.Later at 6:05 am, the defendant sent out a further message:-

“… 由於在2020年1月13日，我和王生在馬匹上權益已有改變，已經不是63.9% vs 36.1%。原因是我於2019年自購入馬匹之后至2020年1月13日由我一直支付的費用。這個數是多少，我將會細算表列出來，給大家一個清楚的交代。”

67.On 12 February 2020, the defendant sent out an Excel table. The table was not blown up in the trial bundles, so there is no evidence as to what it showed. Following the Excel table, the defendant sent out the following message:-

“以上是Holy Legal帳目：王生52% vs 陸生48%”

68.In short, if the parties did enter into the Joint Ownership Agreement, the defendant would have mentioned it in the above messages, and proceeded with the calculations and/or negotiations he thought fit from that basis. The messages were in direct contradiction with the defendant’s evidence under cross examination that the exact split in ownership was agreed some time in April 2019.

69.The defendant fails to establish his counterclaim in the absence of the Joint Ownership Agreement.

K.  Whether the plaintiff affirmed the Oral Agreement

70.Given my finding above that the Joint Ownership Agreement did not exist, the defence relying on it to say that the plaintiff was estopped from rescinding the Oral Agreement fails.

71.In my judgment, the plaintiff cannot be said to have affirmed the Oral Agreement by his conduct generally subsequent to April 2019 as well.

72.As I mentioned above, the plaintiff was furious about the low price Holy Legal was auctioned off. He sent out the following message in the group chat on 30 January 2020:-

“陸先生希望你明白這匹馬女一早已經在大家信任下同你用3,000,000買下來到杜拜跑這場賽事，買之前已聲明如果馬匹跑不到這場賽事你係會全數退回。之後由於馬匹未達成之前的承諾以至到現在的問題發生但你一定要清楚我買馬的時候係我一個人擁有到目前你雖然係三分之一嘅馬主，但你係冇權張這匹馬女用你的名義以$20,000美金賣掉也冇經我同意就以兩萬蚊美金嘅錢去賣掉一匹可以配種嘅馬女情理上說不通可以講有些詐騙成份。我絕不能接受。現我只有一要求兩個選擇第一選擇你同我買返隻馬返嚟我會自作安排，第二個選擇你就俾返三分之二馬價2,000,000港幣這我就可以當作今次冇發生過事…”

(Emphasis added)

73.In addition, by details I do not find necessary to recite or decide, Holy Legal was arranged to the 2019 Keeneland Korea Cup races in South Korea in September 2019. In the race booklet, Holy Legal was stated to be owned by the plaintiff and the defendant[18].

74.The documents in the trial bundles show that the defendant liaised with the Korea Racing Authority for the flight and accommodation for the plaintiff and his wife to attend the races. The plaintiff and Mr Yau also took a photo at the racecourse with whom the defendant identifies as Mr Colombo.

75.Under cross examination, the plaintiff explains that:-

75.1  He referred to the defendant having 1/3 ownership in Holy Legal in his WeChat message simply because that was what he heard the defendant assert since April 2019.

75.2  He went to South Korea at the invitation of the Macau Jockey Club because it was a sponsor of the races. He did not go there to see Holy Legal; he denies to have any dealing with Holy Legal since April 2019.

76.I disbelieve the plaintiff that he had no more dealings with Holy Legal since he rescinded the Oral Agreement in April 2019. After considering the evidence as a whole, I find that the parties were in active discussion since then to try to avoid loss, and the defendant was tasked to achieve that, as he had to refund the plaintiff the purchase price in full. I think this was the underlying reason why, inter alia:-

76.1  The insurance for Holy Legal was amended in April 2019 to include the defendant as a 41.5% owner;

76.2  The defendant went to the United Kingdom in July 2019 for the auction;

76.3  The defendant arranged the plaintiff to go to South Korea to watch Holy Legal’s race; and

76.4  The defendant arranged Holy Legal to be auctioned off in Kentucky, and he told the plaintiff and Mr Yau that he did not intend to set a reserve price for her.

77.In my view, the plaintiff was naturally angry with the result of the auction, because it might mean that the defendant would not have sufficient means to refund the purchase price in full. I accept as credible his evidence under cross examination that he was simply repeating the defendant’s assertion all along as having 1/3 ownership in Holy Legal, possibly on the basis that the defendant already refunded HK$1 million by then. It seems to me that his message on 30 January 2020 at least shows that he did not think the defendant from free from liability with respect to the sale of Holy Legal.

78.It is trite that the action, conduct, and/or words constituting an affirmation of a contract must be clear and unequivocal. Having given due thoughts on the matter, I do not find there was clear and unequivocal affirmation on the plaintiff’s part. I think it is more likely than not that he was merely enabling the defendant to refund the purchase price in full.

79.Hence, it is my judgment that the defendant remains liable to refund the remaining HK$1,962,750.00 to the plaintiff under the Oral Agreement.

L.  Conclusion

80.I enter judgment in favour of the plaintiff for HK$1,962,750.00. Interest shall run at HSBC prime plus 1% from the date of the service of the Writ to the date of this Judgment; and at judgment rate from the date of this Judgment up to payment.

81.The defendant’s counterclaim is dismissed.

82.There will be a costs order nisi that the defendant do pay the plaintiff the costs of this action (including all costs reserved, if any), with a certificate for counsel, to be taxed if not agreed. However, as a matter of taxation, my costs order is subject to the condition that neither legal representatives for the plaintiff or for the defendant shall recover the costs of the preparation and reproduction of the trial bundle indexes and the trial bundles. The defendant’s solicitors shall explain this condition to the defendant, so that he understands the extent of legal fees he has to pay.

83.In my judgment, both sets of legal representatives have failed to prepare the trial bundles with reasonable diligence and professionalism, in that:-

83.1  In the pleadings bundle, the parties’ respective lists of documents are inserted. But it appears to me that they are not required for the trial; nor is there any cross examination on how a party made discovery as a matter of time and sequence.

83.2  There are multiple duplication of documents. Neither party has sought to challenge the authenticity of the duplicated documents in the trial bundles. As such, I cannot see the reason why the duplication is required.

83.3  Some documents are plainly illegible. For example, page 3 of bundle C appears to be a screen capture from a mobile phone showing a document. When this page is reproduced in the trial bundles, the lower left part of the document is simply illegible[19]. Counsel do not suggest that the parties had any prior agreement that the lower left part is not relevant, and thus the court need not concern with it. This page illustrates the haphazard approach on how the trial bundles were prepared and agreed to.

83.4  As I mentioned above, the photos and the screen captures sent by the plaintiff, the defendant, and Mr Yau on are not separately blown up to allow the court to understand what they are. Again, the court is not told that parties agree they are not relevant and are to be ignored.

83.5  Although it is, in itself, a minor matter, I would also like to mention in passing that the pagination of the trial bundles does not assist the court. The pagination starts afresh for each part of the bundles – this hampers the court to recall the evidence as there are the same page numbers across different bundles.

84.I repeat what I said in Leung Chin To Michael v Wong Siu Cheuk Ping Selina [2023] HKDC 376 regarding the duty of legal representatives to assist the court to ensure reasonable proportion and procedural economy in the conduct of proceedings. I find the duty breached by both sets of legal representatives in the present case. I hasten to add that, even if the court, for whatever reason, does not raise objection to how the trial bundles are arranged during the Pre-Trial Review, the parties’ duty to produce a proper set of trial bundles is continuous. Any breach of the duty found out during the trial cannot be excused by the absence of criticism from the court earlier on.

Ms Lilian Ip, instructed by H Y Leung & Co LLP, for the plaintiff

Mr Ray Kwan, instructed by Johnny Yam, Jacky Lee & Co, for the defendant