Wong Sin Ting v. Fan Pui Ling
Read the full judgment text of DCCJ 5540/2021 on BabelCite. This District Court judgment was delivered on 25 September 2025.
1. In January 2015, the Plaintiff (“P”) and Wong Tsz Hong (“WTH”) set up a company known as “Say Hey Limited” (“Company” or “Say Hey”), each holding 5,000 shares, respectively. They set up their first bakery shop by taking over a bakery in Sham Shui Po (“SSP Shop”). WTH was to be responsible for managing the pastry team while P was responsible for dealing with suppliers, packaging design, managing payroll and day-to-day operations in the SSP Shop. In 2016, they opened another bakery in Lai Ch
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DCCJ 5540/2021 [2025] HKDC 1429 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 5540 OF 2021 ---------------------------------------
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--------------------------- JUDGMENT --------------------------- Background and Plaintiff’s claim 1.In January 2015, the Plaintiff (“P”) and Wong Tsz Hong (“WTH”) set up a company known as “Say Hey Limited” (“Company” or “Say Hey”), each holding 5,000 shares, respectively. They set up their first bakery shop by taking over a bakery in Sham Shui Po (“SSP Shop”). WTH was to be responsible for managing the pastry team while P was responsible for dealing with suppliers, packaging design, managing payroll and day-to-day operations in the SSP Shop. In 2016, they opened another bakery in Lai Chi Kwok (“LCK Shop”). 2.P and the Defendant (“D”) have been friends since secondary school. In late December 2017, P offered to sell her shareholding, namely, 5,000 shares (“Shares”), in the Company to D for HK$288. D hesitated. Discussions ensued and on 4 January 2018, D indicated in the WhatsApp conversation that she wanted to take P’s offer (“Transaction”). The relevant documentation relating to the transfer of shares took place on about 25 January 2018. 3.On 3 December 2021, P issued the writ against D for, inter alia, setting aside the Transaction and, alternatively, damages on the ground that in entering into the Transaction, D has unconscionably exploited the mental instability and the scheduled hospital admission of the Plaintiff. 4.D denies the allegations and disputes P’s claim. Legal Principles 5.The parties refer to Lo Wo & Ors v Cheung Chan Ka & Anor [2000] 2 HKLRD 370, where the court concluded that 3 factors were relevant to the court’s consideration of whether to set aside for unconscionable bargain.
6.There is no dispute that Hong Kong courts have continued to apply the legal principles in Lo Wo. In China Finance & Assets Management Limited （中國財務及資產管理有限公司） v Lafe Properties (Hong Kong) Limited (HCA 526/2010, unreported, 18 February 2015), Hon G Lam J (as he then was) adopted at §167 the legal principles in Lo Wo, by reference to Alec Lobb (Garages) Ltd & Ors Total Oil Great Britain Ltd [1983] 1 WLR 87:
7.In Li Kim Sang Victor (李劍生) v Chen Chi Hsia（陳綺霞） & Anor [2016] 1 HKLRD 1153, Hon Au-Yeung J applied the principles in Lo Wo. 8.P does not dispute that the 3 factors formulated in Lo Wo have been persistently applied in Hong Kong. P emphasises and reiterates Waung J’s observation in Lo Wo that “there was no ‘unifying principle or comprehensive requirements’ in establishing a case of unconscionable bargain.” 9.P relies on Commercial Bank of Australia Ltd v Amadio (1982-1983) 151 CLR 447 which is a majority decision from the Australian Court. P submits that the Court of Final Appeal in Ming Shiu Chung & Others v Ming Shiu Sum & Others (2006) 9 HKCFAR 334 had also cited Amadio when considering the necessary elements in pleading a case on unconscionable bargain.
10.P also refers to the English authority, Alec Lobb (Garages) Ltd & Ors v Total Oil Great Britain Ltd [1983] 1 WLR 87 at 95C-D, where the court observed that when the transaction was at substantial undervalue in the absence of an innocent explanation, one could infer impropriety in the stronger party’s conduct:-
The evidence 11.Both P and D gave oral evidence. P also called Miss Cheung Ho Lam to give evidence. There are quite a few disputes on fact between P and D. Both counsel for P and D have made detailed analysis of the evidence of the witnesses in their closing submissions. I do not intend to repeat and set out each and every point they have made. I shall consider their points and make the necessary findings in the course of discussion. 12.Regarding the assessment of witnesses’ testimony, it would be helpful to recite the observations summarised by DHCJ Herbert Au-Yeung (as he then was) in Hu Lan v David Golden [2023] HKCFI 873:
13.I shall bear in mind the above observations in assessing the evidence of the witnesses in the present case. Discussion 14.P and D came to know each other in secondary school. P came from a wealthy family and her parents had their own business in the Mainland. D lived in public housing estate and was apparently less well off. P went to the UK to continue her study after graduating Form 5 in 2006. She returned to Hong Kong during school holidays. P lived in a house and would invite friends over, including D, for barbeque and party when she came back on holiday. There is a dispute as to when they started to become close. 15.In cross-examination of D, Miss Chan, counsel for P, suggested that P and D had already become close friends since 2006 to which D disagreed. Miss Chan showed D some photos taken between 2008 and 2013 showing P and D in some social gatherings. D agreed that there were social gatherings but not frequent. D said she did see P when she came back for holiday and she did go to P’s house to play but not often. D said she only started to see P more after 2014 through school friends gatherings and became close with P since 2017. D agreed that in 2017 and 2018, their relationship was close. 16.P and D do not dispute that they met in school and subsequently became close friends but disagree over when they became close friends. I do not think such disagreement is material in the present case. There is no dispute that during the material time from 2017 to 2018, P and D were close friends. Insofar as it is necessary to make a finding, I prefer the evidence of D in this regard. P’s alleged unconscionable conducts 17.In P’s Statement of Claim, P pleaded the following particulars of unconscionability:-
The circumstances of the Transaction 18.According to P, she fell out with her partner WTH before the Mid-autumn Festival of 2017. She wanted to sell her share, either “she buy him out or he buy her out”. They had also tried find agents for selling their business. 19.There was a friend of P’s father who offered HK$1.5 millions for P’s Shares on the condition that P should stay to continue to run the business and she would be allowed to retain 20% share. P said she did not want to stay because she was sick and was not capable of staying (to continue to run the business). P rejected the offer. 20.P said there were potential buyers interested but she felt that they did not understand the business. She turned down many offers. She felt that she had developed a brand name for Say Hey and Say Hey was her “心血”. She wanted someone who would look after it and develop Say Hey into a big success. The phrase she used was “將四喜發揚光大”. 21.According to D, P had indicated to her an intention of selling her 50% interest in the Company since July 2017. The relevant record of WhatsApp conversation is recited below: 6.7.2017
31.7.2017
3.9.2017
9.9.2017
22.By the end of December 2017, P still had not found the right buyer. P telephoned D and asked whether D would consider buying her share at HK$288 which was a lucky figure. On 1 January 2018, P told D that her partner WTH would not buy her share; the business would be profitable but be prepared that it would be messy. P also suggested at the time that if D were afraid D could share the 50% with D’s boss, Miss Shuen. P also mentioned there was hundreds of thousands in rental deposit which could be refunded if she managed to run it till the end of the term. D wanted to understand the business operation and the risk involved before making a decision. The relevant WhatsApp record is recited as follows: 1.1.2018
2.1.2018
3-4.1.2018
5.1.2018
7.1.2018
23.The evidence shows that P had a strong desire to sell her share at the time and had made contact with different potential buyers but could not find the right buyer. At the same time, P had tried to persuade D to buy her share and that D had previously declined it. One of the main reasons was that D did not have any experience in running a business. P went as far as to suggest that D could share it with D’s boss, apparently to alleviate D’s concern over her lack of experience and the risk in running the business. 24.Regarding the circumstances of the Transaction, there is a dispute as to whether D had promised P not to sell SSP Shop and LCK Shop. P alleged in her witness statement that D had promised her at the time of the Transaction not to sell the SSP Shop and the LCK Shop. Firstly, despite P’s pleading the sale of SSP Shop by D in her Reply that SSP Shop must be of value, there was not a word mentioned by P about the alleged promise or that D was in breach of such a promise in the Reply. If there were such promise, there is really no reason why P would not have stated that in her Statement of Claim or her Reply. Further, when P gave oral evidence on the matter, she came up with a new version of the alleged promise in that the promise was not to sell it to WTH specifically. Having considered the evidence, I accept D’s evidence that at the time of the Transaction, D did not promise not to sell the SSP Shop or LCK shops. D’s knowledge of P’s eating disorder/condition 25.P was diagnosed with “Bulimia Nervosa”, which is an eating disorder, in October 2017. There is a dispute as to when D came to know P’s eating disorder. P testified that when she and her friends met for dinners and birthday parties, she ate a lot and some of them ate a lot too. When she needed to vomit she would go to the toilet. After she vomited, she did not tell her friends there but they might have noticed. In 2016 Mid-autumn Festival the bakery business was good and she was under a lot of stress which made her condition worse. There was an occasion where she ate all the bread left there and vomited a lot. Her condition got worse and she went to see doctor for treatment in late 2016. 26.In cross-examination, P confirmed that she had tried different treatments/therapies. She went to a fasting camp in Taiwan in April 2017. She sought advice from nutrition experts. She told D she had eating disorder (“暴食症”) in October 2017 after she was diagnosed. 27.According to D, she was aware that P ate a lot but at that time many of them ate a lot and always ordered a lot of foods at gatherings. She did not know P was suffering from eating disorder until she heard from her friends in April 2017. She knew P would stimulate her throat to self-induce vomiting after eating but she had not seen it herself. In October 2017, P directly told her that she suffered from eating disorder over their WhatsApp communication: 17.10.2017
28.I accept D’s evidence in this regard which is supported by the record showing the relevant conversation between P and D. 29.P stated that she told D about her suicidal thoughts and the imminent hospitalisation prior to the Transaction. P stated in her witness statement that:
30.In P’s Statement of Claim, P pleaded that in around January 2018, knowing P having difficulties in managing Say Hey, D offered to assist P in managing the accounts of Say Hey and arranging salary payments to employees of Say Hey. P said D had the opportunity of seeing Say Hey’s accounts and hence D knew the Company’s value and that it was making substantial profit prior to entering into the Transaction. D denied the allegations. 31.D said in evidence that P had not told her about P’s suicidal thoughts or her doctor’s advice on hospitalisation prior to the Transaction. 32.Regarding P’s allegation that D offered to help with Say Hey’s accounts, D’s evidence is that she had never offered to help with the accounts or the payroll of Say Hey and that the only occasion when she was given the Company’s financial statements was after she agreed to take up P’s Shares on 4 January 2018. It was only at the time when D agreed to take up P’s Shares did D offer to help with the paperwork of the company in order to alleviate P’s burden but P declined D’s offer at the time. D refers to and relies on the WhatsAapp conversations between P and D from 1/1/2018 to 5/1/2018 (recited in paragraph 22 herein) to show how her offer to help with Say Hey’s paperwork came about. 33.I accept D’s evidence in this regard. Reading the WhatsApp conversations in their context, it shows that prior to 4 January 2018 before D agreed to take P’s Share, D did not have Say Hey’s books of account and did not know the financial situation of Say Hey, and that appeared to be the reason why D asked to see Say Hey’s paperwork to see how P ran the business. It also shows that D offered to help with Say Hey’s paperwork after D had agreed to take P’s Shares on 4 January 2018 to alleviate P’s burden while P was deciding to whom she should sell her Shares. Hence, the WhatsApp record contradicted P’s allegation that D offered to help because of P’s medical condition and P’s allegation that P offered to sell her share at HK$288 because of D’s offer to help. 34.Further, the sequence of the relevant events as alleged by P is totally contradicted by the recorded WhatsApp conversations at the material time. In their WhatsApp conversations, there was no mention of P’s intended admission to hospital. The context in which D offered to help P with the paperwork is very different from what P now alleges. P in fact declined D’s offer to help by saying words to the effect that “don’t be silly, won’t take advantage of you”. I have no hesitation in rejecting P’s account in this regard. P’s scheduled admission to hospital 35.P’s pleaded case is that in around January to February 2018, P informed D of her scheduled admission into the psychiatric ward of Shatin Hospital and therefore D must have known that P’s mental condition was so severely disturbed which warranted an admission into the psychiatric ward. But the evidence is that P’s agreement to hospital admission came after the sale of P’s Shares. According to P, she decided to admit to hospital in February 2018. Therefore, at the time of the Transaction when D agreed to take P’s Shares, it is impossible that P had informed D of her scheduled admission to hospital. I hold that D did not have any knowledge of P’s scheduled admission at the time of the Transaction. I reject P’s submission that the sale was made in the circumstances as a “snatch of bargain” by taking advantage of the imminent admission of P into Shatin Hospital. 36.Miss Chan, counsel for P, seeks to argue that P’s reference to “急賣” on 1 January 2018 must have put D on notice to make inquiry as to why suddenly the sale of the Share was in such a great rush. Miss Chan submits that P’s reference to “急賣” should relate to her hospitalisation. She quoted the following WhatsApp messages:-
37.After D agreed to purchase the Shares on 4 January 2018, P on 7/1/2018 said this :-
38.Miss Chan referred to D’s evidence in cross-examination regarding her understanding of “急賣”on Day 5 of the trial:-
39.Miss Chan submits that the reference to “食住我急賣個勢賤賣”must be referring to P’s intended imminent admission into the Shatin Hospital. If the question of “why suddenly the sale of the Share was in such a great rush” were asked, D would have immediately known that P’s admission to the psychiatric ward of Shatin Hospital was imminent and inevitable in light of her lack of progress in managing her bulimia and stabilising her worsening mental state and suicidal tendencies. I do not agree. 40.Firstly, on 2 January 2018, P had not decided to admit to hospital and that her agreement to hospitalisation only came in February 2018. Hence, I do not agree that the reference to“食住我急賣個勢賤賣”must be referring to P’s intended imminent admission to the Shatin Hospital. 41.Secondly, I do not see there is any basis to put D on inquiry as to why P wanted to sell quickly in the present case. P had made known her intention to sell back in July 2017. On 31 July 2017, P already indicated she wanted to sell quickly and said“過埋中秋就賣 屌咁都唔明既 我求走心切 價有得傾啊”. And by January 2018, P still had not managed to sell her Shares. There is really nothing surprising for P to use the words“急賣”in the context. 42.On the balance of probabilities, I find that:
Special disadvantage/disability 43.P’s evidence is that she developed suicidal thoughts after Mid-autumn Festival in 2017. On 14 August 2017, P had already expressed her suicidal thoughts to Miss Cheung by WhatsApp. At the time when P consulted Dr Lee in October 2017, her suicidal thoughts were already an issue. P referred to the medical notes from Shatin Hospital :-
44.The relevant events can start with P’s falling out with WTH after WTH opened his own bakery shop in Fanling in July 2017. P confirmed in cross-examination for the first time that she in fact went to WTH’s Fanling Shop’s Opening despite she felt she was betrayed by WTH and she hated WTH a lot at the time. She explained that she attended the Opening out of “人情世故”. It was only until sometime before Mid-autumn Festival of 2017 that P and her mother said something bad about WTH’s wife and this audio conversation, by mistake and by accident, somehow found its way to their group chat where WTH and his wife could hear. P and WTH then fell out with each other openly. P described their relationship as “勢成水火”. As reflected in the conversation between P and D on 9 September 2017, the fact that P had finally fallen out with her partner WTH openly was in fact a relief for her so that P could sell her share without any guilty feeling. 45.There is no dispute that P was aware of her medical condition at all material times. She wanted to have it treated. She confirmed in cross-examination that she had been looking for ways to help her illness including, seeing nutritionist to learn proper diet; going to a fasting camp in Taiwan in April 2017, and going to Tze Shan Monastery for meditation and for copying sacred scriptures as a therapy. She learned sports therapy in early December 2017. Incidentally, she found that it had business potential and was prepared to invest in a sports therapy business. She also planned to attend a silent camp for her health: “去禁語營”. P was capable of looking after herself, seeking the appropriate treatments, and looking out for business opportunities at the same time. 46.Doctor advised her to admit into hospital for in-patient treatment in late December 2017. In cross-examination, she said words to the effect that her business would be meaningless to her if she could not live. She knew her health was her top priority. She also said that she could not manage Say Hey once she was in hospital. She could not talk on the phone in hospital and she needed to issue cheques to pay wages to workers. P fully appreciated the practical difficulties she would be facing once being hospitalised. One of the main reasons for her to sell her business was to enable her to seek proper medical treatment for her eating disorder. 47.She knew the importance of the various factors facing her. Money was important but she would consider other factors as well. Her father’s friend offered as much as HK$3 millions to buy the whole business and allowed her to retain 20% share with the condition that P had to stay to manage the business. She said she could not stay to manage the business and hence she rejected the offer. There was another buyer who offered HK$1,400,000 for the whole business but she also rejected it because the buyer intended to sell steamed rice which was not compatible with Say Hey’s products. P mentioned that there were other interested buyers but they did not understand Say Hey’s business and she rejected their offers. She said the price was one thing but she would pick and choose the right buyer. 48.P confirmed in cross-examination that although she was sick and would sometimes forget things, she was not dumb and she did not have amnesia (“我係病唔係蠢唔係失憶, 係有時候唔記得D野”). She confirmed in evidence that from July 2017 to January 2018, she could think clearly and she had her plan as to how to sell the business. The following is the conversation between P and D in July 2017. 31.7.2017
49.From the evidence, one can see that she had her own plan as to how best to sell her business: firstly to sell her share in SSP to outside people, namely, like selling its assets to outside people and then sell her half share in the Company. P said in oral evidence that by doing so she would get more money out of the sale. 50.As reflected in her conversations with D on 2 January and 4 January 2018, respectively, whilst P was making an offer to D to sell the Shares at HK$288, P was also negotiating the deal with a potential buyer and WTH at the same time. P was fully aware of the tactics adopted by her partner in squeezing the offer price. She confirmed in oral evidence that she could adapt and adjust according to the situation and she said that was her skills. 51.In the end, when P could not find the “right” buyer for the Shares, she would rather give it to her friend, the Defendant. In P’s own words, she said “我見到你醒目desrve (sic) better living所以想俾你睇你成功”. It was only then did D indicate that she was willing to take the offer. Even after such indication, D stated that “如果唔可以比我…，我都唔介意幫你..”. Then, P told D that WTH refused to make an offer and that she had given a deadline to the potential buyer to reply. In response, D told P not to hurry and wait for P’s good news. 52.P was able to communicate with D sensibly and was able to make independent and worthwhile judgment. P was dealing with several parties at the same time. She was weighing up the pros and cons trying to achieve the best outcome for herself which may not be purely monetary. She was consciously considering different factors, adapting to the situations arising, weighing up everything: her health condition, whether to admit into hospital, how to keep Say Hey and how to pay workers’ wages, how best to sell her business, how to avoid being squeezed by her partner, and how to choose the right buyer. From mid-2017 to January 2018, P’s conduct demonstrated logical and sharp business sense. I do not find P suffer any serious disadvantage which adversely affected her judgment at the time of the Transaction. Substantial undervalue 53.P referred to Alec Lobb (Garages) Ltd & Ors v Total Oil Great Britain Ltd [1983] 1 WLR 87, and submitted that the price of HK$288 was at substantial undervalue that one could infer impropriety in D. I do not agree. 54.According to the valuation report, P’s 50% share was valued at HK$130,000. The valuation was obtained by deducting liabilities from the net book value of the assets of the Company as at 31 March 2018. As acknowledged by the expert himself, reference was made to the auditor’s qualified opinion in the 2017 and 2018 Audit Reports that:
55.The assets of the Company consisted of, inter alia, the leasehold improvement which was valued at HK$140,750, furniture and fixtures valued at HK$42,965, and office equipment valued at HK$138,011. These three items totalling HK$321,726 represented some 54% of the Company’s total asset value of HK$596,531. Miss Chan, counsel for P, was unable to tell the Court what the leasehold improvement was or whether it could easily be sold and converted into money. Miss Chan was also unable to tell the Court whether the furniture and office equipment could be easily sold and converted into money. 56.The other asset of the Company was the rental deposit but that, in the normal course of event, could only be refunded if the lease term came to an end if the business could continue to run to the end of the lease. 57.The valuation based on the net asset value as at 31 March 2018 could only be a reference figure. It is by no means representative of a “reasonable market value” for the purpose of determining whether the Transaction was at substantial undervalue. The Court will have to look at the whole circumstances of the Transaction to determine whether the consideration is at such an undervalue that it is oppressive in the sense as defined in Lo Wo & Others v Cheung Chan Ka & Another [2000] 2 HKLRD 370 or that one could infer impropriety in D as defined in Alec Lobb (Garages) Ltd & Ors v Total Oil Great Britain Ltd [1983] 1 WLR 87. 58.As to the price of the Shares, HK$288 might appear to be low. There is no dispute that Say Hey was a small business with only two partners. P’s partner WTH was to be responsible for managing the pastry team while P was responsible for dealing with suppliers, packaging design, managing payroll and day-to-day operations. It appears that running Say Hey was certainly a full-time job. One can consider P’s Shares as an asset but at the same time it could also be a liability because the partner has to put in time and effort to manage and operate the business. As P had said she was under stress when the business was declining. One should not lose sight of the fact that there may be what I would call “a subjective value” of such small business in that each potential buyer may have their own valuation taking into account the element of risk and his/her own ability to manage the business. 59.In this connection, it should be noted that according to P’s witness, Miss Cheung, P had also offered to give the business to her but she declined. Miss Cheung said she was hesitant to forgo her full-time job and steady income, and reluctant to devote herself to the business. She feared her lack of entrepreneurial experience would hinder her ability to run the Company effectively. 60.The nature of the asset in the Transaction is an on-going small business. Firstly, it is no easy task to assess the value of such a business. Secondly, whether the business operation will be successful depends on many factors. Thirdly, there are other concerns like financial and operational risks together with other risks associated with the running of a business. In the present case, it is rather obvious that D would also need to put in time and effort to personally manage and operate the business. For someone like D without any knowledge and experience in running a business, it would no doubt be a challenge to her. 61.On the basis of the evidence before me, I am not satisfied that the consideration of HK$288 was at such substantial undervalue that it is oppressive or that one could infer impropriety in D as defined in the relevant authorities. In the present case, there are innocent explanations for the parties to agree at the price as they did without any impropriety in D. It is also important to have regard to the circumstances in which D eventually came to agree to take up P’s Shares. 62.Notwithstanding that D had indicated she had no interest, P continued to persuade D by telling her the business would be profitable and that there was a couple of hundreds of thousands in the rental deposit which would be refunded at the end of term. P even went as far as to suggest D and her boss could each take up 25%. On 2 January 2018, D replied that maybe she picked up some paperwork first so that she could understand how P ran the business. That was the first time D showed interest. On 3 January 2018, D told P that if P did not want to sell yet or needed more time to consider who to sell it to, D could help her with the paperwork so as to reduce her stress. P refused D’s offer to help and said “Don’t be silly. Won’t take advantage of you”. D then tried to comfort P that she did not want to see P suffer too much and she could help with the practical work. 63.P confirmed in evidence that at that stage D offered to help because P had not been able to sell her share since July 2017. In the conversation, P told D that D was smart and deserved better living; that’s why P wanted to give it to her; wanted to see D succeed. It was at this juncture that D said she wanted to take the offer but immediately told P that if she could not give it to her D would not mind just helping her. P then said only if she could not sell it and that if she could sell it she would take them to holiday. In that afternoon, D complained about WTH not wanting to make an offer and P had told the other potential buyer to decide that day the latest. D told P not to hurry was the best way forward. P agreed in cross-examination that at that time D wanted to comfort her or cheer her up more than wanting to have P’s company. In the end, P rejected the last buyer’s offer because that buyer wanted to sell steamed rice. It was only then did P finally decide to sell the Shares to D. On 5 January 2018, P sent over Say Hey’s audited report for 2017 to D. 64.According to D which I accept, she was not aware of the financial status of the Company when she agreed to take up the Shares and that she had not helped P with the accounts previously as alleged by P. 65.On the part of P, she was keen to sell her Shares. The evidence shows that P had her own problems to deal with at the time. Her eating disorder had gotten worse after her falling out with her business partner and required medical intervention. WTH used tactics to squeeze the offer price but did not make any offer in the end. To P, price was not the only factor. She had other criteria and none of the potential buyers satisfied her requirements. According to P herself, her health was a top priority. She wanted to have her medical condition treated and not turned into something more serious, like anorexia. 66.When D finally agreed to take up her Shares, P was so happy and said words to the effect that D had saved her life. P told her mother about it. P obviously regarded that as a relief for her. P was relieved from the liability of running the business and could concentrate on the treatment of her eating disorder. The documentation relating to the transfer of Share was completed on 25 January 2018. In around February 2018, P accepted Dr Lee’s recommendation for admission into the Shatin Hospital which she did in March 2018. Both P and D had weighed the pros and cons from their own perspective. There are indeed innocent explanations for the parties to agree at the price as they did without any impropriety in D. 67.Between 9 January and March 2018, P and D maintained close contact. P taught D how to run the business and how to deal with WTH. P had even arranged a backup chef and the whole supporting team of workers for D in case anything went wrong. P introduced a Miss Jim (who was their old school friend) to D for handling the Company’s accounts. 68.After P’s admission, D had visited her. P would issue some blank cheques for D to make payments for Say Hey (since D had not yet become the authorised signatory of the bank account). They discussed Say Hey’s business and new products for Say Hey. 69.On the basis of the evidence before me, I really do not see how D’s conduct could be morally culpable. Even adopting the formulation set out in the Australian authority Commercial Bank of Australia Ltd v Amadio (1982-1983) 151 CLR 447, I am not satisfied that D had taken unconscientious advantage of P in any way. D had no previous knowledge or experience in running a business. D’s family did not have any such experience either. D had not done anything to persuade P to sell. In fact, D had initially declined P’s offer. It was P who had repeatedly encouraged and persuaded D to take up the Shares notwithstanding D’s reluctance. D was told about the partner dispute. P had specifically warned D about the mess and that Say Hey was not easy to handle. As confirmed by D in evidence, she was taking a risk in taking the Shares. She was encouraged by her boss Miss Sheun to take the risk while she was still young. It was in such circumstances that D decided to take up P’s Shares. 70.In the circumstances of the present case, I am not satisfied that the HK$288 was at such substantial undervalue that it is oppressive or that one could infer impropriety in D as defined in the relevant authorities. P’s witness 71.In respect of P’s witness, Miss Cheung, there is no dispute that P and her were very close and P was Cheung’s partner at the material time. P might have talked to Cheung more about P’s own emotion than to other friends. P had mentioned to Cheung that she wanted to commit suicide but, according to Cheung, she never did attempt doing it. It is understandable that Cheung might have formed a rather dim view about P’s condition at the time. In Cheung’s words, she felt that P was “思想錯亂及神志不清”at the time but she agreed in cross-examination that it was only her own opinion. It is clear from the evidence that P had not told Cheung everything at the time. A clear example is that Cheung did not even know the fact that P had sold P’s Shares to D in January 2018. According to Cheung, P had all along told her that D was simply helping her with the accounts and that Cheung only came to know about the sale in August 2020. Cheung has no personal knowledge as to the circumstances in which P came to sell P’s Shares to D. I do not think Cheung’s evidence would take P’s case any further. 72.In respect of the WhatsApp Group “救救小婷婷 ”, the record of the conversations was not produced. D does not have a clear recollection of the matters being asked by P’s counsel in cross-examination in this regard. P was not a member of the Group. It was only conversations amongst P’s friends. The extent of their knowledge about P’s condition may be different and each of P’s friends may have her own opinion about P’s condition. I do not think such conversations would have much evidential value in the present case. Deregistration of the Company 73.Miss Chan also sought to rely on the deregistration of the Company in August 2020 and the alleged concealment in relation to D continuing trading in the name of Say Hey by another corporate vehicle in establishing unconscionable advantage. Firstly, this is not pleaded and P is not entitled to raise new issue which has not been pleaded. Secondly, even if I were to consider this issue, I have no hesitation in rejecting P’s argument for it clearly has got nothing to do with the question whether D had taken unconscionable advantage at the time of the Transaction. Other disputes 74.In respect of P’s allegation that D must have secretly contacted and communicated with WTH without P’s knowledge when D agreed to take up P’s Shares and that, according to P, explained why WTH’s wife replaced WTH to be the director of the Company on 26 January 2018, one day after P and D executed the instruments of transfer on 25 January 2018. P in her witness statement stated that D, WTH and his wife must have previously conspired together and arranged for WTH to take over the share in SSP Shop 4 months later. P went on to say that if she had known that, she would not have agreed to sell P’s Shares to D. 75.Firstly, such allegations have not been pleaded in P’s Statement of Claim or her Reply. Secondly, D produced their WhatsApp records on 8 and 9 January 2018 which indicated that it was the first time D had contacted WTH about D’s intention of taking up P’s Shares and that on 9 January there was already the plan for WTH’s wife “Lisa” to replace WTH as the director and P knew about it at the time. P was asked about this in cross-examination and P confirmed that she knew the plan for Lisa to become the director in place for WTH at the time and she said that it was for tax purpose in that Lisa could receive salary and thus reduce the taxable profit. In light of that, I have no hesitation in rejecting P’s allegation that D must have secretly conspired with WTH and his wife to arrange for WTH to take over the share in SSP Shop after the Transaction at the time when D agreed to take up P’s Shares. 76.There is also the “apology letter” to P’s mother. Reading that in context, it seems that D only discovered P’s sentimental value of SSP at a very late stage, long after the Transaction. In the said letter, D expressed her gratefulness to P and P’s parents for passing the bakery business to her. D felt regretful to P for letting her down, and for her inability to expand the business, which led to the sale of SSP business to someone P did not like. I agree that the letter was not an acknowledgment that selling SSP was wrong, or that D felt guilty about taking advantage of P. 77.D was asked about the instrument of transfer in which the consideration was stated as HK$100,000 for P’s Shares. When P’s counsel asked D if the consideration of HK$100,000 in the Bought and Sold Note and the Instrument of Transfer amounted to a “false representation” to the Inland Revenue Department, D answered in the affirmative. 78.According to D, the transfer documents were prepared by an accountant, Miss Jim Shuk Yan, who was introduced by the Plaintiff. D did not know who put the HK$100,000 in the Bought and Sold Note and the Instrument of Transfer. When she signed the Bought and Sold Note and the Instrument of Transfer, she did not read the documents in detail at the time. I accept D’s evidence in this regard. Subsequent events 79.D’s counsel also refers to and relies on the subsequent events. P and D maintained contact and remained on good terms. There were occasions where P asked D to buy her presents, including clothes and bag. D cited another example in March 2021 where P asked D to get her a set of car racing game including the video game, the monitor, and the racing chair to go with. According to D, she bought it for P and it costed as much as HK$70,000. D still felt grateful that P had given her the opportunity to run and own her business or else she might still be working as an employee. In June 2021, P had contacted D for placing some orders for a certain amount of mooncakes and other pastry products and there were some issues with the quality and packaging which P referred to as “水飯堂” incident. In July 2021, P also asked D to take her out for a fine-dining treat at Rosewood Hotel. D agreed. 80.On about 31 August 2021, D received P’s solicitor letter setting out her allegations against D. P and D, nevertheless, remained in contact thereafter. Their WhatsApp conversations between July and October 2021 show that P complained that D was not being helpful; P was unhappy about D’s refusal to provide the business contact to P for ordering mooncakes. 81.In September 2021, P requested D to arrange and pay for P’s birthday celebration in a fine-dining restaurant to which D agreed but did not do so at the end. 13.9.2021
23.9.2021
24.9.2021
5.10.2021
6.10.2021
82.P said in their conversations that P had given D the chance to treat her the meal so as to settle the matter (i.e. P’s claim) but D had not taken the offer. P issued the writ on 3 December 2021. On 29 January 2022, P sent the following WhatsApp messages to D 29.1.2022
30.1.2022
83.P said she wanted her HK$600,000 principal back and did not mind using HK$2 million to sue D. P emphasised that if it were not because of friendship she would not have sold it to D at a friendly price. P did not say D had taken unfair advantage of her in the Transaction. P did not say she had been misled in any way. P said she had given D a friendly price. P was angry because D had been stingy to her and did not even buy her dinner once after the Transaction. These are the messages sent by P herself. There is no suggestion that she was suffering from any mental problem or disability at the time when she sent these messages. In the end of the conversation, P reminded D to buy her dinner if she wanted to settle. 84.P confirmed in evidence that she had not complained about the Transaction from January 2018 to the time before she issued the solicitor’s letter dated 31 August 2021. P said in her oral evidence that the triggering point for P to sue D about the Transaction was “水飯堂” incident. Counsel for D submitted that it indicated that the alleged unconscionable bargain claim was an afterthought used to get her revenge for her anger over other disputes with D. It does appear to be so. Be that as it may, I have not taken into consideration P’s motive in bringing the proceedings. I have considered P’s claim on the basis of the evidence relating to the Transaction alone in coming to the conclusion as I did. 85.I accept D as an honest and truthful witness. I accept her evidence regarding the circumstances leading to the Transaction. Her evidence is clear and mostly supported by contemporaneous records. Her evidence is unshaken in cross-examination. I prefer D’s evidence where it conflicts with that of P. 86.In conclusion, I do not find that in entering into the Transaction, D had unconscionably exploited the mental instability and the scheduled hospital admission of P as alleged. I dismiss P’s claim with costs to D. 87.I make a costs order nisi that P do pay D the costs of the action, including any costs reserved, with certificate for counsel, to be taxed if not agreed. Unless there is any application to vary the order nisi by summons within 14 days from the date hereof, the order nisi shall become absolute. 88.Lastly, I thank counsel for P and D for their assistance.
Miss Joyce HT Chan, instructed by Lau Kwong & Hung, Solicitors, for the Plaintiff Miss Charlotte Kong & Mr Jeffrey Ngan, instructed by Wan Yeung Hau & Co, Solicitors, for the Defendant | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment