Zhang, Fengqiu v. Chan, Ka Yung and Another

HCA 951/2023

[2025] HKCFI 5164

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 951 OF 2023

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J U D G M E N T

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I.  INTRODUCTION

1.This is the trial of the Plaintiff’s action against the 1^st Defendant commenced by Writ of Summons filed on 20 June 2023. The 1^st Defendant was absent at the hearing.

II.  PARTIES

2.The Plaintiff is a Chinese national residing in the PRC, while the 1^st Defendant resides in Hong Kong. The 2^nd Defendant is the niece of the Plaintiff’s mother (“Madam Zheng”). The 2^nd Defendant was the 1^st Defendant’s wife, and since about July 2018, they separated and no longer lived together.

III. THE PLAINTIFF’S CLAIM

A.  Personal loans

3.The Plaintiff’s claim consists of two parts. The first part arises from some personal loan advanced by the Plaintiff and Madam Zheng to the 1^st and 2^nd Defendants. According to the Plaintiff, from 2012 to 2014, the Plaintiff and Madam Zheng advanced various loans to the 1^st and 2^nd Defendants (the “Personal Loans”). For these Personal Loans, the Plaintiff and Madam Zheng, as lenders, and the 1^st and 2^nd Defendants, as borrowers, orally agreed that:-

(1)  The Personal Loans shall carry an interest rate of 2% per month from the date of advancement until repayment; and

(2)  The Personal Loans are fully or partially repayable (together with interest) jointly and severally by the 1^st and 2^nd Defendants.

4.By a confirmation letter (the “Confirmation Letter”) signed by the 1^st and 2^nd Defendants on 13 July 2018, the 1^st and 2^nd Defendants confirmed and acknowledged that:-

(1)  They had received the Personal Loans from the Plaintiff and Madam Zheng; and

(2)  The outstanding Personal Loans were repayable with 2% interest per month, such interests to be repaid together with the principal sum.

B.  Tin Fung Agreement

5.The second part of the Plaintiff’s claim arises from an oral agreement reached in March 2011 between Madam Zheng and the 1^st and 2^nd Defendants (the “Tin Fung Agreement”) to purchase and invest in 8 partitioned units in Unit 8B of Tin Fung Industrial Mansion at 63 Wong Chuk Hang Road, Hong Kong (the “Tin Fung Property”). According to the Plaintiff, in or around February 2011, the 1^st and 2^nd Defendants proposed to Madam Zheng an investment opportunity concerning the Tin Fung Industrial Mansion. Subsequently, on 14 March 2011, Madam Zheng transferred a sum of RMB1,000,000 to the 1^st and 2^nd Defendants for the down payment for the purchase of the Tin Fung Property, on the understanding that if Madam Zheng would ultimately decide not to proceed with the investment, the RMB1,000,000 would be regarded as a simple personal loan to the 1^st and 2^nd Defendants (the “1M Loan”).

6.On or around 21 March 2011, Madam Zheng and the 1^st and 2^nd Defendants reached the Tin Fung Agreement, whereby:-

(1)  Madam Zheng would provide 50% of the down payment (the “Down Payment Share”) for the purchase of the Tin Fung Property to be purchased in the name of the 1^st Defendant;

(2)  The remainder of the purchaser price would be funded by a mortgage loan (the “Mortgage”), the payment of the repayment of which would be made by the rental income from the leasing out of the Tin Fung Property;

(3)  In exchange, Madam Zheng would receive 50% of the net profit upon the sale of the Tin Fung Property after repayment of the Mortgage (the “Profit Share”); and

(4)  Upon sale of Tin Fung Property, the 1^st and 2^nd Defendants shall (a) repay to Madam Zheng the Down Payment Share and (b) pay to Madam Zheng the Profit Share.

7.According to the Plaintiff, pursuant to the Tin Fung Agreement:-

(1)  As part of the Down Payment Share, a sum of RMB500,000 out of the 1M Loan was deducted, as evidenced by a written receipt dated 20 June 2011 (the “2011 Receipt”) signed by both the 1^st and 2^nd Defendants;

(2)  The remaining RMB500,000 from the 1M Loan was subsequently merged with and became part of the Personal Loans;

(3)  Upon receipt of part of the Down Payment Share from Madam Zheng, the 1^st and 2^nd Defendant told her (a) that the deal could close anytime in the next two to three months and (b) that she should prepare and transfer the remaining investment monies whenever she had spare funds;

(4)  Accordingly, the Plaintiff advanced sums of (a) RMB1,500,000 on 20 May 2011; (b) RMB1,000,000 on 16 June 2011; and (c) RMB1,992,450 on 17 June 2011 respectively; and

(5)  On 20 June 2011, the Tin Fung Property was purchased in the name of the 1^st Defendant for HK$22,000,000, funded by a down payment of HK$11,000,000 and the Mortgage for the remaining HK$11,000,000.

8.On or about 31 October 2017, without Madam Zheng’s knowledge, the 1^st Defendant sold the Tin Fung Property to one Prime Prestige Global Limited for HK$1,729,944,055. However, in breach of the Tin Fung Agreement, the 1^st and 2^nd Defendants failed to repay any of the Down Payment Share and to pay any of the Profit Share to Madam Zheng.

C.  Mainland Judgments

9.Based on the above, the Plaintiff and Madam Zhang commenced proceedings respectively and obtained judgments in the PRC (collectively, the “Mainland Judgments”) against the 1^st and 2^nd Defendants.

10.First, on 26 July 2021, the Plaintiff commenced an action (the “2096 Action”) in the Intermediate People's Court of Fuzhou Municipality, Fujian Province (the “Fuzhou Intermediate Court”) against the 1^st and 2^nd Defendants for the repayment of the outstanding balance of the Personal Loans being RMB10,400,000 due and owing to the Plaintiff with interest. By a judgment handed down on 8 October 2021 (the “2096 Action Judgment”), the Fuzhou Intermediate Court ordered the 1^st and 2^nd Defendants to jointly and severally repay the Plaintiff the principal amount of RMB10,400,000 with interest. The 2096 Action Judgment is final and conclusive, to take effect on 26 April 2022 as confirmed by a confirmation dated 18 May 2022 issued by the Fuzhou Intermediate Court.

11.Second, also on 26 July 2021, Madam Zheng commenced an action (the “2097 Action”) also in the Fuzhou Intermediate Court against the 1^st and 2^nd Defendants for the repayment of the outstanding Personal Loans due and owing to Madam Zheng for the principal sum of RMB15,340,000 with interest. By a judgment handed down on 18 October 2021 (the “2097 Action Judgment”), the Fuzhou Intermediate Court ordered the 1^st and 2^nd Defendant to jointly and severally pay Madam Zheng a principal amount of RMB14,900,000 with interest. The 2097 Action Judgment is final and conclusive, to take effect on 26 April 2022 as confirmed by a confirmation dated 18 May 2022 issued by the Fuzhou Intermediate Court.

12.Third, again, on 26 July 2021, Madam Zheng commenced an action (the “6288 Action”) in the People's Court of Fuqing City, Fujian Province (the “Fuqing Court”) against the 1^st and 2^nd Defendants for the repayment of part of the Personal Loans in the sum of RMB3,000,000 with interest. By a judgment handed down on 22 February 2022 (the “6288 Action Judgment”), the Fuqing Court ordered the 1^st and 2^nd Defendants to jointly and severally pay the principal amount of RMB3,000,000 with interest. The 6288 Action Judgment is final and conclusive, and has come into effect.

13.Lastly, on 23 July 2021, Madam Zheng commenced an action (the “2095 Action”) against the 1^st and 2^nd Defendants in the Fuzhou Intermediate Court for:-

(1)  The repayment of RMB5,000,000 transferred to the 1^st Defendant with the understanding that it would contribute toward the down payment of the Tin Fung Property; and

(2)  50% share of the profit made from the sale of the Tin Fung Property pursuant to the Tin Fung Profit Sharing Agreement.

14.Madam Zheng subsequently amended her claim to repayment of RMB4,992,450 and economic loss arising from the Defendant’s withholding of the RMB4,992,450.

15.By a judgment handed down on 29 November 2021 (the “2095 Action Judgment”), the Fuzhou Intermediate Court ordered the 1^st and 2^nd Defendants to jointly and severally pay the sum of RMB4,992,450 with losses. The 2095 Action Judgment is final and conclusive, to take effect on 25 April 2022 as confirmed by a confirmation dated 15 July 2022 issued by the Fuzhou Intermediate Court.

D.  Assignment of Madam Zheng’s rights and interests to the Plaintiff

16.By an assignment agreement dated 2 June 2023 (the “Assignment”), Madam Zheng assigned all of her rights and interests in the 6288 Action Judgment, the 2095 Action Judgment and the 2097 Action Judgment with all related rights and interests to the Plaintiff. Written notice of the Assignment (the “Notice of Assignment”) was served on the 1^st and 2^nd Defendants by registered and ordinary post on or around 6 June 2023.

E.  Basis of the Plaintiff’s claim

17.The Plaintiff’s primary cause of action is enforcement of the Mainland Judgments. Alternatively, the Plaintiff’s claim is based on the underlying obligations in the Mainland Judgments.

18.For the sake of completeness, the Plaintiff obtained judgment against the 2^nd Defendant in default on 3 January 2024.

IV.  DEFENCE

A.  Personal Loans

19.In respect of the Personal Loans, the 1^st Defendant denies having borrowed any loans from the Plaintiff and/or Madam Zheng. According to him, he did not sign or acknowledge or authorise the 2^nd Defendant to sign or acknowledge any loan receipts on his behalf. Further, he did not receive any loans from the Plaintiff and/or Madam Zheng.

20.As regards the Confirmation Letter, the 1^st Defendant’s case was that he was forced to and involuntarily sign under duress, threats and force or intimidation. In essence, at §8 of the Defence, he pleads that:-

(1)  On or around 13 July 2018, out of sudden, the Plaintiff, his father and Madam Zheng visited the 1^st Defendant’s home (where the 1^st and 2^nd Defendants and their three children and maid were living and present);

(2)  The Plaintiff suddenly shouted and scolded the 1^st and 2^nd Defendants in front of their children fiercely and loudly;

(3)  The Plaintiff then showed a document (which turned out to be the Confirmation Letter), and asked the 1^st and 2^nd Defendants to sign, saying “如果不簽就玉石俱焚” fiercely;

(4)  Further, the Plaintiff’s father suddenly took out a needle, undressed part of his shirt, and inserted the needle into his body;

(5)  The Plaintiff and his parents kept scolding the 2^nd Defendant and uttering words in 福清話 fiercely and loudly to the 2^nd Defendant; and

(6)  Under such circumstances, the 1^st Defendant felt that he had no choice but to sign the Confirmation Letter involuntarily.

21.The 1^st Defendant also raises the defence of time bar under the Limitation Ordinance.

B.  Tin Fung Agreement

22.In respect of the Tin Fung Agreement, the 1^st Defendant denies that there is any Tin Fung Agreement, and that the Plaintiff had provided any money for the purchase of the Tin Fung Property. The 1^st Defendant’s case is that the Tin Fung Property was purchased with his own money.

23.As regards the 2011 Receipt, quite different from his defence of duress for the Confirmation Letter, the 1^st Defendant simply pleads at §13(d) that:-

“Owing to what is pleaded in paragraph 10 above [denying any contribution from the Plaintiff towards the purchase of the Tin Fung Property], the said written receipt was simply not supported by any valid consideration, and was of no legal effect or effect whether as alleged or at all”.

24.While the 1^st Defendant admits that he sold the Tin Fung Property, he avers that he sold the Tin Fung Property together with other properties all belonging to the 1^st Defendant for HK$1,729,944,055. the 1^st Defendant avers that the sale has nothing to do with the Plaintiff.

25.The 1^st Defendant also raises the defence of time bar under the Limitation Ordinance.

C.  Mainland Judgments

26.In relation to the Mainland Judgments, the 1^st Defendants pleads that they are of no legal effect because:-

(1)  The 1^st Defendant had not received notice and/or there had not been proper or valid service on the 1^st Defendant in respect of the 2096 Action, the 2097 Action, the 6288 Action and the 2095 Action (collectively, the “Mainland Actions”);

(2)  The 1^st Defendant did not have opportunity to present his case and full evidence in the Mainland Actions;

(3)  The relevant PRC Courts did not have the opportunity to evaluate the parties’ cases or evidence in full in the Mainland Actions;

(4)  There had been no proper evaluation of the parties’ cases or evidence, or findings of facts by the relevant PRC Courts in the Mainland Actions;

(5)  The Mainland Judgments are not final or conclusive under the PRC law;

(6)  The Mainland Judgments are null and void, and/or are liable to be set aside under the PRC law; and

(7)  The Mainland Judgments are liable to be set aside under the PRC law on the ground that the alleged loans and/or the underlying transactions took place outside the PRC jurisdiction.

D. The Assignment

27.In respect of the Assignment, the 1^st Defendant reserves the right to contend that the PRC law does not recognise and/or allow the assignment of interests under the PRC Judgments. Further, the 1^st Defendant had not been served with any notice of the Assignment in writing. So, the 1^st Defendant’s case is that the Assignment is not enforceable.

V. ISSUES

28.The issues as crystallised from the pleadings are:-

(1)  Whether the Mainland Judgments are final and conclusive and/or are liable to be set aside under the PRC law because of lack of effective service and/or lack of opportunity to present the 1^st Defendant’s case and evidence in the Mainland Actions;

(2)  Whether the Personal Loans exist at all;

(3)  Whether the 1^st Defendant signed the Confirmation under duress as alleged;

(4)  Whether the claim on the Personal Loans is time-barred;

(5)  Whether the Tin Fung Agreement exists;

(6)  Whether the claim on Tin Fung Agreement is time-barred; and

(7)  Whether the Assignment is valid.

VI.  WITNESSES

29.The Plaintiff’s witnesses are the Plaintiff herself and Madam Zheng. Their witness statements are adopted as evidence in chief. The 1^st Defendant was absent throughout the trial, and thus the Plaintiff’s witnesses were not cross-examined.

30.Further, after the Plaintiff closed his case and the matter was adjourned for oral closing submissions, during the oral closing submissions, Mr Val Chow, counsel for the Plaintiff, without any fault on his part, and very acting very fairly, informed me that he was just informed by the Plaintiff that the Plaintiff had received some money under the Mainland Judgments but was unable to tell the Court the exact amount and when the money was received. As a result, I directed the Plaintiff to file an affirmation deposing to the details of any money he had received under the Mainland Judgments and confirming that he had received no other money under the Mainland Judgments. The Plaintiff filed an affirmation on 3 October 2025,which I admit as part of his evidence. In gist, the Plaintiff received RMB1,880,141.85 on 14 August 2023 as a result of the enforcement of the 6288 Action Judgment.

31.The 1^st Defendant has filed his Witness Statement on 4 June 2024, but since he did not come to court to affirm the same and tender himself for cross-examination, his witness statement is not read into evidence.

VII.  WHETHER THE MAINLAND JUDGMENTS ARE FINAL AND CONCLUSIVE AND/OR ARE LIABLE TO BE SET ASIDE UNDER THE PRC LAW

32.In relation to whether a foreign judgment is final and conclusive, I adopt the summary set out in Dicey, Morris and Collins on The Conflict of Laws (16^th edition) at §14-027:-

“The test of finality is the treatment of the judgment by the foreign tribunal as a res judicata. ‘In order to establish that [a final and conclusive] judgment has been pronounced, it must be shown that in the court by which it was pronounced, it conclusively, finally, and forever established the existence of the debt of which it is sought to be made conclusive evidence in this country, so as to make it res judicata between the parties’: it follows that the possibility of an appeal to a higher court does not alter the finality of the judgment… a default judgment may, in this sense, be final and conclusive, even though it is liable to be set aside in the very court which rendered it.”

33.The Mainland Judgments are on the face of it final and conclusive. There is no evidence of any appeal or application to set them aside, and in any event, a possibility of appeal or set-aside does not affect the finality. There is also no evidence on the PRC law to explain why the Mainland Judgments are not final and conclusive.

34.As far as there is any suggestion that the Mainland Judgments are liable to be set aside and/or unenforceable because of lack of notice to the 1^st Defendant and/or lack of opportunity for the 1^st Defendant to present his case and evidence in the Mainland Actions. Lack of such notice and/or lack of such opportunity may constitute a ground for impeaching the foreign judgment: see Dicey, supra §14-159.

35.In the present case, it was recorded in the Mainland Judgments that without good reason, the 1^st Defendant (and the 2^nd Defendant) did not attend the litigation despite the court’s summons, along the following line:-

“陈家勇、吴国琴经本院依法传唤，无正当理由拒不到庭应诉，视为放弃诉讼权利，本院依法席判决。”

36.In the Mainland Judgments, the relevant Mainland Courts also analysed the evidence before they came to their conclusion.

37.On such evidence before me, and in the absence of the 1^st Defendant’s evidence to support his plea of lack of notice and lack of opportunity, I find that the 1^st Defendant had been well notified of the Mainland Actions and well afforded opportunity to present his case and evidence. It was just that, as the relevant PRC Courts found, the 1^st Defendant abandoned his right.

38.Therefore, the Mainland Judgments are not impeachable on the ground of lack of notice and lack of opportunity.

39.In the circumstances, I am satisfied that the requirements for enforcing foreign judgments, as set out in JSC BTA Bank v Mukhtar Kabulovich Ablyazov [2014] 5 HKC 209 at §27 per Zervos J (as he then was) are all satisfied, and therefore, I find that the Plaintiff has established his claim based on enforcing the Mainland Judgments.

40.The interest awarded under the Mainland Judgments are:-

(1)  2% per month from the date of the loan to 19 August 2020;

(2)  From 20 August 2020, pursuant to the relevant loan agreements, four times the market interest rate for one-year loans at the time of the commencement of the claim to the date of full repayment; and

(3)  If the Defendants fail to fulfil their obligation within 10 days of the respective Mainland Judgments, the interest during the delayed period would be doubled.

41.Mr Chow fairly draws my attention to Hung Fung Enterprises Holdings Ltd and Agricultural Bank of China [2012] 3 HKLRD 679 at §§87-92, where the Court of Appeal refused to enforce the part of the Mainland judgment in that case which provided for payment of double interest in case of non-compliance. The Court of Appeal refused the enforcement on the ground that the purpose of the double-interest payment was not to “compensate for the loss suffered but to punish the defendant and deter others from acting in the same way”.

42.In the present case, the interest the Plaintiff seeks is only those in §§40(1) and (2) above. As pointed out by Mr Chow, both were awarded under the Mainland Judgments as part of the loan agreements between the parties, and therefore, the nature is compensatory but not punitive, and there is no basis for me to hold otherwise. Therefore, Hung Fung Enterprises Holdings Ltd and Agricultural Bank of China, supra, is not applicable here. I am satisfied that in enforcing the Mainland Judgments, interest in §§40(1) and (2) above, being compensatory, should also be enforced. According to exhibit “ZFQ-3” to the affirmation filed by the Plaintiff on 3 October 2025, the total sum of the principal judgment sums and the interests thereon under the Mainland Judgments up to today (31 October 2025) is RMB114,572,614.92.

43.Given my finding that the Plaintiff has established his claim based on enforcing the Mainland Judgments, my view below on the remaining issues are strictly speaking not necessary, but only for the sake of completeness.

VIII.  WHETHER THE PERSONAL LOANS EXIST AT ALL AND WHETHER THE 1^ST DEFENDANT SIGNED THE CONFIRMATION UNDER DURESS

44.All the loans comprising the Personal Loans were evidenced by “借条” signed by the 2^nd Defendant on her own behalf and on behalf of the 1^st Defendant. I note that during the time when the Personal Loans were made, the 1^st and 2^nd Defendants were still husband and wife living together with their children even according to the 1^st Defendant’s own case. These “借条” are strong evidence of the Personal Loans.

45.The Confirmation Letter is yet another piece of strong evidence of the Personal Loans. In the absence of any evidence to substantiate the 1^st Defendant’s allegation of duress, which is a serious allegation, I find that the 1^st Defendant signed the Confirmation Letter without any duress as alleged or at all.

46.Having considered the above and the evidence of the Plaintiffs’ witnesses, which is, as a result of absence of cross-examination, unchallenged, I find that the Personal Loans exist as the Plaintiff claims.

IX.  WHETHER THE CLAIM ON THE PERSONAL LOANS IS TIME-BARRED

47.The Personal Loans are pleaded as repayable “conditional upon a request made by the lender”: see Statement of Claim §4(b), substantiated by the Plaintiff’s witnesses. There is no evidence to the contrary. There is however no plea or evidence as to when such request has been made, and so, the issuance of the Writ of Summons herein shall be taken as such request. In any event, the Confirmation Letter signed on 13 July 2018 is, in my view, an acknowledgment under section 24 of the Limitation Ordinance. Therefore, there is no time-bar.

X.  WHETHER THE TIN FUNG AGREEMENT EXISTS

48.The strongest evidence of the Tin Fung Agreement is the 2011 Receipt, signed by both the 1^st and 2^nd Defendants. As mentioned above, unlike his defence of duress to the Confirmation Letter, he does not raise any defence of duress; nor did he challenge the authenticity of the 2011 Receipt. His defence is that the 2011 Receipt was not supported by consideration and was not legally effective. However, there is no evidence before me to explain why the 1^st and 2^nd Defendants would still sign the 2011 Receipt.

49.Having considered the above and the evidence of the Plaintiffs’ witnesses, which is, as a result of absence of cross-examination, unchallenged, I find that the Tin Fung Agreement exists as the Plaintiff claims.

XI.  WHETHER THE CLAIM ON TIN FUNG AGREEMENT IS TIME-BARRED

50.The sale of the Tin Fung Property took place on 31 October 2017, and it was at that time that the Plaintiff’s right to the profit under the Tin Fung Agreement arose, and it was the 1^st (and 2^nd) Defendant’s failure to share the profit that constituted the breach. Therefore, there is no time-bar.

XII.  WHETHER THE ASSIGNMENT IS VALID

51.Insofar as the 1^st Defendant’s position that the Assignment is not valid under the PRC law, there is no evidence of any basis on which the PRC law would render the Assignment in valid. Assuming that the PRC law is the same as the Hong Kong law, an assignment would be effected in writing so long as express notice in writing of the assignment is given to the debtor: see section 9 of Law Amendment and Reform (Consolidation) Ordinance (Cap. 23).

52.This brings me to the 1^st Defendant’s defence that he did not receive any Notice of Assignment as the Plaintiff claims. However, as pointed out by Mr Chow, the Notice of Assignment was posted to the 1^st Defendant at the address which the Writ of Summons herein was served at, and the 1^st Defendant filed acknowledgment of service. Further, it was also the very address which was the address stated in the Witness Statement of the 1^st Defendant.

53.In the circumstances, and in the absence of any evidence to the contrary, I find that the 1^st Defendant did receive the Notice of Assignment.

54.Therefore, I find that the Assignment is valid.

XIII.  CONCLUSION

(1)  For the above reasons, I enter the following judgment in favour of the Plaintiff:-The 1^st Defendant do pay the Plaintiff RMB114,572,614.92;

(2)  There shall be post-judgment interest at judgment rate;

(3)  For the avoidance of doubt, the sum referred to in paragraph 1 above shall be subject to the rule against double compensation arising from any sum received by the Plaintiff under the Final Judgment dated 3 January 2024 against the 2^nd Defendant; and

(4)  The 1^st Defendant shall pay the Plaintiff costs of the action against the 1^st Defendant, to be taxed if not agreed.

55.It remains for me to thank Mr Chow for his counsel assistance.

Mr Val Chow, instructed by Withers, for the Plaintiff

The 1^st Defendant was not represented and did not appear