Axht Company Ltd v. 王一诚

HCMP 1257/2024 &
HCMP 1258/2024
(Heard Together)

[2026] HKCFI 34

HCMP 1257/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1257 OF 2024

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AND

HCMP 1258/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1258 OF 2024

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(Heard Together)

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J U D G M E N T

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I.  INTRODUCTION

1.Before me are:-

(1)  The money lender’s Originating Summons filed on 19 July 2024 in HCMP 1257/2024 against 王一诚 (“Wang”) for an outstanding principal of loan in the sum of HK$12,500,000 and interest thereon under a loan agreement between the Plaintiff as lender and Wang as borrower dated 7 November 2019 (the “Wang Loan Agreement”); and

(2)  The money lender’s Originating Summons filed on 19 July 2024 in HCMP 1258/2024 against 李克凡 (“Li”) for an outstanding principal of loan in the sum of HK$4,000,000 and interest thereon under a loan agreement between the Plaintiff as lender and Li as borrower dated 3 October 2019 (the “Li Loan Agreement”)

II.  BACKGROUND

2.The two Loan Agreements are not in dispute. The Loan Agreements respectively named Wang and Li as borrowers. On the same dates of the Loan Agreements, both Wang and Li also executed charge agreements and signed confirmation letters respectively to confirm their loans. Further, on 22 December 2023, both Wang and Li issued a letter (“Wang and Li’s 2023 Letter”) to the Plaintiff seeking time extension for repayment of the loans. In that letter, Wang and Li named themselves as borrowers, and signed as borrowers. The Plaintiff also produced evidence of advancements of the loans thereunder to Wang and Li respectively. WhatsApp conversation was also produced showing Wang and Li’s respective attempts to repay the loans. On such evidence, I find that the Plaintiff did advance the loans to Wang and Li as renewed or consolidated under the Loan Agreements. I should also mention that in Wang’s affirmation and in Li’s un-affirmed (but signed) affirmation filed in opposition to the Plaintiff’s application for Mareva injunction, they did not dispute all these at all save and except that they alleged subsequently that one Wong Wai Hong Andrew (“Andrew Wong”) had taken up the responsibility to repay the loans. I shall deal with such allegation later.

3.It is noted that after the execution of the Loan Agreements, on 31 March 2023, Andrew made a written statement (“Andrew Wong’s Statement”) to the Plaintiff alleging that both Wang and Li had repaid the loans, and he was the actual borrower and the actual user of the loans. He further wrote that he would repay these loans and any dispute and liability arising from the loans should be borne by him.

4.However, despite Andrew Wong’s Statement made on 31 March 2023, Andrew Wong executed a Deed of Guarantee dated 12 July 2023 (the “Guarantee”) in respect of the loans under the Loan Agreements.

5.Subsequently, as mentioned above, Wang and Li issued Wang and Li’s 2023 Letter to the Plaintiff seeking time extension for repayment of the loans until 31 March 2024. As mentioned above, they both signed the Letter as borrowers. Nothing was mentioned about Andrew Wong or any third party taking up the loans.

6.Despite the Plaintiff’s repeated requests and demands to Wang and Li, the loans remained outstanding.

III.  EVIDENCE

7.From Wang, there is only one affirmed affirmation, namely, the Affirmation of Wang Yicheng filed on 17 December 2024 in opposition to the Plaintiff’s application for Mareva injunction. In that only properly affirmed affirmation, Wang did not raise any issue on the merits of the Plaintiff’s claim, but only gave evidence on real risk of dissipation and his assets within jurisdiction.

8.All the evidence in opposition to the present proceedings filed on behalf of Wang is three affirmations of a solicitor of the solicitors firm acting for them (dated 17 February 2025, 28 February 2025 and 3 December 2025) exhibiting three signed, but unaffirmed, affirmations. The solicitor, of course, did not confirm the contents to be true and correct – first, it would not be proper for him to do so, and second, in any event, he did not have any personal knowledge of the matter. What the solicitor said in respect of these signed but unaffirmed affirmation has all along been repeatedly that Wang himself confirmed to him that the contents were true and correct, that Wang was not in Hong Kong and would arrange for affirming the affirmations, and that the affirmed affirmation would be filed when available. There has not even been the usual undertaking made by the solicitor to have the affirmations properly affirmed as soon as possible and to file the same when available. No such affirmed affirmations have ever been filed.

9.In respect of Li, he has not affirmed any affirmation at all. All the evidence filed on his behalf in the proceedings is four affirmations (dated 17 December 2024, 17 February 2025, 28 February 2025 and 3 December 2025) made by the same solicitor exhibiting signed but unaffirmed affirmations of Li, saying that Li confirmed to him the contents to be true and correct, giving the same reason to explain why the affirmations were not affirmed and indicating, short of any undertaking, that he would file affirmed affirmations when available. Again, the same solicitor of course did not confirm the contents of the unaffirmed affirmations to be true and correct.

10.The only explanation given to me during the hearing for failure to produce proper affirmations is that Wang and Li have been in the PRC. This explanation is not a good explanation – it is common for affirmants nowadays to make necessary arrange for affirmations to be affirmed out of jurisdiction. No explanation is given as to why such arrangement had not been made. In the circumstances, there is no evidence before me on the defence of Wang and Li. I am not being technical here – the Court relies on affirmations because of the potential consequences of falsely affirming or swearing affirmations on oath. Since the potential consequences could be serious, strict procedures would have to be followed, and if the affirmations were not properly affirmed or sworn, there could well be arguments that no such consequences as consequences of making false affirmations should attach, and so, the unaffirmed affirmations, effectively no more than a signed statement tendered through a third party, should not be given weight at all especially in interlocutory applications where no cross-examination would be conducted. Further, Wang and Li’s solicitor only deposed that Wang and Li confirmed to him that the contents of the unaffirmed affirmations were true. However, such alleged confirmations were, in substance, no difference as if a solicitor making an affirmation exhibiting written instructions from his client and asking the Court to rely on hearsay evidence. I do not accept such affirmations at all as evidence, given that the present proceedings were not interlocutory but final, and thus such hearsay evidence is inadmissible by virtue of Order 41 rule 5(1). In any event, as mentioned above, the tender (that is, the solicitor) does not even confirm to the draft affirmations to be true. I do not place any weight on such evidence even if admissible.

11.The lack of evidence from Wang and Li would be sufficient for me in the circumstances to enter judgments as sought by the Plaintiff on the facts I found above.

IV.  IN ANY EVENT, NO MERITS

12.When I raised this issue of lack of evidence during the hearing, Mr Ko informed me that if necessary, those instructing him could give an undertaking to the Court to file properly affirmed affirmations. However, even if I were not take the unaffirmed affirmations as proper evidence, I would find that the defence raised had no merits at all as explained below.

13.The only defence raised by Wang and Li was that Andrew Wong took up the obligations to repay under a loan swap agreement (the “Loan Swap Agreement”) in May 2019 whereby Wang’s and Li’s liability to repay the Plaintiff was assigned to Andrew Wong in exchange for Wang and Li’s help to repay Andrew Wong’s loans due immediately. In other words, they raised a defence of novation. The law on novation is well established, as set out in Wing Hing (1956) Company Limited v Nissin Foods Company Limited [2021] HKCFI 638 at §§67-69. One of the issues is whether the Plaintiff consented to the alleged novation (if any). Such consent may be inferred by conduct, and the burden lies upon the party asserting novation to “clearly establish” it by evidence “as being only consistent with the intent of achieving a novation”. Mr Jason Ko, leading Mr Chris Wong, counsel for Wang and Li, also draws my attention to Evans v SMG Television Ltd [2003] EWHC 1423 (Ch) at §181 for the “proper approach to deciding whether a novation should be inferred” with reference to “business efficacy to what actually happened” and reminds me that the burden for inference of consent is not high. It is, in my view, a question of fact and degree depending on the evidence and the circumstances of a particular case.

14.In the present case, as pointed out by Mr Kevin Hon, leading Mr Tommy Cheung, counsel for the Plaintiff, there is no document evidencing such consent at all. In my view, although such consent could be inferred from conduct, it would be inherently improbable that the Plaintiff would consent by conduct having considered the following holistically:-

(1)  The Loan Swap Agreement was, even on the Defendants’ case, made in May 2019. After this Loan Swap Agreement, the Loan Agreements in question were entered into after that. If Andrew Wong would like to take up the loan as a borrower, he could simply have done so, without any need to go through the convoluted way to be a guarantor on paper. This is so even if the Loan Agreements were said to be loan agreements to renew or consolidate existing loans. The time of the execution of the Loan Agreements would be the opportunity for the three parties to make everything clear, if there were any consent of the Plaintiff to the novation (if any). At least there should be some documentation.

(2)  Although after the execution of the Loan Agreements were the Andrew Wong’s Statement dated 31 March 2023, this was a unilateral statement only. I note that nothing in that statement indicated any consent from the Plaintiff; nor was there anything seeking the Plaintiff’s consent.

(3)  Instead, after Andrew Wong’s Statement, by the Guarantee executed on 12 July 2023, he agreed to be a guarantor. If he himself had already been the borrower, he would not have to be a guarantor of his own liability at the same time. If the Plaintiff had already consented to any novation, there would be no point for any guarantee to the Plaintiff.

(4)  Consistently with the Guarantee, Wang and Li themselves confirmed their status of borrowers by Wang and Li’s 2023 Letter issued in December 2023.

(5)  There is no evidence at all as to how and when the Plaintiff was informed that there was such a loan swap as alleged. Mr Ko points out Wang and Li’s evidence at §13 of Wang’s 2^nd unaffirmed affirmation that Andrew Wong reassured them that the Plaintiff would agree to such loan swap. However, first, §13 was in the context of May 2019, before the execution of the Loan Agreements, and second, there is no evidence of whether Andrew Wong did inform the Plaintiff of such loan swap and if so, what the Plaintiff’s response was. Put to the highest to Wang and Li, in my view, assuming that Andrew Wong did make such assurance and assuming such assurance was relevant though made in May 2019, it would be a matter between Wang and Li on the one hand and Andrew Wong on the other hand on such alleged reassurance.

(6)  Mr Ko submits that I should assess the evidence on the whole in respect of the reassurance. I agree that I should assess evidence holistically, and this is what I am doing here. Mr Ko submits that it would not be coincidence that there was such reassurance and the Plaintiff received interests from persons other than Wang and Li. In this regard, Mr Ko relies upon the decision of DHCJ Yuen in dismissing the Plaintiff’s application for Mareva injunction [2025] HKCFI 4568, where her Ladyship said at §35 that the interest payments was some weighty evidence supporting Wang and Li’s case that Andrew Wong stepped into their shoes as debtor to the Plaintiff. However, her Ladyship expressly made it clear at §36 that her view was in relation to real risk of dissipation only, and in any event, further evidence had since been filed after that interlocutory stage, and at this final stage before me, I consider all the evidence holistically.

(7)  Here, even assuming that the Plaintiff knowingly received interest payment from Andrew Wong, it does not necessarily follow that there was any consent to any alleged novation. The acceptance is entirely consistent with the proposition that from the Plaintiff’s perspective, it cared about whether the interests were paid, rather than the source of the payments. One could well argue that even assuming that the Plaintiff knew that Wang and Li would on-lend the loans to Andrew Wong and thus it was Andrew Wong repaying, from the Plaintiff’s perspective, Wang and Li would still be the borrowers and the on-lending was a matter between Wang and Li on the one hand and Andrew Wong on the other. Whether Andrew Wong would regard Wang and Li as his nominee was, similarly, a matter between them.  Whether the Plaintiff would regard Wang and Li as nominees for Andrew Wong such that Andrew Wong was the borrower begs the question I have to decide – whether there was any valid novation. All that said, I am not saying that the Plaintiff’s acceptance of interest from third party or even knowingly from Andrew Wong is not a relevant factor. However, it is only a relevant factor in my holistic assessment of the evidence, and it is not a factor that seems so strong as Mr Ko submits.

(8)  The Plaintiff was a licenced money-lender and for any new borrower, the Plaintiff would have to have proper documentation of the loan under the Money Lenders Ordinance. There is no such evidence.

(9)  In his statement of affairs filed in his self-bankruptcy petition in HCB 5609/2024, Andrew Wong mentioned no such loans indebted to the Plaintiff at all. The Defendants’ “evidence” exhibiting WeChat messages where a director of the Plaintiff Wong King Wai asked Andrew Wong whether Andrew Wong had reported to the Official Receiver about the debts due and owed to the Plaintiff is consistent with Andrew Wong’s role as a guarantor.

(10)  Mr Ko submits that the absence of reference to the loans in question shows that Andrew Wong did not take the guarantee liability either. This may be right, and if so, Andrew Wong’s statement of affairs would help neither the Plaintiff’s nor Wang’s and Li’s case. However, the burden lies upon Wang and Li to “clearly establish novation” by evidence “as being only consistent with the intent of achieving a novation”. Absence of reference to the loans in question understood in the context of Andrew Wong’s guarantee liability and of Wong King Wai’s query whether the loans were reported to the Official Receiver can be consistently understood as Andrew Wong’s deliberate intention not to report the guarantee liability to the Official Receiver – this also explains why Wong King Wai asked Andrew Wong if he had reported the “loans” to the Official Receiver. In any event, taking this statement of affairs at highest, this is some neutral evidence on which Wang and Li could not rely on to discharge their burden of proof.

(11)  Mr Ko also submits that some WeChat messages have been missing and so adverse inference should be drawn against the Plaintiff. With respect, I do not agree. The burden lies upon Wang and Li to establish the defence of novation (or for the present purpose, at least some reasonably arguable or triable defence of novation). On such evidence, I do not think that any missing messages would constitute any ground for adverse inference against the Plaintiff. For the same reason, I do not think that the Plaintiff’s failure to have affirmations from Andrew Wong would result in any adverse inference against the Plaintiff.

(12)  If the defence of novation were true, Wang should have set it out when making his only affirmed affirmation, that is, the affirmation to oppose the Mareva injunction. However, in this only affirmed affirmation, Wang did not mention any defence at all.

(13)  For completeness, I should mention that Andrew Wong had been a founding director of the Plaintiff and was a contact point between the Plaintiff and Wang and Li. Given that Andrew Wong was not a director of the Plaintiff at the material times, rightly in my view, no point is made that in the alleged novation, Andrew Wong also represented (actually or apparently) the Plaintiff and that Andrew Wong’s knowledge of the alleged swap loan agreement was imputed to the Plaintiff.

15.In the circumstances, even if I were to accept the unaffirmed affirmations as evidence, I would find that the defence of novation is so inherently incredible that no taking oral evidence would be necessary, and that the Plaintiff did not consent to any alleged novation and so there could not be any valid novation at all.

16.Therefore, it is not necessary for me to accept any undertaking given by Wang and Li’s solicitors to file properly affirmed affirmations, which would serve no practical purpose.

V.  CONCLUSION

17.In the premises, I make an order in terms of §§1-2 of the respective Originating Summonses.

18.Costs should follow the event. By Clause 9.2 of the Loan Agreements, Wang and Li agree to indemnity the Plaintiff against costs and expenses in respect of their breaches. So, I order:-

(1)  Wang to pay forthwith the Plaintiff costs of HCMP 1257/2024 on an indemnity basis with certificate for two counsel, summarily assessed at HK$900,000; and

(2)  Li to pay forthwith the Plaintiff costs of HCMP 1258/2024 on an indemnity basis with certificate for two counsel, summarily assessed at HK$800,000.

19.In the assessment, I took into account the fact that the issues in the two Originating Summonses are substantively identical.

20.It remains for me to thank counsel for their assistance.

Mr Kevin Hon and Mr Tommy Cheung, instructed by Cheung & Choy, for the Plaintiff in HCMP 1257/2024 and HCMP 1258/2024

Mr Jason Ko and Mr Chris Wong, instructed by Cedric & Co., for the Defendant in HCMP 1257/2024 and HCMP 1258/2024