Business Finance Ltd v. Wai Ping So and Others
Read the full judgment text of HCA 2269/2016 on BabelCite. This High Court CFI judgment was delivered on 19 January 2026.
1. In this action, the Plaintiff (“ BFL ”), a licensed money lender, seeks to recover the outstanding unpaid principal of HK$8,982,742.30, and interest thereon, of a loan of HK$9,000,000 (“ the Subject Loan ”) made to the 1 st Defendant Wai Ping So (“ Ping So ”) and the 2 nd Defendant her mother Yeung Yum Tai (“ Yeung ”) as co-borrowers pursuant to a Loan Deed dated 11 June 2015 (“ the Subject Loan Deed ”) and to enforce the security for the Subject Loan by way of a Legal Charge of even date (“
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HCA 2269/2016 [2026] HKCFI 336 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2269 OF 2016 ______________ BETWEEN
(By Original Action) AND BETWEEN
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______________ JUDGMENT ______________ A. INTRODUCTION AND SOME PROCEDURAL HISTORY 1.In this action, the Plaintiff (“BFL”), a licensed money lender, seeks to recover the outstanding unpaid principal of HK$8,982,742.30, and interest thereon, of a loan of HK$9,000,000 (“the Subject Loan”) made to the 1st Defendant Wai Ping So (“Ping So”) and the 2nd Defendant her mother Yeung Yum Tai (“Yeung”) as co-borrowers pursuant to a Loan Deed dated 11 June 2015 (“the Subject Loan Deed”) and to enforce the security for the Subject Loan by way of a Legal Charge of even date (“the BFL Legal Charge”) on the property registered in the names of Yeung and Ping So as joint tenants and known as the Remaining Portion of Lot No. 734 in Demarcation District 180 in Shatin (“RP734” or “the Subject Property”) on which was erected a 3-storey village house. 2.As a fall back in case the Court finds the Subject Loan Deed and the BFL Legal Charge unenforceable, and based on unjust enrichment, BFL alternatively claims the return of the amount of the Subject Loan. 3.This action was commenced by BFL in September 2016 against Ping So and Yeung upon their default in repayment since April 2016. BFL’s claim for the repayment of a loan is otherwise a straightforward one. Mr Ho, counsel for BFL, in the opening stage of the trial criticized that the Defendants and Bing Yin, as a family, have taken all imaginable procedural steps and have advanced all frivolous and scandalous defence / claims to delay and derail these proceedings. 4.Such criticism was based partly on the following procedural history which set the stage for this judgment. 5.In March 2017, Wai Bing Yin, another daughter of Yeung (“Bing Yin”) applied for and was joined as the 3rd Defendant to BFL’s claim in her capacity as an occupier of the Subject Property claiming to have an interest as one of the beneficiaries of the intestate estate of Wai Senior. 6.On 7 June 2017, Ping So acting in person filed her Defence. In it she admitted the Subject Loan, claimed she was coerced by 3 “middlemen” to, and she did, pay fees of HK$500,000 to them, and urged that the sale of the Subject Property be conducted by her and Yeung so as to fetch a higher sale price. 7.On 4 September 2017, Ping So petitioned for her own bankruptcy. On 24 October 2017, Ping So was adjudged bankrupt. Then, Yeung and Bing Yin indicated that they would bring counterclaims against, among others, Ping So. As Ping So was declared a bankrupt, leave to proceed against her was required. The progress of this action was thus halted pending such leave, which has not been applied for by Yeung and Bing Yin. 8.It was only after the coercion by an Unless Order made on 17 July 2019[1] that Yeung and Bing Yin applied on 29 July 2019 for such leave to proceed and subsequently obtained it on 10 September 2019[2]. However, they again dragged their feet in proceeding to amend their pleading to introduce their counterclaims. 9.It was again under the coercion by another Unless Order made on 21 October 2020[3] that Yeung and Bing Yin applied for leave to, and did on 23 February 2021, substantially amended their Re-amended Defence and introduced, with Yeung (in her personal capacity and as one of the co-Administratrices) and Bing Yin as the Plaintiffs by Counterclaim (together “the Counterclaimants”). They counterclaim against BFL, Ping So and the 3 partners trading as Messrs Pang, Kung & Co (“PK&Co”), the solicitors acting for BFL in the BFL Legal Charge, respectively as the 1st, 2nd and 3rd Defendant by Counterclaim. Their Re-Re-Amended Defence and Counterclaim was again substantially amended in November 2023 (“the RRRAD&C”). 10.The RRRAD&C is prolix consisting of 38 pages with “Background” on page 1 as the only heading. It contains long paragraphs, many sub-paragraphs and many cross-references between paragraphs, and many partial repetitions, while the individual defence and cause of action in the Counterclaim, the pleas and averments relevant to each of them, are not separated out or identified, by headings or otherwise. With respect to the pleaders, it seems that the RRRAD&C was authored not to be followed or understood with any ease. 11.Essentially, the defence and counterclaims raised in the RRRAD&C included :
12.Ping So’s trustees in bankruptcy confirmed in August 2022[5] that they have not assigned any right of action in this action to, nor have given their consent to Ping So to defend the main action or the counterclaims brought by the Counterclaimants, but noted that Ping So’s right to defend the counterclaims concerning her conducts as an administratrix does not vest in the bankruptcy estate and they have no objection to Ping So defending such counterclaims. 13.Despite the fact that Ping So may defend the counterclaims and despite the Unless Order dated 13 October 2022[6], Ping So did not file any witness statement to contest the Counterclaim. 14.Therefore, at this trial as respect BFL’s claims against her, Ping So was not authorized by her trustees in bankruptcy to defend; while as respect the Counterclaim against her, she was debarred from adducing any factual evidence by witnesses to defend. 15.The Pre-trial Review (“the PTR”) was due to be heard on 21 November 2023. 16.Six days before PTR (ie.15 November 2023), with no opposition from BFL and other parties, I allowed, among others, the Counterclaimants to amend their pleadings and Yeung and Bing Yin to file and serve their respective 2nd supplemental witness statement. 17.One day before PTR (ie. 20 November 2023), Bing Yin, who previously was represented by Messrs Or & Lau (“O&L”)(who also act for Yeung with Legal Aid), filed a Notice to Act in Person. It transpired during oral evidence that Bing Yin has been an employee of O&L since 2018. 18.At the PTR and pursuant to the joint application by consent summons of the Counterclaimants and PK&Co (with their attendance being excused), the Counterclaim against PK&Co was dismissed in their entirety. 19.However, Miss Winnie Chan, counsel appearing for Yeung on Legal Aid, then informed me that, rather unusually, Yeung intended to apply for subpoenas to compel the attendance of 2 employees of PK&Co, one being the firm’s accountant and the other a legal clerk, (together “Wong & Yu”) to attend trial as Yeung’s witnesses. Despite queries from the bench and discussions of the potential ramifications should Wong & Yu give evidence at trial that were adverse to the Counterclaimants’ case, Miss Chan maintained that intention. 20.Notably, at the PTR, Miss Chan for Yeung did not, nor did Bing Yin, informed me (a) that in fact the Counterclaimants had signed a settlement deed with PK&Co dated 15 November 2023 (“the Settlement Deed”) and (b) more importantly, that Yeung was apparently incapacitated and a medical examination by a specialist had been arranged by O&L and conducted 3 weeks ago on 30 October 2023. 21.The trial was scheduled to commence on 21 February 2024 with an estimated length of 7 days. 22.Upon Yeung’s application, the respective subpoena ad testificandum compelling Wong & Yu to attend trial as Yeung’s witnesses was issued on 8 December 2023. On 19 January 2024, Wong & Yu each took out a summons to set aside the respective subpoena, which were returnable before me on the first day of trial. 23.On 8 January 2024, O&L by a very short letter to Messrs C.T. Chan & Co (“CTC&Co”), the solicitors of BFL, said that they “have received medical evidence that [Yeung] is suffering from dementia and is unable to stand trial or give reliable evidence”. The “medical evidence” was not identified or enclosed. Despite demand by CTC&Co by letter the next day for clarifications and details, O&L by letter dated 12 January 2024 only gave a holding reply. 24.It was only by their letter to this Court dated 5 February 2024 that O&L informed this Court for the first time that (a) they received a medical report from Dr. Henry WM Kwok, a specialist in Psychiatry, dated 4 January 2024 (“the Dr Kwok Report”) which stated that Yeung was suffering from dementia, (b) O&L had notified the Director of Legal Aid, (c) the Legal Aid certificate issued to Yeung was discharged on 31 January 2024, (d) therefore O&L no longer acted for Yeung, and (d) O&L had made effort but was unable to identify anyone willing to act as guardian ad litem. The Dr Kwok Report was again not enclosed with the letter, which, however ended with “We hope the information will be useful to the court in exercising its case management power”. 25.This Court immediately issued directions on 7 February 2024 directing O&L to attend court on the first date of trial to explain and to provide a copy of the medical report, that each party was to comment on Yeung’s situation which might derail the trial dates and indicating its/her proposal on way forward. Several days after the Lunar New Year holidays (10-13 February), BFL lodged a note on 19 February 2024 by Mr Ho. All other parties did not lodge anything or make any comments or proposals. 26.On the first date of trial on 21 February 2024, the Dr Kwok Report[7] was read. 27.The Dr Kwok Report stated that :
28.Together with such further information provided in the Dr Kwok Report, it seemed to this Court that the timing in seeking the Dr Kwok Report and the suppression of the information relating to Yeung’s incapacity until their late disclosure by the letter of 5 February 2024 by Yeung and O&L were such that they created a very chaotic and unsatisfactory state of affairs which was bound to derail the trial; and were therefore most satisfactory. 29.This Court accepted, and all other parties particularly BFL did not dispute, that it was established that Yeung was mentally incapacitated and the trial could no longer proceed as scheduled. This Court was grateful to the office of the Official Solicitor (“the OSO”) who sent a representative to attend court on an urgent basis in the afternoon that day, and after certain discussions, was prepared to be appointed, and was then appointed, guardian ad litem and next friend of Yeung. The trial was then adjourned to a date to be fixed with directions; while the summonses issued by Wong & Yu were directed to be disposed of on papers after the OSO has had a proper opportunity to consider, and if desired, lodged submissions in opposition. 30.As receiving explanation from O&L might entail hearing privileged communications, this Court indicated that after the judgment herein is handed down, this Court would direct Mr William Kwan of O&L to file an affirmation to explain. 31.On 16 September 2024, this Court handed down its decision ([2024] HKCFI 2489) setting aside the respective subpoena against Wong & Yu for the reason that by the terms of the Settlement Deed, Yeung had waived any right to compel Wong & Yu, as “Related Parties” defined in the Settlement Deed, to attend as witnesses for Yeung; and the application for the issuance of the subpoenas was therefore an abuse of process. 32.This is the resumed trial. BFL continued to appear by Mr Ho. Miss Winnie Chan instructed by O&L was engaged by the OSO with Legal Aid to appear for Yeung, Bing Yin appeared in person, so did Ping So, but only to defend the Counterclaim. 33.The witnesses who gave evidence and the witness statements admitted were:
B. BACKGROUND 34.Yeung was born in 1931. Wai Senior, the husband of Yeung, died intestate on 16 February 1986 with the following surviving children, in order of seniority:
These 5 siblings together with Yeung are the beneficiaries of the Estate. 35.The family are descendants of indigenous walled villagers (圍村村民). The significance of this will become apparent. It is common ground that Yeung has been enjoying good relationships with all her children. 36.On 7 October 1987, Letters of Administration of the Estate[8] were granted to Yeung and Ping So as Administratrices. The total value of the assets of the Estate was HK$1,879,618[9] and mainly consisted of 3 land properties:
The remaining assets of the Estate at some HK$79,000 were cash in bank and personal effects. 37.Around September 1991, the Administratrices successfully obtained government permissions / exemptions to re-develop RP734 and to build thereon a 3-storey house, which was completed in around September 1992. Though the correspondence were all addressed to the Administratrices, it is common ground between Ping So and Bing Yin that it was Ping So who undertook all the communications with, and made all the applications to, government departments and who liaised with construction companies concerning the re-development. Ping So and Bing Yin disputed as to the sourcing of money paying for this development. Ping So put to Bing Yin and Yi Kwan in cross-examination that the money for the development was borrowed which loan was repaid by the sale of 1st and 2nd Floors and Roof of the 8A Property in 1992 (“Upper 8A”), but Bing Yin and Yi Kwan both did not accept it. 38.Immediately prior to the re-development of RP734, the family lived in Upper 8A while the Ground Floor of the 8A Property (“G/F8A”) was rented out as 2 shops. After the completion of the 3-storey house on RP734 in 1992, the family moved to live there, and Upper 8A were immediately sold. Bing Yin was married in 1997 and moved out of the Subject Property. Her family moved back to live in the Subject Property since 2003. 39.Upper 8A were sold in October 1992. Yeung’s case (as stated in §11 of Miss Chan’s Opening Submissions) and Yi Kwan’s evidence (§5 of his witness statement), is that each of the 1st and 2nd Floor was sold for HK$3,380,000 (totalling to HK$6,760,000) based on the respective land search results of the 2 floors[10], each recording a sale by an instrument on the same date (1 October 1992) for the consideration of “$3,380,000.00 (PT.)”. However, the memorial number of the instrument for both of the entries was the same - ST671510 – which is the Assignment dated 1 October 1992 assigning the entirety of Upper 8A to Yu Ka Ling for the consideration of HK$3,380,000[11]. Thus, I reject Yeung’s such case and Yi Kwan’s such evidence, which were based on a mis-read of the land search results. Rather, I find that they were sold on the same occasion for the consideration of HK$3,380,000 only. 40.By a mortgage dated 24 May 2001 in favour of Konew Finance Limited[12] , G/F8A was mortgaged to secure a loan of HK$900,000 taken out by Yeung and Ping So together as the Borrower (“the Konew Loan”). The mortgage document recorded that at the time G/F8A fetched a total rental income of HK$19,000 monthly[13]. The mortgage was signed by Yeung personally and Ping So in the presence of Jimmy Chan Yiu Pun, a trainee solicitor of Messrs IP & Willis. 41.G/F8A was sold in January 2006 for HK$2,238,000[14]. 42.The 2 respective assignments assigning Upper 8A and then G/F8A were both executed by Yeung and Ping So as Administratrices and signed on the part of Yeung by her personally in the presence of Doris SY Cheung, Clerk to Messrs W.S. Lo & Yeung. 43.According to the witness statements of Yeung[15], Upper 8A and later G/F8A were respectively sold on these 2 occasions, with knowledge and consent of herself and the siblings, to repay debts owed by Yi Kwan, with the remaining used to pay for the re-development of the Subject Property and a family trip, but she did not know whether there was any balance remaining or how Ping So handled the balance. 44.It is common ground that (a) rental income has been earned from renting out G/F8A until it was sold in January 2006; at the time it was sold, it fetched a rental income of HK$15,500 a month[16], and (b) the Share in Lot 957 produced little income for the family (about HK$1,000 odd a month, according to Yi Kwan), such that for the purpose of this action, it and its income have little significance and would be ignored. 45.Going back to 2002, specifically on 21 February 2002, the Assent, which was prepared by Messrs W.S. Lo & Yeung, was executed by Yeung and Ping So as Administratrices vesting the Subject Property unto them as joint tenants. The Counterclaimants relied heavily on the preamble of the Assent as the principal piece of evidence showing fraud on the part of Ping So. The preamble recited that Yeung and Ping So were Wai Senior’s “only next of kin and the only persons entitled to share in his estate”. 46.Since the execution of the Assent, the instruments listed in the table below (“the Table”) in respect of the Subject Property have been executed, and I will indicate below by bold and underline where Yeung was the sole or co-borrower and where she has signed, and will also name the person who witnessed her signature:
47.Regarding the Subject Loan:
48.Yeung and Ping So failed to pay the monthly instalment of interest due on 11 January 2016 and since have defaulted in further payment. As said, this action was commenced by BFL in September 2016. 49.Little else is known regarding the administration of the Estate. However, it is the Counterclaimants’ pleaded case that “Up to the very date of this Re-Re-Re-Amended Defence, the administration of the Estate is still not completed”[42]. C. ISSUES 50.As Ping So admitted the Subject Loan in her Defence and her trustees in bankruptcy did not defend and refused to authorize her to defend BFL’s claims against her, such claims are therefore established unless Yeung as Defendant or the Counterclaimants are successful in establishing any matter that might affect the enforcement of the Subject Loan Deed or the BFL Legal Charge which matter is equally applicable to the claim against Ping So. 51.In view of the most unsatisfactory state of the RRRAD&C and the fact that Bing Yin only acted in person months before trial, I directed at trial that the parties, particularly the Counterclaimants, had to clearly set out in their written Closing Submissions the defence / causes of action they still relied on and the specific relief they sought consequential thereon, and I would regard any such that was not set out in the Closing Submissions as having been abandoned. 52.Gathering from the Closing Submissions of Mr Ho and Miss Chan, the following issues remain to be determined:
53.Bing Yin in her Closing Submissions said that “I have never formally given up on my rights and/or interest I have in Father’s estate” and she only made submissions under the headings of “BFL’s obligations to safeguard against undue influence”, “So acted outside the authority of the POA”, “BFL is not a bona fide purchaser for value without notice” and “Section 18 of the Money Lenders Ordinance”. The issue as to whether Bing Yin has an equitable interest in the Subject Property allowing her to remain in possession of the Subject Property need to be addressed. 54.Ping So in the course of trial has ventilated that she was the one taking care of Yeung and that the other siblings have mis-treated her causing her deep emotional hurt. In her very short Closing Submissions, she gave some details of the mistreatment and also referred to a number of rather important factual matters including mentioning a number of monetary payments and that she had discussed with Yeung prior to taking out the mortgages on the Subject Property. This Court is very mindful and draws clear distinction between factual matters that have been admitted into evidence and matters that have not and will completely ignore the latter. 55.I record here that the Counterclaimants in their Closing Submissions did not address at all (a) any claim against BFL for damages for alleged breaches of duties, (b) any claim against BFL for alleged conspiracy with Ping So and PK&Co to injure Yeung, (c) any claim against Ping So for breach of her duties as one of the Administratrices in dealing with the assets of the Estate, (d) any claim against Ping So for damages for fraud and/or undue influence on Yeung, or (e) any relief they seek under the Counterclaim. In other words, the issues raised by them were raised by way of defending BFL’s present claims only, particularly to try to shield the Subject Property from being sold to repay the Subject Loan. 56.BFL on its part evidently seeks to enforce the BFL Legal Charge and BFL has in its Closing Submissions set out the quantum :
57.Yeung did not raise any dispute over quantum in her written and oral Closing. D. APPROACH IN EVALUATING EVIDENCE AND PROVING FRAUD 58.The principles and approach guiding the evaluation of evidence are trite. This Court has summarized and applied them in PC Enterprises (HK) Ltd and Another v. Chan Wai Ching [2021] HKDC 966 §41 and Hero Investments Ltd v. Tsang Kwong Chiu Kevin [2024] HKCFI 2029 §79. I bear them very much in mind, but they need not be rehearsed here. 59.Another well-established approach is this: in a civil litigation in which a serious allegation such as fraud is made, because of the gravity of the allegation a court should be more sure before finding serious allegations proved than when deciding less serious or trivial matters. The degree of probability must be commensurate with the occasion. The evidence proving the allegation thus must show a preponderance of probability. However, that does not mean that the court is looking for a degree of probability higher than the civil standard. Rather, it means that the more inherently improbable the act in question, the more compelling would be the evidence needed to satisfy the court on a preponderance of probability (Aktieselskabet Dansk Skibsfinansiering (Body Corporate) v. Wheelock Marden & Company Limited (2000) 3 HKCFAR 70, 77J-78D). 60.I take the view that this approach is particularly apposite here in view of the serious allegations made against Ping So, by her family members, that she has practiced fraud and undue influence on Yeung for a long duration – from 2002 to 2015. E. WITNESS STATEMENTS OF THE WITNESSES; COMMENTS ON THEIR CREDIBILITY; AND SOME OBSERVATIONS 61.I will begin with this remark. As said above, the allegations made by the Counterclaimants against Ping So now are most serious, involving fraud and impropriety against her mother and siblings spanning 13 years. There were also serious accusations against BFL and PK&Co (not abandoned at the time of the witness statements). The parties including the Counterclaimants also have the unusual opportunity of filing 3 rounds of witness statements. It is expected that the Counterclaimants will set out in their witness statements the full details of their allegations. E.1. Yeung’s witness statements 62.She has filed 3 witness statements, respectively dated 16 September 2019 (“Yeung 1st”), 5 August 2022 (“Yeung 2nd”) and 23 June 2023 (“Yeung 3rd”). 63.In Yeung 1st, she said she was uneducated and illiterate, has been a housewife and never worked in any job. She had relied on her husband, and since his death her children, on all matters concerning money and finance. She just broadly said that in administering the assets of the Estate, she did not know any details and signed on any document Ping So asked her to sign as she trusted Ping So just as she trusted all her children. She was adamant that all family members should have a share in the Subject Property which should not have been vested to her and Ping So only. 64.Essentially, Yeung said in her witness statements that she did not know at all that Ping So had mortgaged the Subject Property many times, that she did not remember having seen or signed the documents relating to the Subject Property that she apparently signed, or whether anyone had explained them to her, or whether she had asked Ping So about them before she signed. 65.She spoke of some specific matters:
66.BFL seriously criticized and challenged the probative value and weight of the evidence given in these witness statements. I find those challenges valid. 67.First, according to Yeung and Bing Yin’s case, they only discovered that Ping So had secretly and fraudulently mortgaged the Subject Property to BFL to obtain a loan of HK$9,000,000 when being served the Writ herein around September 2016. Also according to them, the loan amount was a huge amount that the family never needed and could not repaid, and therefore it follows that they must have anticipated at the time that their eviction from the Subject Property was imminent. Bing Yin was legally represented and applied to be joined in March 2017. In such circumstances and particularly in light of Yeung’s old age, in all inherent probabilities, Yeung, Bing Yin and Yi Kwan should have been eager to ascertain from Yeung the details of Ping So’s fraud and to take steps to record a witness statement, or take depositions from Yeung as soon as possible to preserve evidence. 68.Instead, the Counterclaimants have never taken any steps to record a written statement from Yeung or to formally take a deposition from Yeung until 3 years later around September 2019. Moreover, the Counterclaimants have kept delaying and dragging their feet in these proceedings as I narrated above. Thus, I accept Mr Ho’s submissions that such conducts can be indicative that the Counterclaimants’ case that Yeung was defrauded or unduly influenced in fact has little substance or merits. 69.Second, Bing Yin was heavily cross-examined by BFL as to how the family members “explained”, “reminded” and “assisted” Yeung in making her 3 witness statements. The relevant questions put in cross-examination and Bing Yin’s answers were quoted in Mr Ho’s Closing Submissions[43]. Bing Yin’s evidence in a nutshell was that Yeung at the time did not remember much at all but her 2 nieces and herself had to remind and explain to Yeung on each occasion, particularly that “要話俾佢聽個女呃佢, 呃咗佢簽名”. Evidently, the 2 nieces and Bing Yin had no personal knowledge whether Ping So had in fact deceived Yeung into signing those documents, yet the very theme and key point of their “explanation and reminder” to Yeung was that she was deceived by So to sign. On such evidence, I find that the matters contained in Yeung’s witness statements relating to the allegations that Ping So had deceived Yeung are more likely than not all constructed by Bing Yin and the 2 nieces based on their own pre-determined conclusion (without any personal knowledge) which they purportedly “explained” to and “reminded” Yeung of for Yeung to say so in her witness statements. I thus find such allegations contained in Yeung’s witness statements unreliable and I would not give any weight to them. I also accept Mr Ho’s criticism against Yeung’s witness statements that their contents were “highly engineered”. E.2 Yi Kwan’s witness statement and credibility 70.Most Surprisingly, Yi Kwan only gave a very short witness statement containing only 6 short paragraphs. I say most surprisingly as he should be most eager to speak to details as to how Yeung was defrauded and so on because under the Inheritance Understanding (as I will allude to later), Yi Kwan as the only male issue has the most to lose if the Subject Property would be sold to repay the Subject Loan, and moreover, he should be well informed as he lived in the Subject Property with Yeung all these years. 71.However, in his witness statement he only said that by the Assent, the Subject Property was gifted to Yeung and Ping So which he objected to. He said the 8A Property was sold on 3 occasions for a total consideration of HK$8,998,000 (HK$3,380,000 + HK$3,380,000 + HK$2,238,000). I have found above that Yi Kwan was mistaken, and the total consideration received was HK$5,760,000. He said that from the proceeds, HK$900,000 was used to repay a mortgage and HK$300,000 was used to repay a debt he owed. He said that the Subject Property was an ancestral home (“祖屋”) and would not be sold. 72.Also of particular note is that though Yi Kwan was called as a witness for the Counterclaim,
73.Save certain factual matters Yi Kwan spoke to in oral evidence, which I accept for reasons expressed below, I do not find him generally a credible or reliable witness. In particular, I find incredible and unreliable his evidence concerning the debts he owed, the money he had received from Yeung and his involvement in dealing with the assets of the Estate. I have commented adversely against specific aspects of his evidence in the discussion on different topics below. Generally, I find that on many occasions Yi Kwan shifted and changed his evidence, for instance : (a) initially he categorically said that the Cad 1,600 a month he earned as a driver was sufficient for him to live on in Canada, that was however contradicted by his own evidence when later when he was pressed about Yeung’s evidence that Upper 8A was sold in 1992 to repay his debts, he answered that Yeung in around 1991 transferred HK$300,000 to Canada for him to repay debts he owed there, (b) initially, he said that he requested Yeung to sell G/F8A to provide him with the capital of HK$100,000 to buy land, later when confronted by Mr Ho with the lack of commercial sense in selling G/F8A just for funding HK$100,000 and that the real reason for sale was because he personally lacked money to spend, he first answered convolutedly, and when further asked to clarify, he admitted effectively that he asked for the sale of G/F8A because he personally lacked money, and (c) he denied having been in debt since 2015, but when confronted by Mr Ho concerning credit card debts owed to Aeon, he admitted he owed credit card debt of HK$50,000 to HK$60,000. E.3. Bing Yin’s witness statements and credibility 74.She made 3 witness statements respectively dated 16 September 2019 (“Yin 1st”), 27 July 2022 (“Yin 2nd”) and 14 July 2023 (“Yin 3rd”). She said she moved out of the Subject Property in 1997 when she got married and in 2003 she, her husband and their son moved back to live on the Ground Floor of the Subject Property and they since have lived there. 75.In Yin 1st, she said that originally Yi Kwan was to assist Yeung and they together would be the administrators of the Estate, but because Yi Kwan had to leave Hong Kong for a long period, Ping So replaced Yi Kwan. She said she trusted Ping So but Ping So never accounted to her about the Estate. She said she knew nothing about the Assent or about all the loans that were secured by mortgages on the Subject Property until the present action. She emphasized that the preambles in the Assent were untrue. She asked Yeung about the Assent (without giving the date she so asked Yeung) and Yeung said she had no memory or impression about the Assent or whether she had signed it. Based on these Yin said that the Assent, the loans and the mortgages were all secretly arranged by Ping So who took advantage of Yeung’s trust, to seize the beneficial interest belonging to the other siblings (§20). She said that none of the family members agreed that the Subject Property would be beneficially owned by Yeung and Ping So. She said that she never heard from Yeung that she had to borrow money, that the siblings have given Yeung enough money for her expenses, and there was no need for Yeung to mortgage the Subject Property. 76.Yin 2nd is very short consisting of 6 paragraphs only. She produced documents there showing that she and her family in fact lived in the Subject Property and she further said that she had never given up her interest in the Estate. 77.Yin 3rd was also short. It dealt with the HCP Loan and the CKL Loan, and mainly stated that Yeung and the other siblings had no need of the 2 Loans, particularly the CKL Loan which charged high interest and the other siblings would not have agreed to the 2 loans. Bing Yin also listed out the assets of the Estate and emphasized that she and her sisters Ping Yu and Ping Kit have so far not received any distribution from the Estate. 78.As said, apparently based on what she said as narrated above, but with no personal or direct knowledge, she was adamant of Ping So’s fraud and improper conducts and “explained” to and “reminded” Yeung of them. 79.I do not find Bing Yin a reliable witness at all. Firstly, Yin 1st gave the impression that she was keen on her entitlement to the Estate and she was accusing Ping So of failure to give an account. However, when confronted in oral evidence with the Inheritance Understanding Yi Kwan gave evidence about, she admitted not only that there was the Inheritance Understanding but also that her family as villagers of a walled village would abide by it, and she accepted it, and that under the Inheritance Understanding and as a female who has married (“外嫁女”) it was not her business to ask about, and she did not ask about, the Estate. That was a completely different picture concerning her entitlement to and the administration of the Estate than the one she has been portraying in all her witness statement. Secondly, in the course of trial, she accepted what Yi Kwan said that the siblings have been asking Yeung for money and Yeung readily obliged, but she at time hinted and at time queried, and showed dissatisfaction that, Yi Kwan had asked for and gotten away with too much from Yeung. Again, such financial picture which (as it transpired, she all along knew about) was very different from what she portraited in her witness statements. Thirdly and generally, when answering questions when giving evidence, she has at time been evasive, at times gave an answer but when pressed further on the same topic avoided the question by saying she did not remember, and at times shifting and changing her evidence (notably in giving the different versions concerning how the witness statements of Yeung were prepared). Fourthly, it was (and still am) very clear to me that she was so fixed on resisting BFL’s claim to the Subject Property that she was entirely convinced that Ping So had so defrauded Yeung (when she had no personal knowledge) and she has been tailoring her evidence to achieve that outcome rather than giving the facts as she best remembered. Fifthly, it also seems to me very clearly that she has chosen not to disclose the fact that Yeung in fact had other bank accounts and only divulged so when pressed in cross-examination. I think Bing Yin has been telling the Court a lot of half-truths and lies. I find her an untruthful and unreliable witness and would not accept her evidence unless the same were otherwise corroborated by other reliable evidence. 80.Bing Yin in oral evidence has been adding new factual episodes and matters here and there. One notable instance was that she described a dramatic reaction by Yeung (upset and crying, and such) when she discovered the Konew Loan and mortgage at the time of the sale of G/F8A. The other (which was also said by Yi Kwan) was that Yeung was not good with numbers, and they described it in different ways, such as she understood small sums but not sums like hundred thousand, that she could not read zeros and one had to say the number for her to understand. I completely reject these additional pieces of evidence not only because I find Bing Yin an unreliable witness, but also that these are important matters that should have left a clear impression on the siblings such that there is no reason why they did not mention them in the many rounds of witness statement. I think they are clearly after-thoughts and embellishments. E4. Mimi’s witness statements and credibility 81.Mimi was a director of BFL who also oversaw operation and was the officer of BFL approving the Subject Loan. She made 4 witness statements, mostly in answer to the very serious but convoluted claims of the Counterclaimants against BFL alleging that BFL owed many facets of duties of care to Yeung and BFL breached them, that BFL further conspired with its solicitors PK&Co and Ping So to injure Yeung. The Counterclaimants claim that not only BFL could not recover the Subject Loan, but has to pay damages to compensate Yeung, a borrower, that include the amount equivalent to the part of the Subject Loan paid for discharging the HCP Loan and the CKL Loan. With respect to the pleaders, such claims for damages are completely untenable in law. 82.After the abandonment of such claims, Mimi’s evidence is now relevant only to whether BFL had constructive notices and whether BFL was a “purchaser” or bona fide purchaser for value without notice. They would be alluded to under the discussions on those topics below. 83.I would state my view now that I find Mimi an honest witness who answered questions directly and fairly, and I have no hesitation in accepting her evidence. 84.Miss Chan criticized BFL for not calling one Miss Lo who was the staff of BFL who processed the loan application. I do not accept that criticism as valid at all. There is no pleaded averment or evidence deposed in the witness statement for the Counterclaimants raising any issues or factual dispute concerning the conduct of Miss Lo, such as on anything she might have said, represented, ignored, or neglected. At trial, all the questions put to Mimi by the Counterclaimants were germane from the information disclosed in documents - like the age of Yeung, the income of Ping So as stated in the loan application and as supported by documents Ping So supplied, the preambles of the Assent, the short valuation report of the Subject Property. As such, in fact the approving officer – Mimi – and not Miss Lo was the pertinent direct witness. 85.It is convenient for me to state here that for the same reasons, I reject Miss Chan’s submission urging the Court to draw adverse inference against BFL for not calling Miss Lo. E.5. Some observation on the evidence of the Counterclaimants proffered in their witness statements 86.The first observation I would make is about the balance of the proceeds of the sale of the 8A Property. The respective sales of Upper 8A and G/F8A, which were assets of the Estate, were known to all. They brought in a total of $5,760,000 (while Yi Kwan understood, albeit mistakenly, HK$9,140,000). After deducting from that sum the re-development costs (say generously $1.5 million), the repayment of YI Kwan’s debt of HK$300,000 (as Yeung and Yi Kwan said), and the repayment the mortgage of HK$900,000 (as Yi Kwan said), and the costs of one family trip (say generously $200,000), there would have remained a balance of HK$2,860,000 (“the Balance Sale Proceeds”). 87.The respective witnesses’ evidence, or lack thereof, concerning the Balance Sale Proceeds is noteworthy. Only Yeung said that the remainder of the Balance Sale Proceeds was left to be handled by Ping So. There was no mention from any one which and whose bank account were the sale proceeds and/or the Balance Sale Proceeds paid into and kept. Yi Kwan and Bing Yin made no mention and said absolutely nothing about the Balance Sale Proceeds in their witness statements, there was no mention as to whether they had enquired / discussed with Yeung or Ping So about how to handle the Balance Sale Proceeds (say to invest the money), or as to whether they had requested for a distribution, or whether they had requested Ping So to give an account by ascertaining from Ping So the actual re-development costs and the actual amount spent in the family trip, and such. 88.The second observation is this. While in Yin 3rd, Bing Yin again emphasized that she, Ping Yu and Ping Kit so far (from 1986 to 2023) have not received any distribution from the Estate, there was absolutely no mention at all in her 3 witness statements about any communication, oral or written, by any of the 3 sisters at any time during these 37 years enquiring about / requesting for / complaining about distribution of the Estate, even in light of the said 2 sales. 89.This Courts find such complete and conspicuous lack of mention most unusual. F. FINDINGS ON 3 GENERAL BUT IMPORTANT MATTERS CONCERNING YEUNG 90.In my view, my findings in this section are important background matters. F.1. The repeated plea in the RRRAD&C that “Yeung did not and was not capable by her intelligence to understand or know the content and/or effect of [the document]” 91.This allegation is one of the backbones of the Counterclaimants’ case and a premise relied heavily in Miss Chan’s Closing Submissions. However and notably, the Counterclaimants did not plead non es factum, nor did they plead in respect of her execution of which of the documents, that Yeung was suffering from mental incapacity when she so executed that document. In §2 of her Reply Closing Submissions, Miss Chan accepted that Yeung was treated as head of the family by her children after the death of Wai Senior, but contended that she “had not demonstrated any wisdom in managing family assets”, that she was “being manipulated into dealing with family assets by So … by [Yi Kwan] too” and Miss Chan sought to draw a distinction between a sale and borrowing secured by mortgages and maintained the contention that “transactions by Assent, mortgage, charge, POA were understandably beyond the intelligence of Yeung”. 92.I have no hesitation to find that this is not at all proved, for these reasons:
F.2. The plea in §3.1 of the RRRAD&C that all of Yeung’s financial matters, after the death of Wai Senior, were looked after by her children and she was totally dependant on her children in them 93.Again, I find this allegation not proved. The evidence is only that the re-development of the Subject Property and the sales of the 8A Property were handled by Ping So, that the family trip was also arranged by Ping So, and that Yeung simply signed any document Ping So asked her to sign. 94.In fact, there was scanty evidence about “Yeung’s financial affairs” given in the witness statements. Moreover, as I find in the next section, the Counterclaimants have failed to disclose that Yeung has other bank account(s) and disclose their statements or records. 95.In fact, it was Yi Kwan and Bing Yin’s evidence, which I accept and find, that all the rents of the 8A Property were paid to Yeung by way of cheques issued to her as payee and deposited into her bank account. There was no suggestion that any children (Ping So or anyone else) was a signatory of any of Yeung’s bank accounts or that Yeung was not operating her bank accounts independently. 96.Importantly, Yi Kwan said in oral evidence, which I accept and find, that (a) not only were the rentals of the 8A Property deposited into Yeung’s bank account, they were kept and controlled by Yeung, and (b) the sibling respected Yeung in her financial matters, such that they would first ask Yeung for her permission or agreement in financial matters, and if Yeung said yes, then the requesting sibling would help execute the decision. 97.YI Kwan further said, which I also accept and find, that Yeung has been a very obliging mother, and any of the children who had need for money would go to her and ask for it, and Yi Kwan said quite spontaneously and firmly that Yeung would accede to those requests. In the course of trial, Bing Yin ventilated with a tone of dissatisfaction that Yi Kwan had asked for and gotten away with too much money from Yeung, and there were exchanges by the 3 siblings (Yi Kwan, Ping So and Bing Yin) as to how much Yeung had given to whom. One of the instances was that Ping So cross-examined Yi Kwan as to whether he had obtained from Yeung the proceeds of the sale of G/F8A in the sum of HK$1 Million odd and he then gave therefrom HK$700,000 to Ping So, Yi Kwan denied that, but retorted that Ping So obtained that HK$700,000 from Yeung herself, and that Ping So had on one occasion withdrawn US$50,000 from a bank account held in the joint names of Yeung and Ping So. 98.In the course of Yi Kwan’s oral evidence, this Court tried to clarify with Yi Kwan by asking him whether my summary of what I heard on this topic was correct and accurate, and Yi Kwan confirmed it was, and I so find, that the pattern was that individual sibling went to Yeung for, and was given, money by her, but the other sibling would not and did not then know, and still do not know, exactly how much Yeung had given to any of the other sibling. 99.That being what I find, I completely reject this plea that Yeung “was totally dependent on her children in financial affairs”. Not only do I find against it as totally unsubstantiated, I find that the contrary is true in that Yeung was the decision maker concerning the assets that she had control. 100.As have mentioned in §90 above, in Yeung’s Reply Closing Submissions, Miss Chan said that “Yeung was treated as head of the family by her children after the death of the Father”, but she lacked wisdom in managing the family assets and there was some clear evidence that Yeung was “being manipulated by So … and [Yi Kwan] too”. However, that was never the Counterclaimants’ case in pleading or in their witness statements. Their case has all along been that Yeung was defrauded and undue influenced by Ping So for her sole benefit. I thus ignore such submissions. Indeed, I think they can be regarded as acknowledgment that the Counterclaimants’ case as now disclosed in oral evidence is very different from their pleaded case. F.3. Yeung has other bank account(s) that the Counterclaimants have not divulged; drawing adverse inference 101.I have commented above that the Counterclaimants evidence on the financial affairs of Yeung is scanty. However, in light of the serious allegations made by the Counterclaimants, the financial affairs of Yeung were clearly most relevant. 102.Particularly, there were altogether 13 loans secured by the mortgages of the 8A Property and the Subject Property in which Yeung was either the sole or co-borrower :
103.Yeung in §12.4 of Yeung 1st categorically said that she has never received any money from all the loans secured by the Subject Property. Therefore and evidently, whether any of the loan amounts in these 13 loans had ever been paid into a bank account of Yeung (in her sole name or jointly with others) is a matter called into question and would be a very probative and telling fact as to whether Ping So had defrauded Yeung and the Estate (and if so, how), as the Counterclaimants has been claiming. Conversely, if the loan amounts have been so paid into Yeung’s bank account(s), the Counterclaimants would need to say further as to how Yeung was allegedly defrauded and such. Disclosing the existence of all the bank accounts Yeung held in the period of these 13 loans and then producing their bank statements and records are clearly of prime importance. 104.In this regard, I also take note that most of these loans were made within 7 years of the commencement of this action (ie. from September 2009 to September 2016) such that if Yeung requested, the bank(s) could readily provide the bank statements even if Yeung might have lost or misplaced them or if Yeung has not been provided by Ping So with them (if the bank account was in their joint name). 105.However, by way of documentary evidence relating to the financial affairs of Yeung, all that were discovered and produced by the Counterclaimants are only the following, relating only to Hang Seng Bank account no 249-8-015953 (a Hong Kong dollar savings account) held in the joint names of Yeung and Ping So :
106.In the only paragraph in Yeung’s witness statements mentioning her bank account (§17 Yeung 1st”), she disclosed the account thus :
107.Read casually, what was said seemed to indicate that Yeung has only one bank account, which is a joint account with Ping So. However, read more carefully, it can also be read to mean that insofar as concerned Yeung and Ping So, they only have one joint bank account. 108.In cross-examination Mr Ho pressed Bing Yin for disclosure of how many bank accounts Yeung in fact has. It was only then that Bing Yin said Yeung has another bank account in HSBC in her name for collecting old age living allowance. She brushed aside the failure to disclose the account and to make discovery by saying vaguely that the solicitor firm asked her to disclose documents and those were all she found in Yeung’s drawer and therefore she produced them. I reject this explanation and find that Bing Yin was not telling the truth. Evidently, the 2 history reports were not ones that the bank usually issues to a customer but would be provided upon request. Since, they were respectively dated 26 January 2018 and 15 February 2022, they were requested after the commencement of this action. I thus think that in all inherent probabilities, they were requested by Yeung or her solicitors for the purpose of this action. I therefore do not accept that they were found in Yeung’s drawer as Bing Yin said. By requesting for these 2 history reports, Yeung and her solicitors have clearly considered the matter of obtaining bank statements as evidence but ended up only producing those mentioned above. 109.Yet further, Yi Kwan in cross-examination said that the sale proceeds of G/F8A were paid into a bank account in the joint names of Yeung and Ping So, and from which there were made the withdrawals that Yi Kwan and Ping So disputed about as mentioned in §97 above. I note that one of the withdrawals Yi Kwan gave evidence about was a withdrawal of US$, thus indicating that this joint-name account was not a Hong Kong dollars savings account, which Hang Seng Bank account no 249-8-015953 was. When further asked, Yi Kwan first said the joint account was in Standard Chartered, he then corrected himself and said probably in HSBC[47]. On such evidence, I find that there was substantial amount of money deposited in that joint-name account and there were transactions in that account that would have been relevant to the present disputes. 110.Yet again, the Counterclaimants have not disclosed that Yeung and Ping So has a joint name bank account in either Standard Chartered or HSBC, and have not produced the bank statements or records which either would be in Yeung’s possession, or would be in her power and control to obtain. 111.I also take the view that the legal advisers of Yeung and Bing Yin must have appreciated the importance of finding out whether the said loan amounts had been paid into any one of Yeung’s bank accounts and when, to whom and how such loan amounts were paid out, and would have advised and taken instructions from the Counterclaimants. Yet, at least the existence of the HSBC bank account has been supressed and no attempts whatsoever were made to produce its bank statements or records. 112.In view of the Counterclaimants’ such failure to divulge the existence of other bank accounts of Yeung and to produce bank statements of these accounts which were in their possession, custody, power or control, and in such said circumstances, I draw the adverse inference that the Counterclaimants so failed to disclose and produce because if so disclosed and produced they would be adverse to their case. G. THE INHERITANCE UNDERSTANDING 113.In oral evidence, Yi Kwan stated (and when further asked by this Court, confirmed) that according to the customs and traditions of the walled village, which their family abided, only he as the male descendant, and not the daughters, is entitled to a share in the Estate, and that while Yeung, his mother, is alive and as he had to leave for Canada on a long term basis, Yeung would hold the inheritance during her lifetime for him and also to provide for her own livelihood, which inheritance would be passed on to him as heir upon her death; and that in the meantime, he as the only male heir has a strong say in how to deal with the assets of the Estate (“the Inheritance Understanding”). 114.Bing Yin admitted during cross-examination, and confirmed upon clarification by this Court, that there indeed was, and the family abided by, the Inheritance Understanding, and she said more than once that she accepted it. Bing Yin also added, as I have already mentioned, and which I accept and find, that as a daughter who has married (“外嫁女”) it was not her business to ask about, and she therefore has not actually asked about matters relating to the Estate. 115.Based on such evidence of Yi Kwan and Bing Yin, and there being no other evidence proffered by the other beneficiaries, I find that there was a consensus and understanding between all the beneficiaries of the Estate that the Estate would be administered and distributed according to the Inheritance Understanding. In my view, the Inheritance Understand is consistent with and explains the unusual feature that there is no evidence whatsoever showing that in these 37 years the female siblings have ever made any query or complaint regarding the administration of the Estate generally and particularly regarding the Balance Sale Proceeds. H. “YEUNG DID NOT NEED TO BORROW MONEY” ? THE LOANS WERE OBTAINED SOLELY FOR THE BENEFIT OR PURPOSE OF PING SO ? 116.One of the main planks of the Counterclaimants’ case is that the loans obtained with the Subject Property as security were obtained with fraud by Ping So and obtained solely for her own benefit or purpose, and in turn the main factual supports advanced by the Counterclaimants were that Yeung was a frugal village woman and her living expenses were provided for and therefore she did not need to take out the loans secured by the Subject Property, and indeed any loan. By reasons of all I said in this section H, I expressly reject the Counterclaimants’ allegations that “Yeung did not need to borrow money” and that the loans were obtained solely for the benefit or purpose of Ping So. H.1. A case of mis-leading half-truth based on the suppression of the pertinent circumstances; Yeung’s financial provisions to the siblings, especially to Yi Kwan, when she has no other financial resources other than the Estate 117.First of all, the Counterclaimants’ case and evidence is that Yeung’s financial resources are limited, according to her, consisting only of rentals from the 8A Property (up to 2006), occasional payments of money by the siblings to her, and proceeds from sale of “land and house”. I reject any suggestion by Miss Chan in the course of trial that there was any substantial savings on the part of Yeung as there is no evidence whatsoever thereon. 118.As it transpired in the course of trial, quite apart from her living expenses (on which there is no evidence as to details and how much) as well as the repayments of debts owed by Yi Kwan, there were substantial payments made by Yeung to her children as provisions to them, particularly Yi Kwan, as I found in §96 to §98 above and will further find below, which the Counterclaimants never said one word about in the witness statements proffered by them. In my view, the financial picture presented by the Counterclaimants and the evidence in support are misleading half-truths based on the suppression of the pertinent factual circumstances. H.2. Yeung’s provisions to her children, particularly Yi Kwan, were much more than those disclosed in evidence 119.To recap the evidence concerning payments Yeung made to provide for her children : (a) Yeung’s evidence about repaying debts owed by Yi Kwan by the sale of the 8A Property, (b) HK$300,000 wired to Yi Kwan in Canada around 1991, (c) HK$700,000 to Ping So, said by Yi Kwan in evidence, regardless of whether Yi Kwan split it to Ping So from a larger sum he obtained from Yeung or Yeung obtained it from Yeung herself, (d) another US$50,000 withdrew by Ping So from a bank account in the joint names of Yeung and Ping So, as told by Yi Kwan in evidence, (e) as have been briefly mentioned, Yi Kwan in cross-examination further said that Yeung also paid him HK$100,000 as capital to purchase land for building a “Ding House” and he sold, or cooperated with a developer regarding, his “Ding House Right” thereby receiving a payment from the developer HK$2,500,000 (but without giving any details). 120.Thus, even on such evidence, there were already disclosed from the Counterclaimants’ own witness Yi Kwan about provisions by Yeung to Yi Kwan and Ping So of about HK$1.5 million (HK$300,000 + HK$700,000 + HK$100,000 + US$50,000). 121.Considering the following, I come to the conclusion, and I find, that the provisions made by Yeung to her children, especially Yi Kwan, were more than were told to this Court, though there is no evidence or information as to the exact amounts. 122.First, I do not accept that G/F8A was sold just to provide funding of HK$100,000 to Yi Kwan, and that was “the debt” Yeung referred to in her witness statements being the debt G/F8A was sold to repay – as Yi Kwan said in oral evidence. I have no hesitation in accepting Mr Ho’s submission that such a story is most inherently improbable : (a) G/F8A has been fetching very high yield – as have mentioned, it fetched monthly rental of HK$19,000 in 2001 and HK$15,500 in 2006, ie. fetching a yield of 10.1% and 8.3% respectively based on its sale price of HK$2,238,000. (In this regard, I reject Yi Kwan’s oral evidence that G/F8A was unoccupied when it was sold as it was contradicted by what was recorded in the Sale and Purchase Agreement), (b) moreover, such rental has all along been the main, if not sole, source of income supporting the livelihood of Yeung since 1992; and when G/F8A was sold in 2006, Yeung was 75 years old, selling G/F8A meant that Yeung would lose permanently such main source of income, and (c) I also take notice that in January 2006, Hong Kong was recovering from the SARS outbreak and the attendant drastic drop in real property prices, and the property market at early 2006 was not a favourable one for vendors to sell their real property. 123.Moreover, in cross-examination, Yi Kwan said:
124.Such being the evidence and circumstances, I find that Yeung / the family had at least already used up the proceeds from the sale of Upper 8A and find on balance of probabilities that Yeung / the family was in serious financial need when it was decided that G/F8A be sold for HK$2,238,000 in January 2006, and that the sale of G/F8A then was very much a financial measure of last resort. 125.Second, on the available evidence and on balance of probabilities, I find that Yi Kwan has been in substantial financial need. Yi Kwan was 68 years old in 2024. He had worked for 10 years after having graduated Form 4 as a worker in hotels and as a driver. He had difficulty telling the Court his work after then and said that he worked casual jobs since. He has a family to support in that he was married in Canada in 1987 or 1988 and since begot 2 children. He moved back to Hong Kong in 1991. For 11 years between 2003 to 2014, he flied frequently between Hong Kong and Canada in that he lived alternately in either place every several months. He resided permanently in Hong Kong since 2015 and had worked as a security guard. Save the meagre salaries he might have earned on these jobs, the only income he claimed to have was the said receipt of HK$2,500,000 from a developer (which I do not accept as I find his evidence on similar financial matters unreliable). Such being the broad outlook of his financial situation, in the 29 years between 1986 (death of Senior Wai) and 2015, I think he would have substantial need for financial support from time to time. 126.Third, I do not accept Yi Kwan’s evidence that since the death of Wai Senior, he had only asked for money from Yeung twice – namely the HK$300,000 and HK$100,000. I think the following answer given by Yi Kwan in cross-examination is very telling :
Also telling is his answer quoted in §123 above that “通常我需要錢嘅時候就同佢商量… 呢次…”. That answer and the evidence that “她有就給我” in my view clearly indicate that Yi Kwan requested for, and Yeung gave, money to Yi Kwan much more frequent than only the 2 occasions - HK$300,000 in around 1991 and HK$100,000 in 2006. Also, based on Yi Kwan’s financial need from time to time and the fact that the proceeds from the sale of Upper 8A was spent leading to a need to sell G/F8A so requested by Yi Kwan, I draw the inference and find that (a) Yi Kwan actually knew how the proceeds from the sale of Upper 8A were spent, (b) from such proceeds he obtained more than HK$300,000 as he claimed, and (c) he requested for and obtained money from Yeung more than the 2 occasions and he had not been truthful about them. 127.Fourth, I do not accept Yi Kwan’s evidence that he did not know how much the 8A Property was sold for or what happened to the Balance Sale Proceeds, or accept his evidence to the effect that he was rather disinterested in the administration of the Estate. I have already made some observations and findings above, I would add here that I find his such evidence and disinterest inherently improbable and incredible : (a) according to himself, he was the ultimate heir inheriting the Estate, (b) under the Inheritance Understanding, he has a strong say in what to do with the assets in the Estate, (c) he had substantial need for financial support from time to time, and (d) the only consideration for Yeung as to whether to give money to Yi Kwan was whether she had the money. I had the distinct impression that he was trying to distance himself from dealings in the assets of the Estate to hide his involvement and to avoid having to account to his siblings as to exactly how much and when he had been given money by Yeung. H.3. The first 2 borrowings 128.The Konew Loan taken out on 24 May 2001 and the loan from Hang Seng Bank taken out on or about 25 Feb 2002 (“the Hang Seng Loan”) were the first borrowings secured by mortgaging respectively G/F8A and the Subject Property. 129.The Assent was dated 21 February 2002, which was 4 days before the date of the mortgage of the Subject Property in favour of Hang Seng Bank, and both the Assent and the mortgage to Hang Seng Bank was prepared by Messrs W.S. Lo & Yeung, and both documents were signed by Yeung personally and Ping So in the presence Doris S.Y. Cheung, a clerk to that firm. Based on a high inherent probability, I find that the Assent was signed as a requirement for, or was ancillary to, obtaining the Hang Seng Loan. 130.In respect of the Konew Loan and the mortgage of G/F8A to secure the Konew Loan, as said, it was first divulged in Yi Kwan’s witness statement, and there was no complaint whatsoever (in fact, no mention at all) in all of the Counterclaimants’ witness statements of any impropriety or wrong doing in respect of the Konew Loan and mortgage[51]. Evidently, if there were any impropriety or wrongdoing regarding the Konew Loan and mortgage, in all likelihood, Yeung, Yi Kwan and Bing Yin would discover it along the sale of G/F8A when around HK$900,000 was deducted from the sale proceeds of HK$2,238,000, and they would have complained against Ping So then, and no less also so complained in this action, which they have not ever. I have said above that I reject Bing Yin’s evidence describing an episode of dramatic reaction by Yeung when allegedly she first discovered the Konew Loan and mortgage during the sale of G/F8A. If the discovery of the Konew Loan and Yeung’s reaction in 2006 was as described and known to Bing Yin (if not also Yi Kwan and other siblings), Yeung and Ping Yin should since have been put on high alert, taken precaution to prevent further occurrence of Ping So asking Yeung to sign and Yeung signing blindly based on her trust on Ping So, and such. Yet, none such has been even mentioned. I therefore formally find here that there was no impropriety or wrongdoing insofar as the Konew Loan and mortgage were concerned. 131.The Hang Seng Loan was taken out 9 months after the Konew Loan. I do not find any impropriety or wrongdoing established insofar as the Hang Seng Loan and mortgage are concerned, for the reasons :
132.Moreover, it was Yi Kwan’s evidence that (a) Yeung was very much in control of the assets and the siblings would seek her permission or agreement before executing any financial matters, (b) as heir he would have a strong say in how to deal with the assets of the Estate, (c) that he would discuss with Yeung when he had need for money and would discuss whether Yeung had the money to give to him (quoted in §123 above), (d) it was Yi Kwan’s evidence that he asked Yeung to sell G/F8A (quoted in §121 above), together with (e) my finding above that I do not believe Yi Kwan has as little involvement in the dealing of the assets of the Estate as he would have the Court believed, and (f) a complete lack of complaint by him in his witness statement concerning the Hang Seng Loan and mortgage, I find on balance of probabilities that he knew and approved of the Hang Seng Loan and mortgage. H.4. Yeung’s / the family’s financial situation after 2006 133.On the available evidence before me, there is no material showing that the financial need of Yeung / the family, particularly of Yi Kwan, has in any way abated from 2006 to 2015. There is no evidence indicating the income side of their finance has improved, save that Yi Kwan said that he started working as a security guard since 2015, and apparently on casual basis. On the contrary, the available evidence shows that no further rental incomes were generated after the G/F8A sale. With the cumulation of periodic outlays over time, the only reasonable inference I can draw is that their financial situation worsened with time. 134.On the loans obtained and mortgages executed with the Subject Property as security, the following can be observed. As shown in the Table, after the Hang Seng Loan and before the Subject Loan, another 12 loans were periodically taken out with the Subject Property as security (items 2, 4 - 8, 10, 12-14, 16 and 17 in the Table), and Yeung was the borrower or one of the co-borrowers in 9 of them, and Yeung personally signed 5 of the 9 mortgage documents between April 2009 and September 2013 (items 5, 7, 8, 10 and 12). Of these mortgages, a few of them were 2nd mortgages on top of an existing one, but they were invariably discharged on a day that another loan/mortgage was taken out, indicating a pattern that each loan/mortgage was paid off by money obtained from a subsequent loan/mortgage. Also, less than 5 months after the Subject Loan, Yeung also personally signed the 2nd mortgage of the Subject Property in favour of Jeff Credit Limited (item 19). 135.The questions of course is whether all these loans were obtained for the sole purpose and benefit of Ping So, as the Counterclaimants alleged. I have already found above that I reject the Counterclaimants’ case that “Yeung did not need to borrow money”. H.5. Fail to prove the allegation that all the loans were obtained for the sole benefit or purpose of Ping So 136.As said, save that Yeung and Bing Yin claim that they did not know about these loans and “Yeung did not need to borrow money”, there is scanty evidence supporting this allegation, which remains a bare assertion. On the contrary, I draw an adverse inference against the Counterclaimants as they failed to divulge the existence of other bank accounts of Yeung and produced their records and I expressly find that there was no impropriety or wrongdoing regarding the Konew Loan and the Hang Seng Loan and their mortgages. 137.In §73 of her Closing submissions, Miss Chan briefly submitted that “[the CKL Loan] being obtained for the sole purpose of [Ping So] is proved by the fact that the loan was advanced by way of a cash cheque of HK$300,000 and an uncross cheque of HK$200,000 addressed to [Ping So] as the sole payee”. The 2 cheques were not indexed in the trial bundles, nor were their references given by Miss Chan. I reject that submission. By Clause 20 of the Subject POA, Ping So was specific authorized to mortgage the Subject Property and to receive the monies therefrom. Therefore, she was authorized to receive the loan as agent of Yeung. The mere issuance of one of the cheques to her as the sole payee does not prove that the loan was for Ping So’s sole purpose. 138.Thus, I find that this allegation that all the loans were obtained for Ping So’s sole purpose and benefit not proved. I. UNDUE INFLUENCE AND FRAUD BY PING SO I.1 Undue Influence 139.The parties do not dispute the legal principles. For the present purpose, I need only refer to the pertinent part of the oft-cited summary and elucidation by Recorder Ma SC (as the learned former CJ then was) in Bank of China (Hong Kong) Limited v Wong King Sing [2002] 1 HKLRD 358. 140.The Counterclaimants’ case of undue influence is that it is a case of presumed undue influence generally known as Class 2(B). In Wong King Sing, the relevant principles and considerations were elucidated thus :
141.In this case I do not think I need to discuss individually the 2 requirements for Class 2(B) undue influence. The following discussions would suffice. 142.The thrust of the Counterclaimants’ case of undue influence is that Yeung was old, illiterate, and “was not capable by her intelligence to understand or know the content and/or effect of the documents” (which I held against) but signed them without knowing their nature and effect because Yeung trusted Ping So, who is well-educated, and signed whatever Ping So asked for all these years since 2002. 143.Also very note-worthy is that theirs is a broad case – there is no specific allegation made and evidence given as to each or certain of the documents that the Counterclaimants said were signed under undue influence. Their case is that undue influence is to be presumed in respect of all documents signed from the Assent (in 2002) onwards. 144.First, it is not the Counterclaimants’ case that Ping So had acquired an ascendancy or domination over Yeung. It was not said that Ping So was Yeung’s adviser or manager of her affairs. As mentioned above, it was only said that Ping So assisted in certain transactions; while the tenor of Yi Kwan’s evidence was that different siblings were involve in assisting Yeung in handling money or assets in her control, in that when Yeung gave permission to certain transactions, the requesting sibling would help execute. There are also no other specific facts alleged to show the 2 requirements for Class 2(B) are met. 145.Quite the contrary, Yeung’s own evidence is that she trusted Ping So as she trusted all her children – in §7 of Yeung 1st, she said “我相信韋冰素，她叫我簽名便會簽。我對於簽了甚麽文件完全不理解。我也相信我其他子女。他們叫我簽文件，我也會簽” (my emphasis). Thus, Yeung’s evidence seems to be that she had completely surrendered her right to free consent and would sign anything any of her children gave her to sign simply based on trust. That being the case, the clear tenet of the law is that anyone who signs a document negligently not caring to find out what the effect of what he is signing is would be held to the consequences and not relieved, and the document / transaction would not be vitiated. 146.Second, Yeung’s evidence was that all along she signed as asked by Ping So without knowing what the documents and the related transactions were. I find against that evidence and allegation. I have set out in the Table showing that Yeung had between February 2002 to November 2015 personally signed 10 documents, all of them in the presence of different solicitor clerks, legal executives or even solicitors (as there set out) and on each occasion stating in the document that it has been interpreted to Yeung. Seven of those 10 documents were mortgages/legal charges of the Subject Property. Further, I expressly found above that there was no impropriety or wrongdoing in relation to the mortgage securing the Hang Seng Loan. 147.To say that Yeung kept on signing the mortgage documents so unknowingly from 2002 to 2015 meant that on each occasion, the clerk / legal executive / solicitor had failed to interpret to Yeung at least that the nature of the document was a mortgage of the Subject Property. It is most difficult to postulate that the most basic matters – like the simple term “借錢” (or similar term in Chinese) or some identification of the Subject Property like its address and such and that the property was used to secure a loan - were not mentioned during the interpretation. Having held against the plea that “Yeung was not capable by her intelligence to understand”, I hold that “a loan” and “secured by the Subject Property” were simple concepts for Yeung to understand at the material times, regardless of the fact that she was uneducated. In my judgment, it is most inherently improbable that in all these signing sessions, not once was the nature of the transaction being a loan and the Subject Property was used as security being explained to Yeung. If Yeung truly did not know hitherto that it was a loan and a mortgage, any one mention of a loan and/or using the Subject Property as security on any one of those signing sessions should immediately alarm Yeung. There is no evidence of any such alarm over those 13 years. The cumulative effect of so many signing occasions over so many years much strengthens the inherent improbabilities. 148.Third, considering that (a) Yi Kwan was the ultimate heir who has a strong say on the affairs of the Estate, (b) my finding that he was not disinterested in or uninvolved with such affairs as he said, (c) my finding that Yeung and Yi Kwan knew that G/F8A had been mortgaged in 2001, (d) Yi Kwan requested money from Yeung more than he said, his evidence that in 2006 he requested for money from Yeung, (d) Yeung had no money in 2006 leading to Yi Kwan requesting for the sale of G/F8A, which I find was a last resort, and (e) the financial needs of Yeung / the family have not abated and worsen since 2006 (if not earlier), I find it most inherently improbable that Ping So would continuously secretly “defrauded” or “unduly influenced” Yeung to sign loan documents and mortgages of the Subject Property (the ancestral home (祖屋) according to Yi Kwan and Bing Yin), 7 times in all these years, without heeding the risk of being discovered, and (b) such “fraudulent conducts” of Ping So were not actually discovered and complained about in all these years. 149.Fourth, based on all that I find concerning (a) the financial situation of Yeung / the family, (b) there was no impropriety or wrongdoing concerning the first 2 borrowings, (c) my rejection of the allegation that the loans were obtained for Ping So’s sole benefit or purpose and (d) the pattern that the loans secured by the Subject Property were paid off by another loan subsequently obtained, I find that the loans were obtained at least partly for the purpose and benefit of Yeung / the family, and that being the case, I find that the other loans and mortgages, particularly the Subject Loan and the BFL Legal Charge, were not transactions that cannot be readily explicable by the relationship of the parties, particularly bearing in mind the obliging nature of Yeung in taking care of her children financially and her track records, as spoken to by Yi Kwan, that she would give when she had the money. 150.As the other documents set out in the Table were all connect with or ancillary to obtaining those loans and the Counterclaimants’ case of undue influence is a broad one as described above, my discussions above apply equally to these other documents. 151.In all, I find the Counterclaimants’ case of undue influence completely devoid of merits and I must reject it. Having so found, it follows that Yeung is regarded to have understood and given her free consent to the documents she signed. I.2. Fraud by Ping So 152.The Counterclaimants alleged fraud here and there against Ping So. Essentially, it was alleged against Ping So the same broad and circumstantial evidence as those in purported support of undue influence, and that by so doing, Ping So obtained all these loans for her sole benefit and purpose. Additionally, Bing Yin made the sweeping but bare accusation that the Assent was executed so that Ping So could seize the beneficial interests in the Subject Property that belong to the other siblings (§20, Yin 1st), which I find against below. 153.The fraud allegation was not seriously pursued, if at all, in the Counterclaimants’ respective Closing Submissions. 154.As said, the well-establish approach is that fraud must be proved on a preponderance of probability. On the basis of the various factual findings against the Counterclaimants’ case and the discussions above against the undue influence defence, the fraud accusation is clearly also untenable. 155.In light of it being a serious accusation, I hereby formally dismiss it. 156.I would like to make one thing very clear here. In the course of Yi Kwan’s evidence, there were accusations here and there of some other wrongdoings by Ping So that concerned her having taken some of Yeung’s money, and had withdrawn some substantial amounts from one of the joint-name account without Yeung’s knowing or authorization. Those alleged conducts might or might not be fraudulent. However, and I note once again, that those conducts were not made the subject matters of the Counterclaim, and moreover, the Counterclaimants no longer pursue any claim for damages against Ping So in their Closing Submissions. J. IMPUGNING THE ASSENT, THE SUBJECT POA, THE SUBJECT LOAN DEED AND THE BFL LEGAL CHARGE 157.From what I said above, the Counterclaimants’ factual case and key contentions not only crumples but the true circumstances are found to be very much different from what the Counterclaimants seek to put forth. Their allegations attempting to impugn the relevant documents to shield the Subject Property crumple with them. I will for completeness set out my separate holdings in respect of those challenged documents and transactions below. J.1. The Assent 158.I have found above that the Assent was executed as a requirement of or ancillary to the Hang Seng Loan, regarding which I find not established any impropriety or wrongdoing, and indeed Yi Kwan knew and approved of the loan and mortgage. 159.I reject Bing Yin claim in §20 of Yin 1st that the Assent was obtained by Ping So with the ulterior purpose of obtaining the beneficial ownership of the Subject Property for herself against the other beneficiaries. It was but her bare claim, a stretch and conjecture based on the preamble in the Assent. The true factual background, as I found, was that Bing Yin had accepted the Inheritance Understanding for years and regarded it not her business to even enquire with the affairs concerning the Estate. 160.Also, there is simply not a shred of evidence showing that for all these years since the execution of the Assent, there was any communication or conduct on the part of Yeung and Ping So, individually or together, trying to assert their legal ownership or evinced an intention to seize the beneficial interest, against any of the other siblings, including Bing Yin. I included Yeung in my observation above because, as said, she is regarded as having executed the Assent with free consent; and following therefrom is that any allegation of any breach of duties concerning the execution of the Assent would also be allegations against Yeung and not just Ping So. 161.The totality of the evidence and my findings lead me to conclude on balance of probabilities that the Assent was executed as part of the Inheritance Understanding to obtain the Hang Seng Loan for the benefit and purpose of Yeung / the family, and no less Yi Kwan. Thus, despite the lack of accuracy of the preamble, I do not find it proved that the Assent was executed by Yeung and Ping So in breach of their duties as Administratrices, including not having breached the “self-dealing” rule that Miss Chan put forth. J.2. The Subject POA 162.The Counterclaimants’ pleaded that they did not admit the Subject POA was signed by Yeung, but that challenge to proof was no longer pursued at trial. The remaining contention was that it was signed under undue influence under their said broad case, with no specific allegation or evidence proffer as to the circumstances specific to the Subject POA. 163.The contention of undue influence concerning the Subject POA therefore fails as I hold above. J.3. The Subject Loan Deed and the BFL Legal Charge 164.The Counterclaimants’ contention that as the Subject POA is vitiated by undue influence, the Subject Loan Deed and the BFL Legal Charge, signed with the authority of the Subject POA, are therefore not enforceable against Yeung fails together with the undue influence contention. 165.The Counterclaimants next contended that the Subject Loan Deed and the BFL Legal Charged were so signed by Ping So in breach of Ping So’s duties as a fiduciary under the Subject POA, and therefore were signed outside the authority of the Subject POA, and the Subject Loan Deed and the BFL Legal Charge are not enforceable as against Yeung. 166.First, the breach of fiduciary duty allegation was based on the allegation of fraud against Ping So and the allegation that the Subject Loan was obtained solely for the purpose and benefit of Ping So. As I have held against these bases above, this contention fails in limine. 167.Second, though strictly not necessary but for completeness, I accept Mr Ho’s submission’s submission that the reasoning of the Counterclaimants’ contention is flawed and erroneous, and the correct approach and principles, are those stated and applied by DHCJ J Poon (as the learned Chief Judge then was) in Standard Chartered Bank v Shem Yin Fun and Another (HCMP 3289/1998, unrep., 13 May 2002, at §109, which draw a clear distinction between want of authority and abuse of authority, thus :
168.In Shem Yin Fun, having surveyed the authorities and set out the various contentions advanced alleging various facets of constructive notice as a defence, the learned judge summarized in §129 how the matter can be approached, and then applied it :
169.I respectfully agree and adopt the approach as guidance – under sub-paragraph (1) of the above quote, the normal agency principles would apply. Since it is not disputed that the General POA was executed under section 7 of the Powers of Attorney Ordinance Cap 31 giving Ping So, as donee, general statutory authority to do on behalf of Yeung anything which Yeung can lawfully do by an attorney, and that Clause 20 of the Subject POA specifically empowers Ping So to obtain a mortgage on the Subject Property, there was no want of authority but merely allegations of abuse of authority (which in any case I rejected as not proved). The Counterclaimants’ contention, as formulated, therefore also fails. 170.Lastly, the Counterclaimants, more particularly Bing Yin, raised this allegation that the BFL Legal Charge was “subject to the beneficial interests of the beneficiaries of the Estate”, that the beneficiaries are entitled to trace their interest in the Subject Property under section 67 of the PAO. I also reject this allegation. 171.First, under the Inheritance Understanding, Bing Yin has no beneficial interest in the Estate, including the Subject Property. As noted, Yi Kwan’s only complaint is that the Subject Property should not be gifted to Yeung and Ping So. I have held above that the Assent was executed as part of the Inheritance Understanding, therefore, the Assent was not executed by way of a gift. 172.Second, as the pleaded case of the Counterclaimants is that the administration of the Estate is not yet finished, I also accept Mr Ho’s submission on the law, not seriously disputed by Miss Chan, that it is well settled that the interest of an expectant beneficiary of an intestate’s estate is only an entitlement to a chose in action, and not a beneficial interest in the unadministered estate, as held by the Court of Appeal in Wong Suet Foon Shirly v Collector Of Stamp Revenue [2021] 3 HKLRD 862 at §§25-28 :
173.Therefore, as the expectant beneficiaries of the Estate have no beneficial interest in the Subject Property in the first place, there is no such beneficial interest that the BFL Legal Charge is “subject to” and there is really no “tracing”, in the proper sense of the word, of the Subject Property by Bing Yin to begin with, quite apart from the fact that there has been the very long and inordinate delay since the execution and registration of the Assent in the Land Registry and the true explanation for the delay, as I find, is that under the Inheritance Understanding (which she accepted), she had no interest in, and it was not her busy to enquire about, the Subject Property. 174.By reasons of the above, I conclude that subject to the allegation that there was a breach of MLO, the Subject Loan Deed and the BFL Legal Charge is enforceable against Yeung. K. DID BFL HAVE ACTUAL OR CONSTRUCTIVE NOTICE ? WAS IT A BONA FIDE PURCHASER ? 175.For completeness, I will also deal, albeit briefly, with a number of contentions advanced against BFL, by way of obiter. 176.First, I find untenable in law and no reason in principle Miss Chan’s submission that BFL should have investigated the title of the Subject Property in the same manner and vigour as if it were a purchaser of the Subject Property – such that despite the Assent was acted on in the large number of mortgages before the BFL Legal Charge, BFL should have investigated whether what was recited in the preamble of the Assent was true, demanded Yeung and Ping So as Administratrices to supply the affirmation submitted to apply for probate to verify, and if BFL did, it should have learned that there were other potential beneficiaries of the intestate Estate, and then BFL should have queried the Administratrices on whether the Assent was executed in breach of some duty – and since BFL has not done that, it was not bona fide and should be fixed with constructive notice of the alleged breaches of duties, fraud and undue influence. I reject the submission that a mortgagee would need to so enquire as a routine, or as “part of BFL’s duty to protect Yeung”. 177.I reject any submission that while Yeung signed the Subject Loan Deed and the BFL Legal Charge as a co-borrower, because (a) Yeung was Ping So’s mother, (b) was of advance age, and (c) did not have income, therefore in fact, or being apparent to BFL, the loan was obtained for the sole purpose and benefit of Ping So, Yeung was only signing as a surety. First, such submissions are non sequitur. Second, I have already rejected that the Subject Loan was obtained for the sole purpose and benefit of Ping So. 178.Third, I accept Mr Ho’s submission that even applying the test as held in the recent English Court of Appeal case of One Savings Bank Plc v Waller-Edwards v [2024] 3 WLR 281concerning a “hybrid” non-commercial joint-borrowing by borrowers in relationship, the Subject Loan would not be one that would put BFL on enquiry. 179.Essentially, it was held in One Savings Bank, as summarized in the headnote :
180.The key point to note in applying that test is that such assessment as a whole is to be looked at from the point of view of what the lender knew at the time. In the present case, a lot of contentions were advanced by the Counterclaimants not from the point of view of what BFL knew, but were based on what the Counterclaimants alleged as the circumstances relating to Yeung / the family (and those circumstances I have found above are drastically different). 181.Evidently, apart from the 3 matters put forth by the Counterclaimants which I have mentioned in §177 above, the other matters obvious to BFL were (a) that the Assent was executed years ago in 2002 and prepared by a firm of solicitors and executed in front of their clerk, was duly stamped and registered with the Land Registry, and since then many loans have been periodically taken out secured by the Subject Property, (b) many of those loans (starting from 2002) were joint borrowings by Yeung and Ping So and one singly by Yeung, (c) the General POA and the Subject POA were prepared by and signed before solicitors, and (d) that Yeung was liable together with Ping So to repay the 2 previous loans and the predominant majority of the Subject Loan amount (HK$7.9 million odd) would be used to repay them. 182.In all and though without mentioning (but I have also borne in mind) all the other lesser circumstances and points Miss Chan has been doing his best to advance on behalf of the Counterclaimants, and applying the test in One Savings Bank, my view is that BFL was not put on enquiry. Thus, I find against any allegation that BFL has actual or constructive notice. 183.I would also record that despite the cross-examination of Mimi by Miss Chan pressing on her many suggestions (even accusations), I do not find any improper, underhand, exploiting or oppressive conduct or practice on the part of BFL concerning the Subject Loan and the BFL Legal Charge (save the breach of section 18 of MLO). I accept Mimi’s evidence, and find, that prior to approving the Subject Loan, BFL had taken the precaution of obtaining the advice of a solicitor and provided him with all the information BFL then possessed (except information concerning Ping So’s personal finance and their contact details) and was advised that the Subject Loan as secured by the BFL Legal Charge was “do-able”. Miss Chan criticized that BFL should have sent to PK&Co the financial information of Yeung and Ping So for advice and also the contact information of Yeung for PK&Co to contact Yeung directly to verify that she actually applied for the loan and such. With respect, such criticism need to be stated to be rejected. Lawyers generally are not to advise on the commercial viability of their client’s business nor are they independent agents tasked with checking with third parties the veracity of the instructions they are given by their clients. 184.Miss Chan criticized BFL that BFL should have been able to work out from the borrowing history and Ping So’s previous incomes that Ping So has been “over-borrowing” (whatever that means). I find such criticism invalid. It pre-supposes a duty (and failure will be met with a finding that the lender was not acting bona fide) on the part of a lender to have to ensure objectively that the borrower will be in a position to repay as agreed. There may be powerful commercial incentives for the lender to do so, but I reject as untenable in law such as effectively a legal duty. Moreover, I accept Mimi’s evidence that Ping So at the time told BFL that as an insurance agent, her earnings were by way of commissions and she was expecting to receive a substantial sum and the loan was to help her cash flow[52], which BFL had no reason to disbelieve, and that BFL approved the loan also on the basis that the value of the Subject Property was sufficient to cover the loan. 185.In all, I find BFL acted in good faith in the Subject Loan and the BFL Legal Charge, and insofar necessary, I would also find that BFL was a bona fide purchaser for value without notice. L. BFL BREACHED S.18 OF MLO AND EXERCISING THE DISCRETION L.1. Was there a breach of section 18 ? 186.The sole contention is that BFL breached section 18 of MLO, in the case of Yeung, in that the Subject Loan Deed, as the memorandum, has not been signed by Yeung personally and a copy given to her personally. As said, this is common ground. 187.Section 18(1) provides :
188.Miss Chan relied on the plain meaning of the express wording “signed personally”. 189.Mr Ho submitted that the starting position is qui facit per alium facit per se - "he who acts through another, acts himself", but acknowledged that it turns on the construction of section 18. He also, rightly and fairly, mentioned the English case of Re Prince Blucher, ex p Debtor [1931] 2 Ch 70 (CA) in which “signed by him” in Bankruptcy Act 1914 s.16 concerning the signature of the debtor on a proposal for a composition was held to mean that the proposal was required to be signed by the debtor personally and the requirement was not met when it was signed by his solicitors. 190.In Emperor Finance Limited v La Belle Fashions Limited & Others (2003) 6 HKCFAR 402, the Court of Final Appeal decided that section 18 of MLO applies to bodies corporate, but was not breached on the facts of that case, Ribeiro PJ, whose judgment the other members agreed, had this to say :
191.It is therefore well-established that the memorandum is required to be signed by the borrower personally. BFL therefore breached section 18 in the case of Yeung as the Subject Loan Deed was not signed by Yeung personally. The Subject Loan and its security the BFL Legal Charge are therefore pursuant to section 18 not enforceable as against Yeung, subject only to the discretion provided for in section 18(3). 192.I would also mention for completeness that I do not view the effect of section 18 as rendering the loan and security as also unenforceable as against Ping So, the co-borrower vis-à-vis whom there was no breach of section 18. In any case, Ping So admitted the Subject Loan and was not authorized by her trustees of bankruptcy to defend. L.2. Exercising the discretion under section 18(3) 193.Section 18(3) provided :
194.The applicable principles concerning the exercise of discretion under sections 18(3) were not disputed. They were summarized by the Court of Appeal in Easy Fortune Property Limited v Yung Chun Him (翁晉謙) §56 and §57 :
195.Mr Ho also referred to the approach and considerations as explained by Deputy High Court J To (as he then was) in Fast Billion Holdings Ltd v Sun Pui Yuk; Reported [2019] 2 HKLRD 906 §24 to
196.In the present case :
197.I thus conclude that it is clearly inequitable not to enforce the Subject Loan and the BFL Legal Charge. 198.In exercising my discretion under section 18(3) in the circumstances of this case, and in my view, BFL should be disallowed the following in enforcing the Subject Loan and the BFL Legal Charge against Yeung :
199.I thus would order that the Subject Loan and the BFL Legal Charge be enforced against Yeung save the 2 aspects set out in the preceding paragraph. 200.I accept Mr Ho’s submission concerning the enforcement of the BFL Legal Charge as against Yeung, that the court would treat the different extent of liability now respectively enforced against Yeung and Ping So as joint tenants as an act resulting in the severance of the joint tenancy, such that the respective extent of liability would be enforced against their respective half share in the Subject Property. I would so order. M. BFL’S FALLBACK CLAIM OF UNJUST ENRICHMENT 201.Having so found in favour of BFL, there is no need, and indeed I am in no position, even for completeness, to deal with this fall back claim, as there are really no fall back circumstances (in the sense that over some of the circumstances I find in favour of the Yeung and Ping So) for me to base my evaluation of this claim on. N. BING YIN FAILED TO RESIST AN ORDER OF POSSESSION 202.By reason of what I hold in §170 to §173 above, Bing Yin in her capacity as the 3rd Defendant, has failed to establish any defence against BFL’s claim for possession of the Subject Property. O. OUTCOME, DISPOSAL AND OTHER MATTERS 203.I give judgment to BFL as against Yeung and Ping So for
204.I also order that Yeung, Ping So and Bing Yin do deliver up vacant possession of the Subject Property to BFL. 205.BFL do lodge a draft judgment for approval, setting out clearly the interest calculations as ordered above, and also include a term concerning the enforcement of the BFL Legal Charge against the respective half share of the Subject Property held by Yeung and Ping So reflecting what I held in section L.2. above. 206.I dismiss the Counterclaim in its entirety. 207.As I have said, I direct Mr William Kwan of Messrs Or & Lau to file and serve an affirmation within 14 days explaining, in view of the fact that Or & Lau have received instructions and then sent an instruction letter to Dr Kwok dated 18 October 2023, why Or & Lau failed to inform the Court and other parties at the PTR on 21 November 2023 or sooner thereafter in fulfilment of their duties owed to the Court that they should inform the Court of any event or matter that has a real likelihood of derailing a milestone date, no less the trial dates, that it was already quite evident that Yeung was already suffering from mental incapacity and has been medically examined on 30 October 2023. 208.As BFL has indicated through Mr Ho that they had in mind seeking wasted costs against Messrs Or & Lau, and indemnity costs against the Counterclaimants, and Yeung having won some, albeit relatively a minor part, I will direct the parties to lodge and serve their written submissions on costs to be disposed of on papers unless otherwise directed, (a) with BFL to serve its 21 days after receipt of the affirmation from Mr Kwan, and if it seeks wasted costs order against Messrs Or & Lau, states clearly therein the exact costs order sought and facts and matters relied on and serves a copy to Messrs Or & Lau as a respondent to such an application, (b) Yeung, Ping So and Bing Yin shall lodge and serve their costs submissions 14 days after, (c) Messrs Or & Lau may lodge serve theirs in reply to BFL’s application for wasted costs (if any) 14 days after service of BFL’s on them, and (d) BFL may lodge and serve its reply submissions, if it wishes, 7 days then after. 209.I would indicate provisionally that I am minded to order taxation on indemnity basis against the Counterclaimants to express this Court’s disapproval and affront, among others, that they made serious allegations of fraud, undue influence and conspiracy on essentially false factual bases and for having made various totally unmeritorious and untenable claims which unduly complicated this action and caused substantial increase in costs and time, and then abandoning most of them in the last minute and the rest found to be so by me. 210.Lastly, I thank counsel for their assistance, and would particular acknowledge the value of Mr Ho’s timely and able assistance in dealing with the chaos brought about by the very belated notice that Yeung was mentally incapacitated, and his helpful and fair legal research and submissions in response to this Court’s call for assistance to sort out Yeung’s and Bing Yin’s various confusing and convoluted pleas.
Mr. Raymond Ho instructed by Messrs. C.T. Chan & Co., for the Plaintiff (By Original Action) and the 1st Defendant (By Counterclaim) Ms. Winnie Chan instructed by Messrs. Or and Lau for the 2nd Defendant (By Original Action) and the 1st Plaintiff (By Counterclaim) The 1st Defendant (By Original Action) and the 2nd Defendant (By Counterclaim) appeared in person The 3rd Defendant (By Original Action) and the 2nd Plaintiff (By Counterclaim) appeared in person The Joint and Several Trustees of the property of Wai Ping So (The 1st Defendant (By Original Action) and the 2nd Defendant (By Counterclaim)) were not represented and did not appear [1] [A2/4d/111-11 to 111-14] [2] [A2/4e/111-15 to 111-17] [3] [A2/4h/111-24 to 111-26] [4] [C1/27/345-350] [5] Their letter dated 1 August 2022 [C5/112A/1263-1] [6] [A2/4o/111-52 to 111-54] [7] [A2/4dd/111-190 to 111-201] [8] [C1/21/320-324] [9] At §3 [C1/21/322], Assets also listed out in §11 of Yin 3rd [B/14/253-254] [10] [C4/72/1075] and [C4/69/1062] [11] [C4/61/967-976] [12] [C4/65/1003-1030] [13] At [C4/65/1027] [14] [C4/67/1050-1058] [15] §10 & §11 of Yeung 2nd [B/204-205], §8 of Yeung 3rd [B/11/221-222] [16] As stated in Part II of the Second Schedule to the Sale and Purchase Agreement of Ground Floor of the Chik Fuk Property [C4/66/1045], being $7,500 and $8,000 monthly for the 2 respective shops [17] [C1/30/386-414] [18] [C1/28/354-379] [19] [C1/29/380-384] [20] [C1/31/416-437] [21] [C1/32/439-459] [22] [C1/33/461-482] [23] [C2/35/485-520] [24] [C2/38/553-616] [25] [C2/36/521-527] [26] [C2/37/528-551] [27] [C4/78/1097-1098] [28] [C3/46/708-743] [29] [C2/40/619-640] [30] [C2/43/647-668] [31] [C4/79/1099-1112] [32] [C2/45/681-706] [33] [C3/48/746-765] [34] [C3/51/797-837] [35] [C3/53/647-878] [36] [C4/81/1131] [37] [C4/1132-1145] [38] [C5/1188-1190] [39] Loan agreement at [C4/80/1126-1128] [40] Loan agreement at [C4/83/1155-1156] [41] [C5/95/1194], there is an handwritten note thereon which might suggest that the sum was then paid by a cash cheque [42] §3.11 of the RRRAD&C at [A/3/28] [43] P.66 to 71 [44] [C5/109/1259] [45] [C5/112/1263] [46] [C5/118/1332-1335] [47] Cross-examination 17 Oct 2024, appro 12pm [48] Cross-examination 17 Oct 2024 approx 11:45 am [49] Cross-examination 17 Oct approx. 11:51 am [50] Cross-examination 17 Oct 2024 appro 12:35pm [51] Though in the course of trial, the Counterclaimants seemed to be maintaining a rather equivocal stance that the Konew Loan and mortgage was in the same similar position as the other loans secured by the Subject Property [52] The Chinese words used “幫佢周轉” | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCA 2269/2016