Fan Hao Ling Sandra v. Wong Man Fai Frankie

HCA 614/2024

[2025] HKCFI 6324

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 614 OF 2024

________________________

BETWEEN

________________________

________________________

DECISION

________________________

Introduction and Background

1.By Summons dated 14 February 2025 (“P’s Summons”), the Plaintiff (“P”)  applied for summary judgment to be entered against the Defendant (“D”)  or alternatively, interim payment, for the sum of HK$17,450,000 together with compound interest thereon.

2.P’s case is that this is straightforward claim for repayment of loans extended by P to D.  P claims that:

(1)  Prestige Quest Sdn Bhd (“Prestige”)  is a company incorporated under the laws of Malaysia and is the owner of a piece of land located in Kuala Lumpur (“the Land”).  The shareholding in Prestige are held by P (25%), P’s daughter (“Freya”)  (25%)  and D (50%);

(2)  On our around 30 June 2017, Prestige entered into a Joint Venture Agreement with Forebase Property Sdn Bhd (“Forebase”)  to jointly develop the Land into a 40-storey serviced apartment (“the Development”);

(3)  In around April 2017, P agreed to lend HK$10,800,000 to D for a term of 3 years with compound interest at 3% per annum (“the 1^st Loan”);

(4)  By an agreement dated 21 April 2017 (the 1^st Loan Agreement”)  in Chinese signed by D and witnessed by D’s wife and Freya, D acknowledged that he borrowed a sum of HK$10,800,000 on 25 April 2017 from P for the purpose of the Development and promised the interest of the loan shall be at the rate of 3% per annum calculated on a compound basis.  The term of loan was 3 years but partial early repayment was permitted;

(5)  Pursuant to the 1^st Loan Agreement, on around 24 April 2017, P transferred a sum of HK$10,800,000 to D’s account;

(6)  In around September 2018, P and D orally entered into an agreement over the phone (“the 2^nd Loan Agreement”)  whereby P agreed to lend another sum of HK$6,650,000 to D for a term of 3 years, with compound interest at 3% per annum (“2^nd Loan”);

(7)  Pursuant to the 2^nd Loan Agreement, on or around 19 September 2018, P transferred a sum of HK$6,650,000 to D;

(8)  In breach of the 1^st Loan Agreement and 2^nd Loan Agreement, D failed to make repayment of the 1^st and 2^nd Loans. 

3.On the other hand, whilst D does not dispute that he received the loans, he claims that P and D orally agreed that the 1^st and 2^nd Loans are governed by a funding arrangement between D and P’s late husband (“Hemmon”)  and are only to be repaid within 12 months from the date of issuance of a Certificate of Fitness for the Development (which has not taken place)  and interest shall only be at 3% per annum on simple basis. D also relies on the defence of estoppel based on the said arrangement in relation to the 1^st Loan.  D’s defence as summarized in the Skeleton Submissions for D is as follows:

(1)  As far back as 2013, D and his associates acquired the Land and arranged it to be held by Prestige but the completion consideration had yet to be paid.  At the same time, D met P and Hemmon. Hemmon was eager to develop the Land;

(2)  Since D was not in a financial position to contribute to the acquisition and subsequent development costs of the Land, Hemmon agreed to lend to D (and his associates)  the latter’s half of the share of the costs, and for D’s side to repay Hemmon the amount borrowed once the development was completed and profits from the sales of the complete apartment units could be derived from the Project;

(3)  On 20 October 2014, a mortgage deed (“the Deed”)  was executed for Hemmon to lend money to D for the development of the Land. Importantly, Hemmon agreed, and the Deed reflected, that he would not demand payment of the loan and interest prior to the Maturity Date (defined as 12 months from the date of issuance of the Certificate of Fitness of the Development);

(4)  Consequent to the Deed, Hemmon and D acquired all the shares of the Company from D’s associates.  The loan of HK$17.5M was secured by 50,000 shares in Prestige. An assignment was also executed whereby D assigned to Hemmon his rights, title, and interest in the assigned loan which Prestige might from time to time be indebted to D and all future indebtedness;

(5)  The Land acquisition was subsequently completed by way of the amount loaned to D by the Deed, and subsequently P and Freya were each registered as 25% owner of Prestige;

(6)  Hemmon passed away in about 2015 but the arrangement between him and D survived and was continued by P and Freya;

(7)  As such, when the Development needed further financing, P and D had agreed for a financing arrangement similar to that between D and Hemmon (through the Deed)  to be done.  The terms of the oral part of the agreement were that D should repay the amount borrowed under the 1^st Loan Agreement together with interest repayable 12 months from the date of issuance of the Certificate of Fitness for the Development and interest should be 3% per annum on simple basis.  A similar arrangement and agreement applied to the 2^nd Loan Agreement.

4.By Judgment dated 15 July 2025 (“the Judgment”), Master Michael Lok ordered that D do pay P the sum of:

(1)  HK$17,450,000;

(2)  Compound interest at the rate of 3% per annum for HK$10,800,000 from 24 April 2017 until date of the Judgment and thereafter at judgment rate until repayment; and

(3)  Compound interest at the rate of 3% per annum for HK$6,650,000 from 19 September 2018 until date of the Judgment and thereafter at judgment rate until repayment.

5.Today is the hearing of:

(1)  D’s Notice of Appeal to a Judge in Chambers dated 28 July 2025 (“NOA”), whereby D seeks to set aside the Judgment and seeks unconditional leave to defend;

(2)  D’s Summons dated 11 December 2025 (“Amendment Summons”)  for leave to amend the Defence dated 4 September 2024 (“the Defence”).

6.By the Amendment Summons, essentially, D seeks to introduce a new defence that by an oral agreement made on or around 15 December 2023 between P and D, it was agreed that the 1^st Loan Agreement and 2^nd Loan Agreement should be varied to the effect that interest would be calculated on a simple basis rather than compound basis and repayment may be made by transferring shares in Prestige and/or Forebase to P and/or Freya.

7.Mr Jonathan Ng, counsel, appeared for P and Miss Lydia Leung, counsel, appeared for D.

Applicable Principles

8.It is trite that an appeal from a master to a judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him or her for the first time: see Hong Kong Civil Procedure 2026, Vol.1, §58/1/2.

9.The applicable principles for O.14 of Rules of the High Court, Cap.4A (“RHC”)  are trite.  These were summarised by Ng J in Guanghua SS Holdings Limited v Lim Yew Cheng & Another [2022] HKCFI 1052 at §13 as follows:

(1)  The Order 14 machinery works on the basis that if the plaintiff’s application is properly constituted, it is prima facie entitled to judgment unless the defendant shows cause to the contrary;

(2)  The mere assertion in an affidavit of a given situation by the defendant responding to an application for summary judgment does not, ipso facto, ground leave to defend;

(3)  The burden is on the defendant to show a real or bona fide defence or some other reason for a trial.  The defendant must satisfy the Court that his evidence is capable of being believed and that on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence;

(4)  In deciding whether there is a fair or reasonable probability of the defendant having a real or bona fide defence, the Court does not isolate each factual issue and consider whether it is possible that the defendant’s story on that issue is credible.  Rather, the Court must look at the whole situation;

(5)  In assessing the credibility of the defendant’s factual case, while the Court will not embark upon a mini-trial on affidavit evidence, the Court is not obliged to suspend its critical faculties and assume that the defendant’s evidence is accurate;

(6)  If having regard to inherent plausibility, inconsistency with contemporaneous documents and other compelling evidence, the defence is not credible, the Court must say so;

(7)  If the defendant’s evidence is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence.

10.Furthermore, O.14 is for clear cases only which mean cases in which there is no serious material factual or legal dispute.  The procedure is entirely inappropriate where the plaintiff’s entitlement to recover any sum is the subject of any serious dispute, whether of law or fact. See Lesnina H DOO v Wave Shipping Trade Co Ltd [2022] 2 HKLRD 727 at §36 and Hong Kong Civil Procedure 2026, Vol.1, §14/4/9.

11.As for an application for interim payment under O.29, r.12 of RHC, the applicable principles were summarized by Recorder Eva Sit SC in Binchuang Resources Co Ltd v Lockwood Group Ltd [2022] 2 HKLRD 221 at §10:

(1)  The court must be satisfied that if the claim were to go to trial then, on the matter before the judge at the time of the application for interim payment, the plaintiff would succeed in his claim and would obtain a substantial amount of damages;

(2)  The court must be satisfied on the balance of probabilities.  It is insufficient that the plaintiff is likely to succeed; the court must be satisfied that the defendant has no arguable defence or that there are sufficient doubts regarding the genuineness of the defence so that the court would not grant the defendant unconditional leave to defend in a summary judgment application;

(3)  In addition, the court should read Rules of the High Court, Cap.4A, O.29 rr.11 and 12 together and ask the single question of whether the plaintiff fulfils the requirements of those rules as a whole, rather than consider separately and exclusively the plaintiff’s entitlement under each rule;

(4)  As to quantum, under r.11 (damages)  the court can order an amount as it thinks just, not exceeding a reasonable proportion of damages which in the opinion of the court are likely to be recovered by the plaintiff after taking into account any relevant contributory negligence and any set-off, cross-claim or counterclaim which the respondent may be entitled to rely, whereas under r.12 (sums other than damages)  the amount is that which the court thinks just, after taking into account any set-off, cross-claim or counterclaim on which the respondent may be entitled to rely.

Discussion

12.Since in an interim payment application, the court must be satisfied that the defendant has no arguable defence such that the court would not grant unconditional leave to defend in a summary judgment application, the application for interim payment stands and falls with the application for summary judgment.  See Delco Participation B V v Chiho Environmental Group Limited (formerly known as Chiho-Tiande Group Limited)  & Another [2020] HKCFI 1643, at §32 per Coleman J.

13.Given that D accepts that he received the two loans and they are repayable, but the only questions are when and whether they are now repayable (see D’s Affirmation, §36), I need only to consider whether D has shown a real or bona fide defence that the loans are not due and payable until the issuance of the Certificate of Fitness (and payable within 12 months from then), and the interest is simple interest at 3% per annum.

14.Whilst, D now seeks to rely on undoubtedly an unpleaded defence, I should first consider whether D should be allowed to amend the Defence at this stage.

15.It was held by Chu JA in Kaefer A.G. v Winfield Marine Services Co Ltd [2022] HKCA 807 at §33 that where a defence was raised shortly before a judge hearing an appeal against a master, it cannot be said that the judge was plainly wrong in refusing the defendant to run the new defence.  See also Hong Kong Civil Procedure 2026, Vol.1, §14/4/3A.

16.Even if it is not a complete bar, and only a matter of discretion or case management whether a new defence can be run now, I should not allow reliance on this defence if it is wholly unmeritorious.

17.This new defence was never not raised in D’s affirmation in opposition to P’s Summons.  Whilst there was mention of the discussions between P and D in the meeting held on 15 December 2023, his case then was that nothing had materialized (see §37).  In other words, there was no meeting of minds which is fatal to any agreement to vary.  Besides, the fact that it is only belatedly raised, not even before the Master, casts great doubt on the credibility of this new defence.

18.Furthermore, it is wholly inconsistent with the pleaded defence that it was a term of the 1^st Loan Agreement and the 2^nd Loan Agreement (albeit orally agreed)  that there would be repayment within 12 months from the date of issuance of the Certificate of Fitness for the Development and interest should be 3% per annum on simple basis.  If that was the case, there would be no need for “variation”.

19.For all the above reasons, I would dismiss the Amendment Summons with costs to P.

20.I now turn to the only two matters raised by Miss Leung as being triable issues based on the pleaded defence.

21.Firstly, it was submitted that there is a triable issue on the terms of the 1^st and 2^nd Loan Agreements, in particular, whether the parties agreed for the loans not to be repaid until 12 months from the date of issue of the Certificate of Fitness. The estoppel defence (though not mentioned in Miss Leung’s skeleton submissions)  is based on the parties’ understanding or assumption to similar effect.

22.A mere assertion of D that this was orally agreed is not sufficient.  There is no contemporaneous evidence of the alleged oral agreement.

23.On the other hand, this assertion is flatly contradicted by the contemporaneous documents.  If this was truly the case, D would not have signed the 1^st Loan Document which expressly stated the term of the loan shall be limited to three years and promised that the interest of the loan shall be at the rate of 3 per cent per annum calculated on a compound basis.  D has given no explanation for signing a document acknowledging terms which according to him were not the terms agreed.

24.Mr Ng also took me to the contemporaneous communications between the parties which demonstrates that it was D who requested for a written Chinese loan agreement.  It is incredible that there will be terms not set out in that written agreement which he signed.

25.It is also inconsistent with the contemporaneous meeting records and WhatsApp messages in December 2023 discussing how repayment should be made.  Whilst Miss Leung tried to interpret those discussion as how the loans should be repaid upon them being repayable (i.e. forward looking), it defies common and commercial sense for parties to spend the time and effort to discuss in details repayment if repayment was not due until 2 years later.  The fact that D said “I don’t have enough cash at the moment”, also contradicts Miss Leung’s interpretation.  Furthermore, if compound interest had not been agreed, D would not have requested P to reconsider the interest.

26.A month later, when P’s solicitors issued a demand letter, the response of D in his letter dated 30 January 2024 did not allege that the two loans were not yet repayable. 

27.D’s case is contradicted by the subsequent conduct of the parties.

28.The belated raising of the new defence and shifting of D’s case also demonstrates the lack of credibility of the original defence.

29.I do not accept Miss Leung’s submissions that it is not unbelievable for it to be agreed that the loans are repayable only after the Development is completed and within 12 months from the issuance of the Certificate of Fitness, which is similar to the arrangement between D and Hemmon.  I do not see how from an arrangement between D and Hemmon almost two years prior and concerning the acquisition of the Land, and even if they envisaged the Land should be developed, the funds lent to D for development should necessary be the same for a wholly separate loan agreement between P and D.  There is no suggestion that the arrangement was one binding on P and certainly the 1^st Loan Agreement made no reference to it.  The terms set out in the 1^st Loan Agreement is directly in contradiction to the terms of the arrangement between D and Hemmon.  Whilst Miss Leung submitted that it was unlikely that D would agree anything other than a similar arrangement with Hemmon, if that was the case why did he sign the 1^st Loan Agreement?

30.I also do not accept the submissions that simply because the 1^st Loan Agreement is partly oral and partly written and the 2^nd Loan Agreement was oral that this is sufficient to demonstrate triable issues.  The cases relied upon by Miss Leung did not support such submissions and were plainly decided on their own facts:

(1)  In Xue Xiaoyun v Wu Shang Ying [2024] HKCFI 1776, the plaintiff relied on a trust arrangement which was reduced into a written declaration which the defendant admitted was entered into.  However, the defendant’s defence was that there was an oral agreement to terminate the declaration.  Whilst DHCJ Phoebe Man found a number of matters which pointed against the existence of such termination agreement, she also considered that there were points against the plaintiff’s case such that the defendant’s defence is not entirely capable of belief although shadowy so that conditional leave to defend was granted (see §§17-19);

(2)  In Li Chuen Kwai v Po Lam Construction Development Limited (unrep)  HCA 2376/2013, 24 September 2014, the plaintiff sued on an oral contract. DHCJ Wilson Chan (as he then was)  considered that the plaintiff’s claim was problematic as the alleged agreed terms as pleaded in the Statement of Claim was clearly different from the terms as asserted in the verifying affirmation, was not supported by any contemporaneous record and was also contradicted by the parties’ subsequent conduct: see §§15-25.  Thus the learned judge was satisfied that there were unexplained features in both the claim and the defence such that no tentative assessment of strengths should be made but unconditional leave to defend should be given at §13;

(3)  In Goldful Dragon Knitting Factory Limited v Tradeventure International Limited (unrep)  HCA 985/2006, 8 February 2007, the defendant’s case was that there was an oral contract governing the sales and purchases of knitwear products between the parties.  DHCJ To (as he then was)  found the defendant’s case was capable of belief and was supported by some contemporaneous documents and demonstrated that there are genuine disputes as to facts which should be tried (§§26-32);

(4)  In Ginorich Group Limited v Chung Keung (unrep)  HCA 152/2012, 4 November 2013, the defendant was alleged to be in breach of a partly written and partly oral guarantee agreement which the learned judge viewed with some suspicion when the general manager of the plaintiff said he drafted the written guarantee and yet omitted to put all the express terms he said were agreed with the defendant into the guarantee (see §§27-28).

31.Secondly, Miss Leung submitted that there is a triable issue whether the Certificate of Fitness had in fact already been issued.  However, given that I do not find that D has raised a triable issue that it was a term of the 1^st and 2^nd Loan Agreements that they are repayable within 12 months after the issuance of the Certificate of Fitness, this is not a triable issue.

32.For completeness, I should indicate that, in any event, I am in absolute agreement with Mr Ng’s submissions (which Miss Leung had not substantively responded to)  that the Certificate of Completion and Compliance issued has superseded the Certificate of Fitness.

33.In all, I am not satisfied that D has raised a triable issue on the terms of the 1^st and 2^nd Loan Agreements. 

34.Like the Master, I would also enter summary judgment against D and make the same orders.  Accordingly, the NOA should be dismissed with costs to P to be taxed if not agreed.

Mr Jonathan Ng, instructed by Edward Ko & Company, for the Plaintiff

Miss Lydia Leung, instructed by Benjamin Au & Billy Chan, for the Defendant