Yan Caiping and Others v. Wu Minguang and Others
Read the full judgment text of HCA 1746/2018 on BabelCite. This High Court CFI judgment was delivered on 8 April 2026.
1. There are two related actions before me.
Cited by 1 case · Cites 3 cases
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HCA 1746/2018 and HCA 2952/2018 [2026] HKCFI 1956 HCA 1746/2018 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1746 OF 2018 ________________________
________________________ AND HCA 2952/2018 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2952 OF 2018 ________________________
________________________ (Heard Together)
______________ J U D G M E N T ______________ Introduction 1.There are two related actions before me. HCA1746/2018 2.In this action, the plaintiffs are related to the Wong family. They are:
Where appropriate, they are referred to as the “Wong group”. They are represented by Ms Eva Leung and Mr Jason Fee. 3.1. There were originally five defendants. 3.2. Of these five defendants, three are related. They are:
Where appropriate, they are referred to as the “Ng group”. Mr Wu and MDC are represented by Mr Fergus Chan. 3.3. The other two defendants were:
Mrs Yuen is represented by Ms Sakinah Sat. HCA2952/2018 4.In this action, the plaintiff is Mr Yuen, represented by Ms Sat, and the defendants are Mr and Mrs Wong, represented by Ms Leung and Mr Fee. 5.Although the claim against Madam Ng in HCA1746 has been discontinued, she gave evidence for the Ng group in that action and for Mr Yuen in HCA2952. 6.The actions arise from:
7.The persons primarily involved in the proceedings were Mr and Mrs Wong, Madam Ng and Mr Yuen. Mr Wu said at trial that he had no personal knowledge of events. Mrs Yuen took no part in the trial and I have treated her and Mr Yuen as one entity. It is noted that:
Facts 8.The following facts are undisputed or have been found by me for reasons set out. 9.1. To start, it is regrettable that none of the main witnesses (Mr and Mrs Wong, Madam Ng and Mr Yuen) gave completely clear truthful or reliable evidence. Contemporaneous documentary evidence was scarce. According to Mr and Mrs Wong and Madam Ng, none of them had ever downloaded or printed data from the 720 Co website, which contained their electronic wallets (“e‑wallets”), nor had they ever taken any screen shots. 9.2. There were no books of accounts or internal accounting documents to speak of either. Madam Ng alleged she had an accounting staff at the time who was responsible for her company’s accounts but she said the staff member subsequently left her employ, taking documents with her. 9.3. Mr and Mrs Wong and Madam Ng did offer in evidence various documents prepared by themselves containing figures purportedly supporting their respective cases. However there is no evidence to show they were prepared contemporaneously and more importantly, these documents are all unilateral. Although one may not expect an auditing process, there were no attempts whatever to reconcile or confirm accounts (by sending a statement from time to time to the counterparty to confirm the state of the account). It is common ground that Mrs Wong and Madam Ng were close friends and would have trusted each other. But even on Mrs Wong’s own case, there were at times joint investments and at other times loans from her to Madam Ng for the latter’s purchase of antiques (discussed below). In those circumstances, even on Mrs Wong’s own case, one would have expected statements to be sent for confirmation or verification, if only for the avoidance of confusion in their financial transactions. In these circumstances, I am unable to regard the unilateral documents as reliable. 9.4. The lender DDF provided surprisingly few documents. 10.In the face of these evidential difficulties, the court has nevertheless received useful assistance from counsel, to all of whom I would like to express my appreciation. Background 11.1. Mr Wong used to be a restaurant manager, but retired in 2011. 11.2. Mrs Wong worked occasionally at an estate agency owned by her close friend Madam Ng. 12.Madam Ng owned an estate agency, and it is common ground that she was successful in that industry. 13.Mr Yuen was a building contractor who did decoration work from time to time at properties owned or managed by Madam Ng. 14.The above four persons occasionally met at the estate agency office and for tea. However, Mr and Mrs Wong and Mr Yuen did not even have each other’s telephone numbers. 15.At trial, Mr and Mrs Wong alleged that Madam Ng and Mr Yuen were in a relationship even though Mr Yuen was married. This was vehemently denied by Madam Ng and Mr Yuen. Mr and Mrs Wong’s bare assertions were not supported by any oral or documentary evidence. Since it is common ground that Mrs Wong was a close friend of Madam Ng, she should have been able to provide details of the relationship if her allegation were true. She did not, and I find the allegation has not been proved. Properties 16.1. Before the events which gave rise to these proceedings,
16.2. Of the properties mentioned above, before 31 July 2012, only Madam Yan’s property was free of mortgage. The rest were all subject to first mortgages. 720 Co’s scheme 17.1. In early 2012, 720 Co devised a scheme selling online shops. Basically,
17.2. The 720 Co attracted purchasers by offers of rebates, incentives and rewards. 17.3. Purchasers were divided into 5 categories:
17.4. As an incentive, for example, a purchaser of three “5-star” (i.e. 45 shops) would be gifted one “2-star” (i.e. 4 shops), resulting in the ownership of a total of 49 shops. 17.5. Purchasers were also promised rewards such as gold bars, electronic goods, overseas trips and motor vehicles, and commission for introducing other purchasers. However, cashing out of some rewards were subject to conditions. 17.6. To attract potential purchasers, 720 Co held promotions in Xiamen and Hong Kong, among other places. 17.7. In April 2012, 720 Co held an expense-free promotion event in Xiamen which Mr and Mrs Wong and Madam Ng attended. 18.1. In these proceedings, Mr and Mrs Wong said they were introduced to 720 Co by Madam Ng. However, I find it was Law Kwai Fun (“Fanny Law”) who introduced 720 Co to them. This is relevant to an issue which will be discussed later in this Judgment. 18.2. I find it was Fanny Law who introduced 720 Co to them because at trial, Mr Wong said she appeared on stage at the promotion event at which Mr and Mrs Wong and Madam Ng were only attendees. 18.3. Further, in the record of Mr Wong’s interview with the Public Security Bureau (“PSB”) made on 20 August 2012, he said twice that it was Fanny Law who introduced 720 Co to them. At trial, Mr Wong explained that he said this because Madam Ng was also present at the interview and added her comments. I reject that explanation. The record of interview only sets out Mr Wong’s name and particulars. According to the record, he had been warned by the PSB officer at the start of the interview that he would be held criminally responsible if he gave false evidence or tried to hide evidence. Under those circumstances, even if Madam Ng had added any comments, Mr Wong would not have adopted them if they were not true. Purchases in name of Mr and Mrs Wong in April-July 2012 19.1. On 15 April 2012, Mrs Wong entered into an agreement to purchase three “5-star” shops (i.e. 45 shops) at a total price of RMB324,000. 19.2. As Mrs Wong purchased 45 shops, she was thus gifted four additional shops, thus becoming the owner of 49 shops. 19.3. In the sale and purchase agreement, Mrs Wong provided details of her bank account with the China Construction Bank in Lowu (“account #391”). 19.4. Mrs Wong also entered into lease back agreements, the termination date being 15 March 2015. 20.On 10 June 2012, Mr Wong entered into an agreement to purchase seven shops at a total price of RMB50,400. In the sale and purchase agreement, he also designated account #391. He also entered into a lease back agreement, the termination date also being 15 March 2015. 21.On 24 June 2012, 720 Co held a promotion event at a hotel in Hong Kong. Mrs Wong then entered into an agreement to purchase a further seven shops together with lease back. 22.On 3 July 2012, Mrs Wong entered into an agreement to purchase a further 90 shops together with lease back. Purchases in name of Madam Ng 23.There is no documentary evidence of Madam Ng having purchased any online shops in April 2012. 24.On 1 July 2012, Madam Ng entered into two agreements to purchase a total of eight shops at a total price of RMB57,600. In both agreements, she designated an account at the China Construction Bank in Lowu (“account #299"). Although there is no evidence of the name of the account holder, obviously it was not the same as Mr and Mrs Wong’s designated account (account #391). Madam Ng also entered into lease back agreements. 1st and 2nd joint investments? 25.Mrs Wong alleged that despite the documentary evidence of separate purchases by herself and Madam Ng above, these actually comprised two joint investments by herself and Madam Ng, the 1st in April 2012 (“1st joint investment”) and the 2nd from 24 June to 3 July 2012 (“2nd joint investment”). This is denied by Madam Ng, who said there were no joint investments. 26.There were no documents evidencing the alleged agreements for joint investments, or documentary evidence such as confirmation statements I have referred to above. 27.Regarding the alleged 1st joint investment, I note that at trial, Madam Ng did say she bought one “5-star” shop in April 2012 and the Wong family separately bought some shops at the same time. There was no documentary evidence of such a purchase by Madam Ng, whose evidence was at times rather confused. Nor had Mrs Wong mentioned any such purchase in her evidence. I do not think the Wong group can take advantage of what Madam Ng said (for the first time) about her own purchase to support their allegation that there was a 1st joint investment in April 2012, because buying one shop on one’s own is not the same as having half, or a joint interest in the whole, of three shops bought by Mrs Wong. 28.Regarding the alleged 2nd joint investment, Mrs Wong said this comprised shops separately bought in her name and shops separately bought in Madam Ng’s name. However, the sale and purchase agreements for that period exhibited at trial did not support the number of shops she alleged they bought for the 2nd joint investment, or the purchase price alleged. Mrs Wong also did not explain the purpose of entering into separate purchase agreements for different numbers of shops if there was one single joint investment. 29.For these reasons, I do not find that the alleged 1st and 2nd joint investments have been proved. 30.It may be convenient here to consider Mrs Wong’s allegation that she had paid for some antiques purchased from Mainland China by Madam Ng. There is no evidence of such purchases at all, such as invoices and receipts from the vendors issued in Mrs Wong’s name, or documentary evidence of transportation to Madam Ng or storage under her name, or receipts from Mrs Wong to Madam Ng, identifying the purpose of payment from the latter. In the absence of any such evidence, I do not find the allegation of purchase of antiques on Madam Ng’s behalf has been proved. 720 Investment Agreement 31.Between early and late July 2012, 720 Co offered a number of privileges to attract purchasers. With this in mind, two documents were signed on 26 July 2012. 32.1. First there was a handwritten Chinese document entitled Agreement to Co-operate in 720 Investment (“720 Investment Agreement”). It was signed by Mr Wong, Madam Ng and Fanny Law. They were named as the investors and were referred to in the document as “Investment Group”. 32.2. The investment amount was however left blank. 32.3. The terms of agreement included the following:
33.Pausing here, it would be noted that the investment amount was blank, but it was envisaged that loans would be taken out from finance companies for the investment. Mr Wong said at trial that at the time of the 720 Investment Agreement, it was intended that the Investment Group (i.e. he, Madam Ng and Fanny Law) would obtain a loan of HKD4 million each which, after exchange to RMB, would make up the minimum sum of RMB10 million referred to below. 34.The document was witnessed by Wang Lan, a director of 720 Co. 720 Co Privileges 35.1. Secondly, Wang Lan signed a handwritten Chinese document entitled “720 Investment Group Promise”. 35.2. Among the privileges promised (“720 Co Privileges”) were the following:
35.3. Importantly, it was stipulated that to qualify for these privileges:
35.4. In other words, a minimum sum of RMB10 million would have to be raised within five days for the 720 Co Privileges to apply. Fanny Law’s withdrawal 36.1. However, after the 720 Investment Agreement was signed, Fanny Law withdrew from the Investment Group. 36.2. Mr and Mrs Wong alleged that Fanny Law withdrew as Madam Ng wished to include Mr Yuen in the Investment Group, but Fanny Law was opposed to him. I find that to be unlikely. After all, as Mr Wong said in his statement to the PSB, it was Fanny Law who introduced them to 720 Co. Also, under the 720 Investment Agreement, the investment would be placed in her sector. Thus, within the three persons in the Investment Group, she was not only the most experienced but also the more important member. If there had been any disagreement between Fanny Law and Madam Ng necessitating one of them to withdraw, it would more likely be Madam Ng rather than Fanny Law, and since Mr and Mrs Wong claimed they also did not wish to include Mr Yuen, they would obviously have taken Fanny Law’s side. I find therefore that the reason for Fanny Law’s withdrawal was not because of Madam Ng’s wish to include Mr Yuen in the Investment Group, as Mr and Mrs Wong alleged. 37.However, Fanny Law’s withdrawal obviously had an impact, due to the requirement for the minimum sum and the impending date for its payment in order to secure the 720 Co Privileges. 38.In Mr Wong’s witness statement, he alleged that after Fanny Law withdrew, he asked Wang Lan if the Privileges would still be available if they were short of the minimum sum of RMB10 million by less than RMB1 million, and he said the latter eventually agreed to it. There is no documentary evidence that Wang Lan had given this indulgence, and it was not mentioned in Mr Wong’s statements to the PSB or the Hong Kong police. I do not find it has been proved. However, insofar as Mr Wong said he needed to make such a request to Wang Lan, it would show that after Fanny Law’s withdrawal, Mr and Mrs Wong and Madam Ng did not have sufficient resources to satisfy the minimum sum requirement. Mr Wong said the family savings were only about HKD900,000. Mr Yuen’s involvement 39.1. Mr Yuen said that towards the end of July 2012, Mr and Mrs Wong started to persuade him to invest in 720 Co. 39.2. Mr Yuen said he was initially reluctant as he did not even have a Home Return Permit for Mainland China, he could not speak Putonghua and he did not have a bank account in Mainland China. He also did not have much cash. He was reluctant to risk his home which was his family’s only asset. He said he only decided to undertake the risk involved in investing in 720 Co as Mr and Mrs Wong had promised to reimburse him for any losses, and Madam Ng also did so (although Mr Yuen said she was initially surprised to hear Mrs Wong include her in the promise). 40.1. Mr and Mrs Wong denied having made such a promise. I also find it inherently improbable that they would have done so. However confident they might have been in 720 Co, their financial situation was not such that they could have taken on a potential substantial liability. As mentioned above, Mr Wong said that at the time, they had family savings of about HKD900,000 only. He had retired from his former work as a restaurant manager due to health issues. Mrs Wong was a housewife, only occasionally working for Madam Ng. And neither was a guarantor for Mrs Yuen’s loan. (As for Mr Yuen’s claim that Madam Ng had also made such a promise, that is not a lis in these proceedings and I say no more about it). 40.2. Mr and Mrs Wong also denied having persuaded Mr Yuen to invest in 720 Co. They alleged they did not approve of the relationship between him and Madam Ng. I have found that there was simply no evidence of any such relationship between Mr Yuen and Madam Ng. 41.It may well be that initially Mr and Mrs Wong persuaded Mr Yuen to invest in 720 Co in order to get commission for introducing a new customer. There is evidence that Mr Wong had received commission for introducing other customers, such as former colleagues, to 720 Co. But it does not follow that Mr Yuen entered into an investment agreement with Mr Wong and Madam Ng, like Fanny Law under the 720 Investment Agreement. No new investment agreement 42.Mr Yuen’s Amended Statement of Claim did not plead when an agreement to invest in 720 Co was made between himself and Mr Wong and Madam Ng, or how it was made. 43.1. There was no pleading of an oral agreement. Mr Yuen’s oral evidence was confusing. Among other inconsistencies as to time and place, he said first that he decided to invest in 720 Co after a meal with Mr and Mrs Wong and Madam Ng at a restaurant a few days before Mrs Wong took him to DDF to apply for a loan after he said he had no money for investment and they suggested that he persuade his wife to mortgage her property. Subsequently however, he said he did not even know that funds had been borrowed from DDF until he went to dinner with Mr and Mrs Wong and Madam Ng on 31 July 2012 after going to the DDF office, and that it was only then that he decided to invest in 720 Co. I find Mr Yuen has failed to prove any oral agreement. 43.2. Nor were there any documents evidencing the agreement alleged. It would have been easy to draft a written agreement. Mr Wong had the original of the 720 Investment Agreement and Madam Ng had a copy of it. It could have been used as a template or even just as a first draft, but Mr Yuen was not even shown it. No written agreement was made despite the fact that the sums involved were not small. 43.3. Of course it is well established that an agreement may be proved by conduct, but no particulars of conduct have been pleaded. There was no evidence of any discussions between Mr Yuen and Mr Wong and Madam Ng as to how long the investment should last. It would be noted that the 720 Investment Agreement bound the parties for nearly three years (until 15 March 2015). Nor was there evidence of discussions of how the proceeds would be applied. It would be noted that at trial Mr Yuen mentioned that he needed funds to tender for construction projects. Nor was there evidence of discussions as to who would manage matters such as whether to cash in rewards in kind. 44.In conclusion, I am not satisfied that there is sufficient evidence to support a finding of an investment agreement made between these three persons. I find that Mr Yuen was not part of any group of investors, but was just “tagging along” with Mr Wong and Madam Ng, content that they (or at least Madam Ng) would keep him abreast of developments which might affect his own investment in 720 Co. 45.Further, I also do not find that Mr (and/or Mrs) Wong and Madam Ng made another agreement, whether orally or in writing or by conduct, for a new investment in the proportion of 50:50. This has been referred to by Mr and Mrs Wong as the alleged “3rd joint investment” or the “Wong-Ng investment”. 46.1. Although at times when it suited them, Mr Wong and Madam Ng alleged there was some sort of 50:50 agreement between them, it seems each had his/her own version of a 50:50 agreement. 46.2. In respect of Madam Ng, she referred to a 50:50 agreement with Mr Wong in the context of an agreement to compensate Mr Yuen for any loss. In her declaration in the Xiamen Ct Action, she said there was no joint investment as such. 46.3. As for Mr Wong, he said that “after Fanny Law voluntarily left the ‘investment group’, the two of us, I and Madam Ng, took over [承接] this agreement (‘the 3rd joint investment’) and Mr Yuen invested independently” (1st witness statement, §13). 47.I do not see why there would have been the alleged 3rd joint investment between Mr Wong and Madam Ng only. If Madam Ng did not insist on including Mr Yuen, then Fanny Law’s reason for withdrawal (according to the Wong group) falls away, and Mr Wong, Madam Ng and Fanny Law could simply have carried on with their lucrative investment under the 720 Investment Agreement. 48.There is no satisfactory evidence as to whether the agreement for the 3rd joint investment was made orally, in writing, or by conduct. Mr Wong did not say in his witness statements that there was a fresh oral agreement between himself and Madam Ng for a joint investment, and if so, when such an agreement was made, and what were its terms. As for writing, even though Mr Wong had the original of the 720 Investment Agreement, there was no amendment to reflect a new bipartite agreement in place of the original tripartite agreement. And the sum of investment in that document remained blank. 49.1. Further, on 29 July 2012, Mr Wong opened an account with the China Construction Bank in his sole name (“account #952"). The 720 Investment Agreement had called for a joint-name account. 49.2. Mr Wong’s explanation for opening a sole-name account notwithstanding his allegation of a 3rd joint investment with Madam Ng was that she was undergoing a divorce and it was not convenient for her to hold any assets. 50.I do not find that explanation plausible. Both before as well as after that date, Madam Ng’s online sale and purchase agreements were in her own name, and in them, she had specified account #299. Mr Wong’s allegation of Madam Ng’s need to hide her assets to keep a low financial profile is also inconsistent with the allegation in his witness statement that on 2 August 2012, at a meeting with officers of 720 Co, he and Mrs Wong wanted Madam Ng to join the board of directors of the company. 51.Account #952 remained Mr Wong’s sole-name account throughout, an act which is inconsistent with his allegation of a joint investment with Madam Ng. However it should be noted that Mr Wong accepted that as Mr Yuen did not have a Home Return Permit and did not have a bank account in Mainland China, he (Mr Wong) agreed that Mr Yuen’s funds from 720 Co would be placed in that account. 52.In Mr Yuen’s testimony at trial, he did say that he heard talk about a 50:50 split of profit returns between Mr Wong and Madam Ng. However he did not understand it as he had also invested HKD3 million. But because at the same time they did not say that he would get a separate profit return, he thought it meant that there would be one lump sum for the purpose of calculations. This mention of a 50:50 split of profits was not in his witness statement, and there was no other evidence that he was part of any discussions between Mr Wong and Madam Ng. In these circumstances, I do not consider that what Mr Yuen said is reliable evidence establishing that there was a 3rd joint investment between Mr Wong and Madam Ng. 53.After the termination of the 720 Investment Agreement upon Fanny Law’s withdrawal however, Mr Wong and Madam Ng had to make up the minimum sum (RMB10 million) by 31 July 2012 to qualify for the 720 Co Privileges. It was therefore understandable for Mr and Mrs Wong and Madam Ng to welcome capital from Mr Yuen to satisfy the minimum sum requirement. Mortgage loans from DDF 54.At various times before 31 July 2012, Mr and Mrs Wong, Madam Ng and Mr Yuen went to DDF for valuations of various properties for the purposes of obtaining loans. 55.It is common ground that on 31 July 2012, six mortgage loan agreements covering a total of 14 properties were made with DDF, as follows:
56.As seen above, the total sum of HKD13 million was raised by each group in the following proportions:
57.The sum of HKD13 million, after deduction for legal and administrative fees and applying the exchange rate of HKD1 to RMB0.822 used by DDF, was RMB10,505,160, which reached the minimum sum of RMB10 million for the 720 Co Privileges. 58.I shall adopt the nomenclature used by counsel at trial, and refer to Madam Yan’s mortgage as the “1st Mortgage Loan” (to reflect that it was a 1st legal charge) and the others as “2nd Mortgage Loans” (to reflect that they were 2nd legal charges). The six mortgagors are referred to as “Borrowers” for ease of reference. 59.1. All six loan agreements were signed on the same day, save that Mrs Yuen was not present at the same time as the rest of the Borrowers. 59.2. All six loan agreements contained similar terms, essentially that the loans were for one year (i.e. repayment to be on 1 August 2013) and redemption would not be permitted within the first six months. However there was an arrangement whereby DDF would accept repayment and early redemption during that period, as indeed occurred. 59.3. All six loan agreements were guaranteed by Madam Ng and Mr Cheng, save that Mr Wu (a director of MDC) was an additional guarantor for the loan to MDC. 59.4. There was a lump sum legal fee and administrative charge, which was applied to all six loan agreements without individual bills or apportionment. 59.5. As seen below, all six loans were not drawn down individually but together. 60.1. Further, the following are notable:
60.2. There can be no doubt that viewing the Borrowers as a group, the above arrangement benefitted them financially vis-a-vis the lender. 61.1. Finally in relation to the loans, Madam Ng said she lent HKD300,000 out of the HKD5.85 million raised by the Ng group to Mr Yuen so that he would have HKD3 million for investment in 720 Co. This was because it was thought initially that Mrs Yuen’s property would be valued at HKD3 million, but it turned out that DDF valued it at only HKD2.7 million. 61.2. Madam Ng also alleged that Mr and Mrs Wong kept HKD550,000 out of the sum of HKD5.85 million raised by the Ng group. There is no evidence to support this, as it was clear that the entire sum of RMB10,515,160 was remitted by DDF to Ngai Shun of 720 Co (discussed below). DDF document 62.1. It is important to note that on the same day as the six loan agreements, there was an additional document typed on DDF headed paper. It has been referred to in the District Ct Jmt as “Remittance Instruction” and has also been referred to as “Loan Confirmation Document”. I shall refer to it neutrally as the “DDF document”. 62.2. This document first set out a table containing six boxes. In each box, the left-hand column stated the name of the mortgagor and interest rate, and the right-hand column stated the mortgaged property/properties followed by the loan amount for each property. 63.In Madam Yan’s box, there was added in the right-hand column “(1st mortgage)” and “1 year (6 months) interest first”. It was agreed by Madam Yan and Mr Law at the District Ct trial (paragraph 12, District Ct Jmt) that this meant repayments would be applied to interest first before the principal. This is consistent with the amount of the first 11 of the 12 repayment instalments stated in Madam Yan’s loan agreement, which (in contrast with the 2nd Mortgage Loans) comprised the amount of interest only. 64.Significantly, the following words were printed below the table on the DDF document (emphasis added).
65.This was signed by five of the Borrowers but not Mrs Yuen who had signed her Loan Agreement at a different time. It was put to Madam Ng who signed twice that her second signature was as agent for Mrs Yuen. She denied this, but in any event I find for the reasons below that Mr Yuen, who was present as his wife’s representative, was aware of, and agreed to, the contents of the DDF document. 66.I find, contrary to Mr Yuen’s evidence, that he was aware of the contents of the DDF document. At trial, he said first that the signatories were in a small office, so he did not enter. Then he said he was there, but he sat at the end of the table, so he did not hear anyone talking about remittance, lawyers and administrative fees, or the exchange rate. Pausing there, if it was such a small office as he said, it would have been strange for him not to have heard people speaking. I find his evidence inconsistent and unreliable. 67.As discussed above in this Judgment, Mr Yuen said at trial that he did not even know that funds had been borrowed from DDF until he went to dinner with Mr and Mrs Wong and Madam Ng afterwards, and that it was only then that he decided to invest in 720 Co. Whilst this might provide him with an explanation for why he was not interested in the contents of the DDF document, it is inconsistent with his other evidence of his decision to invest in 720 Co on an earlier day, and I reject it. I find that he was aware of the contents of the DDF document, and was happy to go along with them as the other Borrowers did so. Irrevocable power of attorney 68.1. On the same day as the six loan agreements, there were also signed by each of the mortgagors an irrevocable power of attorney in Chinese, which stated that he/she instructed DDF to authorize Mr Law to remit the mortgage loan amount to the account No. 6217-8517-0000-0107-622 of Ngai Shun at the Bank of China Xiamen branch (a different bank from that stated in the DDF document, but nothing turns on that). It is notable that the document also stated that there would be no recourse against DDF for any loss if any disputes arose from the “allocation” of the loan amount. 68.2. Even though the power of attorney gave authority to the staff of 720 Co to remit funds, as noted above the DDF document contained many more important details regarding the use of funds (the amount of deducted legal and administrative fees, the exchange rate, the date of remittance, and the text emphasized in paragraph 64 above). Clearly the DDF document was an essential document in the operation for the use of funds. As discussed above, although Mrs Yuen (and her agent Mr Yuen) did not sign the DDF document, I find that Mr Yuen who was present at the signing of the DDF document was aware of and had agreed to its terms, essentially that there was one loan of HKD13 million for which all Borrowers were liable. Legal Charges 69.1. Legal charges were executed by the mortgagors in favour of DDF. They were all dated 31 July 2012. The “borrower” is defined as the mortgagor, and “secured indebtedness” is defined as all sums advanced from time to time by DDF to the borrower and all other moneys and obligations in respect of moneys which the borrower covenants to pay DDF under clause 2 or other terms of the charge. 69.2. Clause 2(ii)(d) provided that the borrower would pay all sums of money for the time being owing to DDF in respect of:
It would seem on an objective construction that “credits opened” referred to letters of credit, and counsel before me have not sought to argue otherwise. 70.Returning to the facts, at trial it was no longer disputed that DDF remitted the sum of RMB2 million on 31 July 2012 and the balance of RMB8,505,160 on 1 August 2012 to Ngai Shun, making up a total of RMB10,505,160. There is therefore nothing in Mr Yuen’s submission which was based on 720 Co having offered a better exchange rate which, it was suggested, would have resulted in excess funds available to Mr Wong. 71.Significantly the sum of RMB10,505,160 was remitted to 720 Co as a lump sum (albeit in two tranches), thereby satisfying the minimum sum requirement under the 720 Co Privileges. “Shop List” 72.1. There is in evidence a document referred to as a “Shop List” which Mr Wong said he received from 720 Co purportedly showing the number of shops purchased on 1 August 2012. The Shop List does not show how much was paid for all or any of the shops. 72.2. Counsel have agreed that according to the Shop List:
The total number of shops purchased by the three of them, according to the Shop List, was thus 143 “5-star” (i.e.2,145) shops. Of this, the total number purchased by Mr Wong and Madam Ng was 113 “5-star” shops. However it would be noted that many more were attributed to Madam Ng compared with Mr Wong. In Mr Wong’s statement to the Hong Kong police on 24 August 2012 (referred to below), he said he and his wife together with “two friends” pooled funds of RMB11,500,000 to purchase 106 “5-star” shops. It is difficult to reconcile these figures. Arithmetically, the last scenario seems more accurate (106 x 5 x 3 x RMB7,200 = RMB11,448,000). 73.Be that as it may, the proportion of shops is still inconsistent with the 50:50 alleged by Mr and Mrs Wong of a “3rd joint investment” with Madam Ng. 74.Although the Shop List referred to a large number of shops, it does not state how much was paid for them and raised more questions than answers. As such, it does not prove that Mr and Mrs Wong and Madam Ng had enough funds themselves to reach the minimum sum required for the 720 Co Privileges. They needed the funds supplied by Mrs Yuen, hence the arrangement for the RMB equivalent of HKD13 million to be sent in one lump sum (albeit in two tranches) to Ngai Shun on 31 July - 1 August 2012. 75.Pausing here, it would be noted that although the parties had mortgaged individually owned properties and had purchased shops in individual names, and I have found that there was no investment agreement between them, that is distinct from the issue whether as between them and DDF, they had agreed to be jointly liable for the loan of HKD13 million. 76.In respect of the submission made on behalf of Mrs Yuen that she only incurred several liability for her own loan, the DDF document has to be construed objectively in the matrix of facts. Whilst it may well have been reckless to agree to be jointly liable for a substantial loan, at the end of July 2012, everyone was attracted by the rewards and privileges promised by 720 Co which had a good track record, or so it appeared at the time. 720 Co’s closure 77.Unfortunately for the parties to these proceedings, 720 Co closed down in mid-August 2012. Mr and Mrs Wong and Madam Ng went to Xiamen for a meeting called by 720 Co but found on 18 August 2012 that the PSB had closed it down for suspected fraud. Mr Wong’s statements to the police 78.Mr Wong gave statements to the PSB and the Hong Kong police on 20 August 2012 and 24 August 2012 respectively. I consider that more weight should be placed on these reports because they were made contemporaneously to the police authorities, albeit with generalizations or inaccuracies. 79.In the statements, Mr Wong said (among other things) that:
80.Pausing here, the following would be noted regarding the statements.
Other payments received? 81.Apart from these, at trial there was an issue as to whether other payments were received by Mr Wong from 720 Co. This issue arises from two statements made by Wang Lan on 18 November 2018 and 21 July 2021 respectively. They were purportedly signed by him and authenticity was not challenged. However, they were not made on oath or affirmation or notarized. Wang Lan’s statements 82.It is common ground that Wang Lan was imprisoned as a result of 720 Co’s activities. 83.1. In his 1st statement, he said:
83.2. Pausing here, it is noted that:
84.Wang Lan’s 1st statement is therefore not supported by the documentary evidence and I find the alleged payment of RMB2 million on 1 August 2012 has not been proved. 85.1. In his 2nd statement, he said that:
85.2. Attached to the statement was a remittance record showing that on 14 August 2012, Wang Lan had transferred RMB1 million to Mr Wong’s account #952. 85.3. Pausing here, it is noted that:
85.4. Mr Wong alleged that this sum of RMB1 million was not referable to the investments on 1 August 2012. He alleged that it came from a motor vehicle reward of RMB3 million. Even though 720 Co did not permit withdrawing such a reward in cash, and the reward could only have been used for purchase of other online shops, Mr Wong alleged in his witness statement that Wang Lan agreed to arrange funds coming into 720 Co from other purchasers to be deposited into his (Wang Lan’s) own account, for onward transfer to Mr Wong so that the latter could receive RMB3 million in cash in August. 85.5. Under cross-examination however, Mr Wong said he had not asked Wang Lan to cash out the RMB3 million car reward and that the RMB1 million was not part of it. 86.In any event, the allegation is implausible. At a time when 720 Co was close to illiquidity, there was no reason for Wang Lan to favour Mr Wong with such an arrangement. On the contrary, in 720 Co’s financial circumstances at that time, Wang Lan would not have made payments out other than when absolutely necessary. 87.Secondly, it has been noted above that Mr Wong did not include this sum of RMB1 million in his statement to the PSB when asked what rebates had been received from 720 Co. This sum should have been foremost in his memory as he had transferred out the RMB1 million in two transfers of RMB500,000 to Yim Choi Hung and Mrs Wong on 14 August and 19 August 2012. I find that he did not mention it when making the statement as, contrary to his allegation, Madam Ng had not agreed to Mrs Wong keeping RMB500,000 as a “set off” for what Madam Ng owed Mrs Wong (discussed below). 88.By reason of the above, I find that on 14 August 2012, Wang Lan did transfer RMB1 million to Mr Wong as proceeds of the sums invested in 720 Co on 1 August 2012 by Mr Wong, Madam Ng and Mr Yuen. Repayments to DDF 89.After 720 Co’s closure, the parties immediately started to make repayments to DDF. 90.Repayments of various amounts on various dates were made by the Wong group and the Ng group. According to Madam Ng’s witness statement (paragraphs 28-29) and her counsel’s opening (paragraph 17), HKD700,000 was paid by her on behalf of Mrs Yuen. However, Madam Ng later mentioned that instalment payments of HKD37,500 totaling HKD750,000 were also paid on behalf of Mrs Yuen instead of Mr Wu and MDC. This was an unexplained departure from her earlier evidence. I find that she only paid HKD700,000 on Mrs Yuen’s behalf. 91.Some official receipts issued by DDF were included in the bundles. However, its allocation of the repayments is shown more clearly in a helpful document prepared by counsel entitled “Summary Table of Repayment Allocation” (“Repayment Allocation Table” or “RAT”), a copy of which is attached to this Judgment. 92.Apart from early redemption situations when there was correspondence between solicitors, there were no written instructions to DDF specifying how it should allocate the sums paid to it. 93.Mr Wong alleged that he had orally informed Miss So, a manager at DDF, each time repayment was made, that he was only repaying the loans of his children and then Madam Yan. One would have thought that if Mr Wong had in fact asked DDF to restrict his repayment to those loans, he would have asked Miss So to make a note of it for the record. However, Miss So was not called, nor was there any statement or documentary evidence from her to support Mr Wong’s allegation, which I reject. 94.As discussed above, there were no regular statements or accounting documents from DDF showing the state of the loan(s). Further, some references in DDF’s official receipts were inaccurate, e.g. the 1st Mortgage Loan was omitted in the references in DDF’s receipts dated 28 September 2012 (CB82) and 30 November 2012 (CB90), even though it can be seen from RAT that interest for the 1st Mortgage Loan was included in the repayments. In instances of early redemption however (CB84), DDF did not allocate repayments to interest for the 1st Mortgage Loan (RAT). 95.1. Importantly however, at trial the following facts were agreed:
95.2. The agreed fact that on 31 August 2017, “all outstanding sum owed by the Borrowers had been repaid to DDF” means that upon the payment of HKD16,534,219.50, there was no over payment, or under payment, or adjustment needed in instances of early redemption. In other words, the parties agree that the allocation by DDF of their repayments as shown in RAT was correct, whatever the parties had in mind when they made repayments. 95.3. Some factual matters regarding the source of funds were disputed (discussed below), but the parties do not dispute the arithmetical calculations which show that this was how DDF allocated the repayments resulting in what the parties agree was the correct outstanding sum. District Ct Jmt 96.1. As mentioned earlier, in 2013 Madam Yan sued DDF in the District Ct Action. The hearing took place in June 2016. Apart from Madam Yan, Mr Wong also gave evidence for her, as did Wongs’ son and Wongs’ daughter. 96.2. The main issue was whether Madam Yan should be liable for all the funds from DDF under the six loan agreements. 97.Madam Yan alleged that she had, through Mr and Mrs Wong, made total repayment of HKD2,704,300 (District Ct Jmt §9f), but DDF had refused to discharge the 1st Mortgage over her property. 98.DDF’s defence was that the funds provided on 31 July 2012 were lent as a single loan, for which all Borrowers were liable jointly. As an amount was still outstanding, DDF was not obliged to discharge the 1st Mortgage. 99.Mr Law testified that in an oral arrangement made on 31 July 2012 between the Borrowers (or their agents Mr Wong and Mr Yuen) and DDF, it was agreed that:
100.For reasons given in the judgment dated 11 August 2017, the judge accepted DDF’s case, found that there was a single loan for which all Borrowers were liable, and that there was an oral arrangement that repayments would be applied to the higher-interest loans (2nd Mortgage) first, before the lower-interest loan (1st Mortgage). Since a sum was still outstanding, he dismissed Madam Yan’s claim against DDF with costs. There was no appeal. 101.Shortly after the District Ct Jmt was given, the Wongs paid to DDF sums amounting to HKD4,146,219.50 (which DDF allocated as to HKD2.5 million for the principal and HKD1,646,219.50 for the interest on the 1st Mortgage Loan after May 2015) as can be seen from RAT. 102.With payment of these sums, DDF was repaid in full by 31 August 2017 (Agreed Facts, paragraph 11). This was confirmed in a document from DDF dated 11 March 2019 in which it referred to a loan of HKD13 million to the Borrowers secured jointly by 14 properties. 103.Pausing here, I do not accept the Wong group’s submission that Mr Wu and MDC or Mrs Yuen are bound by the findings in the District Ct Jmt. Clearly there cannot be res judicata in the narrow sense as they were not parties. But I also find there is no abuse of process in the context of a collateral attack on a prior civil decision. This principle is based on fairness, and I find the Wong group cannot complain of unfairness to it when it had not informed Madam Ng and Mr Yuen about the District Ct Action earlier than a few days before the start of that trial. The Wong group called a meeting at a restaurant, but Madam Ng was not in Hong Kong and was only represented by a member of her staff. Mr Yuen said he did not stay. In my view it can hardly be fair for the Wong group now to complain of abuse of process when it had chosen not to join the Ng group and Mr and Mrs Yuen as parties in the District Ct Action, and had left it so late to inform them of the impending trial. High Court actions 104.1. On 27 July 2018, the Wong group issued a writ against the Ng group, Mrs Yuen and Mr Cheng on the basis of unjust enrichment, contribution, reimbursement and/or breach of contract for HKD3,183,756.67 or any sum to be determined by the court for repayment of loans owed by Mr Wu, MDC and Mrs Yuen to DDF. 104.2. On 20 December 2018, Mr Yuen issued a writ against Mr and Mrs Wong claiming that they were his agents and/or fiduciaries or trustees and should account to him in respect of his investment of HKD3 million in the purchase of online shops, and for an inquiry and an order for payment. Xiamen Court action 105.Before the High Court actions were heard however, there were proceedings in Xiamen. 106.It would appear that in 2022, Madam Ng first commenced proceedings against 720 Co, Mr and Mrs Wong, Wongs’ daughter, and Yim Choi Hung. Mr Yuen and Wang Lan were “third persons” 第三人. Those proceedings were then withdrawn on 28 March 2023. 107.On 14 August 2023, Madam Ng commenced proceedings in action 9221 in Xiamen against the same persons with the addition of Wongs’ son, Madam Yan and Ngai Shun. Again, Mr Yuen and Wang Lan were “third persons”. 108.In the meantime, on 8 November 2022, Mr Yuen commenced proceedings against 720 Co, the Wong group, Yim Choi Hung, Ngai Shun and one Ng Yung Ding. However, on 24 March 2023, he withdrew the proceedings. 109.720 Co, Ngai Shun and Wang Lan did not appear at the trial. 110.On 8 August 2024, the Xiamen Ct gave judgment in action 9221. It ordered Mr Wong to pay Madam Ng RMB542,192.31. Ms Leung informed this Court that this sum has been paid, but she says Madam Ng’s liability to repay this sum is “a separate matter between [Madam] Ng and Mrs Wong and does not require determination in these Actions”. 111.Among the issues the Xiamen Ct decided was that Wang Lan had not paid RMB2 million to Mr Wong on 1 August 2012. Ms Leung submitted that Mr Yuen is bound by the Xiamen Ct Jmt by res judicata or issue estoppel. I note however that the Xiamen Ct Jmt was not pleaded as it should have been, as it is well established that Mainland Chinese law is regarded in the Hong Kong courts as foreign law, and foreign law and its features (such as finality and the status of a ‘third person’) are matters of fact which should have been pleaded. Quite apart from that, no expert opinion evidence on features such as the status of a ‘third person’ and the finality of the Xiamen Ct Jmt was adduced, as Ms Sat submitted in closing. Accordingly, I have not taken the Xiamen Ct Jmt into account in this Judgment. Issues 112.Against the facts set out above, the issues in these two proceedings may be summarized as follows:
Discussion (1) No investment agreement 113.I have discussed in paragraphs 42 to 52 above the reasons for my finding that there was no investment agreement between Mr Wong, Madam Ng and Mr Yuen, nor between Mr Wong and Madam Ng. However, it is a different consideration whether there was an agreement among the Borrowers vis-a-vis their obligation to DDF, which will be discussed below. (2) Were Mr and Mrs Wong agents for Mr Yuen? Was Mr Wong a trustee or fiduciary of Mr Yuen and were any assets held on trust? 114.Quite apart from the allegation that Mr Yuen had not given a letter of authorization to Mr Wong which Madam Ng said was required for the appointment of an agent for 720 Co transactions in Mainland China, it is well established law in Hong Kong that an agency is a consensual arrangement. I do not find a consensus between Mr and/or Mrs Wong of the one part and Mr Yuen of the other for the former to be Mr Yuen’s agent(s). There was nothing in Mr Yuen’s evidence to show that he had any control over Mr and Mrs Wong’s actions or decisions (Bright Gold Ltd v Mega Well Development Ltd [2020] HKCA 575, [94] - [96]). I find therefore that neither was an agent for Mr Yuen. Rather, as discussed above, I find that Mr Yuen was “tagging along” with Mr Wong and Madam Ng, who had more experience investing in 720 Co and who had invested more money than him. 115.Regarding distributions from 720 Co however, it was common ground that Mr Yuen did not have a Home Return Permit for Mainland China and did not have a bank account there. At trial Mr Wong admitted that he had Mr Yuen’s e‑wallet password and that he had agreed that proceeds from Mr Yuen’s investment could be placed in his (Mr Wong’s) account. Although Mr Wong said he agreed to this on Madam Ng’s request, and although it may have been done as a matter of convenience, I find he had thereby assumed the duties of a fiduciary to Mr Yuen, and I find he was a constructive trustee of proceeds that he should, but failed to, pay to Mr Yuen, discussed below (Lewin on Trusts [34-006]). (3) Did the Borrowers agree to be jointly liable to DDF? 116.Although I have found for the reasons given in paragraphs 42-52 above that there were no agreements between any of the parties for a joint investment in 720 Co, it is a different matter when it comes to the obligation to the lender DDF. 117.With the deadline of 31 July 2012 looming for payment of the minimum sum of RMB10 million for the 720 Co Privileges, it was necessary for Mr Wong, Madam Ng and Mr Yuen to agree to act together to borrow a lump sum. If there was no agreement to act together, any one or more of the Borrowers could withdraw from taking out a loan at the last minute (in the same way as Fanny Law had withdrawn from the Investment Agreement) or draw down his loan at a different time, or use only part of his loan for 720 Co and part for some other venture (as Madam Ng and Mr Yuen had their own businesses), thereby jeopardizing entitlement to the 720 Co Privileges. 118.On an objective reading of the DDF document, it is clear that the Borrowers had undertaken joint liability for the lump sum of HKD13 million. Instead of individual draw downs by each Borrower, it was agreed that the entire sum would be remitted through Mr Law albeit in two tranches. The fact that there was no distinction which Borrower’s funds were remitted in the first tranche, and which in the second, is another indication that it was one joint loan. Legal fees and administrative charges were taken out of the lump sum, irrespective of the amount of each loan and irrespective of how many properties had been mortgaged by each Borrower. Further, the arrangement whereby DDF agreed that the higher interest 2nd Mortgage Loans would be repaid before the lower interest 1st Mortgage Loan was beneficial to the group of Borrowers as a whole, as there would have been no reason for Madam Yan to agree to that arrangement, had each Borrower been liable only for his own loan. 119.Accordingly, I find that the Borrowers agreed to be jointly liable for the sum of HKD13 million, not severally for his/her own loan. Nor was there joint and several liability in the absence of express language to this effect (Goff & Jones on Unjust Enrichment [20-71]). 120.That analysis is demonstrated by the fact that after 720 Co’s closure, the Wong group and the Ng group immediately set out making repayments to DDF without specifying which loan should be credited. As Madam Ng put it in her supplementary witness statement (paragraph 12) and confirmed at trial, everyone’s focus at the time was on jointly discharging the liability as soon as possible. (4) What is the effect of joint liability? 121.Although they were jointly liable to DDF for the lump sum of HKD13 million, as between themselves, the benefit that each Borrower had received was as follows:
122.Although the remittance to the 720 Co was in one lump sum of RMB10,515,160, according to Mr Wong’s statements to the PSB and the Hong Kong police, what was paid to 720 Co was RMB11,500,000, attributable as follows:
123.The additional RMB1 million from Mr Wong has been discussed in paragraph 80(4) above. Deducting this amount, what was received by 720 Co from each of the three investors was more or less similar to the proportion of the loan each received from DDF. 124.The Wong group submits with reference to RAT that it has over‑contributed in discharge of the joint loan, the calculations of which I will discuss below. I shall first discuss the legal bases of the Wong group’s claim in HCA1746. Its claims are based on:
125.Pausing here, there is also a separate claim said to be “on the basis of equitable jurisdiction of the Court”, but I do not think this adds to the claim under unjust enrichment (Goff & Jones [19-10]). 126.Further, it is not clear that CLCO would apply. It applies to “damage” suffered, and as discussed in Goff & Jones [19-30], the language is more appropriate for torts, rather than debts or unjust enrichment. I would therefore decline to order any relief on this basis. That leaves LARCO and unjust enrichment. 127.The LARCO section is based on s.5 of the Mercantile Law Amendment Act of 1856 which is still current in the UK (Goff & Jones [19-46]). Essentially, it provides that where A and B are co-debtors, then when A pays the debt, he can stand in the creditor’s place to use all its remedies against B, but A would only be entitled to a just proportion to which, as between A and B themselves, B is justly liable. Although the section starts with a reference to sureties, it has been held that it applies in a situation where “ ... there is, strictly speaking, no contract of suretyship, but in which there is a primary and secondary liability of two persons for one and the same debt, by virtue of which, if it is paid by the person who is not primarily liable, he has a right of reimbursement or indemnity from the other” (Duncan, Fox & Co v North and South Wales Bank (1880) 6 App Cas. 1, quoted in Goff & Jones [19-46]). 128.The statutory remedy under LARCO (or, in the UK, the Mercantile Law Amendment Act) was an extension to personal claims under the common law which were being developed in the 19th and early 20th centuries (Goff & Jones [39-30]). 129.Nowadays, claims under unjust enrichment are well developed. First, the law is clear that where a claimant and a defendant are jointly liable to a creditor, and the claimant pays part of the debt to the creditor, the defendant is discharged from liability pro tanto to the creditor. If the claimant pays more than his share, the law will allow him to recover the excess from the defendant on the basis that the defendant was “primarily” and the claimant “secondarily” liable for that excess (Goff & Jones [5-70] - [5-71]). 130.Although sometimes the term “subrogation” is used, the less ambiguous term for the claim where there is a pro tanto discharge would be “contribution”. The advantage of a claim under contribution over a claim under LARCO is that it is more flexible, not being limited by the statutory language, and may be used where the payment to the creditor has not been requested by the defendant or has been made by the claimant under mistake (Goff & Jones [19-19]). It is therefore the more appropriate remedy in this case where it has been argued that Mrs Yuen had not requested payment from the Wong group, and where the Wong group has alleged that it had made payment by mistake (which is denied). 131.The claimant can bring an action in his own right for contribution, as a restitutionary remedy which reverses unjust enrichment (Goff & Jones [19-03]. This is of course on the basis that the four requirements for an unjust enrichment claim are present. The four requirements are: (1) the defendant was enriched; (2) the enrichment was at the claimant’s expense; (3) the enrichment was unjust; and (4) no defences are applicable (Shanghai Tongji Science and Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79 at [67]). 132.These principles cannot be seriously disputed once joint liability is found and over-payment has occurred. What has been disputed is the percentage that each of the Borrowers should contribute to repayment, which would determine whether the Wong group has made over-payment, and if so, how much. (5) What is the sum that each of the Borrowers should contribute to repayment? 133.I shall first discuss the relevant percentage that each Borrower should contribute to repayment, and then consider the points made by the parties as to the actual amount to be paid. 134.As discussed above, although the Borrowers were jointly liable to DDF for the lump sum of HKD13 million, as between themselves, the benefit that each Borrower received was as follows:
And, after deducting the additional RMB1 million from Mrs Wong, that was the percentage, more or less, of the sum of approximately RMB10,515,160 remitted to 720 Co and used for the purchase of shops by Mr Wong, Madam Ng and Mr Yuen respectively on 31 July to 1 August 2012, as follows:
The percentages are not precisely the same because the figures have been rounded up or down. I have discussed at paragraphs 72.1 to 74 above the questions posed by the Shop List and why the figure of 106 shops given by Mr Wong in the PSB statement seems more accurate. Be that as it may, it is clear from the remittance made directly by DDF to 720 Co and its use for the purchase of at least 106 shops that each of the Borrowers had made full use of the funds he/she received from DDF. 135.In light of the above, it is clear to me that the percentage that each of the Borrowers should contribute to repayment should be in the following proportion:
If one applies this percentage to the end figure of HKD16,534,219.50 which the parties have agreed was the outstanding sum due to DDF, then their respective contributions should be as follows:
136.These amounts are however disputed because it is said that the percentage originally applicable to the repayment of the principal should not be applied to the repayment of interest. As seen from RAT, the debt to DDF remained outstanding until August 2017 as it was only then that the Wong group paid HKD4,146,219.50 towards the principal of HKD2.5 million and interest of HKD1,646,219.50 for the 1st Mortgage Loan. 137.In the present case, I do not think it would be just to draw a distinction between the proportion of liability for the principal and that for interest. As discussed above, the parties did not receive any regular statements from DDF showing its allocation of repayments throughout that time, nor even annual confirmations of account. None of them saw fit to ask DDF for them. Although the Borrowers had made an arrangement with DDF in July 2012 for repayments to be allocated to the higher interest 2nd Mortgage Loans first, they did not know how that actually applied in practice as there were no statements from DDF. It was only after the District Ct Jmt that the Wong group was aware that the principal of the 1st Mortgage Loan was outstanding and that only HKD975,000 had been paid towards its interest from 2012 to 2015. The District Ct Jmt was given on 11 August 2017, and by 31 August 2017, the outstanding sum was paid to DDF. 138.Accordingly, I find that the amount that each of the Borrowers should contribute to repayment should be as follows:
I shall now discuss issues raised by the parties who have sought to reduce the sum of their respective contributions above. (6) What was distributed by 720 Co and received by Mr Wong for and on behalf of Mr Yuen? 139.Mr Yuen has pleaded (paragraph15(3) Amended Statement of Claim) that Mr Wong has received distributions in cash or in kind, part of which were received on his behalf. 140.It should be noted that prior to the DDF remittance to 720 Co, the Wongs and Madam Ng had purchased a number of shops from which they would have received rents and other rewards (albeit payable into their e-wallets at first instance). There was only one period (1-8 August) for which rents would have been payable between the time of the DDF remittance and 720 Co’s closure on 18 August 2012. For 106 shops, rent at RMB20 a day for 8 days would only have come up to RMB16,960, and there is no evidence that this sum had found its way to the purchasers. 141.However, Mr Yuen alleged that there were other distributions (whether called rebates or rewards etc). I shall consider them in chronological order. 142.First, concerning the sum of RMB150,000 being the proceeds of sale of three gold bars, I find that these were rewards from Mrs Wong’s previous purchases, as the invoices from the gold retail shop were dated 28 June 2012 and 19 July 2012, before the DDF remittance. 143.Second, there was an allegation relating to RMB100,000 which was not pursued, so I shall ignore this allegation. 144.Third, it was alleged that Wang Lan paid Mr Wong a sum of RMB2 million on 1 August 2012. I have found for the reasons given in paragraphs 83.1 to 84 above that Wang Lan’s 1st statement was not supported by documentary evidence and that this allegation has not been proved. Pausing here, it follows that Madam Ng’s allegation that this RMB2 million was the source of the Wong group’s repayment of HKD2,068,500 to DDF on 31 August 2012 should also be rejected. 145.Fourth, Mr Wong himself told the PSB that on 10 August 2012 he received in account #952 a sum of RMB270,000 by way of rebate, of which Mr Yuen was entitled to RMB56,700. The only reason Mr Wong gave for withholding this sum from Mr Yuen was that he says Madam Ng had told him to set it off against what she owed Mrs Wong. Quite apart from my finding that there were no joint investments between Mrs Wong and Madam Ng nor a loan from Mrs Wong to Madam Ng for the purchase of antiques, this is not an acceptable reason for Mr Wong, who was in a fiduciary position, to withhold this sum from Mr Yuen who had not given him any such instructions. 146.Fifthly, I have found for the reasons given in paragraphs 85.1 to 88 above that on 14 August 2012, Wang Lan did transfer RMB1 million to Mr Wong’s account #952 as proceeds of the sums invested in 720 Co on 1 August 2012 by Mr Wong, Madam Ng and Mr Yuen. As Wang Lan’s 2nd statement refers to a total investment sum of RMB11.5 million, of which Mr Yuen provided RMB2.4 million (or 20.87%), his share of this RMB1 million should therefore be RMB208,700. 147.Insofar as Mr Wong alleged that he had set off part of the RMB1 million for Madam Ng’s debt to Mrs Wong, I find for reasons discussed above that he is not entitled to do so. (7) What were the actual repayments made by each party to DDF? 148.The RAT sets out the actual repayments to DDF. I have rejected above Madam Ng’s allegation that the Wong group had used RMB2 million from 720 Co to pay DDF HKD2,068,500. The Ng group has also alleged that the Wong group paid HKD100,000 less than the figure of HKD1,406,900 to DDF on 31 October 2012. The HKD1,406,900 figure can be seen in a cheque (CB77) and transaction advice (CB75) and I reject the Ng group’s allegation which is not supported by documentary evidence. 149.Madam Ng also alleged that the Wongs had used HKD400,000 which came from her group. There are bank statements showing that Mr Wu drew two cheques of HKD200,000 each near that time, but the actual cheques or cheque stubs were not produced, so the recipient(s) is/are unknown. Mr Wu himself could not recall who he had paid those cheques to. Accordingly, I find that allegation has not been proved. 150.Finally, as discussed above, the Ng group has paid HKD700,000 on behalf of Mrs Yuen. Accordingly, the actual repayments made by each party to DDF making up the total of HKD16,534,219.50 are as follows:
(8) If there has been over-payment, who must repay and how much? 151.Applying the general principle of rateable contribution in the co-surety context (Andrews & Millett, Law of Guarantees [12-013]) and in the subrogation context (Goff & Jones [39-107]), the parties’ positions now are as follows (HKD):
152.Accordingly, I find the Wong group is entitled to HKD449,598.78 from Mr Wu and MDC, and it is entitled to HKD2,734,157.39 from Mrs Yuen. Mr Wong should however pay Mr Yuen HKD322,991.80, being the HKD equivalent of RMB56,700 and RMB208,700 that Mr Wong should have given to Mr Yuen from 720 Co’s distribution, at RMB1 to HKD1.217 (from the exchange rate of HKD1 to RMB0.822 applied by DDF which I take to be the current exchange rate at that time). I do not see the need for an account or inquiry to be taken notwithstanding the trust claim. Mr and Mrs Yuen were treated as one entity. The Wong group and the Ng group were using available funds to repay DDF, to whom Mrs Yuen was liable. Interest 153.Finally, as for interest on the unjust enrichment claim in HCA1746, the Wong group sought pre-judgment interest at the rate charged by DDF. 154.The learned editors of Goff & Jones have commented that the courts have not “carefully examined” the basis of pre-judgment interest awards [39-111], but that according to one line of authority, “in claims for contribution or reimbursement, the courts do not seem to have assumed that they must, or indeed, can, award interest at the rate payable on the discharged debt. Instead, interest has been awarded at what appears to be a conventional rate, even where the debt discharged did not bear interest, or where it bore interest at a higher than the conventional rate” [39-113] (emphasis added). 155.As discussed above, the state of the parties’ respective liability to repay was clearly hampered by the lack of information from DDF. Further, I have not been referred to a letter of demand prior to the issue of the writ on 27 July 2018. In the circumstances, it would be just to order interest on the claim at prime + 1% from the date of writ to Judgment, and thereafter at the Judgment rate. 156.I do not think it is appropriate to order interest on Mr Yuen’s claim in HCA2952/2018 for the same reason given in paragraph 152 above as to why I would not order an account. Order 157.I would order in HCA1746/2018 that:
I would order in HCA2952/2018 that the 1st defendant pay the sum of HKD322,991.80 to the plaintiff with interest at prime + 1% from the date of writ to Judgment and thereafter at Judgment rate. Costs 158.Finally, applying the general rule that costs follow the event and taking everything as a whole, I would make an order nisi that the 1st and 2nd and 3rd defendants in HCA1746/2018 (i.e. Mr Wu and MDC and Mrs Yuen) and the plaintiff in HCA2952/2018 (i.e. Mr Yuen) do pay the costs of the proceedings to be taxed if not agreed. 159.It only remains for me to thank all counsel for their work which has been of considerable assistance to the court.
Ms Eva Leung and Mr Jason Fee instructed by Messrs. Jackson Ho & Co. for the 1st to 5th Plaintiffs in HCA 1746/2018 and the 1st to 2nd Defendants in HCA 2952/2018 Mr Fergus Chan instructed by Messrs. Cheng & Ng for the 1st and 2nd Defendants in HCA 1746/2018 Ms Sakinah Sat instructed by Messrs. L&L Lawyers for the 3rd Defendant in HCA 1746/2018 and Plaintiff in HCA 2952/2018 HCA 1746/2018 & HCA 2952/2018 Summary Table of Repayment Allocation (HK$)
Notes: (1) Save for Wongs’ repayments on 31.8.2012 and 31.10.2012 marked with an asterisk (*) above (where Ngs/Yuens admit such payments but dispute their source of funds), Ngs/Yuens do not dispute the rest of the repayments made by Wongs and Ngs. (2) Payments pertaining to early redemption are in orange shade, where the relevant formula is not applied. [1] According to Ng SWS [A/24/197/§§28-29] and Ngs’ Opening §§16-17, only HK$700,000 on 28.9.2012 out of the HK$6,940,800 (or HK$7,040,800 on Ng’s case) was paid by Ng on behalf of Lai; the rest were paid on behalf of Wu and Meritocrat. [2] According to Ngs/Yuens (denied by Wongs), this figure is HK$1,306,900. [3] According to Ngs/Yuens (denied by Wongs) [A/21/195/§20], there was an additional HK$100,000 payment, such that this figure is HK$400,000, and the sub-total should be HK$900,000. [4] HK$14,300 interest had been prepaid in the early redemption of Chris Wong’s mortgage, and is therefore deducted here. [5] According to Ngs/Yuens [A/21/197/§25], Wu paid Diamond Dragon directly by way of a cheque in the sum of HK$801,700, and Wu transferred HK$750,000 to Ng, for Ng to further paid HK$150,000 and HK$210,000 to Diamond Dragon. [6] According to Ngs/Yuens (denied by Wongs) [A/21/197/§26], Ng paid the instalments of HK$37,500 during the period of September 2012 to May 2014. Ng’s evidence [A/21/197/§28] is that these instalments were paid on behalf of Lai. [7] Wu’s bank record from Feb 2013 to Aug 2013 showing 5 payments of HK$37,500 and 1 payment of HK$39,400 in May 2013 (no record of HK$37,500 was shown for that month). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Further hearings and rulings under HCA 1746/2018