Joy Capital Holdings Ltd and Another v. Yu Kafu
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HCA 1608/2025 [2026] HKCFI 5975 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1608 OF 2025 ____________ BETWEEN
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________________________ J U D G M E N T ________________________ A. INTRODUCTION 1.This is a case related to HCA 193/2025 (“the 193 Action”) in which summary judgment was given to the Plaintiff on 29 September 2025: Wang Boheng v Yu Kafu, HCA 193/2025, [2025] HKCFI 4566 (“the 193 Judgment”). The abbreviations in the 193 Judgment are adopted here. 2.Both cases arose out of the same factual matrix concerning a loan allegedly lent by the 1st Plaintiff (“JCH”) to the Defendant but later assigned to the 2nd Plaintiff (“Wang Junior”)[1]. There was a set of loan documentation related to the loan. The Defendant entered into an SPA to sell the Property to JCH’s nominee, Wang Junior, to repay the loan. The Defendant failed to complete the SPA. 3.The 193 Action was founded on the SPA. The 193 Judgment found the Defendant to have repudiated the SPA, ordered the Defendant to refund the Deposit to Wang Junior, and granted a declaration of an equitable lien over the Property. 4.The present action (referred to in the 193 Action as the “Loan Recovery Action”) concerns recovery of the outstanding loan from the Defendant based on the set of loan documentation. 5.This is the hearing of the Plaintiffs’ Order 14 Summons dated 4 February 2026. The Defendant opposes the same on the basis that there are triable issues as to the validity of the loan documentation. He counterclaims for declarations that the loan documents are invalid and seeks damages for the Plaintiffs’ wrongful repudiation of the SPA. B. THE FACTS 6.The introduction in Section A and the facts in Section B of the 193 Judgment are relevant to this case. I just add material facts relevant to this Summons. 7.In gist, JCH was said to have advanced a Loan Debt in the total sum of HK$107,241,381.00 to the Defendant to purchase the Property. 8.Related to the Loan Debt is a series of loan documentation, ie the Loan Agreement, the Promissory Note, the Deed of Assignment of Loan Agreement and Deed of Assignment of Promissory Note, all of which are governed by BVI law. 9.By the Loan Agreement dated 3 January 2017, JCH agreed to advance unsecured, interest-free loans to the Defendant in sufficient amount for the purchase of the Property. The Clauses relevant to the present action are as follows:
10.On 3 April 2017, the Defendant executed the Promissory Note upon completion of the SPA. The Clauses material to this case are:
11.About 5 years later, on 7 June 2022, 2 documents were executed (“the 2022 Deeds”) to take effect on that date:
12.In around September 2024, Wang Junior informed the Defendant (through Mr Lau) that he wished for the Property to be sold to Wang Junior. So the SPA dated 4 November 2024 was entered into. The Defendant agreed to sell the Property to Wang Junior, free from encumbrances, at a price of HK$76,800,000.00. Wang Junior paid the 10% Deposit to the Defendant by way of set off against the Loan Debt, as stated in the Deed of Set-Off dated 2 January 2025. The balance of the purchase price was to be paid on the completion date of 6 January 2025 and time was of the essence. 13.At that time, the Property was subject to a Mortgage and Mr Lau advanced HK$33.5 million to pay off the Mortgage to facilitate the completion. 14.The Defendant requested twice for postponement of the completion date, to 13 and 27 January 2025, respectively. Wang Junior granted the first but rejected the second. The Defendant was unable to discharge the Mortgage and did not complete. On 21 January 2025, through Deacons, Wang Junior accepted the Defendant’s repudiation of the SPA. 15.On 4 February 2025, Wang Junior commenced the 193 Action. Summary judgment was granted by this Court on 29 September 2025, with unconditional leave to defend the counterclaim (which materially duplicates the counterclaim in the present action). The Defendant’s appeal against the 193 Judgment is pending. 16.Meanwhile, on 29 August 2025, the Plaintiffs issued the present action. The Plaintiffs say that the Defendant has breached the SPA, PN Clause 3(c) and the Loan Agreement. The Plaintiff is thus entitled to demand the immediate repayment of the Loan Debt, the balance of which amounts to HK$99,561,381, after deducting the Deposit. 17.The Defendant pleads various issues in his Defence and Counterclaim, chiefly to dispute the validity of the loan documentation:
18.The Defendant counterclaims for declarations that (a) the Loan Agreement, Promissory Note, Deed of Assignment of Promissory Note, and the Deed of Set-Off are invalid; and (b) the Plaintiffs were in breach of the Deed of Set-Off in failing to extend the completion date. The Defendant also counterclaims for damages for not being able to sell the Property due to the litigation in the 193 Action and this Action. 19.The Defendant asks for unconditional leave to defend. He also asks for the issues concerning BVI law to be dealt with at a trial (“BVI Law Issue”). C. LEGAL PRINCIPLES FOR ORDER 14 APPLICATIONS 20.The principles have been recently summarized in Wang Junior Shuai v Zhang Qiaohui [2023] HKCFI 2067, §21, DHCJ Tong:
21.The mere fact that the defendant has put forward a counterclaim does not necessarily entitle him leave to defend. The appropriate order to make in an O.14 application where there is a counterclaim turns on the degree of connection between the claim and counterclaim, the strength of the counterclaim and the plaintiff’s ability to satisfy any judgment on the counterclaim: Hong Kong Civil Procedure 2025, Vol. 1. (“HKCP 2025”), §14/4/14B (pp 371-372). D. PLAINTIFFS’ CASE 22.The Plaintiffs’ case is that by reason of his breach of the SPA, the Defendant is in breach of PN Clause 3(c) and/or the Loan Agreement. By virtue of the Deed of Assignment of Promissory Note and/or the Deed of Assignment of Loan, Wang Junior is entitled to demand the return of the Loan Debt directly from the Defendant. See §§25-26 of the Statement of Claim (“SOC”). 23.On the Plaintiffs’ evidence, the original Loan Debt was confirmed by the Promissory Note. Pursuant to PN Clause 3(c), JCH had requested the Defendant to sell the Property to Wang Junior to set off the Loan Debt and hence the SPA was entered into. (See the letter of Deacons dated 22 January 2025.) The Defendant failed to complete and the 193 Judgment held that he was in wrongful repudiation of the SPA. However, regardless of the reason for non-completion, the Defendant was in breach of PN Clause 3(c) and he has to pay all outstanding amount of the Loan Debt in full immediately. 24.On the other hand, I am not satisfied, on the Plaintiffs’ case, that the Defendant was in breach of the Loan Agreement. The acceleration of repayment in Clause 4 of the Loan Agreement only applies if there was a “material breach” of the Loan Agreement. Failure to complete the SPA was not a breach under the Loan Agreement and the Plaintiffs have not pointed to any other breach. 25.In principle, the Plaintiffs are only entitled to judgment for breach of PN Clause 3(c), subject to any triable issue that the Defendant can raise. E. VALIDITY ISSUE 26.This Issue was raised and dealt with in the 193 Judgment (§§56-63). Wang Junior had admitted there that the loan in 2017 was not recorded. The loan documentation was prepared after Mr Lau obtained the Defendant’s agreement to do so (§58). After analyses, this Court held that the defence was not capable of belief when tested against the contemporaneous circumstances. At best, the original Loan Agreement and Promissory Note were not prepared at or about the time of the advance. However, the Loan Agreement was affirmed by documents dated 2017 and further affirmed by the 2022 Deeds signed by the Defendant (§61). Apart from PN Clause 3(c), the Defendant has not been able to identify any material difference between any of those documents and the original loan agreement as regards the loan. The Defendant considered and amended the draft versions of the 2022 Deeds before signing and returning the same to Mr Lau. Mr Lau, in turn, forwarded the same to JCH to countersign. The Defendant could not be ignorant of the purpose of signing those documents. He did not state how the 2022 Documents or any amendment did not correctly reflect the loan advanced in 2017. 27.Underlying the execution of the loan documentation was the fact that the Defendant was and is a qualified attorney admitted to the New York State Bar since 2002, with experience in banking, finance and investment. He was educated and affluent in English. As a professional, he could not have failed to understand the effect of signing the loan documentation and the terms therein (193 Judgment, §63). 28.In the end, this Court held that none of the Defendant’s challenges to the Loan Agreement and related Deeds could have any impact on the 193 Action (193 Judgment, §66). 29.The Validity Issue attempts to re-open the issues decided against the Defendant in the 193 Judgment. The Defendants relies on some documents he produced only under the present Summons but not in the 193 Action:
30.The Telegrams show discussions between Mr Lau and the Defendant discussing about the drafts of the Promissory Note and Loan Agreement. In my view, there was nothing wrong about the parties seeking to record in 2022 what had agreed upon in 2017. 31.The Transcripts told more as to why the loan documentation had to be created. In particular, there was reference to the need to avoid stamp duty and the risk of an injunction being imposed on assets of JCH. There was a reference to Mr Lau reminding Wang Junior not to push his grandfather to sign anything but think carefully first (at 03:02:37, the last point no. 2 on B237). 32.As explained by Mr Lau, the drafts were created primarily to record the loan arrangement as well as to flesh out the precise terms in order to maximise protection to the Plaintiffs and the Defendant in view of the ongoing litigation involving JCH and Wang in HCCT 77/2022. 33.On 3 October 2022, immediately after the 2 October Conversations, Mr Lau sent the March Email to Deacons[2], cc Defendant, stating that, “Regarding the Conduit Road property, clients have retrieved a promissory note dated 3 April 2017 from Canada (underline added). The note is for HK$107,241,381 (the “Promissory Note”). This was the aggregate of the amount of loans advanced by [JCH] to [the Defendant] for the purchase of the property in 2017. The Promissory Note was executed and delivered pursuant to a loan agreement dated 3 January 2017. Clients are still trying to locate the loan agreement. I will send the loan agreement to you once I have received it.” 34.The May Email was sent by Mr Lau to Deacons, enclosing the Loan Agreement, although it did not say whether the Loan Agreement was the one “located” by Mr Lau’s client or the one created in 2022 but back-dated to 2017, or otherwise. 35.What is puzzling about the March Email is that: Mr Lau had either lied to Deacons that the Promissory Note created in 2022 but dated 2017 was a document retrieved in Canada; or the Promissory Note truly existing in 2017 and retrieved in Canada was deliberately concealed from the Court for unknown reasons in the application for summary judgment in the 193 Action. 36.Be that as it may,
37.Accordingly, the Defendant’s denial of there being the Loan Debt or that the Promissory Note and Loan Agreement are invalid is inconsistent with his own stance in 2022, more than 2 years before the 193 Action and this Action were commenced. 38.As the Loan Agreement and Promissory Note had taken effect from 2017, the Promissory Note was clearly assignable to Wang Junior on a later date by way of the Deed of Assignment of Promissory Note. That Deed was signed between the parties after full consultation with the Defendants (193 Judgment, §62). 39.Mr Lau affirmed that a fully signed original of the Deed of Assignment of Promissory Note was given to the Defendant on 2 December 2022 for his record. The Defendant has no answer to that. 40.The Validity Issue is not triable. F. PN CLAUSE 3(c) ISSUE 41.On the Plaintiff’s case, the Deed of Assignment of Promissory Note was concluded between the Plaintiffs and the Defendant on 7 June 2022 but formally recorded in writing in around early October 2022 (Reply, §6). The Deed arose as a result of Wang Junior’s discovery in early 2022 that the Defendant had mortgaged the Property to BEA without first notifying the Plaintiffs. As the Defendant refused to produce the mortgage statements to show the outstanding amount PN Clause 3(c) was incorporated (Reply, §6(2)(d)). 42.The Defendant points out that the information provided by the Plaintiff (including the metadata disclosed through discovery in this Action) has not shown how PN Clause 3(c) was drafted, with email exchanges which led to the final version. The Plaintiffs mainly rely on the so-called meeting on 17 October 2022 between Mr Lau and the Defendant to explain how PN Clause 3(c) came into being. 43.He submits that the Deed of Assignment of Promissory Note is self-contradictory. On the one hand, it asserts that the assignment to Wang Junior is “unconditional and irrevocable”; on the other hand, it affords JCH substantive control over the maturity of the Loan Debt and the disposal of the Property through PN Clause 3(c). PN Clause 3(c) is in direct conflict with PN Clause 1(a) as it effectively negates the Defendant’s right to discharge the debt from the net proceeds of sale. 44.With respect, paragraph 42 above does not make this Issue triable because a clause might have been so well drafted that it had not required amendments. 45.What raises more concern is PN Clause 3(c) itself. The Assignment of Promissory Note states that a Clause 3(c) was to be added “immediately after Paragraph (c) of Clause 3” of the Promissory Note. However,
46.In my view, on a proper interpretation of the Deed of Assignment of Promissory Note:
47.As the parties intended PN Clause 3(c) to form part of the Promissory Note, the incorrect numbering of Clause 3(c) cannot make that Clause void for uncertainty. The Defendant has not suggested the existence of another document that can fit in PN Clause 3(c) numerically. 48.There is no contradiction or inconsistency between PN Clause 1(a) and PN Clause 3(c) either. Each Clause provides the Defendant an alternative means to satisfy the Loan Debt. 49.The 2 Clauses operate under different conditions, including the notice period that JCH has to give the Defendant to repay; the time during which the Defendant may elect to sell; the intended purchaser. Importantly, PN Clause 1(a) provides an opportunity for waiver of any outstanding loan if the net proceeds are not sufficient, whereas PN Clause 3(c) requires the sale proceeds to settle the outstanding Loan Debt in full. With regard to acceleration of repayment, it would occur under PN Clause 2 only if, amongst others, the Defendant commits material breach of the Promissory Note, whereas under PN Clause 3(c), only if the Defendant fails to complete the SPA for whatever reason. 50.The PN Clause 3(c) Issue is not triable. G. SET-OFF ISSUE 51.The Defendant’s contention is that without the Loan Debt, the Deed of Set Off would have been invalid. This has been dealt with in the 193 Judgment, §§41-51. The SPA had actually existed as a genuine transaction but fell through. The question of Deposit was finally adjudicated in the 193 Judgment. The Defendant cannot re-open the issue. H. PLAINTIFFS’ REPUDIATION ISSUE 52.This is a matter that should have been raised in the 193 Action. In that Action, the Defendant has not referred to the time frame for completion under Clause 9 of the Deed of Set-Off when seeking the second extension of completion under the SPA. The 193 Judgment has found the Defendant to be the party repudiating the SPA. The Defendant cannot re-open the issue of repudiation in the present case. I. BVI LAW ISSUE 53.The Defendant has not even pleaded or produced evidence on BVI law to show that any of the documents relied on by the Plaintiffs for debt recovery are not valid or enforceable. In the absence of such evidence, it is presumed that BVI law is no different from Hong Kong law. 54.On the other hand, the Plaintiffs have adduced a legal opinion on BVI law to show that there is no conflict between PN Clause 1(a) and PN Clause 3(c). 55.For the reasons given in this Section, the BVI Issue is not triable. J. CONCLUSION AND COSTS 56.All of the issues raised by the Defendant are not triable. The Plaintiffs have proved, on a balance of probabilities, that the Defendant breached the Promissory Note and the outstanding Loan Debt is immediately repayable. 57.The counterclaim is related to the claim and must fall with the defence. 58.I grant judgment on the Summons such that there be:
59.On the issue of costs, this case has no complexity and the documents and facts duplicate much with those in the 193 Action. There is no justification for two fee earners. I summarily assess the overall costs of the Plaintiffs, on party-and-party basis, at HK$400,000. 60.I thank Mr Ismail for his assistance.
Mr Justin Ismail, instructed by Deacons, for the 1st and 2nd Plaintiffs The Defendant appeared in person | ||||||||||||||||||||||||
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