IMPERIAL PACIFIC INTERNATIONAL (CNMI), LLC v. CHAN CHI HUNG

HCA 75/2018

[2026] HKCFI 1483

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 75 OF 2018

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BETWEEN

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JUDGMENT

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A. INTRODUCTION

1.  This case arose out of some gambling debts owed by the defendant (“D”) to the plaintiff (“P”). D borrowed a total sum of US $1.5 million for the purpose of gambling at P’s licenced casino in Saipan. He lost the entire sum in his gambling and has never repaid them.

2.  Although the loans were well supported and evinced by different contemporaneous documents at the time when they were made, due to the multiple defences put forward by D in this case, it resulted in a 6-day trial before me.

B. BACKGROUND

3.  P is a limited company incorporated in the Commonwealth of the Northern Mariana Islands (“CNMI”) and operated a licenced casino on the island of Saipan (“the Casino”).

4.  After coming to the acquaintance of Mr Ji Xiaobo (紀曉波) (“Ji”), D visited the Casino on Saipan for 3 days from 13 to 15 October 2016. Allegedly, D came to know Ji for the purpose of a potential “business cooperation” regarding P’s parent company, namely, Imperial Pacific International Holdings (“IPI Holdings”).

5.  Ji is not an employee of P. Instead, he is an employee of Best Fortune Corporation Limited (“Best Fortune”), which in turn a wholly owned subsidiary of P at all material times. Ji held the title of Project Director of the Saipan Casino Resort Project in Best Fortune.[1]

6.  D visited the Casino as a VIP. However, according to P, the VIP treatment of D at the Casino went only as far as providing him complimentary transportation and accommodation in Saipan. D, on the other hand, alleges that Ji had invited him to the Casino and “promised all expense (sic) of [D] and his accompanying friends would be borne by Ji.”[2]

7.  As revealed by P’s internal documents, in anticipation of D’s arrival to the Casino and as per its usual practice, P took the steps to assess D’s credit by checking whether he had any outstanding debts owe to any other casinos in different parts of the world. This is done through P’s Credit and Collection Department which led to P’s subsequent approval of the loan in the total sum of US $1.5 million to D.

8.  Immediately after his arrival in Saipan, D went straight to the Casino and started gambling.

9.  By a written loan agreement dated 13 October 2016 (“the Loan Agreement”), P granted a credit line of US $1 million to D in the form of “Non-negotiable Casino Chips” (「泥碼」) (“the Chips”) for the purpose of gambling in the Casino.

10.  On the same day, D also signed a written Chinese / English document to join P’s “Individual Casino Rebate Program / 泥碼回佣計劃” (“the Rebate Form”), indicating his participation in the cash rebate scheme run by the Casino. According to the terms of the Rebate Form, under the rebate programme, he was entitled up to 1.3% cash rebate together with an additional 0.1% of the money gambling at the Casino (“the Cash Rebate”).

11.  The Loan Agreement and the Rebate Form were not the only documents which D had signed on that day. D also acknowledged his loan from P by signing a promissory note for a sum of US$ 1 million (“the Promissory Note”). Further, he also signed acknowledgement slips (“Acknowledgment Slips”), signifying his knowledge of the US$ 1 million loan.

12.  As said, D lost the entire sum of US$ 1.5 million during his stay at the Casino:-

(a) US$ 500,000 on his first day, ie on 13 October 2016. D used the credit line offered by P and lost the Chips through gambling.

(b) On the second day, ie 14 October 2016, D obtained a further US$ 500,000 worth of chips from P.

(c) On 15 October 2016, D’s credit line was subsequently increased to US$ 1.5 million under a written document provided by P, known as “Application for a Cheque Cashing or Credit Facility Limit Change” (“the Application”). Further, pursuant to the Casino’s practice for the drawing of the Chips, D also signed another Acknowledgment Slip for the extra US$ 500,000.

(d) D continued to gamble and ultimately lost the final US$ 500,000 worth of the Chips.

13.  D left the Casino on 15 October 2016 and Saipan on 17 October 2016.

14.  Since D left the Casino, he has failed to make any repayment to P for his credit line in the total amount of US$ 1.5 million.

15.  As a result of D’s failure to repay the loans, P issued numerous demand letters for the payment of the outstanding loans in the amount of US$ 1,446,184.40 (after taking into account of the Cash Rebate as agreed between P and D): see demand letters from P to D on 17 November 2016 and 14 March 2017.

16.  As there was no response from D on the demand letters, P instructed its solicitors to issue a further demand letter: see letter from P’s former solicitors Messrs Brandon Luk & Co dated 8 November 2017 to D.

17.  P’s claim is based on the simple fact that the US$ 1.5 million was a loan advanced by it to D for the purpose of gambling at the Casino. It also relies on the alternative claim that D was unjustly enriched by being given the US$ 1.5 million in the form of the Chips.

C. PROCEDURAL BACKGROUND

18.  Having issued the demand letters with no positive answers from D, P commenced the present proceedings in 2018 by filing the writ of summons and statement of claim (“SoC”) on 10 January 2018. No acknowledgment of service was filed initially by D. Default judgment was therefore obtained on 6 April 2016 as a result.

19.  On 17 May 2018, D took out an application and set aside the default judgment. The default judgment was ultimately set aside on 24 January 2019.

20.  Eventually, D filed his defence on 15 February 2019 which contains a large number of different defences. After two rounds of amendments, the gist of the defences remain the same as presently contained in the RAD which was filed on 30 October 2023.

21.  One of the defences relied on by D is based on CNMI law, yet no expert evidence in this regard has been adduced by D. In fact, by the Order of Master Kot on 27 April 2023, D was deemed to have elected not to adduce expert evidence on CNMI law as he failed to nominate an expert. On the matter of foreign law, P has elected to only adduce copies of extracts from the relevant CNMI statutes as pleaded in the RAD by way of disclosure.

22.  As can be seen from the RAD, D adopted what P’s counsel Mr Ronald Pang would call a “kitchen sink approach”, encompassing everything that could be raised by D’s legal team. As far as it can be ascertained from the RAD, at least seven distinct defences can be found, some of which are internally inconsistent with each other, both legally and factually.

23.  Further, even after these proceedings were set down for trial, D belatedly applied for leave to file additional witness statements and to add Mr Wong Tak Wai (黃德偉) (“Wong”) as D’s witness in this case. Out of fairness to D, the application was allowed by this court on 18 February 2025 with further leave to D to file supplementary witness statements. In reply to D’s new evidence, P was given leave and filed witness statements in reply.

24.  Rather extraordinary, D further applied at the pre-trial review (“PTR”) hearing before this court for leave to “amplify” his witnesses’ statements in examination in chief. In order not to deprive D the opportunity to do so, this court allowed further witness statements to be filed. The late filing of these witness statements has clearly shifted the focus of this case during the trial.

D. P’s CASE

25.  As summed up by Mr Pang in P’s Opening Submissions (“P’s Opening”), P’s case is based on the simple fact that D has borrowed the US$ 1.5 million for gambling at the Casino and has never repaid them. P’s case is well supported by contemporaneous documents like the Loan Agreement, Promissory Note and the Application signed by D (collectively referred to as “the Loan Documents”). P says that the Loan Documents are all legitimate and compliant with CNMI law.

26.  P says that it clearly had, as per its usual practice forwarding loans to its gambling patrons, intention to enter into a legally binding agreement with D.

27.  Further, P says that the Loan Agreement and arrangement between the parties are well documented with contemporaneous evidence, with the relevant Acknowledgment Slips clearly bearing D’s signature, indicating his understanding and receipt of the Chips.

28.  P claims that D has all along accepted that he did sign the relevant documents:-

(a) he accepted in the RAD that he did sign the Promissory Note;

(b) he further went on to accept that he did sign the “Purported Loan Documents” (see RAD §13 & §23), which he uses as an all-encompassing term to refer to the Loan Agreement, Promissory Note and the Application respectively: see RAD §13. However, D now says that “[he does] not recall signing any documents on 15^th October 2016” in his 2^nd Supplementary Witness Statement (“D’s 2^nd Supp WS”), eventhough this was not a matter which has been pleaded.

(c) he makes no averment that the “Purported Loan Documents” were not signed or wrongly dated. All he states is that he did not understand the “nature and legal implications of those papers”: see RAD §13.

29.  P also claims that the alleged earlier representations by Ji and the supposed business discussions between D and Ji before D’s arrival to the Casino are irrelevant to the loans made by P to D.

30.  Assuming such discussions took place as described by D, P says the same is clearly a personal matter between Ji and D, as D in his RAD merely states that “…Ji invited [D] to a trip as a site-visit to the casino…and resort facilities…of [P]…and promised all expense (sic) of [D] and his accompanying friends would be borne by Ji.”: see RAD §12.

31.  The above is repeated largely in the same manner in the purported quotation of what Ji said to D: see RAD §21a.

32.  P also points out that there has never been any allegation that Ji had any position within P. Instead, it is D’s case, by some convoluted averment, that Ji is somehow the “boss” of P through his mother’s indirect shareholding in IPI Holdings through Inventive Star Limited (“Inventive Star”): see RAD §2.

33.  P says that in fact Ji has all along been an employee of a subsidiary to P only and does not have authority to gift any chips to D on behalf of P.

34.  P claims that its case regarding P’s standard procedure and actual forwarding of the Chips as per its lending policy are well corroborated by the evidence given by P’s witnesses Mr Kang Kai (康凱) (“Kang”) and Mr Howyo Chi (“Chi”), as contained in their witness statements (“WS”) and in the documentary evidence.

35.  A VIP host that took part in receiving D to the Casino, Mr Tao Shao Ju (陶少儒) (“Tao”) further corroborates P’s account that there were no representations made by the staff at the Casino to D during his visit that the Chips were somehow a gift from Ji. He confirms that D did sign the Loan Documents on the material days during his stay at the Casino.

36.  Further, P says it is prohibited by the regulations of the Commonwealth Casino Commission (“CCC”), the regulatory authority which governs all gambling activities in the licenced casinos in Saipan, to freely gift any chips to its visitors. P is compelled to keep close track of any complimentary chips given. There is no record of gifting any to D.

37.  P alternative case is that even if there was no valid loan, the Chips as received by D were not for any good consideration at all and therefore amounts to unjust enrichment of D: see ASOC §13A and Re-Amended Reply (“RAR”) §11A.

38.  P’s case is also supported by the fact that after receiving the Chips, D had won multiple times at the gambling table, which earned him cash chips (現金碼) (“Cash Chips”) that could have been redeemed for cash: see Tao’s WS §206.

39.  P’s case is said to be further supported by the fact that D had, by way of signing the Rebate Form, been credited with US$ 53,715.60 in his account that he could have withdrawn in form of cash by the time he left the Casino: see RAR §11A(b). D further enjoyed the opportunity to gamble at the Casino by reason of receiving the Chips, which P avers amounts to enrichment of D.

40.  As such, the Chips provided to D were of value and D was enriched by his receipt of the Chips. The mere fact that D ultimately lost all the Chips back to P does not assist him, as it was because of D’s conscious choice to convert his Cash Chips back into the form of the Chips, ie the non-negotiable chips and to continue gambling that led to his loss of all the Chips.

E. D’s CASE

41.  D’s counsel, Mr Valentine Yim, appearing with Mr Roger So, in D’s Opening Submissions (“D’s Opening”) denies that D has adopted a “kitchen sink approach” in his defence. D claims that each of the defences taken was relevant and made to adjust to the specific feature of the present case. Depending on P’s evidence and the court’s factual findings, D says that it may led to different available defence and therefore D simply cannot be criticized by exercising his legal rights to put forward all of them.

42.  In any event, Mr Yim has summarized D’s defence as follows:-

(a) Gift / Estoppel: D says in the event that Ji and the VIP room managers were found to be authorized by P in making the 1^st to 3^rd Representations made, neither P nor D had the intention to enter into a loan relationship, and the Loan Documents would be void. P therefore ought to be estopped from reneging from making a gift. Alternatively, D alleges that it may be that Ji himself provided the Chips (either self-owned or misappropriated from P) to D, which makes the Loan Documents become shams that does not accord with the reality, and a separate case may lie between P and Ji for the latter’s misappropriation: see RAD §§18-20 and RAD §§21-24.

(b) Mistake: In the event that the VIP room managers were found to be unauthorized in making the 2^nd and 3^rd representations to D, P might indeed have an intention to enter loan relationship with D. Yet, D claims that he did not have the reciprocal intention due to the misunderstanding induced by the 2^nd and 3^rd representations made. In that case, D said that there was still be no contract to the doctrine of unilateral mistake: see RAD §§25-26.

(c) Non est factum: D further relies on his illiteracy in terms of English as a form of disability in understanding the Loan Documents and he taking one step further to confirm the nature of such documents with the VIP room managers. D claims that if the court finds in favour of D on the above two matters, it must follow that it was not D’s deed to sign a loan agreement with P: see RAD §46.

(d) Fraud: On the assumption that the court will find in favour of D in the above factual scenario, D says that the act of VIP room managers making the 2^nd and 3^rd representations may lead to a case of fraud under the laws of Saipan, providing another basis for the Loan Documents to be found void: see RAD §§27-28; and

(e) Invalidity of the Promissory Note / Illegality: As to the Loan Documents themselves, D challenges their validity and enforceability as D claims that they contain clear breaches against CNMI laws: see RAD §§29-32 and RAD §§33-35.

F. JOINT STATEMENT OF UNDISPUTED FACTS

43.  Despite the Order made by this court at the PTR on 29 April 2025, inter alia, directing the parties to agree and lodge a joint statement of undisputed facts (“JSUF”) by 12 May 2025 and agreed joint list of issues (“Joint List of Issues”) by 29 May 2025, regrettably, the parties did not do so. Instead, P prepared his own list of issues (“P’s List of Issues”) while D insisted to adopt the Joint Statement of Issues in Dispute which was agreed between the parties back on 19 September 2023 (“the Old Joint List of Issues”). D’s counsel considers the Old Joint List of Issues would provide a more comprehensive and systematic formulation of the issues. While this may or may not be true, the fact remains that D was unwilling to follow the court’s directions to agree and lodge a JSUF and Joint List of Issues with P before the trial. More importantly, it is obvious that a JSUF is very different in nature and serves a very different purpose as the Joint List of Issues. It is regrettable that D failed to follow the court’s clear directions in this matter which in my view would have saved a lot of time and costs for the trial.

44.  For the sake of completeness, I shall produce the Old Joint List of Issues filed in September 2023 hereinbelow:-

“1.Whether the Loan Documents are inherently valid and enforceable under the laws of the Commonwealth of Northern Mariana Islands (“CNMI”), or whether they shall be rendered void and/or ineffective due to formality requirements under CNMI laws or illegality.

2.Whether the chips given to the Defendant by Casino Staffs throughout his trip to Saipan (the “Chips”) were gifts from Mr. Ji Xiaobo (“Ji”) on behalf of the Plaintiff or in his personal capacity and whether Ji had communicated the Plaintiff/his intention to the Defendant directly or impliedly through himself or Casino staffs.

3.Whether Ji had the authority or apparent authority to render the Chips gifts on behalf of the Plaintiff.

4.Whether the Loan Documents (i.e. the Loan Agreement dated 13 October 2016, the Promissory Note dated “Oct 2016”, the Credit Change Request dated 15 October 2016 and the records for dispatch of chips dated 12, 14 & 15 October 2016) were intended by the Plaintiff as mere formalities or valid legal instruments.

5.Whether the Loan Documents constitute as a form of revocation if the court found the Plaintiff or Ji intended to gift the Chips to the Defendant.

6.If the Plaintiff indeed intend the Loan Documents to be valid legal instruments, whether the Defendant willingly and intentionally entered into the alleged contractual loan relationship, as opposed to inadvertently entering into it due to mistake and/or non est factum.

7.Whether Ji and Casino Staffs made the representations to the Defendant as illustrated in §21 in the Amended Defence and, if yes, whether they constitute a form of estoppel that bars the Plaintiff from pursuing the claims stipulated under the Amended Statement of Claim.

8.If the Casino Staffs made the representations to the Defendant illustrated in §21 in the Amended Defence without the Plaintiff’s authorization, and/or that Ji and other staffs recklessly permitted it to have occurred, whether it constitutes fraud under CNMI laws, which may further render the Loan Documents void.

9.Whether, as an alternative to breaching the contractual obligation under the Loan Documents (if any), the Defendant was unjustly enriched by receiving the Chips from the Plaintiff.

10.Whether the Chips are cash chips or non-negotiable chips that could only be used in the Casino, and if they could constitute a form of enrichment.

11.Whether the opportunity to gamble with the Chips is a form of enrichment.

12.Whether the Plaintiff suffered from any detriment, especially when the Defendant had eventually lost all the Chips.

13.Whether and the extent to which the Plaintiff is entitled to the reliefs claimed in paragraphs 13, 13A and 14, and prayer for relief of the Amended Statement of Claim.”

45.  However, I should point out that D’s case has clearly changed between the date when the Old Joint List of Issues was filed in September 2023 and by the time of the trial in June 2025. Not only D has re-amended his defence on 13 October 2023 substantially, he has also managed to secure Wong as his witness in the trial which was preceded by Wong filing his witness statement dated 13 January 2025 (“Wong’s WS”) and his supplementary WS dated 8 May 2025 (“Wong’s Supp WS”). The Old Joint List of Issues was also predated by D’s supplementary witness statement dated 13 October 2023 (“D’s Supp WS”); D’s 2^nd Supp WS dated 20 January 2025; and D’s 3^rd supplementary WS dated 12 May 2025 (“D’s 3^rd Supp WS”).

46.  Thus, in my view, the Old Joint List of Issues is of limited value and D’s refusal to agree to a JSUF and Joint List of Issues is extremely unhelpful and only resulted in prolonging the trial unnecessary as even some of the basic undisputed or indisputable facts or issues could not be agreed upon and required P to prove them strictly at the trial.

47.  While I may not agree with the term used by P’s counsel to describe D’s adopting a “kitchen sink approach” in his defence, I think it will not be inappropriate to describe D’s pleaded defence as unnecessary cumbersome and complicated. It tries to encompass all possible factual scenarios which the court may find at the end of the trial without caring whether those defences are consistent with each other or whether they match with the indisputable evidence in the case. They also ignore the inherent probabilities and commercial reality in light of those clear and indisputable evidence. Further, D’s case is not helped by his last-minute introduction of some new evidence (by way of Wong’s WS and Wong’s Supp WS) and various legal challenges made to the legal documents produced by P in the bold assertion that those documents are invalid under CNMI laws but without producing any expert evidence in support.

48.  I notice D’s factual case in regard to the Saipan trip was only finally crystalised at the trial by relying on Wong’s evidence (especially the photos allegedly taken by him on his mobile phone at various time during the trip to Saipan) to say that D did not gamble or sign any document on 14 and/or 15 October 2016. However, as Mr Pang has rightly pointed out, D has not made any application to amend his pleadings in order to reflect this significant change in his case. This is also not consistent with the fact that he does not dispute the authenticity of a signature on the Loan Agreement, despite claiming that he did not sign on the date depicted on the document itself.

49.  In my view, the real problem with D’s case is that it is not only inconsistent with the documentary evidence but largely contradictory to it. It is also totally out of touch with reality. As can be seen from the RAD, D claims that it was in about early October 2016 that Ji had approached him to explore “business cooperation” in relation to P with an estimated investment amount to about HK$ 1-2 billion (“the Intended Business Cooperation”). D claims that, in order to show his sincerity, Ji has invited him for a “site visit” to the Casino and resort facilities of P in Saipan. D alleges that Ji has promised that all expenses of D and his accompanying friends will be borne by him. As a result of which, D embarked on a trip to Saipan accompanied by two male friends and a female staff from the Casino from 13 to about 15 October 2016: see RAD §12.

50.  The main problem with D’s claim is that the Intended Business Cooperation which allegedly worths between HK$ 1-2 billion is not supported by any documentary evidence at all. Save from a one-page unsigned “business proposal” prepared by D, there was nothing else to show this so-called Intended Business Cooperation ever existed. In my view, it was no more than a pie in the sky or castle in the air. Even if true (which I do not believe it is), it shows no more than some very preliminary discussions among two businessmen. It certainly has not led to any serious discussions amongst D and Ji, let alone any concrete proposals or agreement. In my opinion, no businessman in his right mind would have offered someone a large sum like US$ 1.5 million to gamble on some “pipe dreams” put forward by D.

51.  In my judgment, it is the inherent improbability and lacks of any touch of reality that makes D’s case unbelievable. This is not helped by the fact that I find D as a totally unreliable and incredible witness. I also find his witness Wong of the same calibre whose evidence simply lacks any ring of truth to it.

G. PRINCIPLES ON ASSESSMENT OF WITNESSES’ CREDIBILITY

52.  This case principally involves an assessment of the witnesses’ credibility as they have put forward diametrically opposite accounts of relevant events. The material events related by P and D’s witnesses in their evidence are so far apart that they could not both be truth at the same time. Therefore, the assessment of witnesses’ credibility is of particular importance in this case.

53.  The relevant principles have been recently summarized by DHCJ H. Au-Yeung (as he then was) in Hu Lan v David Golden [2023] HKCFI 873. After citing, inter alia, the author cited judgement of DHCJ Eugene Fung SC (as he then was) in Hui Cheung Fai v Daiwa Development Ltd HCA 1734/2009 (unrep., 8 April 2014), the learned judge stated at §36 as follows:-

“When I consider the credibility of various witnesses who had given evidence in court, I shall take into the following matters into account:

(1) Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2) Importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3) The court will also attach importance to the consistency of the witness' evidence with undisputed or indisputable evidence, and the internal consistency of the witness' evidence. The latter type of consistency is often tested by a comparison between the witness' oral testimony and his or her witness statement.

(4) The court should consider a witness' motive for deliberately not giving truthful testimony. For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest;

(5) It is essential to have regard to the entirety of a witness' evidence. A witness can make mistakes, but the mistakes do not necessarily affect other parts of his evidence. Likewise, a witness may lie. However, lies themselves do not mean necessarily that the entirety of that witness' evidence is to be rejected. A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie;

(6) On the other hand, where it is shown that a witness has been discredited over one or more matters to which he has testified, this fact is relevant to the assessment of his overall credibility;

(7) While the court is entitled to take demeanour into account when assessing testimony, it should be borne in mind that demeanour can be deceptive and is therefore to be approached with care.”

54.  I also find the observation of Poon J (as the Chief Judge then was) in Big Island Construction HK Limited v Wu Yi Development Co Limited and Another, HKCA 1957/2005, HCA 714/2007, HCA 886/2007 and HCA 1364/2008 (unrep., 28 July 2011) at §§16-21 helpful in cases involving diametrically opposite factual cases:-

“16. The court decides a fact in issue on the balance of probabilities. The occurrence of the fact in issue must be proved to have been more probable than not. The burden of proof rests with the party who substantially asserts the affirmative of the issue : Phipson on Evidence, 17^th Edition, para.6-06 at p.151. If he fails to discharge the burden, then the fact is treated as not having happened. As Lord Hoffmann explained in In re B (Children), supra, at para.2:

“If a legal rule requires a fact to be proved (a ‘fact in issue’), a judge or jury must decide whether or not it happened. There is no room for a finding that it might have happened. The law operates a binary system in which the only values are zero and one. The fact either happened or it did not. If the tribunal is left in doubt, the doubt is resolved by a rule that one party or the other carries the burden of proof. If the party who bears the burden of proof fails to discharge it, a value of zero is returned and the fact is treated as not having happened. If he does discharge it, a value of one is returned and the fact is treated as having happened.”

17. The task of making a finding when faced with two sharply conflicting versions of events is sometimes a difficult one. The court must still perform it without prejudice and preconceived ideas to its best ability. In In re B (Children), supra, Baroness Hale exhorted judges in these terms:

“32. In our legal system, if a judge finds it more likely than not that something did take place, then it is treated as having taken place. If he finds it more likely than not that it did not take place, then it is treated as not having taken place. He is not allowed to sit on the fence. He has to find for one side or the other. Sometimes the burden of proof will come to his rescue : the party with the burden of showing that something took place will not have satisfied him that it did. But generally speaking a judge is able to make up his mind where the truth lies without needing to rely upon the burden of proof.” [Emphasis supplied]

18. As Baroness Hale observed, in most of the cases, the court will be able to decide which of the two conflicting versions is probable and which is improbable and make a finding on the fact in issue accordingly.

19. If one version is found to be improbable, it does not necessarily lead to the acceptance of the other when, owing to the unsatisfactory state of the evidence, the court is not satisfied that the latter is probable. There are judicial utterances to the effect that in such scenario, the judge would be forced to say “I just do not know” on which side of the line the decision ought to be drawn. However, such judicial utterances should not be understood to mean that the court will or should shy from making a finding. What the court will do is to resort to deciding the matter on the burden of proof : The Popi M, supra, per Lord Brandon at p.956A; see also Yau Wah Yau v Commissioner of Inland Revenue, supra, per Tang JA (as he then was) at paras.42 to 46. Applying In re B (Children), supra, the court will treat the matter of which the party carrying the burden of proof but failing to discharge it, as having not taken place.

20. If neither version is improbable, rejection of one may justifiably lead to the acceptance of the other : Datec Electronics Holdings Ltd and others v UPS Ltd, supra, per Richards LJ at para.83 (upheld on appeal); Ide v ATB Sales Ltd, supra, per Thomas LJ at para.6.

21. Finally, a good dose of common sense is required when the court evaluates the evidence in determining the probability or otherwise of the conflicting versions of events.”

H. ANALYSIS OF EVIDENCE

H1. P’s Witnesses

55.   P has called a total of three factual witnesses and one expert witness at the trial. They are respectively Chi (PW1), Tao (PW2), Kang (PW3) and Mr Sean Frink (PW4).

56.  I find P’s factual witnesses all credible and honest. Their evidence are well supported by the contemporaneous documents produced by P. Further, they have all put forward consistent accounts regarding P’s practice in giving out credits to its patrons at the Casino.

57.  In the case of Chi, he has been employed by P since July 2017 and is now serving as its director. He started his employment with P as a human resources business partner. He was promoted to the position of human resources director in January 2023 and was promoted to the present position of director in September 2023. He is not a shareholder of P and is a professional who specializes in human resources in his career. Over the years, he has been promoted through the ranks to the current position as director of the company. It is clear that he has no direct interest in the outcome of this case.

58.   In the case of Tao, he was employed by P as a VIP host from August 2016 to March 2018. Since leaving P’s employment, Tao has returned to Taiwan where he originally came from and now works as a trainer in a gymnasium. He was invited by P to specially come to Hong Kong to give evidence at the trial. He has no connection with P whatsoever since leaving his employment in 2018.

59.  In the case of Kang, he was employed by P in May 2016 as its marketing director. He was responsible for the VIP marketing of the Casino while he was working for P. He left the employment of P in 2019. He has no more contacts with P until he was asked to give evidence on its behalf in the present case.

H2. Chi’s Evidence

60.  As the director of P, Chi is the most senior member of the management team of P who gave evidence in this case. In my opinion, Chi clearly is a hard-working professional who has worked in P for a number of years and gained its trust. He started with a relatively junior position of a human resources business partner to eventually becoming one of its directors. He gave his evidence in a most direct, straightforward and professional manner. Most of all, his evidence on various important matters like how D had incurred the debts at the Casino to the steps P had taken in order to recover them are all well-documented by P’s internal documents. Further, as the Casino was under the preview of the CCC and was licenced to operate under the very strict rules and regulations laid down by the CCC, it is most unlikely that they would ask D to sign any documents just for the sake of “going through the procedures” (「走走程序」) as alleged by D. In my judgment, there was nothing suspicious about the gambling debts incurred by D during his stay in Saipan at all. All the Loan Documents were duly signed and executed by D. They go directly against D’s bald assertion that it was a gift from Ji.

61.  In particular, I accept the following evidence given by Chi which is contained in his witness statement and was adopted as his evidence-in-chief:-

(a) As one of the directors of P, Chi was the custodian of P’s records since July 2021. As such, he has the authority to access P’s record of outstanding debt and loan;

(b) He was therefore able to gain access of the Outstanding Receivable Aging Report (“the Report”) of P which was generated by its Credit and Collection / Cage Department;

(c) Chi is able to confirm that D is listed as one of the debtors to P in the Report. There was a total number of 819 debtors recorded in the Report which was last updated on 31 January 2022. The relevant page of the Report depicting information of D which was retrieved from P’s shared drive in March 2022 and was produced as an annexure to Chi’s witness statement;

(d) Chi confirms that P’s debtors are all listed chronologically in the Report. The order of the ranking of the debtors may be adjusted of a debtor pays off his debt to P. Once the debtors pay, the name will be removed from the list in the Report and the debtors subsequent will move ahead in the list. According to the annexure 1 to his witness statement, Chi is able to confirm that D is currently ranked as number 102 out of 819 debtors in the Report;

(e) As can be seen from the Report, it contains all essential information of debtors’ debt to the company, such as the patron’s name, patron number, guarantor information (if any), trip end date, approved credit limited, original outstanding balance, repayment amount, last repayment amount, outstanding amount as of March 2020 and April 2020, net outstanding balance and collection efforts remarks;

(f) In the remark section of Annex 1, it can be seen that an effort to collect the debt from D was made on or about 15 November 2016, by way of a reminded letter. However, D refused to cooperate. A demand letter dated 17 November 2016 was subsequently sent to D;

(g) D acknowledged his receipt of the demand letter dated 7 November 2016 in D’s 2^nd affirmation;

(h) Subsequent to the collection effort made on 7 November 2016, P made various other attempts to collect his debt from D. Those attempts are apparently reported in the remark section of the Report; and

(i) Those attempts included calling D on the phone. However, D could not be reached by phone at all. Thus, another letter was issued to D on 14 March 2017.

62.  It is significant to note that there has been no reference or record in the Report of D’s outstanding debt being considered as exempt from collection as an alleged gift or its equivalent in chips. Chi in his evidence stated clearly that based on his experience and knowledge of being employed by P since 2017, he had never encountered the practice of gifting chips in such a large amount to any of P’s patrons. He stated clearly that it was simply not an option in P’s practice to consider a debtor exempt from repayment due to having been giving chips as a gift. This is accordingly no column or option in the Report to show exempt or even to record a debt owing from a patron as a “gift”.

63.  I have no reason to doubt Chi’s evidence that the Casino was subject to strict regulation of the CCC which oversees and regulates all the casinos in the CNMI jurisdiction. Chi stated that the CCC regularly monitored P’s chip issuance practice, and its regulation were followed by P closely in order to prevent any misuse of chips for nefarious purposes, such as money laundering. As such, P is legally bound to keep a clear record of any complementary chips or its licence may be put in jeopardy. As a company incorporated in the CNMI, pursuant to Part 500 of the regulations, P is also subject to and is bound by the accounting regulations stipulated by the CCC.

64.  Further, as observed by Chi, P is subject to tax on its business growth revenue. According to his knowledge, which I have no reason to doubt at all, the relevant taxation rules do not allow P or any member of its management to gift away any free chips to patrons of the Casino. Any gifting away of chips will affect the calculation of revenue of P, and in turn will affect the proper collection of revenue tax on P’s gross revenue.

65.  In my judgment, based on the above evidence given by Chi, which was amply supported by credible and objective documentary evidence, I find it extremely unlikely that P, as a properly run casino governed by the strict regulations of CCC, would have given the large amount of chips to D as a gift, whether through Ji or anybody else.

66.  Further, I do not find any good reason why Chi would jeopardize his own professional reputation or career to try to lie to the court when he has no personal interest or gain in the case. I find him to be a forthcoming and honest witness. He frankly admitted under cross-examination that he does not have any direct knowledge on the operation of the floor of the Casino or the practices of P’s debt collection department. When the hypothetical question that if someone gave to D the Loan Documents to sign but did not explain the contents to them, Chi frankly admitted that he would not know. However, his evidence that it is most unlikely that the Chips were given to D as a gift is strongly supported by the contemporaneous documents generated from the Casino’s “cage” and hard drives. Those documents, which was subjected to the strict regulation of CCC, simply do not support D’s far-fetched story that the US$ 1.5 million was given to him by Ji as a gift.

67.  In my judgment, Chi’s evidence has not been undermined by the cross-examination conducted by D’s counsel in any way. With respect, a lot of irrelevant questions like whether there were CCTV record in the Casino of the gambling sessions and if so why P had never produced them; whether he would agree that P’s practice of conducting credit chips of whether a person has other outstanding loans in other casinos were “not a very safe method that in [P] is not checking his financial, his net worth”; whether Chi has ever in his dealing with this litigation “try to understand or find out that whether indeed, Mr Ji was or was not a directing mind of the company”, etc. have been put to Chi.

68.  With respect to D’s counsel, not only these questions are not directly related to any of the real issues in dispute, they are all peripheral matters which have little or no direct bearing on the outcome in this case at all.

69.  As Mr Pang for P has pointed out in P’s Closing Submissions (“P’s Closing”), during cross-examination, D’s counsel did not put his case to Chi which included the following important matters:-

(a) that Ji had authority in P to gift the Chips to D;

(b) that Ji made the 1^st Representation to D;

(c) that D is not a debtor to P because of Ji’s gift; and

(d) that the sun set in Saipan before 4 pm.

70.  As such, I make the following findings according to the unchallenged evidence given by Chi:-

(a) that D is recorded as a debtor in P’s official records;

(b) that Ji did not hold any offices in P, but in Best Fortune;

(c) that Ji did not oversee P and do not have any authority to gift the Chips to D; and

(d) that from the photos taken in Saipan, there is still ample sunlight at about 4 pm. Saipan, being a tropical island which has a stable hot weather all year around, will have sunset at around 6 pm everyday only.

H3. Tao’s Evidence

71.  I also find Tao as an honest and credible witness. As he no longer works for P or has any association with the company, he has no vested interest in the outcome of the case and has no reason to lie about what he knew. In addition, Tao has frankly admitted that he did not serve P personally at his first gambling session. As such, he did not see the signing of the relevant Loan Documents himself.

72.  However, in his witness statement filed for the present proceedings, he has set out in detail of his role as a VIP host and the established procedures and practice within the Casino. In particular, he explained in detail of the limited authority given to the managers, assistant managers and VIP hosts at the Casino which did not include providing any loans or gifts in terms of chips to any of its patrons. During his one and a half year working at the Casino, he had never seen or heard or experienced that the Casino (or Ji or P for that matter) had ever given any gifts in terms of ten or thousands or over a million US dollars of chips to its guests.

73.  In his witness statement, Tao also sets out clearly the standard procedures for receiving the first-time patrons of the Casino. The staff will first assess the credit line of each of the patron, and would pass the information, including the credit line and the membership number of the guest, to the account office of the VIP room as well as to the manager, assistant manager and/or the VIP host who are going to receive and look after the patron.

74.  The VIP host would according to the pre-approved credit line to help to the patron to fill up:-

(1) the Credit Application (「信貸申請表」);

(2) the Loan Agreement (「貸款協議書」); and

(3) the Promissory Note (「致富承諾票據」).

75.  The VIP host will also assist the first-time player at the Casino to fill in the Player’s Information Sheet (「玩家資訊表」) (which later on was renamed “Opening Account Form” (「開戶表」) and would require customer to sign it. This document was used for opening the VIP member’s card and account. Only after the account is opened that the credit line could be placed in the particular customer’s account and for him to take out the chips: see §§10-11 of Tao’s WS.

76.  Tao also explains clearly in his witness statement of the difference between Cash Rebate (「現金回贈」) and Complementary Rebate (「贈送回贈」). Such rebates were decided by the Casino and would range from 1% to 1.3%. The rebate amount would be determined by the amount of non-negotiable chips which a patron would use to gamble. The cash rebate would be placed in the patron’s account and the patron could take out cash from that account. However, as most patrons would like to gain more cash rebate, they would usually use up the cash chips (“the Cash Chips”) in exchange for the Chips. This also happened in this case: see §12 of Tao’s WS.

77.  During cross-examination by D’s counsel, Tao has given the following evidence which in my view have strengthened rather than weakened P’s case. For example, Tao was able to confirm the Casino’s usual practices (「約定俗成的規定」) regarding the turnover of chips from Cash Chips into the Chips, and the signing of the relevant Acknowledgement Slips:-

(a) For the exchanging of Cash Chips into the Chips the procedure is for the VIP host to first collect the cash chips from the gambler’s table, bringing the cash chips to the bookkeeper department (「賬房」), have the cashier in the bookkeeper department issue an acknowledgment slip, which is then signed by the cashier supervisor and the VIP host. Only then will the VIP host return to the gambler’s table with the non-negotiable chips.

(b) The bookkeepers of the Casino will fill in “RTS” (the acronym for “reject to sign”) in order to avoid interrupting the patrons’ gambling session.

(c) Acknowledgement Slips regarding the issuing of the front money to patrons must however be first signed by the patron.

78.  Further, Tao confirmed that it was impossible for a staff in the Casino to tell a patron that the chips are gifts from someone. It is to protect the Casino from any allegation of money laundering. As each of the staff was trained for anti-money laundering practice, they would simply avoid such conduct. As all the Casino’s staff have to be licenced by the CCC and their licences will be renewed at every year, the conduct at the Casino are strictly monitored and regulated. Thus, it was impossible that this would happen in the Casino.

79.  Tao’s evidence is further corroborated by the contemporaneous documents referred to in his witness statement. For example, all signatures by the staff at the Casino on the Acknowledgment Slips are annotated with their CCC licence number, and that D is recorded to have exchanged his Cash Chips for the Chips on 14 and 15 October 2016. Based on such documents, in my opinion, it cannot be denied D must have gambled on those days, as it would be impossible for the bookkeepers of the Casino to otherwise generate records of his turnover of his Cash Chips into the Chips.

80.  Tao’s evidence in this respect is also well supported by other documentary evidence which inter alia, included the WeChat messages among the frontline staff at the Casino[3] and Report Player Cage Balance generated at the end of each of D’s gambling sessions. In my view, such documents would not have existed if D had never gambled on 14 and 15 October 2016.

81.  In a desperate attempt to undermine Tao’s credibility, it was put to him by D’s counsel that there were unusual features of the Loan Agreement, being that the maturity date was not filled in. However, this was clearly an innocent omission and nothing significant turns on this.

H4. Kang’s Evidence

82.  I also find Kang as a straightforward and credible witness. He was readily willing to admit to matters he does not have direct knowledge of and he also does not shy away from any questions put to him by D’s counsel under cross-examination. Significantly, Kang stated categorically that the Casino’s procedures would apply universally to every patron to the Casino and there will be no exception. His evidence on this is well-supported by the documentary evidence produced by P during D’s gambling sessions on the 14 and 15 October 2016.

83.  In his witness statement, Kang has set out very clearly the usual procedures adopted by P at the Casino. These are all strictly governed by the regulations of the CCC and are well supported by the documentary evidence produced by P. I have no reason to doubt any of his evidence in so far as it relates to P’s practice and procedures at the Casino. Under cross-examination, Kang was able to confirm and elaborate on the Casino’s practice and procedures. In my judgment, the explanation given by Kang not only was logical and well supported by the documentary evidence produced by P in this case, they were inherently probable, considering the size of the Casino and the fact that they were strictly licenced and regulated by the CCC.

84.  In particular, I accept the following evidence given by Kang in the witness box as highlighted by P’s counsel in P’s Closing:-

(1) Kang confirms that Casino staff are subject to regular training by P and CCC, in order to keep their respective licences issued by the CCC.

(2) Kang also confirms that the maturity date on the Loan Agreement is based on the last date of gambling for the patron, and that the Casino’s usual practice (in line with other casinos around the world) presumes the patron’s loan will become due in 1 month.

(3) Kang confirms further that the Premium Player Settlement Sheet reflects how much Cash Rebate the patron is entitled to. Kang confirms that despite sometimes not being signed by the patron personally (as the patron may be in a bad mood or in a rush to leave Saipan), the document itself is an accurate depiction of the Casino’s finances subject to CCC’s real-time supervision.

85.  In a desperate attempt to try to discredit Kang, it was suggested by D’s counsel first time during his cross-examination that the Casino did not strictly comply with the CCC regulations because it was newly opened. I have no hesitation to dismiss such outrageous suggestion as it was not only not pleaded in the RAD nor included in any of D’s witness statements as part of his case against P. As a casino which was properly licenced and strictly regulated by the CCC, I simply cannot see how it could be true that just because the Casino was newly opened, they did not have to strictly comply with the authority’s rules and regulations.

86.  In my view, Kang’s evidence is highly credible and I will accep them without any qualification.

H5. P’s expert Mr Frink’s Evidence

87.  As D has elected not to call any expert witness to give evidence on the CNMI laws, it must be taken that D has no positive case in regard the application of the CNMI laws. As such, I agree with Mr Pang that the expertise and the interpretation of CNMI law by Mr Frink cannot be validly challenged by D. As was observed by Mr Pang, save for the two questions that were put into writing, nothing else was asked of Mr Frink by D. Therefore, I would accept Mr Frink two expert reports in full without any reservation.

88.  During his cross-examination, the only question asked of Mr Frink was of the substantive law in the Court of Illinois’ decision in Johnson & Johnson 614 N.E.2d 348 (Ill. App. 1 Dist. 1993). However, the question put to Mr Frink merely relates to whether the findings in Johnson & Johnson would change his opinion regarding the validity of the Promissory Note. Mr Frink answered in the negative on the basis that the ruling of Johnson & Johnson related to the variable interest rates and its impact on the negotiable insurance under the CCC.

89.  I am of the opinion that the answers provided by Mr Frink to the questions were very well reasoned and I have no reason to doubt his opinion.

90.  I also note that D’s counsel did not put to Mr Frink matters of fraud or conspiracy under CNMI law, despite having pleaded it in D’s defence that the alleged relevant statute of the CNMI applied.

91.  In my view, as D chose not to put forward any evidence, whether expert or otherwise, to back up his claims on fraud or conspiracy under the CNMI laws, it is not open for D to argue this as a matter of law anymore.

I. D’s Witnesses

92.  D has called two witnesses to give evidence at the trial. They are D himself as DW1 and Wong as DW2.

I1. D’s Evidence

93.  Let me start by stating that I find D as a totally incredible and dishonest witness. I find his defence completely devoid of merits, contradictory to the documentary evidence and lacks of any sense of reality.

94.  As a witness, his demeanor was playful and not serious at all. Most importantly, his story that an acquaintance that he had recently met would give him a gift of US$ 1.5 million to gamble at a properly licenced and regulated casino in Saipan simply lacks any ring of truth to it and is most inherently improbable. I have no hesitation to reject his evidence.

95.  The following five key areas of his evidence as highlighted by Mr Pang in P’s Closing demonstrate that D’s defence is simply a sham and not capable of belief at all.

I1.1. The purported discussion with Ji about the Intended Business Cooperation

96.  For an Intended Business Cooperation which is supposed to be worth between HK$ 1-2 billion, there are very little documents to show for it. The only one-page document which was typed up by one of D’s staff was homemade and was never examined by a lawyer before D purportedly showed it to Ji. The document was drafted in the vaguest of terms. It does not indicate that there were any serious negotiations on the Intended Business Cooperation between Ji and D or between P and D. It was never signed by Ji or anybody on behalf of P.

97.  In my judgment, this was no more than a self-serving document which could have been made by D after the event. In my view, at best, the so-called Intended Business Cooperation was no more than at a very preliminary discussion stage, if it was indeed true at all. In my opinion, it certainly would not warrant either Ji or P to gift such huge amount of chips to D for gambling in the faint hope that there may be a possible deal between them one day. It simply does not make any commercial sense at all.

98.  I do not find the Intended Business Cooperation actually existed. In my judgment, the whole Intended Business Cooperation was made up by D as an excuse not to repay any of the gambling debts that he had incurred at the Casino during his trip to Saipan.

99.  Further, D avers for the first time in his oral evidence that Ji had told him that P actually was the same company as IPI Holdings, which he agrees is a matter he has never mentioned in any of his four witness statements filed in the proceedings. Also, D failed to mention in his four witness statements that he had met up with Ji again after his visit to Saipan to discuss the Intended Business Cooperation.

100.  In my view, it is clear that D was simply making up his evidence as he went along. I do not accept the above two matters which were first mentioned by him in his evidence.

101.  I also reject his wild and totally unfounded assertion given under cross-examination that, in a public listed company, the fact that if the mother was the major shareholders and chairman of the company (as Ji’s mother Madam Cui was in this case), if her son (in this case Ji) was holding the redeemable bonds (「債劵」) and if he cashes them in, he would become 90% in control of the company, therefore making him a de facto owner of the company.

102.  In my judgment, not only this understanding of D between the difference of an actual role of an officer in the company and a person holding some redeemable bonds is incorrect as a matter of law, it also shows D’s desperation in trying to link Ji to the holding company, IPI Holdings and/or P.

103.  Further, I do not believe that the one-page unsigned document produced by D in support of the Intended Business Cooperation has any legal effect. As admitted by D under cross-examination, he knows that Ji did not have the authority to bind IPI Holdings. Therefore, I find this whole allegation of the Intended Business Corporation did not exist at all and was merely made up by D in order to justify his story.

I1.2. The signing of the Loan Documents

104.  In my view, it is most incredible that D would, for the first time during his oral evidence, stated that all the Loan Documents (ie the Player’s Information Form, the Loan Agreement, Promissory Note, Application and Acknowledgement Slips) were either completely or partially blank when he signed on them purportedly on 13 and 14 October 2016.

105.  In my judgment, the suggestion that these documents being blank when they were presented to D is clearly a recent fabrication. In my view, it is inherently impossible and totally incredible that all these documents prepared by the staff of the Casino, including the printed Acknowledgement Slips generated by the bookkeeper department (with date/time chop printed on them by machine), as somehow filled in later when D has all along never challenged its authenticity.

106.  The alleged blanked documents not only have not been pleaded, nor was it ever mentioned in any of D’s four different witness statements prepared for the trial, the last one of which was filed only less than one month before the trial on 12 May 2025.

107.  When D was being caught out in this blatant lie, he simply responded by giggling aloud in the witness box. When asked by the court why he laughed, D stated that it was due to “embarrassment” (「尷尬」). While stating in his witness statements that the only document he could understand was that of the Rebate Form, he stated in evidence that he did not see or read the Rebate Form when he signed it. Again, this is clearly not believable as this document contained Chinese translation of the terms stated therein. His explanation that this was in line with his understanding that Ji was providing this to him as “sweeteners” for the Intended Business Cooperation clearly is not believable. With respect, neither D or his counsel was able to provide any good explanation as why D has not put this very material part of this case in the witness statement and only mentioned this in evidence for the first time during the trial.

108.  Last but not the least, D in his oral evidence claims that now he thinks the Casino’s offer of the Cash Rebate to him did not make sense as the Chips were supposed to be a gift to him by Ji. However, this does not explain why he was willing to sign the Rebate Form, which was written in a language that he could properly understand. He simply provided no explanation as to why he would sign the Rebate Form when he thought that the Chips were a gift from Ji.

109.  I have no hesitation to reject this part of his evidence also.

I1.3. D’s alleged inability to read English

110.  I also do not believe D that he does not know English well enough to understand the basic nature of the Loan Documents. As a successful and sophisticated businessman who obviously is into big investment projects or business deals, D has no difficulties in running the daily operations of his companies. He stated that each time when he sees an English document, he would ask member of his team to translate for him.

111.  I do not believe him when he said that he signed the documents because the staff of the Casino had asked him to sign it for “going through the procedures” (「走走程序」) only. As a successful businessman and in the context of gambling in a licenced and properly run Casino, I do not accept that D would be so careless or naive as not even asking any of his friends or assistants to help him to translate the documents put to him by the staff in exchange for the Chips. It is simply to be too good to be true that someone he hardly knew like Ji would provide him with US$ 1.5 million in the form of the Chips to gamble for nothing. I therefore find D knew exactly what he was doing when he signed the Loan Documents. He knew that he was signing for the Chips for gambling. There is no doubt in my mind that he knew by signing the Loan Documents he would incur the debt liability to P.

I1.4. The VIP host who had served him at the Casino

112.  I also reject D’s evidence on his recollection of events at the Casino. Not only they were not supported by any documentary evidence, they were also inconsistent with the previous allegation he made in his witness statements. For example, while D stated during his oral evidence that he had a strong impression that it was Ms Hung, the purported VIP host who had received him and made the 2^nd and 3^rd Representations, because her surname was spelt in the same way as one of the characters of his own name, ie Hung (「雄」), D failed to mention her name in his pleadings and did not mention Ms Hung’s name until his supplementary witness statement was filed in October 2023. When pressed on the matter by P’s counsel, D incredibly stated that both versions were true (「兩個版本都喺事實嘅」). Such blatant discard of the truthfulness of its evidence in my view has made D’s evidence not capable of belief at all.

113.  Further, D’s claim that Tao has never served him must also be untrue as he admitted he had signed on an Acknowledgement Slip for the issue of the gambling money of US$ 200,000 to him which was also counter-signed by Tao. This Acknowledgement Slip which can be found on [D1/21/91] was time chopped with a machine stated the document was generated on 13 October 2016 at 10:12 pm. Such document simply cannot lie and the only person I find to be lying about this matter is D himself.

I1.5. D’s response to the demand letter and litigation

114.  D has also failed to provide any good explanation as why he did not deny P’s claim or include his intention to settle the dispute with Ji when he first responded to the debt collection letter through his legal representative. He answered that he had try to locate Ji but could not contact him is simply not believable. When pointed out to him by P’s counsel that he had never mentioned this in any of his witness statements, D was not able to provide any answer at all. As the demand letter came into existence shortly after this dispute arose between the parties, the fact that D has failed to mention any possible defense like that of a gift which he subsequently raised in the present proceedings has in my view put the genuineness of this case into serious doubt. I find the defence of gift raised by D in this case clearly is an afterthought made up by D in an attempt to try to avoid paying his gambling debt incurred at the Casino.

I2. Wong’s evidence

115.  I also find the D’s witness Wong to be an unreliable and not trustworthy witness. Not only his evidence is not able to support D’s case on the key issues, I actually find that he has done more damage than good to his case. For example, he insisted that the Casino staff member who served P when they first arrived the Casino was a male. This contradicts with D’s evidence that was Ms Hung who had received him at the Casino and gave him the Loan Documents to sign.

116.  I also agree with Mr Pang that Wong’s credibility should be thrown into question in light of the illogical explanation that he gave as why he did not testify for D earlier in the proceedings when he left the prison in Macau for the offence of blackmail. In his evidence, Wong admitted that he was approached as early as in 2021 that he might be required to act as a witness for D. However, Wong has inadvertently admitted that he has ignored his conditions for parole from prison in Macau as he interpreted the prohibition was only for seeing D face to face and not from contacting him.

117.  The main purpose of D in calling Wong as a witness in the trial is for him to produce the photos that were allegedly taken by him on his mobile phone at certain time after the end of some of the gambling sessions at the Casino attended by him and D together. However, a closer examination of those photos in fact reveals that the time shown on the photos could not be true at all.

118.  For example, he stated that the photos taken of Ji’s yacht on his phone where they were invited on board were taken between 18:00 and 18:12 on 14 October 2016[4]. According to the weather information obtained by P downloaded from the internet, sunset time was at 18:18 on that day which means the sun only started to set from that time onwards. Therefore, the sky could not be pitch dark as shown on those photos. I find either Wong had failed to adjust his phone to the local time or had manipulated the time on the photos. Either way, I find the time shown on those photos could not be accurate at all.

119.  Equally, for the photos allegedly taken on 15 October 2016 at 16:16 and 16:22[5], I find that they could not have been taken at that time as shown. The reason being that the spot lights on the beach had been turned on (for photo at p 383) and rays of twilight of the sea can be seen (for photo at p 383). It is quite clear that they are photos showing scenes of sunset rather than bright sun light at around 4:20 pm in the afternoon. I find that Wong’s phone either had not been adjusted to the local time or he had changed the time shown on the photos. I find the actual time those photos taken were likely to be about 2 hours later, ie at or around 18:16 to 18:22 when the sun began to set on that day. My view above is supported by the photo at p 385 (which shows a large local bus with both its headlamps and the background street lights were fully on, with a pitch dark sky in the background) which allegedly was taken at 18:23 on 15 October 2016. In my judgment, this photo could not have been taken immediately after sunset as the sky was completely dark. Thus, I find the time shown on the photos taken on his phone on 15 October 2016 could not be accurate and most likely they were taken at least 2 hours later, it not more.

120.  As to what he allegedly saw and heard in the Casino during the gambling, I do not believe he was telling the truth. Given the clear evidence provided by P’s factual witnesses, which was well supported by contemporaneous documents, I do not believe the account given by Wong about the alleged representations made by the staff of the Casino to D could be true at all. For the reasons stated above under the analysis of D’s evidence, the alleged representations made by the staff of the Casino to D that the Chips were a gift from Ji (which were supposedly have been overheard by Wong) in my view simply cannot be true at all.

J. FINDINGS OF THE COURT

J1. Summary of Factual Findings

121.  Based on the above discussions and analysis of evidence, I would accept P’s case and reject D’s case. Accordingly, I make the following findings of facts which has been summarized by Mr Pang in P’s Closing:-

(a) Ji has all along merely been an employee to P’s sister company Best Fortune, and is not the ‘directing mind’ of P. Even with his kinship to Madam Cui, and status as a potential majority shareholder through his holding of convertible notes, Ji does not and cannot have influence over the daily operations of the Casino. Further, D has never pleaded what facts or particulars he relies on to support its case in this regard.

(b) All along, P has operated the Casino according to the regulations and supervision of the CCC.

(c) After coming to the acquaintance of Ji, D visited the Casino from 13 October 2016 to 15 October 2016, leaving Hong Kong on 12 October 2016 and then leaving Saipan on 17 October 2016.

(d) During D and Ji’s meeting before D’s Saipan trip, there were no representations made by Ji about D’s expenses for his visit. Staff members of P obtained D’s details and produced through consulting Central Credit LLC a Full Gaming Report.

(e) After D arrived at the Casino in the early morning of 13 October 2016, as prompted by P’s loan procedures, the staff of the Casino presented to D documents in respect to loaning D the relevant sum and rebate program.

(f) D, an able-bodied adult and a well-established businessman, knew that the documents were for the purpose of P forwarding to him a line of credit in the amount of US $1,000,000. D further knew of the Cash Rebate offered to him. D knowingly signed on the documents.

(g) P’s staff members, ie the VIP hosts who received D when he gambled in the Casino, did not make the 2^nd Representation to D on 13 October 2016. They told D according to their understanding of the CCC regulations what the documents were, which were loan documents from P in the form of the Chips. P therefore provided to D the first tranche of the Chips in the amount of US$ 500,000 on 13 October 2016.

(h) D subsequently gambled in 3 sessions (about 02:58-05:17, 16:19-19:56, 22:13-22:41) on 13 October 2016, losing the US$ 500,000 worth of the Chips. This is supported by contemporaneous evidence:-

(i.) WeChat records of D’s gambling sessions; and

(ii.) The Acknowledgement Slips reflecting the turnover of D’s Chips from cash chips into the Chips.

(i) D obtained another US$ 500,000 worth of the Chips on 14 October 2016 at about 15:41, which D then lost in one session of gambling on 14 October 2016 from about 15:40-16:50. This is also were supported by contemporaneous evidence.[6]

(j) P’s staff members did not make the 3^rd Representation to D on 14 October 2016.

(k) D subsequently applied on 15 October 2016 to increase his credit limit by US $500,000 worth of the Chips, which he signed the Application in confirmation. D then lost the Chips in one session of gambling on 15 October 2016 from about 15:42 – 17:40. This is again, supported by contemporaneous documents: (1) emails between Yuki Xia and Maggie Guan (2) Acknowledgement Slips of receipt and (3) Acknowledgment Slips showing conversion of the Chips.

122.  I further find that the Cash Rebate offered to D is accurately calculated and D did win sufficient Cash Chips during his visit to generate a turnover of US$ 4,476,300. P’s calculation of D’s Cash Rebate is supported by P’s records of D’s turnover of his Cash Chips into the Chips. Thus, the final Cash Rebate figure of US$ 53,715.60 (as set out in the table at P’s Closing at §80) is indisputable.

123.  Last but not the least, I find that P has never gifted any chips to D as alleged by him or at all. If there were any chips gifted, it would have been recorded in P’s records, which depict all the chips gifted by P to its patrons from 2016 to 2019[7]. As those records shown, the amount gifted by P to those patrons ranged from modest amounts from US$ 1,000 to the highest sum of US$ 68,000 (as tournament prize). There was never any gift recorded of such large sum as US$ 1.5 million as alleged by D. Thus, it is inherently improbable that P would have gifted D such a large sum to gamble.

J2. Findings on the Issues in Dispute

124.  Given the fact that the parties were not able to come up with a JUDF and Joint List of Issues at the beginning of the trial, I was going to follow the order of the issues in dispute under the Old Joint List of Issues in making my findings. However, without any explanation or prior notice, D’s counsel in D’s Closing decided to adopt P’s List of Issues (with slight amendments made by them) and invited the court to make the findings according to the amended list.

125.  While I consider this is a rather unsatisfactory way of doing things, I shall adopt the shortened version of P’s List of Issues as now agreed by D’s counsel.

J2.1 Issue 1: Whether the Chips given to D by staff members of P’s Casino were a loan from P as provided by the Loan Documents?

126.  Based on my factual findings above, I find the Chips given to D by the staff of P at the Casino were a loan as provided by the Loan Documents.

J2.2 Issue 2: If P intends the Loan Documents to be valid legal instruments, whether D willingly and internationally entered into the contractual loan relationship?

127.  Based on my analysis of the evidence above, I have no doubt that P intended the Loan Documents to be valid legal instruments. I further find that D had willingly and intentionally entered into the contractual loan relationship.

J2.3 Issue 3: Whether Ji or staff members of P’s Casino made representations to D that the Chips were a gift and not a loan as provided by the Loan Documents?

128.  On the 1^st Representation allegedly made by Ji, as I have rejected D’s evidence on the Intended Business Cooperation and found that it did not exist at all, therefore there was no reason for Ji to make such a generous gift of US $1.5 million to D.

129.  Besides, other than D’s bare assertion, there was nothing to support D’s allegation that Ji had made such representation to him. As I found D was an incredible witness whose evidence I have rejected, on balance of probabilities, I find Ji had never made the 1^st Representation to D.

130.  On the 2^nd and 3^rd Representations allegedly made by the staff at the Casino, given my findings above that all the staff were properly trained and subjected to the strict regulations and supervision of the CCC, on balance of probabilities, I find it is most unlikely that they would have made such representations to D. In addition, as the loan was well supported by the Loan Documents which were signed by D, it goes directly against D’s allegation. Further, as all the gifts to patrons have to be recorded according to the CCC regulations, it is most unlikely that the staff of the Casino would have made such representations to D.

131.  Moreover, I find it is inherently improbable that P’s staff would risk their own CCC licence just to tell D that the Chips was a gift from Ji. It is further inherently improbable that P’s staff would risk the licence of the Casino and ignore all the standard practice and procedures at the Casino just to please D.

132.  Therefore, on this issue, I find Ji and the staff of the Casino did not make those alleged representations to D.

J2.4 Issue 4: Whether Ji or staff members of the Casino would have been able to proffer the Chips at all on behalf of P according to the practices and regulations applicable to the Casino and P?

133.  This is an issue involves the authority of Ji. As Ji did not hold any position within P or its holding company, he has no authority to do any act on behalf of P. Any acts of Ji therefore cannot bind P. Even as a potential majority shareholder by reason of his holding of convertible notes, his acts still cannot bind P.

134.  Further, even if he is a majority shareholder, he has no authority to exert control over the daily operations of P, which is left to the directors of the company.

135.  In my view, it is absurd for D to suggest that Ji somehow has the power to override P’s procedures and supervision by the CCC just because he is the son of Madam Cui, who was the beneficial shareholder of P.

136.  Therefore, I find Ji would not have been able to proffer the Chips at all on behalf of P.

137.  Equally, as the staff at the Casino are under the strict regulations and supervision of the CCC, I find it inherently improbable that the staff at the Casino would have been able to proffer the Chips on behalf of P according to the practices and regulations applicable to the Casino. They simply would not have the authority to do so. Besides, to do so would have violated all the practices and regulations laid down by the CCC. It was also directly contradictory to all the Loan Documents signed by D.

138.  I therefore find that staff at the Casino would not have been able to proffer the Chips at all on behalf of P.

J2.5 Issue 5: Whether the Chips and/or the opportunity to gamble with the Chips may amount to a form of unjust enrichment of D?

139.  This is a very interesting issue but has become academic as I found D is liable under the Loan Documents to pay the US$ 1.5 million debt he owed to P.

140.  For the sake of completeness, I shall briefly deal with this issue here.

141.  It is not disputed that in order to establish unjust enrichment, a plaintiff must show that (1) a defendant was enriched, (2) such enrichment was at the plaintiff’s expense, (3) the enrichment was unjust, and (4) none of the defences to unjust enrichment (such as change of position) apply: see Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79, at [67] (Ribeiro PJ).

142.  The issue in dispute between the parties is (1) as summarised by Shanghai Tongji. The main contest lies in whether the Chips, which were nonnegotiable and for the use in the Casino only, were to be considered “of value” so that D was unjustly enriched by receiving the Chips without forwarding any consideration himself.

143.  P submits that the analysis of Lipkin Gorman v Karpnale [1991] 2 AC 548 in Tokić DOO v Hong Kong Shui Fat Trading Ltd [2022] HKCFI 217 by DHCJ Laurence Li should be applied:-

“42. In Lipkin Gorman, the defendant casino gave chips in return for a gambler's money. The money turned out to be stolen money. The plaintiff sought its return. As Lord Templeman said at 564A and 567C-F, and Lord Goff said at 576F-577G, the giving of chips in return for money was not giving value. The chips represented the money. Value was to be given when the gambler used the chips to gamble. At that time, there was a contract to honour winning and losing. But that contract was void under the Gambling Act 1845. The casino could not be held to it, i.e., the casino could not be held to give value. It followed that the casino had not given any value.

43. Once the issue is put in the right light by their Lordships, the answer becomes self-evident. Where a person "gives value" by agreeing to give value in a contract, if that contract is void, the person has not given value!

[…]

46. As a matter of principle, where a person has acted bona fide (not immorally or illegally, as in Clarke) and has given real value (which is not contingent on enforceability of a contract, as in Lipkin Gorman), it cannot be correct to say the value he has given is to be disregarded simply because the transaction he engaged in is illegal in the sense that it breaches some law or regulation.

47. It is trite that an illegal transaction in the above sense is not necessarily void or even voidable. If the law does not automatically void the transaction, I cannot imagine why or how it would automatically void the value given in the transaction.” [emphasis supplied]

144.  Mr Pang submits that the rationale behind Lipkin’s ratio is that the Chips were not of value is premised on the voidability of the underlying contract to gamble. However, in the present case, the underlying contract for the Loan Agreement and the underlying contract applicable for gambling in the CNMI in the Casino is legal and enforceable. He says that this is proven by Mr Frink’s conclusions drawn in his report that P carries on the business of a licenced Casino.

145.  Therefore, P submits that the Chips forwarded to D is of value. As such, D’s receipt of the Chips for no consideration at all amounts to unjust enrichment that he is liable to repay to P.

146.  On the other hand, D relies on the case of London Clubs Management Limited v The Commissioners for Her Majesty's Revenue and Customs [2016] UKUT 259 (TCC), where the UK Upper Tribunal Tax and Chancery Chamber found that the nature of non-negotiable chips is fundamentally different with cash chips, and the mere fact that it allows the player to gamble and win does not entail a valuable right or anything with objective financial value:-

“5. … Non-negotiable chips are used to place bets at the gaming tables in the same way as cash chips. Like cash chips they are replayable until lost. If a player places a bet with non-negotiable chips and wins, the banker pays out the winnings in cash chips and the player retains the non-negotiable chips to place further bets. When such a player loses, the banker takes the non-negotiable chips and places them in the table’s “drop box” as the FTT described at [7].

6. Whilst non-negotiable chips are similar to cash chips, there are differences. First, of course, the non-negotiable chips are not purchased for cash, but are provided free of charge. Secondly, a non-negotiable chip can only be used to place a bet at the gaming tables; unlike a cash chip it cannot be encashed or used to pay for goods and services. Thirdly, there are certain physical differences which enable a non-negotiable chip to be distinguished from a cash chip.

…

27. In our view the argument that the value of a Non-Neg must be equal to the face value of the stake pays insufficient regard to the requirement that the value is in money or money’s worth. That expression is one that is commonly used to mean either a value in money or in something else that may be converted into money. In the context of gaming, where it is clear on authority that gambling with a cash chip is not gambling with the chip itself, but is in substance gambling with money, it is the money which is the stake, and the money which falls to be valued, as money, for the purpose of s 11(10)(a). In the case of a Non-Neg, by contrast, there is no money deposited for the chip or voucher which can fall to be valued in the same way. Nor, contrary to Ms Wilson’s argument, can the value of the stake staked with a Non-Neg be the amount which, if a cash chip had instead been employed, would have been the amount of money staked. That would be to value something different from the actual stake staked with the Non-Neg.

…

33. We do not regard as anything to the point that the Non-Neg might provide the player with a right to play a game, or a right to have the chance to win, or a promise from the club in those respects, which Ms Wilson argued was a valuable right. The mere fact that such a right might subjectively be regarded by the holder of the Non-Neg as a valuable right, in the sense that it would enable that holder to play a game without putting money at risk, is not material to an objective valuation, in money or money’s worth, of the stake staked.” [emphasis supplied]

147.  D notes that P has not adduced any evidence on the objective value of the Chips provided to D. In the event that the court does find that D was indeed unjustly enriched, P would, therefore, be entitled to only nominal damages.

148.  In my view, the key issue here concerns whether the Chips are “of value” so that D was unjustly enriched by not giving any good consideration.

149.  As submitted by D, P only relies on the legality and enforceability of the Loan Agreement and the underlying contract applicable for gambling in the Casino to prove its case.

150.  I agree with Mr Yim that the concept of value is distinct from the question of legality. As addressed by Lord Goff in Lipkin Gorman, a gaming contract under Gaming Act 1845 was void and a gambler had no right to any winnings even though he might have had an expectation that the casino would pay.

151.  It was held by the UK Supreme Court that non-negotiable chips are free bets that have no real world value to the casino when the gambler loses them, and such nature does not instil in them a “value, in money or money’s worth” in accordance with actual and real world value from a banker’s perspective: see London Clubs Management Ltd v HMRC (SC(E)) [2020] 1 WLR 5144 at §§37-38, 44, 72-73 and 90.

152.  The difference in nature between non-negotiable chips and cash chips has been clarified by the majority judgment that the former does not represent money to which the gambler is entitled. Non-negotiable chips cannot be encashed or exchanged for goods or services: London Clubs Management Ltd v HMRC (SC(E)), at §43.

153.  In my judgment, there is no dispute that the Chips in this case have the same nature that they cannot be encashed and can only be used in the Casino for gambling. This difference clearly departs from the premise in Lipkin Gorman that a gambler is gambling with money when using cash chips.

154.  I agree with Mr Yim that an opportunity to gamble or a valuable right as such is immaterial to the objective valuation of the Chips.

155.  Given that P has adduced no objective value of the Chips, I agree that P would be entitled to only nominal damages in the event that D was found to have unjustly enriched.

156.  However, as said, this issue has become academic as I found D is liable to pay the debt under the Loan Documents. Thus, P does not need to rely on this alternative plea in order to succeed against D.

J2.6 Issue 6: Whether the Loan Documents are valid and enforceable under CNMI laws?

157.  Based on Mr Frink’s expert opinion, I find the Loan Documents are valid and enforceable under CNMI law.

158.  As D has elected not to adduce any expert evidence in this case and has merely adduced extracts of copies to the CNMI laws during the trial, I find his purported challenge of P’s expert opinion is not valid at all. D has no expert to challenge the basis of Mr Frink’s opinion. D’s counsel only put to the expert the proper interpretation of “sum certain” with regards to the Promissory Note, which as I have concluded above, as inappropriate.

159.  In short, D has no positive case on the foreign law, including the serious allegation on the illegality of the Loan Documents made against P.

160.  As I have accepted Mr Frink’s opinion on the CNMI laws, I find the Loan Documents are inherently valid and enforceable under the laws of CNMI. As such, I find P has discharged its primary burden of proof to the legality of the claim.

J2.7 Issue 7: whether any of D’s defences applies, ie estoppel. mistake, non est factum, unjust enrichment?

161.  Given my factual findings above, I find that, save from the alternative plea of unjust enrichment as discussed above, none of the above defences applies in this case.

K. CONCLUSION

162.  In conclusion, I find P has successfully established its case against D in this case and I further find none of D’s defences contain any merits at all and they should be rejected.

163.  I therefore will enter judgment in the sum of US$ 1,446,184.40, having taken into account of the Cash Rebate of US$ 53,715.60 provided by P to D.

164.  Interest will be awarded at 24% per annum pursuant to section IV(i) of the Loan Agreement. For the sum of US$ 1,000,000 it will be awarded from 13 October 2016 and for the sum of US$ 500,000 it will be awarded from 15 October 2016, to the date of judgment and thereafter at judgment rate until payment.

165.  Costs will follow the event.

166.  I agree with P that these entire proceedings were an exercise of futility and only serve to waste the parties’ time and costs. Ds’ uncooperative attitude in agreeing even to the most basic undisputed facts and issues in dispute prior to the commencement of the trial has unnecessary prolonged the trial. In addition, D’s all-encompassing approach in his defence has also added to the length of the trial unnecessary. I find it is a waste of the court’s time and precious judicial resources. I therefore consider that it is only appropriate that D should pay the costs of P on an indemnity basis, such costs to be taxed if not agreed. I shall make the above costs order on a nisi basis. Any party who wishes to vary the same should apply by way of summons within 14 days after the handing down of the judgment. The matter will be dealt with by way of paper disposal.

167.  Accordingly, I will make an order in terms of the draft order submitted by P’s counsel attached to P’s Closing (as amended by him during closing submissions).