POON LAI YIN MICHAEL v. KONG LUNG CHEUNG

HCA 714/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 714 OF 2012

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J U D G M E N T

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Introduction

1.  This is a dispute not unfamiliar in the commercial world.  The Defendant was about to acquire and embark upon a columbarium business project (“Project”) with a view to selling it to a listed company in Hong Kong (“Intended Sale”). The Plaintiff said he had orally agreed to introduce a listed company to the Defendant and assist him in the Intended Sale to that company. The Plaintiff also said, for his services, the Defendant promised to pay him HK$8 million. The Defendant did eventually acquire the Project, sell it to the listed company (the meaning of which would be explained more clearly later in this Judgment) and become a majority shareholder of that company.  The Defendant did not pay the HK$8 million to the Plaintiff. He said there was no such oral agreement and the Plaintiff did not introduce the listed company to him.

2.  The Plaintiff was an accountant by training and worked as the Chief Financial Officer (“CFO”) of Enviro Energy International Holdings Limited (“Enviro”), a company listed on the Growth Enterprise Market (“GEM”) of The Stock Exchange of Hong Kong Limited, between July 2008 and November 2009.

3.  The Defendant was a businessman. He was the sole shareholder and director of Red Rabbit Capital Limited (“Red Rabbit”). Red Rabbit, via its wholly-owned subsidiary, Casdon Management Limited (“Casdon”), acquired the Project in November 2009. What that really meant was that Red Rabbit purchased, at the price of HK$120 million, the shares of companies which held various plots of land in Ngau Tam Mei, Yuen Long (“the Land”) on which a number of rather large village houses were situated. Casdon was nominated to take up the shares. According to the agreement in question, conversion works had already commenced to turn these houses into a columbarium. As is well known, columbarium was then, as is now, in short supply in Hong Kong. The Project was expected to be a hugely profitable one.

4.  The listed company in question was Aptus Holdings Limited (“Aptus”), also listed on GEM.  In 2009 and for the better half of 2010, Mr Fung King Him Daniel (“Daniel Fung”) was one of its executive directors. It was Daniel Fung who represented Aptus in dealing with the Defendant.

The Plaintiff’s case

5.  The Plaintiff and the Defendant did not know each other until around July 2009 through the introduction of Mr Lau Chi Kwong (“Gary Lau”), PW2. Gary Lau’s background was a loss adjuster and he had his own loss adjuster firm at the time. Gary Lau said since April or May 2009, he had been assisting the Defendant in the formulation of the business plan and acquisition of the Project. By 2009, Gary Lau and the Defendant had known each other for a few years.

6.  In July 2009, Gary Lau told the Plaintiff that the Defendant was keen to look for a listed company to acquire the Project from him and asked the Plaintiff whether he knew any which would be interested. The Plaintiff said he could keep an eye on that but he needed to know more about the Project and the Defendant’s financial resources.

7.  Thereafter, the Plaintiff met the Defendant for the first time in July 2009 through the arrangement of Gary Lau. There was a dispute as to the venue of that meeting but that was insignificant. During that meeting, the Defendant explained to the Plaintiff about the Project which he planned to sell to a listed company and asked him to introduce a buyer to him. The Plaintiff in turn introduced to the Defendant his experience in corporate finance and mergers and acquisitions, that he had contact with some listed companies and could keep an eye for the Defendant. Gary Lau was present at that meeting.

8.  The Plaintiff and the Defendant had met at least three times to discuss the detailed business plan of the Project at the Suzuki Café in Hopewell Centre, Wanchai in September 2009. At the last of the three meetings, the Defendant asked him to introduce a listed company and assist in the Intended Sale to the company. If the sale went through successfully, the Defendant would pay him HK$8 million. This was, on the Plaintiff’s case, the Oral Agreement (“Oral Agreement”).

9.  The Plaintiff and Daniel Fung of Aptus did not know each other either. After the meeting with the Defendant, the Plaintiff came to know a Mr Lau Shek Yuen Simon (“Simon Lau”) of Convoy Investment Services Limited (“Convoy”). Simon Lau found three listed companies which might potentially be interested in the Project. One of the three was Aptus. The Plaintiff then asked Simon Lau to invite Aptus’ management out for lunch to meet with the Defendant. He asked Gary Lau to book a restaurant. He asked the Defendant to come to the lunch. The lunch took place about one week after the Oral Agreement at Caharisme Pavillion in Wanchai (“the Restaurant”). The Restaurant was very close to Hopewell Centre where Aptus’ office then was.

10.  This lunch was the first meeting between the Plaintiff and Daniel Fung and also between the Defendant and Daniel Fung. Apart from the three, Gary Lau was there. Daniel Fung turned up with two persons. One of whom was Mr Tim Kwok (“Tim Kwok”). No witness remembered the name of the other person. The Plaintiff said he arrived first. Then Daniel Fung came. When the Defendant arrived, the Plaintiff introduced him to Daniel Fung and they exchanged name cards. There was a very preliminary discussion of the Project between the Defendant and Daniel Fung. This was the introduction (“Introduction”) according to the Plaintiff’s case.

11.  What happened afterwards, until March 2011, was largely uncontroversial.

12.  On 30 October 2009, Aptus and Red Rabbit signed a “Memorandum of Understanding” regarding the Project (“Memorandum of Understanding”). On 21 November 2009, Red Rabbit entered into an agreement to buy up the shares of the companies which held the Land. As I said earlier, according to the agreement in question, conversion works had already commenced to turn these houses into a columbarium. These works continued after the agreement.

13.  After the Introduction, the Plaintiff had rendered various assistance in relation to the Intended Sale of the Project to Aptus. These included inter alia preparing and calculating the profit forecast of the Project for passing onto to Daniel Fung, proposing a timetable for the Intended Sale, recommending to Aptus Castores Magi (Hong Kong) Limited (“Castores Magi”) for compiling the valuation report of the Project and related liaison with Castores Magi, liaison with Benson Li & Co., solicitors for the Defendant, in drafting the Memorandum of Understanding, recommending to Aptus Grand Vinco Capital Limited (“Grand Vinco”) as the financial advisor for the acquisition of the Project and related liaison with Grand Vinco, recommending to Aptus ShineWing (HK) CPA Limited (“ShineWing”) for the audit on Casdon and its subsidiary and related liaison with ShineWing, assisted in the due diligence exercise on the Project and Casdon.

14.  At the Defendant’s invitation, the Plaintiff left Enviro in November 2009, signed an employment agreement with Casdon and formally joined it as its CFO on 1 January 2010.

15.  Aptus successfully completed the acquisition of Casdon from Red Rabbit, and hence the Project, on or about 27 May 2010 (“completion”). The aggregate consideration for Casdon was HK$1,085,000,000.00 and was settled in the following manner:

(i) HK$85,000,000.00 in cash.

(ii) HK$850,000,000.00 by Convertible Bonds issued by Aptus.

(iii) HK$20,000,000.00 by secured Promissory Note issued by Aptus.

(iv) HK$130,000,000.00 by unsecured Promissory Note issued by Aptus.

16.  On 11 June 2010, the Plaintiff was appointed as the CFO, company secretary and authorized representative of Aptus. Gary Lau was appointed executive director of Aptus on the same day.

17.  Red Rabbit then became the majority shareholder of Aptus. As at 12 July 2010, Red Rabbit held 800 million shares in Aptus, or 23.10% of its share capital.

18.  Aptus changed its name to HK Life Group Holdings Limited (“HK Life”) on 21 October 2010. The Plaintiff was appointed an executive director of HK Life on that day.

19.  The Plaintiff said in December 2010, months after the completion, he asked the Defendant several times about the HK$8 million. The Defendant kept telling the Plaintiff he would honour his promise but he had to focus on fund raising for HK Life first.

20.  One day towards the end of March 2011, at the poolside outdoor restaurant at the Four Seasons Hotel, Central, the Defendant told the Plaintiff and Gary Lau that he did not have enough money to redeem Red Rabbit’s HK Life shares then pledged with a securities firm and had to sell them to a 3^rd party (“New Purchaser”) in batches (“Four Seasons Hotel meeting”).  The Defendant also told the Plaintiff and Gary Lau that he was due to receive payments for the shares on 30 June, 30 September and 31 December 2011. The Defendant said the New Purchaser had requested for the Plaintiff’s resignation from the board of HK Life no later than 30 September 2011.  The Plaintiff said he reminded the Defendant about the Oral Agreement and the HK$8 million and the Defendant said OK.

21.  In the morning of 9 April 2011, a Saturday, the Defendant met the Plaintiff at Aptus’ then office on 20^th Floor, Times Media Centre, Wan Chai. He gave the Plaintiff a cheque of HK$8 million post-dated to 30 September 2011 (“Cheque”). The Plaintiff said this payment was made pursuant to the Oral Agreement. The Cheque was drawn on Red Rabbit’s bank account by the Defendant and made payable to a Mr Wong Chi Wai at the Plaintiff’s request. After receiving the Cheque, the Plaintiff promised to resign from all positions in HK Life on 30September 2011 and handed over his resignation letter to the Defendant. Gary Lau was present on that occasion.

22.  Thereafter, the Plaintiff gradually faded out from HK Life. He first resigned as company secretary on 18 April 2011. He then resigned as CFO and authorized representative and became a non-executive director on 12 July 2011. Lastly, he resigned from the board of Aptus altogether on 31 December 2011. The reason why the Plaintiff remained on the board of Aptus until 31 December 2011, and not 30 September 2011 as promised, was owing to an on-going litigation engaged by HK Life at the time about the intended use of the Land for the columbarium business. HK Life lost the litigation and apparently the expectation of a huge profit from the Project was also in doubt, if not completely lost.

23.  On 4 January 2012, the Plaintiff presented the Cheque for payment but and it was dishonoured and returned with the reason “Refer to Drawer”.

24.  On 16 April 2012, the Plaintiff’s solicitors sent a demand letter to the Defendant for the HK$8 million, setting out the Plaintiff’s case which was largely in line with his case in these proceedings (“Demand Letter”).

25.  On 25 April 2012, the Defendant’s solicitors came back with a short and astonishingly unusual reply (“Reply Letter”):

“We are instructed to write to give you notice that we have our client’s instructions to receive correspondence on his behalf.”

The Defendant’s case

26.  In gist, the Defendant denied there was any Oral Agreement between the Plaintiff and him. He also denied that it was the Plaintiff who introduced Daniel Fung to him. The Defendant’s case was that he was introduced to Aptus by his friend Mr Michael Cheng (“Michael Cheng”).

27.  The Defendant was introduced to the Plaintiff through Gary Lau during a business meeting in August 2009. During that first meeting, the Defendant learnt that the Plaintiff was the Chief Financial Officer of a listed company in Hong Kong and he had years of such experience. Thereafter, the Defendant discussed with the Plaintiff on matters concerning how to run and invest in a listed company in Hong Kong.

28.  The Defendant accepted that he had asked more than 1 person to see if they knew any listed company which was interested in acquiring the columbarium business from him. He had asked inter alia Michael Cheng and the Plaintiff.

29.  In September 2009, Michael Cheng told the Defendant his friend Daniel Fung, an executive director of Aptus, had shown interest in the columbarium business. He then met Daniel Fung in the Pacific Coffee Company opposite Hopewell Centre in Wanchai.  On that occasion, the Defendant was accompanied by Michael Cheng who introduced Mr. Daniel Fung to him. On the Defendant’s case, this was the introduction which eventually led to the sale of the Project to Aptus. For this introduction, Red Rabbit gave Michael Cheng 200,000,000 Aptus shares as remuneration, worth approximately HK$50m at the time.

30.  Thereafter, the Defendant had a number of meetings with Daniel Fung concerning the Intended Sale.  At that time, he sometimes met the Plaintiff and sought his advice about the Intended Sale.  He said the Plaintiff had never asked for any remuneration for giving the advice or assistance to him or Red Rabbit.  It was he who introduced Daniel Fung to the Plaintiff at one of the meetings with Daniel Fung at Aptus’ office in Hopewell Centre.

31.  In March 2011, at the Four Seasons Hotel meeting, the Defendant, on behalf of Red Rabbit, made an enquiry upon the Plaintiff whether he knew anyone who might want to acquire all Red Rabbit’s shares in HK Life.

32.  In early April 2011, the Plaintiff asked the Defendant for a fee of HK$8 million for introducing a buyer to acquire the shares on condition that the offer price for the shares was not less than HK$100 million.

33.  In the late afternoon of 8 April 2011, the Plaintiff exchanged a number of “SMS” messages with the Defendant over the mobile phone. The Defendant said the Plaintiff had found a buyer who was willing to purchase Red Rabbit’s HK Life shares and the purchase could be completed before the end of September 2011. The Plaintiff on the other hand said he was merely making some inquiries on behalf of a PRC client he met that morning. The messages read as follows:

“Plaintiff: ‘My client is willing to buyout 12, cheque will be ready next week. Give me your contract terms’

Plaintiff: ‘Means you sell 31% in consideration of HKD100M, settle before end of September’

Defendant: ‘But the first 50m must arrived Monday cos some cheque is deliver’

Plaintiff: ‘Then issue New share and kick off acquisition of mobile manufacturing business’

Plaintiff: ‘Have you received 50M yet?’

Plaintiff: ‘Sign contract? Give me and Gary a copy’

Defendant: ‘No they are in security house’

Defendant: ‘How come a contract?’

Plaintiff: ‘Why? To secure the transaction. Candy on my table yet?’

Defendant: ‘Did I sign contract with chan ting? be realistic la’

Plaintiff: ‘Ok that’s you!’

Plaintiff: ‘Chan Ting and Daniel did not sign pre-arranged resignation either’

Defendant: ‘I don’t want to discuss by SMS when will u back’ ” (emphasis added)

34.  It was common ground that the words “Candy on my table yet?” referred to payment of HK$8 million. The difference between the parties was whether it was referable to the Oral Agreement, as the Plaintiff suggested, or the introduction fee/commission, as the Defendant contended.

35.  Between 8 and 9 April 2011, the Plaintiff asked the Defendant for a post-dated cheque of HK$8 million as security for the introduction fee/commission.

36.  On 9 April 2011, a Saturday, the Defendant gave the Cheque to the Plaintiff. He said the Cheque was security for the said introduction fee/commission. Since the Plaintiff failed to introduce any buyer for Red Rabbit’s HK Life shares before 30 September 2011 or at all, the Plaintiff should not have presented the Cheque for payment.

37.  Lastly, the Defendant said the Plaintiff had fabricated the story about the Oral Agreement with the mala fide intent to damage his reputation and financial credibility.

Issues

38.  The three agreed issues at this trial, all factual, were:

(a) whether there was the Oral Agreement as pleaded by the Plaintiff  (“1^st Issue”);

(b) whether it was the Plaintiff who introduced Aptus to the Defendant  to acquire the Project (the “2^nd Issue”);

(c) whether the Cheque was for payment pursuant to the Oral Agreement as claimed by the Plaintiff, or whether it was security for the Plaintiff’s introduction of a buyer to purchase Red Rabbit’s shares in HK Life, as claimed by the Defendant (“3^rd Issue”).

39.  It would be clear from the discussion below that the resolution of these issues turned primarily on the credibility of the Plaintiff and the Defendant.

Analysis

40.  At the trial, the Plaintiff called two witnesses:

(1) The Plaintiff himself. 

(2) Gary Lau. 

41.  The Defendant testified for himself at the trial. Further, he called Daniel Fung as his witness. 

42.  I had carefully considered the testimony, as well as the demeanour, of all four witnesses and assessed it against such of the documentary evidence as there was and the known and undisputed surrounding circumstances of this case.  I had in particular considered the inherent probabilities or otherwise of the parties’ respective contentions, and assessed the witnesses’ credibility accordingly. 

43.  I found the Plaintiff generally a truthful witness.  He gave his evidence clearly and calmly and his response to questions was mostly direct.  His credibility had withstood the test of cross-examination. 

44.  I also found Gary Lau a truthful witness.  His answers to questions were always direct and to the point.  There was no inherent reason for Gary Lau to lie in order to injure the Defendant – in any event, none had been put forward by the Defendant. On the evidence, he knew the Defendant first and then the Plaintiff - it was he who introduced the Defendant to the Plaintiff. His credibility has not been effectively challenged in cross-examination.  His evidence corroborated that of the Plaintiff in a number of material ways.

45.  As for the Defendant, I found the manner in which he gave evidence was rather affected. He became emotional even when faced with matter-of-fact questions put to him mildly by counsel for the Plaintiff. In the course of his cross-examination which lasted less than two hours, he had to take a 10-minute break half way through and literally rushed out of the courtroom. For reasons to be set out later in this Judgment, this court found his evidence incredible in a number of material ways.

46.  Daniel Fung was an “eleventh hour” witness. His signed witness statement for the Defendant was dated 21 November 2013 and he had been approached by the Defendant only days before that. The Plaintiff had previously, in October 2012, asked him to be the Plaintiff’s witness but he refused. By the time of his signed witness statement, the material events had already taken place more than 4 years ago. While in the witness box, he was unable to recollect most of the events asked of him. This came as no surprise to this court. After the completion in May 2010, Daniel Fung appeared to have little interest in the Project and soon became a non‑executive director of Aptus, in July 2010. He then left the board of Aptus completely – he resigned as non-executive director of Aptus in December 2010, according to the 2011 Annual Report. I did not find his evidence useful in the resolution of the disputes between the Plaintiff and the Defendant.

47.  In his oral closing submissions, Counsel for the Defendant highlighted three main points for this court’s consideration. They were as follows.

48.  First, not only was there no written agreement between the parties in relation to the HK$8 million, there was nothing in writing which recorded or referred to the Oral Agreement. This was wholly improbable if the Plaintiff’s case was truthful.

49.  Second, the Plaintiff had made no demand for the HK$8 million upon the completion of the sale to Aptus in May 2010. On the evidence, the Plaintiff did not ask for payment until December 2010.

50.  Third, the word “Candy” in the SMS messages ought to refer to some kind of “treat”, a reward with a view to inducing or encouraging the recipient to do something, rather than payment of an old debt which had been outstanding for almost a year. Hence, it was more probable than not that “Candy” referred to payment of introduction fee/commission and that the Cheque was issued by the Defendant /Red Rabbit as security for the HK$8 million introduction fee/commission requested by the Plaintiff.

51.  At the trial, the Plaintiff had been cross-examined at length on the absence of a written agreement in support of his claim for HK$8 million. His explanation was sensible and in my view truthful:

(1) He regarded the Defendant as his client and trusted him - he asked for HK$8 million at the last of the September meetings and the Defendant agreed to it immediately.

(2) At the time of the Oral Agreement ie September 2009, the Intended Sale was only at a preliminary stage - the Defendant had not even acquired the Land; hence, it was unsure whether the Project could be successfully sold to a listed company.

(3) By the time the Defendant entered into the agreement to acquire the Land in November 2009, the Plaintiff had already resigned from Enviro Energy and worked full time to assist the Defendant’s Intended Sale of the Project to Aptus; accordingly he felt the Defendant and him were in the same boat; he also felt it would look petty (小家) to ask the Defendant for a written agreement at that time.

(4) After the successful completion of the Intended Sale in May 2010, the Plaintiff said he did not feel the necessity of asking for a written agreement; by then, the Plaintiff had been the CFO of Casdon for months and had taken up positions in Aptus; later, he was even appointed an executive director of Aptus; he did not think the Defendant would renege on his promise.

52.  In this court’s view, by May 2010, it would be pointless for the Plaintiff to ask for a written agreement from the Defendant. If the Defendant were prepared to honour his promise, he would pay the HK$8 million, eventually if not immediately. If the Defendant were not going to honour his promise, it was highly improbable that he would agree to sign anything by then.

53.  Further, although not in name or in a legal sense, the Defendant could be perceived to be the Plaintiff’s boss, at least from the Plaintiff’s point of view. The Defendant was the majority and controlling shareholder of Aptus, while the Plaintiff was an employee, and later, a director of Aptus with the voting support of the Defendant. His annual remuneration package with Aptus (director’s fees, salaries, share‑based payments, and MPF) was worth almost HK$2.5 million according to Aptus’ 2011 Annual Report. The profit outlook of the columbarium business was good. The Defendant appeared to be a man of means – he acquired the companies holding the Land for a hefty HK$120 million in cash. This court could well understand why the Plaintiff did not see fit to antagonise the Defendant by asking for a written agreement or pressing the Defendant hard for payment of the HK$8 million. This could also explain why the Plaintiff did not demand for payment until the end of 2010 and why there was no written demand for payment until April 2012, after the Cheque had bounced.

54.  In his closing submissions, Counsel for the Plaintiff made a number of points which very much undermined the Defendant’s credibility and showed the Defendant’s case did not stand up to scrutiny.

55.  First, according to the Defendant, Michael Cheng was his friend. He would also be a crucial witness in support the Defendant’s case that it was Michael Cheng, not the Plaintiff, who introduced Daniel Fung/Aptus to the Defendant. Yet, the Defendant was unable to give the full name, Chinese name or some background of this person. This was all the more surprising since in his witness statement, the Defendant said, pursuant to an agreement made between him and Michael Cheng, Red Rabbit gave Michael Cheng 20 million Aptus shares, worth about HK$50 million at the time, as remuneration for this introduction.

56.  It was only during cross-examination that the Defendant first revealed that there was a written agreement with Michael Cheng but the same had been destroyed. It was also only during cross-examination that the Defendant first revealed that the 20 million Aptus shares had been issued to Michael Cheng’s wife.

57.  Second, the Defendant’s evidence was contradicted by Daniel Fung. According to Daniel Fung’s witness statement, it was Tim Kwok, not Michael Cheng, who introduced the Defendant to him. Tim Kwok was said to be Michael Cheng’s partner. Tim Kwok was present at the lunch meeting in the Restaurant. Michael Cheng was not. Apart from being Michael Cheng’s partner, no one could tell this court the full name, Chinese name or the background of this mysterious Tim Kwok either.

58.  Third, the lunch meeting in the Restaurant was a critical event on the Plaintiff’s case – it was the Introduction. This was pleaded in the Further and Better Particulars of the Statement of Claim dated 21 September 2012. For reasons best known to the Defendant, there was no reference to this lunch meeting in his witness statement at all – the statement was dated 6 November 2012, just two months after the Further and Better Particulars of the Statement of Claim. It was only during his examination-in-chief that the Defendant admitted having attended the lunch meeting at the Restaurant with the Plaintiff, Daniel Fung, Gary Lau, Tim Kwok and another person. He, of course, denied that was the Introduction. If so, one would have expected the Defendant to state his denial clearly in his witness statement in direct confrontation with the Plaintiff’s case in the Further and Better Particulars of the Statement of Claim. The Defendant did not do so.

59.  Fourth, in his witness statement, the Plaintiff said there was this Four Seasons Hotel Meeting in March 2011 where he reminded the Defendant about the Oral Agreement and the HK$8 million - the Defendant said OK. This was corroborated by Gary Lau in his witness statement. As the Defendant denied this Oral Agreement, one would have expected him to state his denial clearly during his examination-in-chief, if there was no opportunity to do so when he signed his witness statement (because for instance the witness statements were simultaneously exchanged). The Defendant again did not do so.

60.  Fifth, the Defendant’s explanation for giving the Cheque to the Plaintiff as “security” for the fee/commission in return for the introduction of a potential buyer of Red Rabbit’s HK Life shares was highly improbable:

(i) The Cheque was issued on 9 April 2011, a Saturday, at a time when the Defendant knew next to nothing about this so-called potential buyer – no name, no backgound, no nothing. There were only the rather incomprehensible SMS messages referred to above.

(ii) There was no evidence before this court that the Defendant had asked the Plaintiff about this potential buyer or the “first 50m” referred to in the SMS messages after the issue of the Cheque either, even though the Defendant demanded that the first HK$50 million must arrive next Monday ie 11 April 2011. 

(iii) The Defendant was then in financial difficulties, hence the need to look for buyers for his HK Life shares. It was inherent unlikely that he would not even bother to “bargain” with the Plaintiff about the amount of introduction fee. Yet, that appeared to be what had happened on the Defendant’s case.

(iv) The Defendant admitted that by the time of the Four Seasons Hotel meeting, he had already secured a buyer for the HK Life shares, although the terms of payment (by three instalments) were not ideal. It was again inherently unlikely that the Defendant was willing to give the Cheque to the Plaintiff as security for the full amount of the introduction fee/ commission without knowing a thing about the potential buyer yet to be introduced by the Plaintiff.

(v) The Cheque was post-dated to 30 September 2011, exactly the day when the Plaintiff had promised to resign from Aptus altogether. It was also not in dispute that the Plaintiff’s resignation letter was handed over to the Defendant on 9 April 2011, exactly the day when the Defendant gave the Cheque to the Plaintiff. This could have been a coincidence, but unlikely. The SMS messages referred to “pre-arranged resignation letter” which would be common, albeit not invariable, when there was a change in the controlling shareholder of a company, listed or otherwise. This rather supported the Plaintiff’s explanation that the Defendant finally agreed to pay the long overdue HK$8 million because he had found the New Purchaser who requested the Plaintiff to leave Aptus. The Plaintiff’s evidence as to what happened on 9 April 2011 was corroborated by Gary Lau.

(vi) If the Defendant’s reliance on the SMS messages was justifiable, there was no reason to post‑date the Cheque to 30 September 2011 since his terms for the potential buyer was that the first HK$50 million must arrive next Monday ie 11 April 2011. If so, the Defendant would know whether the Plaintiff had a serious buyer on 11 April 2011, not end of September 2011.

(vii) According to the Defendant’s case, the Plaintiff failed to introduce any buyer for the HK Life shares at all and no sale of the HK Life shares took place on or before 30 September 2011. In these circumstances, one would expect the Defendant to ask the Plaintiff for the Cheque back, well before 30 September 2011 but at least on or shortly after 30 September 2011. On the evidence, he did not do any such thing. Nor did he countermand the Cheque either.

61.  This court had no hesitation in disbelieving the Defendant’s explanation for the Cheque. As there was no other explanation for it save the Plaintiff’s, this court also had no hesitation in accepting that the Cheque was (belated) payment pursuant to the Oral Agreement.

62.  Finally, this court would add that it found the Defendant’s response in the Reply Letter astonishing. However busy the Defendant might have been at the time (which was his explanation as to why the response was drafted in those terms), a simple denial of the Plaintiff’s case in the Demand Letter would have been called for, if the Defendant was adamant that the Plaintiff had fabricated the story about the Oral Agreement with the mala fide intent to damage his reputation and financial credibility. There was no such denial in the Reply Letter.

63.  For all these reasons, this court found the Defendant an unreliable witness. Whenever there was a conflict between the Defendant’s evidence and that of the Plaintiff and Gary Lau, this court would prefer the evidence of the Plaintiff and Gary Lau. As I said earlier, Daniel Fung had demonstrated to this court a poor recollection of the material events and I was not disposed to rely on his evidence in the resolution of the present dispute.

64.  In summary, this court found in favour of the Plaintiff on all three agreed issues.

Disposition and costs order nisi

65.  In the premises, this court found in favour of the Plaintiff and entered judgment against the Defendant in the sum of HK$ 8 million with interest at the rate of 1 % above the prevailing Hong Kong Bank best lending rate, from the date of the Writ to Judgment, and thereafter at judgment rate until payment.

66.  There would be an order nisi that the Plaintiff is to have the costs of the action, to be taxed if not agreed, with certificate for 1 counsel.

67.  Lastly, I thank counsel for their helpful assistance.