LAM CHEUK WAI TREVOR, THE SOLE EXECUTOR OF THE ESTATE OF LAM HAK MAN, DECEASED (By Order dated 8 August 2022 to carry on) v. WONG MAN HON FREDERICK

HCA 2379/2018

[2025] HKCFI 2279

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2379 OF 2018

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J U D G M E N T

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1.  This action was commenced by the late Lam Hak Man (林克敏) (“Deceased”) against the defendant, Wong Man Hon Frederick (王文漢) (“Wong”), for a declaration that Wong holds the “Shares” (as defined in §10 below) on trust for the Deceased and an order requiring Wong to pay HK$2,660,000 as compensation for the loss of the Shares.

A.    Factual background

2.  The following facts are not in dispute. 

3.  The Deceased came to know Wong in 2011 and they became friends. 

4.  Wong worked in the banking industry from 1975 to 1990.  He was a director of iLink Group Limited which carried on business as financial printer at the office at The Chinese Bank Building in Central[1].

5.  Agritrade Resources Limited (鴻寶資源有限公司) (“Agritrade”) was until 31 January 2022 a company whose shares were listed on The Stock Exchange of Hong Kong Ltd (“HKEx”) (stock code 1131).

6.  On 19 May 2015, Wong told the Deceased that he could purchase 1,000,000 shares in Agritrade on his behalf at the price of HK$1,566,000[2].

7.  By a cheque dated 28 May 2015, the Deceased paid a sum of HK$1,566,000 to Wong (“Cheque”) for the purpose of purchasing 1,000,000 shares in Agritrade.  Wong admits that he used the proceeds of the Cheque to purchase 1,000,000 shares in Agritrade but contends that it was done pursuant to the “Oral Agreement” (as defined in §19 below)[3]. 

8.  In October 2017, the Deceased asked Wong to return  1,000,000 shares in Agritrade to him[4].

9.  On 27 November 2017, Wong wrote and signed a note stating that he would return 1,000,000 shares in Agritrade to the Deceased on or before 10 December 2017 (“Written Note”)[5] in this way:

“本人王文漢將於十二月十日前歸還林克敏先生1131鴻寶資源股票一百萬股.

立此為據”

(English translation: I Wong Man Hon [transliteration] will return 1 million shares in 1131 Agritrade Resources Limited to Mr Lam Hak Man [transliteration] before 10 December.

This serves as the proof)

10.  On 12 January 2018, each of the issued shares in Agritrade was sub-divided into 4 shares, and the 1,000,000 shares purchased by Wong became 4,000,000 shares (“Shares”)[6].

11.  Wong never returned the Shares to the Deceased. 

12.  During the period from December 2017 to January 2018, the price of the shares in Agritrade, apparently after adjustment for the sub-division of one to 4 shares, ranged from HK$0.665 to HK$0.79 per share[7].

13.  On 10 October 2018, the Deceased commenced this action.

14.  On 4 November 2020, the Deceased passed away. 

15.  On 26 January 2022, HKEx announced that the listing status of Agritrade would be cancelled pursuant to rule 6.01A of the Listing Rules with effect from 31 January 2022[8].    

16.  By order dated 8 August 2022, leave was given to the sole executor of the estate of the Deceased to continue the action as the plaintiff.

B.    Parties’ pleaded cases

17.  The plaintiff’s pleaded case is simple:

(1)     The Shares were acquired by Wong with the Deceased’s money and, therefore, have been held by Wong on resulting or constructive trust for the Deceased[9]. 

(2)     Alternatively, Wong has been unjustly enriched by the Shares and is liable to compensate the Deceased for the loss of the value of the Shares in the amount of HK$2,660,000, calculated at HK$0.665 per share (which was treated as the trading price on 10 December 2017) multiply by 4,000,000 shares[10].

(3)     Wong is liable to pay HK$2,660,000 or compensation for the loss of the Shares together with interest[11].   

18.  Wong does not dispute that the Shares were acquired by him using the Deceased’s money and the same have not been returned to the Deceased.  He denies liability to pay compensation for the loss of the Shares on 2 bases:

(1)     The Shares became de-listed.  Pursuant to the “Oral Agreement”, Wong would not be required to bear any loss suffered by the Deceased[12]; and

(2)     Wong never intended to hold the Shares on trust for the Deceased[13].

19.  Wong’s case, as pleaded in AD&CC, is that in April 2014, the Deceased and Wong orally agreed that the Deceased would invest in shares in listed companies in Hong Kong on the advice of Wong and would share any profit or loss from the sale of the shares so acquired and sold with Wong equally (“Oral Agreement”)[14]. The Oral Agreement contained the following terms (collectively “Express Terms”) [15]:

(1)     Wong would conduct research and provide advice to the Deceased on shares to be purchased;

(2)     In consideration of Wong’s advice and Wong’s agreement to bear 50% of any loss suffered by the Deceased for the shares purchased, the Deceased would share 50% of the profit generated from the sale of the shares with Wong;

(3)     If the Deceased failed to “fully and properly follow” Wong’s advice, the Deceased would bear any loss caused by any fall in share price or alternatively, “notwithstanding such failure, [the Deceased would] share any and all profits realised from the resale of such shares equally with [Wong]”;

(4)     The Deceased would notify Wong as to the details of any shares purchased; and

(5)     The Deceased “would share any and all realised profits with [Wong] immediately upon the resale of the shares, regardless of the quantity of shares remaining unsold”.

20.  The Oral Agreement is subject to the following implied terms, which were only introduced by way of amendments[16]:

“(a) In the event the Oral Agreement is terminated before all the shares purchased pursuant to the Oral Agreement are sold, the profits generated from any subsequent sale of those remaining shares are to be shared equally between the Deceased and [Wong].

(b) In the event the shares held in the Deceased’s brokerage account … are transferred to another account maintained by the Deceased, the profits from any subsequent sale of such shares from the aforesaid account are to be shared equally between the Deceased and [Wong].

(c) In the event that shares are purchased pursuant to the Oral Agreement but done by [Wong] instead of the Deceased, [Wong] would be able to sell those shares at his own liberty, and any profit generated or loss suffered as such would be shared equally between the Deceased and [Wong].

(d) In the event that the shares purchased pursuant to the Oral Agreement remain unsold when the subject Hong Kong listed company is delisted from the Hong Kong Stock Exchange, the Deceased would bear any and all resultant losses so suffered.”

21.  It is Wong’s case that:

(1)     pursuant to the Oral Agreement, the Deceased purchased 15,230,000 shares in Agritrade, which comprised (a) 14,230,000 shares purchased by the Deceased through his securities account at HSBC during the period from 15 April 2014 to 18 December 2015; and (b) 1,000,000 shares purchased with the proceeds of the Cheque[17]. 

(2)     The total number of shares after sub-division were 60,920,000 shares.  Based on the total consideration paid by the Deceased (HK$17,823,430), the average acquisition price would be HK$0.293 per share[18].

22.  The Deceased acted in breach of the Oral Agreement in that:

(1)     In October 2017, Wong advised the Deceased to start slowly selling the shares in Agritrade.  On 18 October 2017, the Deceased sold 485,000 shares at average price of HK$2.248 per share and realised profits of HK$521,860 but failed to share half of the profits (HK$260,930) with Wong (“1^st Sale”)[19].

(2)     In November 2017, Wong advised the Deceased to sell more shares in Agritrade but the Deceased refused to do so[20].

(3)     “In the premises, [Wong] avers that since the said 1,000,000 shares become de-listed, and pursuant to the Oral Agreement, [Wong] would  not be re   quired to bear any loss suffered by the [Deceased].  As such, [Wong] is not liable for the claim of HK$2,660,000 or any part of it”[21].

(4)     On 5 January 2018, the Deceased sold 3,000,000 shares in Agritrade without first seeking advice from or informing Wong, and made profit of HK$6,684,000 but failed to share the same with Wong[22] (“2^nd Sale”).

(5)     From 2 January 2018 to 10 January 2018, the Deceased sold 575,000 shares in Agritrade at average price of HK$3.43 per share (“3^rd Sale”).  From 12 January 2018 to 1 June 2018, the Deceased sold 30,050,000 shares in Agritrade at average price of HK$1.277 per share (“4^th Sale”).  Based on the average purchase price of HK$0.293 per share, the Deceased made profits of HK$30,873,000 in the 3^rd and 4^th Sales, and Wong is entitled to share HK$15,436,650, but the Deceased failed to pay the same to Wong[23]. 

(6)     The total profits made by the Deceased from the 1^st to 4^th Sales were HK$19,039,580[24].

(7)     On 13 May 2018, Ronald Cheung on behalf of the Deceased, proposed to share HK$6 million of the profits with Wong, being the profits generated from the sale of 10,000,000 shares in Agritrade (40,000,000 shares after sub-division) at an average price of HK$2.5 per share (“2018 Offer”) [25]. The 2018 Offer constituted repudiatory breach of the Oral Agreement which was accepted by Wong on 4 June 2018.  By reason of the Deceased’s repudiation of the Oral Agreement, Wong has suffered loss and damage in the amount of HK$19,039,580[26].   

23.  In his Counterclaim, Wong relies on the same matters set out in §§18 - 22 above and counterclaims HK$19,443,780 against the Deceased, being his 50% share of the profits generated from:

(1)     The 1^st to 4^th Sales in the amount of HK$19,039,580; and

(2)     A further sale of 10,105,000 shares in Agritrade by the Deceased from 11 June 2018 to 22 May 2020 which generated profits of HK$808,400 of which Wong is entitled to share HK$404,200 (“5^th Sale”)[27].

24.  Accordingly, the issues which require determination of the court are:

(1)     Whether the Shares have been held by Wong on trust for the Deceased and, if so, whether Wong should be ordered to pay HK$2,660,000 as compensation to the estate of the Deceased (Trust Issue); and

(2)     Whether the Oral Agreement existed and, if so, whether Wong is entitled to counterclaim HK$19,443,780 against the Deceased (Counterclaim Issue).

C.     Trust Issue

25.  Mr Austin Yiu, counsel for the plaintiff, submits that the Shares have been held by Wong on resulting trust or constructive trust for the Deceased, and Wong has been unjustly enriched by failing to return the Shares to the Deceased by 10 December 2017.  Reliance is placed on the following principles:

(1)     Where purchase money is provided by the plaintiff, a resulting trust arose for the plaintiff in respect of the property purchased unless he intended to make a gift to the defendant (Underhill and Hayton Law of Trusts and Trustees, 20^th ed., §26.14). 

(2)     Equity imposes a constructive trust upon property which a defendant might attempt to obtain or retain for himself exclusively (or might prevent the equitable interest therein passing to persons for whom he had agreed to hold the property) by fraudulently or unconscionably taking advantage of statutory provisions or other fundamental legal principles such as the need for certainty of subject matter of trusts. The constructive trust will be in favour of those to whose disadvantage the invocation of the provisions or principles would otherwise operate (Underhill, §32.1).

(3)     Any property acquired by trustees by reason of their legal ownership of the trust property must be held by them as trustees only.  The fruit of trust property is itself trust property: Underhill, §29.75).

(4)     Where the trustee cannot perform his obligation to deliver trust assets in specie because he has lost or misapplied them in an authorised transaction, the court can order the trustee to pay money as a substitute for performance of his core duty (Underhill, §91.13).

(5)     Where a constructive trust has been imposed on property held by the defendant and the value of the property rises and falls between the date of the defendant’s receipt and the date of judgment, the defendant is personally liable to pay the plaintiff the highest intermediate value, on the account there is a duty to realise the property at the most advantageous moment and to account for proceeds (Underhill, §29.51).

(6)     Where the property value has gone down, the trust will have suffered a loss through the wrongful act of the trustee, which he ought to be required to make good (Thanakharn Kasikorn Thai Chamkat v Akai Holdings Ltd (2010) 13 HKCFAR 479, §150).

26.  In my judgment, the 1,000,000 shares in Agritrade (which became the Shares upon the sub-division on 12 January 2018) have since their acquisition been held by Wong on resulting trust for the Deceased, given that they had been acquired with the Deceased’s money. 

27.  Neither of the 2 matters pleaded in the AD&CC (see §18 above) constitutes a defence to the plaintiff’s claim:

(1)     Even if, contrary to my view, the Shares had been acquired pursuant to the Oral Agreement, there is no basis (none has been identified by Wong) as to why the delisting of Agritrade would have the effect of making Wong not liable to return the Shares or to compensate the Deceased for the loss of the value of the Shares. 

(2)     Nor the fact that Wong never intended to hold the Shares on trust for the Deceased provides a valid defence to the claim.  To the contrary, the fact that Wong failed to return the Shares in compliance with the Deceased’s demand by itself constituted a breach of trust.

28.  As for relief, the principles are clear:

(1)     As a trustee, Wong is liable to restore the trust estate, either in specie or by value, and questions of foreseeability and remoteness do not come into such an assessment (Libertarian Investments Ltd v Hall(2013)16 HKCFAR 681§79). 

(2)     Where the trust asset or its traceable proceeds cannot be restored in specie, the remedy is for the wrongdoer to pay a sum of money sufficient to restore the trust fund to the position it would have been if the trust assets had not been misapplied (i.e.  equitable compensation) (Snell’s Equity, 35^th edn., §30-013).

(3)     The court is entitled to take into account any post-breach changes affecting the value of the lost trust property.  Equitable compensation is limited to the loss flowing from the trustee’s acts in relation to the interest he undertook to protect.  Where the plaintiff provides evidence of loss flowing from the relevant breach of duty, the onus lies on a defaulting fiduciary to disprove the apparent causal connection between the breach of duty and the loss apparently flowing therefrom. The plaintiff’s actual loss as a consequence of the breach is to be assessed with the full benefit of hindsight, and the plaintiff is not required to mitigate (Libertarian §§79, 91-93, 96).

29.  In the present case, as a result of Wong’s failure to return the Shares to the Deceased, the Deceased was deprived of the opportunity to sell the Shares before Agritrade was delisted.  That being the case, equitable compensation should be assessed at the highest price at which Agritrade’s shares were traded during the period from October 2017 up to the date of delisting.  

30.  However, in §15 of ASOC, the plaintiff admits and adopts the lowest trading price pleaded in §17 of D&CC (i.e. HK$0.665 per share) and treated it as the price on 10 December 2017, and then multiply this price by 4,000,000 shares and comes up with a claim for HK$2,660,000.  There are at least 3 problems with this approach:

(1)     The plaintiff has not pleaded any claim for equitable compensation to be assessed at the highest trading price of the shares in Agritrade.  Mr Yiu has not applied for leave to amend ASOC during the trial. 

(2)     The plaintiff has not adduced any evidence on the trading prices of the shares in Agritrade during the period from the date of the breach up to the date when Agritrade was de-listed. 

(3)     It is not clear if the range of prices pleaded in §17 of D&CC were the actual trading prices of Agritrade’s shares or the prices after adjustment for sub-division of shares which only took effect on 12 January 2018.  If the range of prices pleaded in §17 of D&CC were the actual trading prices, it would be wrong for the plaintiff to calculate the loss by multiplying that price with 4,000,000 shares.

31.  Neither Mr Yiu nor Wong (who appears in person) has addressed the matter described in §30(3) above.   

32.  It therefore falls on the court to consider the issue on the basis of the pleadings and the evidence filed by the parties:

(1)     In §15 of ASOC, the plaintiff adopts the range of prices pleaded in §17 of D&CC as the trading prices of the shares in Agritrade during the period.

(2)     Although §17 of D&CC was deleted when Wong filed AD&CC, it would not affect the plaintiff’s admission of the facts pleaded in §17 of D&CC.  This is because as soon as the plaintiff admitted the range of prices pleaded in §17 of D&CC, the same ceased to be a factual dispute.  If and to the extent that Wong wanted to re-open that factual issue, he would need to obtain leave of the court to do so under Order 27 rule 3[28], but he never did. 

(3)     In §29 of Wong’s witness statement filed on 30 December 2019 (“Wong WS”), which is adopted by Wong as part of his evidence without any amendment, he refers to the same range of prices pleaded in §17 of D&CC. 

(4)     In his 2^nd witness statement filed on 8 May 2020 (“Wong 2^nd WS”), Wong describes the share prices of Agritrade in 2018, that is, after the sub-division had taken effect, and the prices were much higher than the range of prices pleaded in §17 of D&CC.  These include:

(a)     In §40 of Wong 2^nd WS, he refers to the average selling price of Agritrade shares at HK$1.38 per share from January 2018 to December 2018; and

(b)     In §47 of Wong 2^nd WS, he refers to the trading price of Agritrade shares at HK$1.66 per share in May 2018.

(5)     The above evidence of Wong shows that the price of HK$0.665 per share has already taken into account the effect of sub-division of shares (which took effect on 12 January 2018), and the plaintiff is entitled to claim compensation by multiplying this price by 4,000,000 shares (instead of 1,000,000 shares).

33.  As the plaintiff has not claimed compensation for breach of trust at the highest trading price of Agritrade and has not adduced any evidence on the trading prices of the shares before Agritrade was de-listed, there is no basis for the court to consider whether equitable compensation payable by Wong should be assessed at a price higher than HK$0.665 per share. 

34.  For the above reasons, I hold that:

(1)     the Shares have since 28 May 2015 been held by Wong on resulting trust for the Deceased;

(2)     Wong acted in breach of trust by failing to return the Shares to the Deceased following the demand made by the Deceased in October 2017; and

(3)     Wong is liable to pay equitable compensation to the plaintiff in the amount of HK$2,660,000. 

35.  As regards interest, although the court may award compound interest against Wong for having acted in breach of trust, there is no plea in ASOC for compound interest.  Nor has Mr Yiu made any submission on interest. 

36.  That being the position, it is appropriate to award simple interest from 10 December 2017 (i.e. the date when Wong was liable to return the Shares to the Deceased on the plaintiff’s case) to the date of judgment. 

D.     Counterclaim Issue 

37.  Wong’s counterclaim is based on the existence of the Oral Agreement. 

38.  The principles are well-established.  Where, as here, a defendant puts forward an alleged oral agreement in support of his defence and counterclaim, he bears the burden of proving the oral agreement on a balance of probabilities – it is not for the plaintiff to convince the court of the defendant’s alternative account (Music Holdings Property HK Ltd v Ooi Lean Choo [2020] HKCFI 1312, §55, per Ng J).

39.  The approach of the court in assessing the credibility of the  witnesses where there is a direct conflict of their testimony as to the existence or otherwise of an alleged oral agreement has been stated by DHCJ Jin Pao SC in Leung Chin Sing, Rabo and Another v Ko Chun Hay, Kelvin [2021] HKCFI 2242, §§41-44:

“41. Since this case concerns the existence of an alleged oral agreement, and turns on my assessment of the credibility of witnesses, the legal principles on evaluating the truthfulness of an account given by a witness are relevant. These principles were referred to in Hui Cheung Fai v Daiwa Development Ltd (HCA 1734/2009, 8 April 2014) at [77-80] by DHCJ Eugene Fung SC, and helpfully summarized by Recorder Yvonne Cheng SC in Joint and Several Trustees of the Property of Yeung Wing Sing v Yeung Wing Sing [2021] HKCFI 2018 at [26] as follows:

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

(2) in deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3) regard should be had to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence;

(4) care should be taken in drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’ character;

(5) witnesses’ credibility should be tested by reference to the objective facts proved independently of their testimony, and regard should be had to their motives and to the overall probabilities.’

42. It is rare in modern commercial litigation to encounter a claim based on an agreement which is not only said to have been purely by word of mouth but of which there is no contemporaneous documentary record of any kind. The prevalence of e-mails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic imprint: Blue v Ashley [2017] EWHC 1928 (Comm) at [65] per Leggatt J (as he then was); Music Holdings Property HK Ltd v Ooi Lean Choo [2020] HKCFI 1312 at [58] per Ng J. Because the value of a written record is understood by anyone with business experience, its absence may, depending on the circumstances, tend to suggest that no contract was concluded: Blue v Ashley at [49]; Wing Hing (1956) Co Ltd v Nissin Foods Co Ltd [2021] HKCFI 638 at [56] per DHCJ Abraham Chan SC.

43. In Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [16-20], Leggatt J (as he then was) set out a detailed analysis on the unreliability of human memory and the impact on the civil litigation process on recalling past events. In view of these considerations, at [22], it was held that the best approach for a judge to adopt in the trial of a commercial case is to place little if any reliance on witnesses’ recollection of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. These observations were cited with approval by Kwan VP in Galleria (Hong Kong) Ltd v DBS Bank, Hong Kong Branch [2021] HKCA 611 at [175]...

44. I also bear in mind that the burden of proof rests on the Plaintiffs to prove and establish the oral agreement, including the manner in which it was concluded and on the terms as pleaded, on a balance of probabilities.  There is no burden on the Defendant to persuade the Court that his alternative version of events should be accepted: Music Holdings Property HK Ltd at [55] per Ng J.” 

40.  Wong adduces the following evidence in support of his case that the Oral Agreement existed:

(1)     Wong WS and Wong 2^nd WS.

(2)     Mr Cheung Ka Yue, also known as Ronald Cheung (“Cheung”), who describes himself as a mutual friend of Wong and the Deceased, has made a witness statement dated 31 December 2019 and a supplemental witness statement on 4 September 2023.  Cheung does not attend trial to give evidence and his witness statements are not admissible as evidence. 

(3)     Witness statement of Liu Qi (“Liu WS”).  Liu was employed by Wong from 2010 to 2019. 

41.  I do not think that there is any probative value in Liu’s evidence for the following reasons:

(1)     It is clear from Liu’s oral evidence that he was not privy to the Oral Agreement and has no personal knowledge of the matter.  Under cross-examination, Liu admits that everything he said in Liu WS about the Oral Agreement was based on what he had been told by Wong. 

(2)     The only time Liu met the Deceased was when the Deceased came to the office to meet Wong.  Even on that occasion, Liu did not participate in the meeting, though he says that he could hear some arguments between Wong and the Deceased outside the meeting room, and he heard that the Deceased demanded for return of the 1,000,000 shares in Agritrade. 

(3)     It is also clear from Liu’s evidence that the Deceased never provided any information and documents in relation to his purchases and sales of any shares listed on HKEx to Wong, and neither Wong nor Liu had any access to the Deceased’s securities account at HSBC Private Bank (Wealth Management) Brokerage Account (“HSBC Brokerage”).

(4)     Under cross-examination, Liu confirms that all the information on the number of shares purchased and sold, and the prices at which they were purchased and sold, which formed the basis of Wong’s counterclaim, had been derived from (a) the closing prices of Agritrade trades published by HKEx and (b) the CCASS shareholding online search provided by the Hong Kong Exchanges and Clearing Limited, which show tradings in the shares carried out through HSBC Brokerage. Liu surmised that because the Deceased held a securities account at HSBC Brokerage; very few clients would use HSBC Brokerage to trade in shares listed on HKEx; and Agritrade shares did not have much trading activities, all the purchases and sales of shares in Agritrade through HSBC Brokerage must have been carried out by the Deceased.  There is no proper basis in support of Liu’s speculation and I do not accept his conjecture.   

42.  The Deceased in his witness statement and supplemental witness statement denied the existence of the Oral Agreement.  His witness statements are admitted as hearsay evidence.  His evidence is simple and straight-forward:

(1)     The Shares were acquired with the Deceased’s money.  He had been demanding Wong to return 1,000,000 shares after their purchase, but Wong used various excuses to delay the return.  After his repeated chasers, Wong wrote and signed the Written Note in which he promised to return the Shares but failed to do so. 

(2)     The Deceased had over 20 years’ experience in horse betting before he came to know Wong in 2011, and he did not need to rely on Wong’s advice on horse betting.  There were a few occasions when Wong asked the Deceased to make bets for him and the Deceased agreed to make a joint bet with Wong, one of which resulted in dividend of HK$2.8 million.  However, Wong should not make use of such incident and lied that the winning was owing to his so-called “tips and analysis”. 

(3)     The Oral Agreement was a pure fabrication.  By 2014, the Deceased already had 30 years’ experience in investing in shares in listed companies.  His investment in shares in Agritrade was based on his own assessment and decision and had nothing to do with Wong. 

(4)     The Deceased did not throw any tantrums or caused any disturbance in Wong’s office.  He urged Wong to return 1,000,000 shares in Agritrade to him but Wong said that he had pledged those shares and needed some time to arrange for their release, and Wong wrote the Written Note and undertook to return the shares on that day.   

(5)     Hong Kong Stock Link Securities Limited (港股通証券有限公司) (stock code 1318) (“HK Stock”) had a shareholder, Regal Success Development Ltd (“Regal Success”) which, in turn, was owned by 3 shareholders, being the Deceased’s company[29] (33%), Wong’s company[30] (34%), and another investor[31] (33%).  The dispute in relation to HK Stock had nothing to do with this action, but Wong deliberately selected and copied some of the WhatsApp messages exchanged between the shareholders in relation to Regal Success/HK Stock and claimed that the messages related to the alleged profit sharing under the Oral Agreement.  

43.  In my judgment, the Oral Agreement is a pure fabrication created by Wong after the Deceased commenced this action to claim the return of the Shares for the reasons explained in §§44-49 below. 

44.  First, the Oral Agreement is directly contradicted by the contents of the Written Note prepared and signed by Wong himself. 

(1)     In the Written Note, Wong acknowledged and admitted his obligation to return the Shares to the Deceased by 10 December 2017.  Had the Oral Agreement existed, Wong would have referred to it given that on his own case, the Shares had been acquired pursuant to the Oral Agreement.  Wong has not been able to provide any explanation, let alone a credible explanation, as to why he did not refer to it when he wrote the Written Note.  This was particularly so when Wong claimed to be a very experienced businessman and investor. 

(2)     I reject Wong’s allegation that the Written Note was prepared and signed following “urges from the Deceased’s wife to the Deceased to take control of his investments in Agritrade”[32]. The allegation is self-evidently a fabrication as it was only introduced when AD&CC was filed on 2 May 2023.  Prior to that, the story put forward by Wong was that the Written Note was signed “in order to placate the [Deceased] so that he would stop making a scene at the office”, which plea was abandoned in AD&CC. 

(3)     Under cross-examination, Wong tries to explain away the Written Note by seeking to resurrect the allegation he abandoned, and alleges that the Deceased had acted very aggressively and even shouted in Wong’s office when he demanded the immediate return of the Shares, whereupon Wong had no alternative but to prepare and sign the Written Note on that day.

45.  Second, there is no contemporaneous document or any electronic communication between Wong and the Deceased which shows that the Oral Agreement existed.  This is despite the fact that on Wong’s case, the Oral Agreement existed and continued over a period of 4 years, from April 2014 to June 2018 when it was terminated by Wong; and Wong did communicate with the Deceased through WhatsApp.

46.  Third, the extracts of some of the WhatsApp messages exhibited to Wong 2^nd WS do not support his case that the Oral Agreement existed since April 2014:

(1)     In the first place, the extracts are clearly incomplete.  Some of them do not bear any date and do not show from who and to whom they were sent.  There is no explanation as to why Wong did not disclose or exhibit the complete chain of correspondence as evidence.   

(2)     It can be seen from the contents of the extracts, almost all the messages were concerned with the shareholders’ dispute in relation to “港股通” (the Chinese name of HK Stock), including the appointment of directors, the debt owed by 港股通 to Wong, the convening of general meeting and the subsequent discussions on how to resolve the dispute. 

(3)     In reply to a message apparently sent to the Deceased on 9 May 2018, Wong rumbled about the relationship with the Deceased, and admitted that he still owed the Shares to the Deceased in this way:

“敏哥, 我們之間的事其實很簡單，首先，我問心無愧，我對您沒有什麼惡意。第二，我欠你的一百萬股(現在是四百萬股) 和一千萬兩百萬元，這些都是鐵一般的事實。第三，我和你之間的股票數，亦應該計算清楚，因為我股票才贏錢，我已開始另一兩隻股票了，包贏的。外面的股票貼士，我永遠不會再相信。…”

(4)     Had the Oral Agreement existed, the natural thing for Wong to do would have been to refer to the Oral Agreement and the Deceased’s refusal to share the profits with Wong in the past 4 years.  There is no explanation as to why Wong did not refer to the Oral Agreement had it existed at the time.  The clear admission by Wong on 9 May 2018 that he still owed the Deceased 1,000,000 shares (which became 4,000,000 shares) without any reference to the Oral Agreement goes against Wong’s allegation that the Oral Agreement existed at the time. 

(5)     From the extracts of the WhatsApp messages, the first time Wong referred to dividing the profits of 10 million shares in “1131” (which Wong says is a reference to the shares in Agritrade) was on 29 May 2018, after Wong had not been able to reach any agreement with the Deceased in relation to the dispute in HK Stock.  Even then, it was Wong’s unilateral proposal to have a share in the profit said to have been made by the Deceased in the 10 million shares.  This again militates Wong’s allegation that the Oral Agreement already existed at the time.    

47.  Fourth, the fact that the Deceased carry on all the tradings in the shares in listed companies without any reference to Wong is  consistent with the Deceased’s evidence which I accept.  It is inconceivable that Wong never requested the Deceased to provide any records of the tradings in the shares or any reports on the amount of profits and loss, whether in writing or through WhatsApp which according to Wong, was one of the modes of communications used by them at the time.  Even after the relationship between the Deceased and Wong had turned sour as a result of the dispute in relation to HK Stock, Wong still did not request the Deceased to provide any records of trades or report on the profits or losses.  Again, no credible explanation has been provided by Wong as to the absence of such request. 

48.  Fifth, Wong’s case on the key term of the Oral Agreement has changed.  In D&CC, his pleaded case was that he would share 50% of the profits generated from the purchase and sale of shares in listed companies, but did not have to bear any of the loss sustained.  It was only when  AD&CC was filed 4 years later (in May 2023) that Wong changes his pleaded case and alleges that under the Oral Agreement made in 2014, he has to share both the profit and loss from trading in the shares in listed companies. 

49.  Lastly, the Express Terms make no sense.  There is no dispute that the Deceased had over 30 years’ experience in investing in shares in listed companies, and he did not need the advice of Wong in making any investment.  This is consistent with the fact that all the trades were carried out by the Deceased through his own account without any reference to Wong.  Even if the Deceased wanted to take advice before investing in any shares, there was no reason why he had to turn to Wong (a retired banker) for advice, still less at a substantial cost which required the Deceased to pay the entire cost of purchasing the shares but with an obligation to share 50% of the profits from the investment.  The Express Terms are at odds with the objective evidence and the evidence of the Deceased (which I accept), make no commercial sense and are incredible. 

50.  The Oral Agreement is a complete fabrication.  It follows that the counterclaim must be dismissed. 

E.     Disposition and costs

51.  For the above reasons, I make the following order:

(1)     Wong do pay equitable compensation in the amount of HK$2,660,000 to the plaintiff;

(2)     Wong do pay interest on the amount of HK$2,660,000 from 10 December 2017 up to the date of this judgment at HSBC prime lending rate plus 2% and, thereafter, at judgment rate until payment; and

(3)     the counterclaim is dismissed. 

52.  As for costs, I make a costs order nisi that Wong do pay the costs of and occasioned by the action and the counterclaim including all costs reserved, to be taxed on an indemnity basis, if not agreed.

53.  It is appropriate to order costs against Wong on a higher scale having regard to the nature of the plaintiff’s claim, which involve a breach of trust on the part of Wong, and to reflect the court’s disapproval of Wong’s conduct in putting forward a defence and counterclaim based on false allegations.  I do not consider that the case warrant the engagement of 2 junior counsel.