XUE BORAN AND ANOTHER v. HUI CHI SUM AND ANOTHER

HCA 2493/2018

[2024] HKCFI 349

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2493 OF 2018

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J U D G M E N T

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INTRODUCTION

1.  The 1^st and 2^nd plaintiffs, 薛博然and 楊丽璇, are husband and wife. They are originally from Mainland China. They obtained residence rights in Hong Kong in the early 2010s.

2.  The 1^st and 2^nd defendants, 許智深and 袁斯敏, are husband and wife.

3.  The 1^st plaintiff and the 1^st defendant are distant relatives and they are both of Chiu Chow descent.

4.  This is the trial of the action brought by the plaintiffs to recover sums under what they say is a loan advanced to the defendants. The plaintiffs contend that in around 2009, they and the defendants reached an agreement for a loan orally (“the Oral Loan Agreement”). Pursuant to that, sums totalling $20,000,000 were lent to the defendants between 2009 and 2011. The Oral Loan Agreement was varied and acknowledged in writing by a loan note dated 10 May 2013 (“the Loan Note”). That in turn was varied and acknowledged by a written loan agreement dated 23 November 2014 (“the Loan Agreement”).

5.  The plaintiffs’ primary case is that they are entitled to recover the outstanding sums under the Loan Agreement. Their alternative position is that if that agreement is unenforceable, they are entitled to recover under the Loan Note. As a further alternative, if the Loan Note is unenforceable, they would claim under the Oral Loan Agreement. At the conclusion of the trial, the parties managed to agree on the quantum of the plaintiffs’ claims and the reliefs to be granted under the three scenarios.

6.  The defendants deny that there was such a loan. They also deny that the Oral Loan Agreement existed. There were in fact sums of money given to them by the plaintiffs since July 2009. However, they amounted in total to around $15,500,000, not $20,000,000. And they were advanced pursuant to an oral agreement reached between the 1^st plaintiff and the 1^st defendant on 3 June 2009. Under that agreement, the former would provide funds to the latter for investing in stocks in Hong Kong. If profits were made on such investments, the 1^st defendant would get 30% of the profits. However, if there were any losses, the 1^st plaintiff would bear them all. I shall refer to the alleged agreement as “the Investment Agreement”. (The defendants’ case on a number of aspects of the agreement has undergone some changes in this action. What is just stated reflects the position adopted by them at the trial.)

7.  It is the defendants’ case that substantial losses were incurred on the investments and there remained only a balance of $1,899,358.42. They returned the balance in instalments to the plaintiffs over the period from December 2014 to March 2018. They say that they had made full repayment.

8.  In fact, the defendants made a counterclaim alleging that they had overpaid the plaintiffs by a Piaget watch with a value of $200,000. In opening submissions, however, the defendants applied for leave to discontinue the counterclaim. I granted leave with costs to the plaintiffs.

9.  As to the Loan Note, the defendants say that it is not enforceable against them as the 1^st defendant had signed it under the undue influence of the 2^nd plaintiff and the 2^nd defendant had not signed it in the first place and had no knowledge of it at the time.

10.  As to the Loan Agreement, the defendants say that it is not enforceable against them either as they had signed it under duress.

11.  This action therefore primarily involves factual disputes between the parties. It is effectively a case of the plaintiffs’ words against the defendants’ words as to the circumstances in which (1) the sums of money totalling $20,000,000 (on the plaintiffs’ case) or $15,500,000 (on the defendants’) were given to the defendants, (2) the Loan Note was signed, and (3) the Loan Agreement was signed.

12.  The material events span from 2009 to 2018.

13.  The outcome of the action would turn on the court’s assessment of the credibility of the witnesses. And that is to be tested by reference to the objective facts at the relevant times and contemporaneous documents which include WeChat messages exchanged between the parties.

14.  In addition to themselves, the plaintiffs called three witnesses to testify at the trial. First, Ms Xue Junxuan. She was (and still is) the 2^nd plaintiff’s personal assistant. She was involved in chasing the 2^nd defendant for repayment after the Loan Agreement was signed. Second, Mr Xue Junpeng. He was (and still is) the 1^st plaintiff’s personal assistant. He was present when the parties signed the Loan Agreement at the plaintiffs’ flat at The Arch, Kowloon (“The Arch flat”). Third, Mr Lau Kit Hung (“Lau”). He is a Hong Kong solicitor. He was responsible for drafting the Loan Agreement. He was present at The Arch flat when the agreement was signed.

15.  Both defendants testified. They did not call any other witness.

16.  At the trial, the plaintiffs were represented by Ms Jennifer Fan and Mr Zenith Chan. The defendants were represented by Mr Lee Hui Jen Michael.

THE PLAINTIFFS’ CASE

17.  The plaintiffs’ case is as follows.

Background

18.  As to the background of the 1^st plaintiff:

(1)  He obtained an undergraduate degree from the Guangdong University of Finance in 1995 and a postgraduate degree from Zhongshan University College in 2007.

(2)  He has been working in the securities and finance industry.

(3)  From 2007 to 2009, he was the general manager of CITIC Securities. From 2009 to 2012, he was the general manager (Shenzhen) of Guangdong Rong Heng Capital Ltd. Since 2012, he was the general manager of Joincap Holdings Ltd and since 2015, he has been the general manager of Joincap Financial Holdings Ltd in Hong Kong.

19.  As to the background of the 2^nd plaintiff:

(1)  From 2000 to 2003, she worked in the finance department of securities firms.

(2)  From 2003 to 2008, she was a researcher at the Guangdong University of Finance.

(3)  From 2011 to 2015, she was the general manager of Joincap Holdings Ltd. Since 2015, she has been the director of Joincap Financial Holdings Ltd in Hong Kong.

20.  The 1^st plaintiff became acquainted with the defendants in around 2007. By 2009, the plaintiffs and the defendants had formed a close friendship. The latter had assisted the former with various matters when they visited Hong Kong.

2009 – Oral Loan Agreement

21.  On 3 June 2009, the 2^nd plaintiff gave birth to a son, the third child of the plaintiffs, in Hong Kong. The 2^nd defendant had assisted her in various logistical and transportation arrangement when she came to Hong Kong for medical appointments.

22.  In the second half of 2009, the 1^st defendant asked the 1^st plaintiff for a loan in two meetings which took place in Guangzhou and Shenzhen. The defendants intended to use the loan to expand their food business.

23.  At the second meeting, the 1^st plaintiff reached the Oral Loan Agreement with the 1^st defendant. It was agreed that:

(1)  The plaintiffs would lend a total amount of $20,000,000 to the defendants.

(2)  The loan would be interest free and repayable on demand.

24.  Pursuant to the Oral Loan Agreement, the 2^nd plaintiff gave the 2^nd defendant an equivalent of around $20,000,000 from 2009 to 2011 on five occasions.

2013 – Loan Note

25.  In around mid-2012, the 1^st plaintiff was diagnosed with cancer. This prompted him to consider the need to tie up loose ends both from family and business perspectives and the need to provide for his three young children, in case his treatment failed and he were to pass away. He therefore asked his family and friends to repay loans previously extended by the plaintiffs to them, including the defendants.

26.  The plaintiffs demanded the defendants to repay the loan in about June or July 2012. However, the defendants made no repayment. The plaintiffs therefore wanted the defendants to sign a note to record the debt.

27.  On 10 May 2013, the 2^nd plaintiff was in Hong Kong. She met with the 1^st defendant and produced a typed up note for him to sign. That would be the Loan Note. There were certain parts of the note which had been left blank. The intention was to ask the defendants to fill them out themselves. It was felt that it would be better if they themselves handwrote the amount owed and to whom the loan was owed.

28.  I reproduce the contents below. The underlined words in the extract are those parts which had been left blank and were filled up by the 1^st defendant by hand.

“本人许柏德，香港身份证号码：[omitted]，妻子袁思敏，香港身份证号码：[omitted]。于2010年向薛书荣、杨丽璇、夫妻借款 (币种大写) 港币：贰仟萬元正。，并约定于2013年6月份开始按月还款。最长还款期限不超5年，即2018年6月之前还清所借款项。” (underline added)

29.  In the Loan Note, the 1^st defendant’s name was stated to be “许柏德”. There is a dispute in this action as to whether he was also known by this name. The plaintiffs say that he was whereas the defendants deny that the name was used by him. However, the 1^st defendant admitted in cross-examination that the 1^st plaintiff has called him “阿德” throughout the years. Separately, there was a typo in the 2^nd defendant’s name. The middle character of her Chinese name was stated to be “思”, instead of “斯”.

30.  In the Loan Note, the defendants acknowledged that they had borrowed a sum of $20,000,000 from the plaintiffs in 2010 and they agreed to repay the loan by monthly instalments starting from June 2013, with the loan to be repaid in full within no more than five years, ie before June 2018.

31.  It is the 2^nd plaintiff’s evidence that the 1^st defendant signed on the Loan Note in front of her and he promised that he would ask the 2^nd defendant to sign it. Later that day, when the 1^st defendant handed back the Loan Note to the 2^nd plaintiff, there were two signatures on it, which corresponded to the respective Chinese names of the defendants.

32.  Shortly after the signing of the Loan Note, at the request of the 2^nd plaintiff, the defendants made two transfers to the plaintiffs through the 2^nd plaintiff’s company account. The first transfer was in the sum of $300,000 and effected on 2 August 2013 and the second one was for $10,000 which was transferred on 5 November 2013. The plaintiffs say that these are repayments pursuant to the Loan Note.

2014 – Loan Agreement

33.  After that, however, the defendants made no further repayment.

34.  In August 2014, the 2^nd defendant was diagnosed with cancer. Therefore there was again a need for money. The plaintiffs instructed a law firm to draft a loan agreement and they invited the defendants to go to their flat at The Arch for the purpose of signing a written loan agreement.

35.  On 23 November 2014, the defendants went to The Arch flat. Apart from the plaintiffs and the defendants, also present were Junpeng and two staff from the law firm, namely Lau and a paralegal.

36.  The plaintiffs produced the loan agreement drafted by the law firm for the defendants to sign. That would be the Loan Agreement. It was a pre-typed document. The recital referred to the loan of $20,000,000 and the signing of the Loan Note, and further stated that the defendants had not observed their repayment obligations. The material terms of the agreement provided that the loan was to be repaid by 42 monthly instalments from December 2014 to May 2018. The original clauses are reproduced below:

“1. 还款期限为42个月，自2014年12月1日起至2018年5月31日止。

2. 经双方约定，借方应于还款期限内，分42次归还贷方所贷款项。”

37.  What followed was a table containing a repayment schedule with the dates and the amounts of each of the 42 instalments set out. Each amount comprised both principal and interest. According to the table, the defendants were to repay a fixed sum of $480,000 towards the principal each month. As for interest, the amount due for the first month was $58,333. The interest amount would decrease each month. And the interest component of the last instalment was $933.

38.  Upon being asked to repay the loan and seeing the document, the 2^nd defendant became very emotional and burst into tears. She said that their business was not doing well and they could not afford to pay $500,000 a month. Therefore the 1^st plaintiff asked Lau and the paralegal to leave the flat for a while so as not to embarrass her. They were away for 20 to 25 minutes. The plaintiffs and the defendants were discussing the matter in the living room. Meanwhile, Junpeng was staying in a separate room. The defendants requested the plaintiffs to give them more time to make repayment.

39.  Acceding to their request, the following new clauses were added by hand and the repayment table crossed out:

“3. 從2014年12月1日至2015年3月31日，借方僅需支付利息。

4. 從2015年4月1日开始，借方需支付本金及利息，但总額不得少於100,000港元。

5. 借方必須於2018年5月31日或以前付清本金和利息。”

40.  While the final repayment date remained unchanged, it is immediately notable that the amounts to be paid by the defendants immediately after the date of the Loan Agreement would be much less than what was originally provided for in the repayment table. For the first four months, only interest was payable. After that, the minimum amount to be paid each month was $100,000.

41.  The plaintiffs and the defendants signed the amended document in the presence of Lau and the paralegal. The signing process was video recorded on Lau’s mobile phone. It was Lau who suggested to record the process as he wished to prevent any disputes as to how the agreement came to be signed from arising in the future. The video recording was produced as evidence in the trial.

42.  The Loan Agreement provided that interest would be charged at 3.5% per annum and that in the event of late payments, interest would be charged at 10% per annum.

December 2014 to April 2018 – repayments and chasers under the Loan Agreement

43.  Shortly after the signing of the Loan Agreement, from 2 December 2014 onwards and up to March 2018, the defendants made 24 payments to the plaintiffs in the total sum of $2,053,332. The fact of such payments and the amounts are not in dispute. (In this action, initially, the defendants’ position was that they had paid $2,103,332 in total. But Mr Lee conceded in opening that the amount should be $2,053,332.)  The plaintiffs say that they were repayments made under the Loan Agreement.

44.  In respect of the repayments:

(1)  From December 2014 to August 2015, there was a monthly payment of $58,333 for the first four months and a monthly payment of $100,000 for the following five months. The plaintiffs say that they plainly tally with the repayment terms in the Loan Agreement.

(2)  There was no repayment made in September 2015.

(3)  Then, in about October 2015, the defendants gave a Piaget watch to the plaintiffs as repayment in the sum of $200,000.

(4)  From November 2015 to March 2018, there were payments of varying amounts in some but not all of the months. The amounts ranged from $50,000 to $200,000.

45.  As the amounts paid from November 2015 onwards fell short of the sums stipulated in the Loan Agreement, the 2^nd plaintiff and Junxuan started to chase the 2^nd defendant for repayment via WeChat. Copies of the WeChat messages were produced as evidence in the trial.

46.  Ms Fan has compiled a table setting out the 24 payments alongside the chaser messages in chronological order. It would appear from the table that the defendants were trying to make the payments to comply with the Loan Agreement and when they failed to meet the minimum monthly amount of $100,000, Junxuan or the 2^nd plaintiff would follow up. And the defendants would then make some payments shortly afterwards but the amounts would often be still short of the required amounts. The 2^nd defendant would at times apologise. On some occasions, Junxuan referred to a loan contract. The plaintiffs say that that was a reference to the Loan Agreement.

47.  Below are some examples. The references to “敏姐”, “思敏” and “敏” are to the 2^nd defendant. “旋姐” is the 2^nd plaintiff and “小旋” is Junxuan.

48.  On 4 November 2015, the defendants made a payment of $50,000. On 16 November, Junxuan followed up on the shortfall of $50,000:

“Junxuan: 敏姐，您好！璇姐让我问问你，月中既5万港币存入距账户未？

The 2^nd defendant: 明天入

Junxuan: 好的”

49.  On the following day (ie 17 November), the defendants made a payment of $50,000.

50.  A sum of $50,000 was made in January 2016. No payment was made in the month of February 2016.

51.  On 8 March 2016, the 2^nd plaintiff chased up the outstanding amounts and referred to a signed contract:

“The 2^nd plaintiff: 思敏，你已经有一个半月的欠款没如期还账了，因二月是春节，我不追你，但这个月就要把前面的一起还了，我们是签过合约的，希望你是个有信用的人

The 2^nd defendant: 我知道” (underline added)

52.  Then, on the following day, the defendants made a payment of $70,000.

53.  Immediately on the following day (10 March 2016), the 2^nd defendant apologised to the 2^nd plaintiff for paying only $70,000 which she knew was not enough:

“The 2^nd defendant: 旋姐，我昨天已入了七萬，我知道是不夠，我会尽力安排，請見諒，对不起

The 2^nd plaintiff: 二十五万和七万还相差很多，这个月你想办法补齐吧，我那么多的钱让你们挪用了我的损失找谁要去，我已经很仁慈了，将心比心，你会作为感想？”

54.  There are other occasions when Junxuan expressly referred to a contract or loan agreement.

55.  On 21 March 2016, Junxuan wrote:

“敏姐，你好！璇姐暧我帮距跟踪你里笔数，你睇睇几时可以存到钱入距帐户到，可能要麻烦你给我个时间，距又问我！我好答覆距！

其实你上礼拜同我讲既我都明白你既处境 但系合同系甘签既 你可能要按照合同行事，费事大家误会左” (underline added)

56.  On 18 May 2016, Junxuan wrote:

“你睇睇有没有什么计划可以碑到钱 因为璇姐有交代我去稳份合同借款协议出来睇睇条例，然后叫我交碑公司律师去睇” (underline added)

57.  Some of the exchanges show that the 2^nd defendant did not dispute that she and the 1^st defendant owed money to the plaintiffs and that they were supposed to make scheduled repayments. See the exchange on 6 and 7 June 2016:

“The 1^st plaintiff: 敏，5月份的欠款你们至今未还，我们大家亲戚一场，我也不想搞得以后无法往来，希望你还是按时还款，不要搞到无法调和才好。

The 2^nd defendant: 小旋，麻煩你跟旋姐說声我明天或後天能入5万，暫時真的只能這樣，麻煩你了

余下的我再想办法” (underline added)

58.  Then, in April 2018, Junxuan followed up with the 2^nd defendant expressly referring to the deadline of 31 May 2018 under the contract. She asked the 2^nd defendant to come up with a repayment proposal.

59.  On 2 April 2018, Junxuan sent the following voice message:

“敏姐敏姐，你好呀，你之前呢就同呀璇姐同呀榮哥簽嘅呢份合同呢，我想提一提你係5月31號就到期嘅。咁你宜家啲數唔知你準備成點，姐係到時，因為..呃…因為呀榮哥佢地呢邊係咁叫我去通知你，到期呢就要還番呢筆錢。咁續期果啲就無得講架啦 …

咁第三個呢，就係你個方案，如果你唔方便話俾我知嘅，咁你可以寫份大概嘅還款方案囉，姐你所…你琴日同我講嘅，要還款嘅方案，要同佢地傾嘅，你大概要話聲俾佢知，因為佢唔知道你具體還款方式係點。

… 睇下你宜家呢邊係安排成點樣囉。” (underline added)

60.  The 2^nd defendant replied on the same day, also by voice message. There was no denial of the contract or the repayment date of 31 May 2018.

“小璇呀，我宜家係柬埔寨做緊嘢呀。我後日…我聽日翻去，但係都好夜，我夜啲或者聽日夜啲或者後日打俾你，因為呢度成日都無乜信號，岩岩先睇到，唔好意思。”

61.  On 17 April 2018, Junxuan sent another voice message, once again referring to the deadline in the contract:

“敏姐，我有同呀璇姐講左你琴日同我講嘅，大概約一約佢兩公婆。咁呀璇姐嘅意思叫我轉達翻俾你。第一個呢就係，你話俾佢知，你今年。即係係2018年上半年呢份合同到期，你琴日所講嘅果個短期內會還翻一半，大概一半到，可以還到一半到咁樣嘅款俾翻佢地，咁…..你係…短期內，你…佢叫我問翻你，確認翻……第一點就係，短期內係具體係短到幾時，俾個具體確切嘅日期。咁第二

…

我係有同佢約時間睇睇話，你…幾時……問佢幾時，問佢幾時方便你上黎搵佢，搵佢地兩公婆又得，或者係過去香港，等佢過香港，約埋一齊見面再傾方案，咁佢就叫我話聲會……先叫你落實呢幾點俾佢囉。” (underline added)

62.  To this, the 2^nd defendant replied:

“一會和你說現在忙搞小朋友沖涼食飯”

63.  After March 2018, the defendants did not make any further repayment. Demand letters were issued in August and October of the same year to no avail. The plaintiffs then commenced the present action shortly afterwards that year to claim the outstanding sums from the defendants.

THE DEFENDANTS’ CASE

64.  There is no dispute that sums of money were given by the plaintiffs to at least the 1^st defendant from 2009. The parties however disagree on the precise total amount and the purpose for which they were given. There is also no dispute that the 1^st defendant put his signature on the Loan Note on 10 May 2013. However, the parties disagree on why he did so – whether he did so voluntarily or under undue influence. Lastly, there is no dispute that the 1^st and 2^nd defendants signed the Loan Agreement on 23 November 2014 at The Arch flat. There is however a dispute as to whether they had done so voluntarily or under duress.

65.  Some aspects of the defendants’ case have undergone changes in the course of this action. I record below the version which Mr Lee adopted in his closing submissions.

Background

66.  The 1^st defendant was educated up to primary level. He started working when he was about 14 or 15 years old. He had worked in many jobs, including ironing clothes in a garment factory, working in restaurant kitchens, delivering goods in cargo vans and auto repair in a garage. In 1993, he started his own delivery business, making deliveries for meat stores to restaurants. In 1999, he took over a meat store from a customer who was then emigrating to Canada. Since then, he has been working in the food business. From 2008 to 2015, he ventured into the business of selling wine and cigars.

67.  In cross-examination, he confirmed that he has no credentials or academic qualifications in stock investment.

68.  There is no evidence before the court as to the personal background of the 2^nd defendant.

2009 – Investment Agreement

69.  On 3 June 2009, the 2^nd plaintiff gave birth to the plaintiffs’ son in Hong Kong. The 1^st plaintiff and the 1^st defendant met outside the operating theatre of the hospital on that day. It was on this occasion that they reached the Investment Agreement orally.

70.  The 1^st plaintiff asked the 1^st defendant to assist him in making stock investments in Hong Kong because (1) the 1^st plaintiff intended to start a career in the stocks and securities industry in Hong Kong, and (2) the plaintiffs intended for their son to stay and study in Hong Kong. The 1^st plaintiff told the 1^st defendant that they had known each other for two years and their relationship was close. The 1^st plaintiff trusted the 1^st defendant. At the former’s proposal, the two of them agreed that the 1^st plaintiff would provide funds for the 1^st defendant to invest in stocks, and that the 1^st defendant would share 30% of the profits whilst the 1^st plaintiff would bear all the losses.

71.  From around July 2009, the 1^st plaintiff provided the 1^st defendant with about $15,500,000 mostly in cash.

72.  The defendants used the funds to trade in shares in five listed companies, namely Polytec, CH Grand Forest, Long Success, Sustain Forest and China Mining, via their own bank accounts following the 1^st plaintiff’s instructions. The trading mostly took place in 2009, 2010 and 2011, with a few transactions happening in 2013. The investments continued to register losses.

73.  In this action, the defendants have produced their bank statements. They show the trading activities in these five shares. However, according to their own evidence, the banks statements are not complete in that they do not show all the transactions carried out under the Investment Agreement.

Late 2010 to 2014 – “the Matter”

74.  In about late 2010, the 1^st plaintiff informed the 1^st defendant that he had run into trouble and would suspend contact with the defendants. When the 1^st defendant told him that the investment kept registering losses and asked him what to do with the stocks and the money, the 1^st plaintiff said that he did not have the time or mood to deal with it and reassured him that the defendants were at liberty to make their own decisions on the investments.

75.  In around February 2011, the 1^st defendant received a phone call from a mainland number, in which he was told that the 1^st plaintiff wanted to meet him in Shenzhen.

76.  The meeting took place in a hotel in Shenzhen between late February and late March 2011. The 1^st plaintiff revealed that the China Securities Regulatory Commission (“the CSRC”) had charged him for market manipulation and he was wanted nationally. This is referred to in the defendants’ pleading as “the Matter”. The 1^st plaintiff therefore had to hide himself from place to place and could not take the airplane or the train and had to suspend all contact methods.

77.  From that time onwards and up to the end of 2014, the 1^st plaintiff would meet the 1^st defendant every several months for about four or five times. The latter would receive a telephone call from the mainland telling him that the 1^st plaintiff wished to meet him in Shenzhen. They would meet in a hotel. In those meetings, the 1^st plaintiff allowed no other parties, including the 2^nd defendant, to be present as he feared that his whereabouts would be disclosed. Neither the 1^st defendant nor the plaintiffs would bring up the topic of stock investments in any of those meetings.

78.  In respect of the Matter, the defendants have produced an article issued by the CSRC dated 9 December 2011. In that article, the 1^st plaintiff was one of a number of individuals who were named as being investigated by the CSRC for a large scale stock market manipulation in the mainland between April 2007 and October 2009.

79.  The defendants also point out that the 2^nd plaintiff and her daughters obtained Hong Kong residency via the Capital Investment Entrant Scheme in about April 2012 but the 1^st plaintiff did not join them at that time. He only came to Hong Kong via the one-way permit in October 2013.

80.  On the other hand, as regards the Matter, the 1^st plaintiff explained in cross-examination that the announcement only shows that some preliminary actual findings were made against him and others and it does not state that a finding regarding any breach of securities regulations was made against him. There is in any event nothing in the announcement to suggest that the he was wanted nationally at any time.

81.  In fact, during the period which the defendants allege that the 1^st plaintiff was wanted nationally:

(1)  The 1^st plaintiff was working at Guangdong Rong Heng Capital Ltd as general manager (until 2012).

(2)  He was paying regular visits to the hospital for his cancer treatment in mid-2012.

(3)  He visited the campus of the China University of Political Science and Law in May 2012 in Beijing.

2013 – Loan Note

82.  Despite there being no loan in the first place, the defendants’ case on why the 1^st defendant would sign on the Loan Note acknowledging that there was one is as follows.

83.  In about early May 2013, during one of those meetings in Shenzhen, the 1^st plaintiff told the 1^st defendant that the market manipulation matter was near conclusion and he only needed to explain to certain people the whereabouts of his previous funds.

84.  Then, on 10 May 2013, the 2^nd plaintiff requested to meet the 1^st defendant. She went to his food store in Tai Po with three or four people. She introduced the 1^st defendant to those people, who then went out to smoke cigarettes.

85.  The 2^nd plaintiff told the 1^st defendant that the Matter was drawing to a close and the only issue remaining was that the plaintiffs had to explain to certain people the whereabouts of the 1^st plaintiff’s previous funds. She said that the plaintiffs had told these people that the plaintiffs had lent those funds to the 1^st defendant and hence those people now came to Hong Kong to check if the 1^st defendant did exist.

86.  She then took out the Loan Note and asked the 1^st defendant to sign it. Taken aback, the 1^st defendant said that what the 2^nd plaintiff said contradicted the facts entirely and it was unacceptable.

87.  The 2^nd plaintiff replied that the plaintiffs had passed the point of no return. She admitted that the plaintiffs had set the defendants up by bringing along those people to the defendants’ store and dragged them into the plaintiffs’ own problems. She further said that if the plaintiffs and the defendants mishandled the Matter, those people would give the defendants a hard time in the future and the defendants would be in big trouble.

88.  The 2^nd plaintiff asked the 1^st defendant to help out and sign the Loan Note. She further said that if the Matter was disposed of smoothly, the 1^st plaintiff would be free and he would take care of the matter.

89.  Feeling entrapped by the plaintiffs’ conduct and the burden of the need to help the 1^st plaintiff, the 1^st defendant had no choice but to sign the Loan Note.

90.  In cross-examination, he said that at that time he knew that the 1^st plaintiff was restricted to leave the mainland. From his perspective, the 1^st plaintiff had treated him well before and he wished to be grateful to his benefactor and to return the favour. If he did not do so, he would be met with the reproach of everyone.

91.  In cross-examination, the 1^st defendant confirmed that the defendants had never reported the matter to the police. He explained that the 2^nd plaintiff was a friend and the 1^st plaintiff was really in trouble. Even though he thought the request to sign the Loan Note was a bit too much, he nonetheless understood that the motive was to help the 1^st plaintiff to gain back his personal freedom.

92.  It is not in dispute that a sum of $300,000 and a sum of $10,000 were paid to the 2^nd plaintiff’s company in August and November 2013 respectively. The defendants say that they were not repayments made under the Loan Note.

93.  In late July 2013, the 2^nd plaintiff asked the 2^nd defendant to sell some shares and to transfer $300,000 to her company’s bank account. The 2^nd defendant proceeded as requested, by selling some Grand Forest shares, as shown in her bank statements.

94.  In late October 2013, the 2^nd plaintiff asked the 2^nd defendant to transfer $10,000 to her company’s bank account. Again, the 2^nd defendant complied with the request.

2014 – Loan Agreement

95.  As to the signing of the Loan Agreement, the defendants’ case is that they had signed it under duress. Hence, the agreement is not enforceable against them.

96.  On 23 November 2014, the 2^nd plaintiff contacted the 2^nd defendant inviting them to go to The Arch flat.

97.  The defendants arrived at about 8 to 9 pm. When they entered the flat, they saw the plaintiffs and four other men. Two of them were staff from a law firm. The plaintiffs and the defendants were then seated in the living room area. The four men stood around and walked around at times.

98.  During the discussion, the 1^st plaintiff requested the two law firm staff to leave the flat for about 20 to 25 minutes. After they left, the 1^st plaintiff brought up the topic of stock investment and asked the defendants how to deal with the losses. He then took out the Loan Agreement and demanded them to sign it.

99.  The defendants refused because they did not need to bear any loss according to the Investment Agreement and they never borrowed any money from the plaintiffs.

100.  The 1^st plaintiff then made the following threats:

(1)  The defendants should think about their three small children and consider whether they would want misfortune to happen to the defendants.

(2)  The defendants were not allowed to leave The Arch flat unless they signed the Loan Agreement.

101.  Upon hearing this, the 2^nd defendant burst into tears for fear of being assaulted, injured or killed and for fear of the three children being harassed or harmed as the plaintiffs knew well where they lived and studied.

102.  The 1^st plaintiff then called the law firm staff to return to the flat. One of the law firm staff started to make amendments to the Loan Agreement. All along, the defendants were forced to stay in The Arch flat for nearly 90 minutes and not allowed to leave.

103.  Feeling intimidated by the threats, the defendants succumbed to the coercion and reluctantly signed the Loan Agreement. After signing, they told the plaintiffs that they would not be able to make payments in accordance with the repayment table contained in the Loan Agreement. As a result, the table was crossed out and new clauses were added by hand.

104.  In cross-examination, the defendants confirmed that they had never reported the matter to the police. After they left the flat, the 1^st defendant wanted to give a call to his police friend. But the 2^nd defendant stopped him. She felt that the police would not be able to help and she was afraid of the ramifications that it might bring.

December 2014 to April 2018 – return of the balance of investment funds

105.  It is common ground that after the signing of the Loan Agreement, the defendants made 24 payments to the plaintiffs from December 2014 to March 2018. The defendants say that these sums represented the balance of the investment funds after the losses were accounted for under the Investment Agreement. They were not paid pursuant to the Loan Agreement.

106.  After the incident at The Arch flat, the 1^st defendant asked the 2^nd defendant to locate the bank statements and calculate the remaining balance from the stock investments.

107.  It had however taken more than one year for her to retrieve the bank statements and to come up with the figures. In the meantime, she was constantly bombarded with text and voice messages from the 2^nd plaintiff and Junxuan. She was troubled by these messages.

108.  As the 1^st defendant was certain that there would be money left under the Investment Agreement, he told the 2^nd defendant to start making payments pending the calculations.

109.  In cross-examination, the defendants were asked why the 24 payments appeared to tally with the repayment terms of the Loan Agreement, the 1^st defendant said that since the calculations had taken much longer than expected and the 2^nd defendant was troubled by the chaser messages, he therefore thought they would make payments in accordance with the Loan Agreement first. But by doing so, they did not accept the repayment terms.

110.  They were also asked why they never denied their liability under the Loan Agreement subsequently. The following allegations were made for the first time in this action.

(1)  The 1^st defendant said that there were three occasions when he met the 1^st plaintiff and told him that the funds returned were not payments under the Loan Agreement.

(2)  The 2^nd defendant said that she had two to three telephone conversations with the 2^nd plaintiff in which she said that the defendants had no obligation to repay under the Loan Agreement.

(3)  The 2^nd defendant also explained that she did not talk to Junxuan about it as she thought Junxuan was a mere assistant and it would not help to speak to her about it.

111.  In April 2018, the 2^nd defendant told the 2^nd plaintiff that the defendants had finished paying the balance to the plaintiffs.

Calculations under the Investment Agreement

112.  As to how the defendants arrive at the figure of $15,500,000 being the total amount given to them under the Investment Agreement, in his cross-examination, the 1^st defendant said that he had not kept any records as to the sums given. He arrived at the figure by deduction. That is to say, one starts with the sums repaid to the plaintiffs from 2014 to 2018, ie $2,103,332, and adds to that the total amount of losses, ie $13,290,641.58, and the two sums transferred in 2013, ie $310,000, and lastly deducts the value of the Piaget watch, ie $200,000. However, when it was pointed out to him that one could not start with the assumption that the sum of $2,103,332 was indeed the balance of the investment funds after the losses were accounted for, the 1^st defendant then said that it was in fact the 2^nd defendant who did all the calculations.

113.  When it was the 2^nd defendant’s turn to testify, on the first day of her evidence (which was a Friday), she confirmed that the calculations were in fact done by way of deduction. However, when she resumed her evidence the following Monday, she claimed that she had taken anti-depressants on the previous Friday and her mind was blank when she answered the questions on the calculations. And she would like to clarify that she had in fact reviewed the banks statements and added up the purchase prices of the five shares belonging to the plaintiffs. The total sum would represent the money given to them by the plaintiffs (except in cases of re-purchase after sale of the same shares). She then deducted from the purchase sums the sale prices in order to come up with the total losses made on the five shares.

114.  The defendants admitted that some of the losses were only estimations of losses as they had lost some of the bank statements or records.

Summary

115.  In summary, the defendants contend that there was never any loan extended to them by the plaintiffs and that the Oral Loan Agreement did not exist. What was agreed in 2009 was the Investment Agreement and they had already fully repaid the balance of the investment funds by March 2018.

116.  It is the defendants’ case that notwithstanding that the 1^st defendant signed on the Loan Note, he was not acknowledging that there had existed a loan owed to the plaintiffs. He signed the document under the undue influence of the 2^nd plaintiff. He should therefore not be liable under it. As for the 2^nd defendant, she did not sign on the Loan Note and had no knowledge of it. She should not be liable under it.

117.  Lastly, the Loan Agreement is not enforceable against the defendants as they had signed it under duress.

The plaintiffs’ argument on affirmation of the Loan Note and the Loan Agreement

118.  The plaintiffs argue that even if the Loan Note was signed under undue influence, the defendants have subsequently affirmed it. This is because they subsequently made the two payments of $300,000 and $10,000 at the request of the 2^nd plaintiff. The payments cannot be explained with reference to the Investment Agreement and could only have been repayments under the Loan Note. Furthermore, the defendant had never sought to avoid the Loan Note until the service of their amended defence and counterclaim in May 2019, ie six years later, when they denied for the first time that they were not liable under the Loan Note.

119.  The plaintiffs further contend that even if the Loan Agreement was signed under duress, the defendants have subsequently affirmed it by making the 24 payments from 2014 to 2018 and by having taken no step to set it aside from 2014 to January 2019 when they served their defence and counterclaim.

ISSUES IN DISPUTE

120.  This action is primarily a factual dispute. The parties are putting forward completely different narratives as to the circumstances in which (1) the sums of money were advanced from 2009, (2) the Loan Note was signed, and (3) the Loan Agreement was signed.

121.  The burden is on the plaintiffs to show that the Oral Loan Agreement existed.

122.  As to the Loan Note, the 1^st defendant accepts that he in fact signed the document whereas the 2^nd defendant says that she did not and should not be bound by it. The burden is on the plaintiffs to show that she should be so bound. As regards the 1^st defendant, he is bound by the Loan Note unless he is able to show that the document is vitiated by a factor recognised at law such that it should not be held enforceable. In this case, the burden is on him to make out the case of undue influence: Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334 at paras 86 to 87.

123.  Similarly, the defendants accept that they had signed the Loan Agreement. They are therefore bound by it unless they can show that it is vitiated by the alleged duress such that it should be held unenforceable.

EVALUATION OF THE EVIDENCE

124.  The principles on the evaluation of factual evidence in a trial are not in dispute. The parties rely on their respective alleged oral agreements. The outcome of the case therefore turns on the credibility of the witnesses.

125.  In the evaluation exercise, contemporaneous documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility. Importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events. Regard should be had to the consistency of the witness’ evidence with undisputed or indisputable facts, and its own internal consistency. 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 his character. Regard should be had to the witnesses’ motives and to the overall probabilities. See Leung Chin Sing, Rabo v Ko Chun Hay, Kelvin [2021] HKCFI 2242 at paras 41 to 43.

126.  The following passage in the above decision at para 42 is also pertinent in the present case:

“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 … 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 …”

127.  The plaintiffs and the defendants are relatives. It may be said that strictly speaking, the present case does not arise in a commercial setting. In my view, however, the above observations apply equally here. The sums of money advanced, whether under the Oral Loan Agreement or the Investment Agreement, are substantial. There were in fact text communications exchanged between the parties about the subject-matter via WeChat at a time before the present dispute emerged. Where an alleged oral agreement leaves no documentary footprint at all throughout its life (and afterwards) is a matter which would considerably diminish the likelihood of such oral agreement having existed in the first place.

The plaintiffs’ case is inherently plausible and coherent

128.  Overall speaking, the plaintiffs have put forward a clear and coherent account of events which together make out their factual case, including the extension of the loan between 2009 and 2011, their chasing of the loan from 2012, the signing of the Loan Note in 2013 and the signing of the Loan Agreement in 2014. It would appear that every material event or development in their factual case bears an inherently credible and plausible explanation.

129.  As regards the extension of the loan, Mr Lee queries why the plaintiffs would be willing to lend a substantial sum to the defendants when they only came to know each other in 2007. Not only were the plaintiffs willing to lend, but they also did not charge any interest for the loan. Mr Lee submits that there appears to be no incentive for such a large loan. Furthermore, on the plaintiffs’ case, the defendants asked for the loan to expand their food business. However, it is indisputable that the plaintiffs knew very little about the business and they made no investigation at all to ascertain the defendants’ repayment ability. Mr Lee also queries why the plaintiffs did not ask the defendants to sign a written agreement in respect of the loan in 2009.

130.  In my view, these are all legitimate queries.

131.  In response to them, in cross-examination, the 1^st plaintiff admitted that he had not visited the defendants’ meat store or had not asked for any financial statements prior to the loan. He explained that at that time he believed that the defendants would repay the loan as (1) the two families had cemented a good relationship over the past two years as the defendants had assisted the plaintiffs in various matters in Hong Kong, (2) the defendants had rendered their assistance in an honest manner, and (3) at that time the defendants lived in a townhouse in Hong Lok Yuen in Tai Po and this gave the 1^st plaintiff confidence that they would be in a position to repay the loan.

132.  As to why the plaintiffs did not request the defendants to sign a written loan agreement in 2009, the 2^nd plaintiff explained that Chiu Chow people had what she would call an odd habit of lending money to relatives and family based on trust without following any strict formalities as implementing such formalities would make the borrowing parties feel that the assistance was not based on personal relationship (“人情”).

133.  I consider that these explanations are inherently plausible. The objective fact is that the plaintiffs did advance a substantial sum to the defendants from 2009 even though the families had known each other for only two years. Whether the parties had concluded the Oral Loan Agreement or the Investment Agreement, the plaintiffs were subject to the similar risk that the defendants would not repay moneys due to them. The fact that a substantial sum was advanced in itself indicates that there was a high degree of trust between the two families at that time. Given that level of trust, I consider that it is inherently credible that the plaintiffs would make such a big loan to the defendants without any written agreement.

134.  The next material event of the plaintiffs’ case is when they demanded the defendants to make repayment for the first time after the diagnosis of the 1^st plaintiff’s cancer in June 2012.

135.  In cross-examination, the 1^st plaintiff explained that he made the demand because he felt the need to tie up loose ends both from the family perspective and the business perspective and the need to provide for his three young children in case the treatment did not work.

136.  The 1^st plaintiff’s cancer diagnosis is supported by medical reports. As to his explanation, Ms Fan submits that it accords with common sense and is credible. I accept that submission.

137.  The next material development is the signing of the Loan Note.

138.  Mr Lee raises a number of queries on the Loan Note. He says that the document was poorly drafted and the names of the defendants were written wrongly. Further, even though the Loan Note required the defendants to make monthly instalments, it did not state the amount for each instalment. He asks rhetorically if the plaintiffs had really wanted to record a real loan, they would have been more serious about it by putting in accurate information and setting out the precise monthly instalment amount. The contents of the Loan Note is, he submits, more consistent with the defendants’ case, namely that the purpose of the Loan Note was not to enforce any loan, but to help the 1^st plaintiff to explain the whereabouts of his funds in the context of the Matter.

139.  Mr Lee also takes the point that there was a time gap between the diagnosis of the 1^st plaintiff’s cancer (in June 2012) and the signing of the Loan Note (in May 2013). He submits that therefore the two could not possibly have any connection.

140.  I consider that it is inherently plausible that after the defendants failed to repay the loan upon demand, the plaintiffs would want to escalate the efforts to make sure that the defendants would repay by having them acknowledge the loan in writing and imposing a final repayment date. (I do not find it necessary to resolve the factual dispute over whether the 1^st defendant had used two names. Importantly, he admits that he did sign on the Loan Note.) 

141.  The next milestone event is the signing of the Loan Agreement.

142.  According to the plaintiffs’ case, the Loan Agreement was made against the background that the 2^nd plaintiff was diagnosed with cancer in August 2014 (which allegation is supported by medical records) and the defendants had failed to repay the loan. It would appear that the request to signed a detailed loan agreement represents yet another escalated effort to make sure that the defendants would make the repayment. This time, the plaintiffs engaged lawyers to draft an agreement with a repayment schedule setting out the payment dates and the payment amounts for each of the 42 instalments.

143.  In fact, shortly after the scheduled final repayment date of 31 May 2018 as stipulated in the Loan Agreement, the plaintiffs instructed solicitors to send demand letters to the defendants. When no repayment was forthcoming, they promptly commenced the present action in October of the same year.

144.  Overall speaking, the plaintiffs’ case on how they extended the loan in the first place and the steps which they took to secure repayment by the defendants, which were escalating as time went by, is inherently plausible and coherent.

The plaintiffs’ case is internally consistent

145.  In their live testimonies, both the 1^st and 2^nd plaintiffs were able to speak about the various aspects of their case clearly, coherently and convincingly. Their oral evidence is consistent with their written evidence.

146.  It is notable that in his closing submissions, Mr Lee has not even tried to point out any discrepancy in the plaintiffs’ evidence.

147.  I note however that there is a potential inconsistency within the plaintiffs’ case. They now say that the two payments totalling $310,000 made in 2013 were made to repay the loan under the Loan Note. However, when the Loan Agreement was signed in 2014, it still stated that the loan amount was $20,000,000, without giving allowance to the sum of $310,000. In fact, the recital expressly stated, “截止本合约签署日，借方都没有履行其还款义务”. And the repayment schedule was compiled based on the loan amount of $20,000,000. In this regard, the plaintiffs’ case appears to be inconsistent. But this point was not brought up at the trial.

148.  Even if I am to take into account this potential inconsistency in my overall evaluation of the evidence, I would still consider that the plaintiffs’ evidence is, on the whole, internally consistent.

The plaintiffs’ case is strongly supported by contemporaneous documents and objective facts

149.  It is plain that the plaintiffs’ case on the Loan Agreement is strongly supported by contemporaneous documents and objective facts.

150.  The significant objective fact is that the defendants have made 24 payments to the plaintiffs starting from December 2014, which is the month immediately after the signing of the Loan Agreement.

151.  According to its terms, the defendants should pay interest only for the first four instalments. The interest amount for each instalment would be $58,333 (ie $20,000,000 x 3.5% /12). And that is the precise amount which the defendants paid during each of those four months. The agreement further provided that from 1 April 2015 onwards, the defendants would need to pay principal and interest with an amount not less than $100,000. Again, the defendants paid exactly the sum of $100,000 for each of the months from April to August 2015. This payment pattern is therefore strong evidence showing that the defendants were in fact performing their obligations under the Loan Agreement.

152.  From September 2015 onwards, however, their payments fell short of the sums stipulated in the Loan Agreement. And it was from about this time onwards that we see the WeChat messages sent to the 2^nd defendant for repayments. The messages really speak for themselves. They show two things.

153.  First, there is a pattern in which Junxuan (in most cases) and the 2^nd plaintiff (on a few occasions) would chase for the shortfall and in response to such chasers, the 2^nd defendant would follow up with some payments, even though they still fell short of the minimum stipulated monthly amount of $100,000. In fact, on some occasions, the 2^nd defendant apologised (or sounded apologetic) for the shortfall (eg “我昨天已入了七萬，我知道是不夠，我会尽力安排，請見諒，对不起”; “麻煩你跟旋姐說声我明天或後天能入5万，暫時真的只能這樣，麻煩你了”). This shows that the defendants were in fact trying to comply with the payment obligations but were not able to do so.

154.  Second, in the WeChat messages, Junxuan and the 2^nd plaintiff at times explicitly referred to a signed contract and a loan agreement and a contractual repayment date of 31 May 2018. This strongly corroborates the plaintiffs’ case on the Loan Agreement. Importantly, at no time did the 2^nd defendant refute the defendants’ liability under it in the WeChat exchange.

The defendants’ case on the Investment Agreement is inherently implausible

155.  The credibility of the alleged Investment Agreement is to be tested against the objective backdrop that the plaintiffs are highly educated people who had had experiences working in the financial sector for some years by 2009 whereas the 1^st defendant had had no training or credentials in stock investment at all.

156.  On its face, there is no immediately apparent reason why the 1^st plaintiff would ask the 1^st defendant to make investments on his behalf.

157.  The inherent plausibility of the parties having reached the Investment Agreement is, in my view, open to grave doubt.

The Investment Agreement is unsupported and is in fact contradicted by contemporaneous documents

158.  What is notable in this action is the undeniable fact that the defendants have produced no one single piece of document referring to or evidencing the existence of the Investment Agreement. This is notwithstanding the fact that we are talking about a substantial sum of money here and a long period of interaction between the parties, namely from 2009 to 2018.

159.  There were no records kept by the defendants themselves to track the sums advanced to them and their trading activities. One must wonder how then they were supposed to calculate the profits and losses pursuant to the arrangement under the Investment Agreement.

160.  Ms Fan also highlights the fact that the alleged investments made on behalf of the plaintiffs were intermixed with the defendants’ own investments. In fact, it was the 1^st defendant’s evidence that they did not open accounts specifically for the trading carried out under the Investment Agreement.

161.  The absence of any specific records kept for the trading made on behalf of the plaintiffs and the intermixing of the plaintiffs’ and the defendants’ own investments would appear to point to the possibility that all these stock investments were in fact the defendants’ own investments.

162.  On the defendants’ case, there was a period from late 2010 to 2014 when the 1^st plaintiff was wanted nationally and he specifically told the 1^st defendant in one of the meetings in Shenzhen that the defendants would be at liberty to make investments. That may explain why there was no communication, eg text messages, between them which might make reference to the Investment Agreement or the investments. In this regard, I do not find it necessary to resolve the disputes surrounding the Matter.

163.  What is however seriously damaging to the defendants’ case is the objective fact that even after the Matter had apparently been resolved and during the period from late 2014 to 2018 when the 2^nd defendant and the 2^nd plaintiff and Junxuan were communicating with each other on WeChat, there was no one single instance where the parties referred to or mentioned the Investment Agreement or the investments which were supposed to be carried out under it.

164.  The passage in Leung Chin Sing quoted in para 126 above apply with considerable force here. The complete lack of documentary traces of the Investment Agreement or any investments supposedly made under it over a period of nine years (from 2009 to 2018) strongly, if not overwhelmingly, suggests that the Investment Agreement did not exist in the first place.

165.  Worse still, as seen above, the contents of the WeChat messages strongly suggest that the defendants were trying to comply with the repayment terms of the Loan Agreement. The 2^nd defendant at times acknowledged those terms and sometimes apologised for not keeping up with the payments. The defendants’ case that they were not paying pursuant to the Loan Agreement is contradicted by these WeChat messages.

166.  The explanation given by the defendants in their cross-examination in this regard is inherently implausible and hence incredible.

The defendants’ case on the contents of the Investment Agreement is internally inconsistent

167.  Ms Fan points out that the defendants have proffered two different versions of the Investment Agreement in the course of this action. First, the defendants’ pleaded case is that it was concluded between the 1^st plaintiff and both defendants, and that the 30% profits would be given to both defendants. Second, in their witness statements, they allege that the agreement was concluded between the 1^st plaintiff and the 1^st defendant only, and that the 30% profits would be given to the 1^st defendant only.

168.  In cross-examination, when the different versions were put to him, the 1^st defendant confirmed that the version in his witness statement should be the correct one. However, he was unable to explain the inconsistencies between his pleading and witness statement. He suggested that there might have been some misapprehension as the pleading was in English.

169.  The Investment Agreement forms the crux of the defendants’ case. The internal inconsistency over the terms of the agreement goes to undermine the credibility of their case.

The defendants’ case on the investments made under the Investment Agreement is incoherent

170.  The defendants’ account of how they calculated the total sum advanced under the Investment Agreement ($15,500,000) and the losses is confusing and incoherent. The allegation that they arrived at the total sum by way of deduction is illogical. Yet, that was the method which the 1^st defendant and the 2^nd defendant (initially) said they had adopted. On the second day of her evidence, the 2^nd defendant changed her testimony regarding the method. On this, I agree with Ms Fan’s submission that it is unlikely that she could have been mistaken on the general method which she used to do the calculations.

171.  In general, I find the defendants’ case of how they came up with the figures under the Investment Agreement incoherent. I would have grave reservation in giving weight to what they say in this regard.

FACTUAL FINDINGS AND RULINGS

172.  In my judgment, on balance, the plaintiffs’ evidence is on the whole more credible than the defendants’ and more likely than not to be true. Save for the matters referred to in paras 140, 162 and 174, I accept the plaintiffs’ factual case as true and, in case of conflict, I prefer the plaintiffs’ evidence to the defendants’.

173.  More specifically, I find that the plaintiffs and the defendants reached the Oral Loan Agreement in 2009. Sums amounting to $20,000,000 in total were given by the plaintiffs to the defendants between 2009 and 2011 pursuant to the Oral Loan Agreement.

174.  I further find that the 1^st defendant signed on the Loan Note without the alleged undue influence of the 2^nd plaintiff. Its terms is therefore binding on him. As for the 2^nd defendant, the plaintiffs in fact do not know how the signature in her name came to be appended to the document. She did not sign it in front of the 2^nd plaintiff. There is also evidence before me that she signed her name in a different way in other documents. The plaintiffs’ evidence has failed to demonstrate that the 2^nd defendant had signed the Loan Note herself or that she had knowledge of the document in the first place. Hence I make no factual finding in this regard.

175.  Lastly, I find that on 23 November 2014 at The Arch flat, the threats alleged by the defendants did not take place. The 2^nd defendant did burst into tears at one point but that was when she was shown the Loan Agreement. However, she and the 1^st defendant signed on the document without the alleged duress.

176.  Based on such factual findings, the defendants have failed to discharge the burden of making out the alleged duress and are therefore bound by the Loan Agreement. The plaintiffs succeed on their primary case.

CONCLUSION

177.  The parties have agreed on the reliefs to be granted should the plaintiffs succeed.

178.  I order that judgment be entered against the 1^st and 2^nd defendants in the sum of $19,320,817, together with (1) interest in the sum of $702,998 (representing interest accrued at 3.5% per annum from 24 November 2014 to 31 May 2018), and (2) interest at 10% per annum accruing from 1 June 2018 until payment in full.

179.  I make an order nisi that the 1^st and 2^nd plaintiffs do have costs of the action, including all reserved costs, to be taxed if not agreed, with certificate for one counsel (Ms Fan).