LOK WAI YEE v. MAN KOON HUNG

HCA 1181/2014

[2020] HKCFI 2549

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1181 OF 2014

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JUDGMENT

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A. Introduction

1.  Ms Lok (“P”) and Mr Man (“D”) were a married couple.  At different stages of their relationship (dating, cohabiting, and whilst married), P had advanced monies for D’s use.  She claims that those monies were advanced to him pursuant to a number of legally enforceable loan agreements (the “Loan Agreements”).  P has demanded for their repayment.  D has refused.  P is now suing for repayment of those monies, or alternatively damages.

2.  D denies liability.  Various defences have been raised.  The main one is that the alleged loans were the results of domestic arrangements between them as boy and girl friends and subsequently husband and wife.  There was no intention to be legally bound. 

3.  This is the trial of their disputes.

4.  During the trial, Ms Lorinda Lau (“Ms Lau”) appeared for P.  Mr Michael Chai (“Mr Chai”) and Mr Ryan Law appeared for D.

B.  The Alleged Loan Agreements and the Scott Schedule

5.  P has pleaded 7 Alleged Loan Agreements.  One of them is no longer being pursued.  Six remain.  The 6 categories of relevant loans have been referred to as the “Ronis Loans”, “Citibank Credit Card Loans”, “Wedding Loans”, the “Hang Seng Bank Loans”[1], “D’s Expenses Loans” and “D’s Personal Loans”, which terms I will adopt.  The amounts being claimed (net of part repayments etc) have been set out in the updated revised Scott Schedule (“Revised Scott Schedule”), which may be summarized as follows:

The loans	No of items in Revised Scott Schedule	Amount (HK$)
The Ronis Loans	13	$68,100.00
The Citibank Credit Card Loans	42	$393,954.66
The Wedding Loans	27	- $8,013.00[2]
The Hang Seng Bank Loans	81	$153,002.62[3]
D’s Expenses Loans	153	$255,091.86
D’s Personal Loans	117	$542,994.60
Total:		$1,405,130.74

C.  The parties

6.  The following facts are not in dispute.

7.  As said, P and D were husband and wife. 

8.  Ronis Project Management Limited (“Ronis”) was incorporated on 3 April 2008.  D was its sole director and shareholder.  It was dissolved by striking off on 27 November 2015.

9.  When in business, Ronis accepted orders for construction and decoration works.  It then subcontracted them to other contractors for profits.  From time to time, it needed to pay those sub‑contractors.

10.  In October 2008, P and D decided to get married. They had known each other for some time prior to that.  At some stage, they started to be in a romantic relationship.  When that actually started is in dispute.  I will come back to this.

11.  On 23 September 2010, P and D got married.

12.  On 19 July 2013, P commenced divorce proceedings for their divorce.

13.  The decree absolute for their divorce was granted on 29 January 2014. 

D. The parties’ pleaded cases

14.  P’s Statement of Claim was last amended on 6 September 2017. The end product is the Re‑Re‑Amended Statement of Claim (“RRASoC”).

15.  P’s pleaded case is primarily agreement‑based:

(a)  In respect of the Ronis Loan Agreement, she pleads that:

“ 3. In or about June 2008, by an agreement partly in oral and partly by conduct as evidenced by various bank transfers, [D] orally requested [P] to pay the contractors of Ronis for debts owed by Ronis to the contractors (‘the Ronis Loan Agreement’).

…

 5. Between 3^rd June 2008 to 10^th November 2008, [P] had made 11 entries and lend [sic] [D] a total of HK$73,600 …”

(b)  In respect of the Citibank Credit Card Loan Agreement, she pleads that:

“ 7. In or about June 2008, [D] orally requested [P] to apply for a Citibank credit card for him so that he can use it mainly as an octopus card as the bank refused to grant his application for a credit card.

…

8A. [D] repaid [P] HK$5,000 a month in the beginning. However, [D] spent more and more and he would charge to pay for his personal spending rather than using it mainly as an octopus card for traveling purposes.

9. In or about September 2008, [D] has been charging ten of thousand [sic]of dollars and he could not even afford to repay [P] HK$5,000 a month and requested [P] to settle the monthly Citibank Credit Card bill for him and he promised to repay [P] on demand (‘the Citibank Credit card Loan Agreement’).

10. Between 28^th September 2008 to 18^th August 2013, [P] had settled the Citibank Credit Card bills using her own money per the oral requests of [D] in the sum of HK$393,954.66 ...”

(c)  in respect of the Wedding Loan Agreement, she pleads that:

“ 12. In or about October 2008, [P] and [D] decided to get married. Per the oral request of [D], [P] paid for some of the expenses incurred for the marriage, the wedding photos, wedding ceremony as well as wedding celebration (‘Wedding Expenses’) and [D] agreed to repay [P] on demand (‘the Wedding Loan Agreements’).

13. Between 3^rd November 2008 to 20^th September 2010, [P] has paid Wedding Expenses in the sum of HK$188,944.00 using her own money. [D] ad [P] agreed that [P] to apply for personal loans from Hang Seng Bank to pay for the Wedding Expenses first and [D] would repay the whole sum incurred for wedding to [P].

14. [P] had successfully applied for 3 loans from Hang Seng Bank Limited … [P] subsequently used the said 3 loans applied from Hang Seng Bank Limited to repay part of the Wedding Expenses …”

(d)  in respect of the Hang Seng Bank Loan Agreements, she pleads that[4]:

(i)  by 3 oral agreements made between her and D (the “1^st, 2^nd and 3^rd Hang Seng Bank Loan Agreements”, the 1^st one in about late February 2009, and the 2^nd and 3^rd ones in about August or September 2010), P agreed to lend D respectively the sums of $57,000, $46,000 and $38,000 to be borrowed from the Hang Seng Bank;

(ii)  D agreed to repay P such loans (with bank interest and handling fees) on demand;

(iii)  Pursuant to the 1^st, 2^nd and 3^rd Hang Seng Bank Loan Agreements, P entered into written agreements with Hang Seng Bank for personal loans, and advanced such sums to D by using them to partly repay the Wedding Expenses;

(e)  in respect of the D’s Expenses Loan Agreement, she pleads that:

“ 27. In or about March or April 2010, [D] orally requested [P] to pay on his behalf for services he subscribed, products he used as well as services and products he agreed to pay including instalments for electric appliances, telephone bills, internet services, utility bills, TV cable fees, [D’s] credit card payments etc.; and [D] orally promised to repay [P] on demand (‘the Defendant’s expenses Loan Agreement’).

28. Per the said oral request of [D], [P] paid for the same.

29. Between 12^th April 2010 to 25^th February 2013, [P] had settled all these bills using her own money per the oral requests of [D] in the sum of HK$255,091.86.”

(f)  in respect of the D’s Personal Loan Agreement, P pleads that:

“ 34. Since or about 10^th May 2008 until 25^th August 2011, [D] has orally requested [P] to lend him monies by way of cash or direct bank transfers, and [D] agreed to repay [P] on demand (‘the Personal Loan Agreement’).

35. [D] had expressly asked [P] to keep clear record of each loan transaction, therefore whenever [P] lent monies to [D] by bank transfers, she would transfer the monies to the joint bank account so as to make  a clear record of the loan transactions. Pursuant to the Personal Loan Agreement, [P] lent [D] a sum of 692,994.60.” 

16.  P also avers, and as has been summarised by Ms Lau at §§5 to 10 of her written closing submissions, that:

(a)  D has in certain WhatsApp messages acknowledged the debts owed and made promises to repay;

(b)  D on 7 January 2014 during a hearing on ancillary relief through his lawyer again acknowledged the debts and agreed to repay P the debt of HK$1 million;

(c)  alternatively, D would be unjustly enriched;

(d)  alternatively, D was estopped from denying that he had borrowed the loans from P; and

(e)  alternatively, the consideration for the Alleged Loan Agreements has been wholly failed.

17.  D’s Re‑Re‑Amended Defence is dated 28 September 2017 (the “RRADef”).  D puts P to strict proof of her case.  He denies the existence of any of the Alleged Loan Agreements.  He denies the enforceability of any subsequent alleged admission or acknowledgement.  He relies on the doctrine of past consideration.  As summarized and highlighted by Mr Chai at §5 of his written closing submissions:

“ (a) In respect of the Loan Agreements, even if P is successful in proving the requests for ‘loans’ and promises to repay, taking into account all circumstances of the case, P has failed to prove the intention to create legal relations.

(b) In respect of unjust enrichment, the claim based on the unjust factor relied on, namely ‘total failure of consideration of the Loan Agreements’, fails together with the claim based on the Loan Agreements. In any event, counter-restitution is impossible as the monies were advanced in exchange of D’s love and affection.

(c) In any event, P’s evidence is insufficient to prove the amount which D allegedly owned and due to P.”

18.  In addition to the above, D has also pleaded specifically:

(a)  in relation to the Citibank Credit Card Loan Agreement, that:

(i)  as agreed between him and P, he had been making monthly contributions in the sum of around HK$10,000.00 to HK$15,000.00 as housekeeping expenses (“Housekeeping Monies”) in the form of cash payment or bank transfer to P, and that P was to allocate the Housekeeping Monies for payment of household expenses[5];

(ii)  P had used the Citibank Credit Card for expenses in relation to her own pet dog and for her personal use (such as grooming, personal expenses, meals)[6];

(b)  in relation to the Wedding Loan Agreement, that:

(i)  D had paid for Wedding Expenses by asking his mother for a loan of HK$140,000.00[7]; and

(ii)  It was agreed between P and D that gift monies from relatives and friends (“Gift Money”), which P would collect, would be used to pay Wedding Expenses.  The total Gift Money received was in the sum of approximately HK$144,000.00[8].

(c)  in respect of the D’s Expenses Loan Agreement, that:

(i)  it was agreed between P and D that P was to allocate the Housekeeping Monies towards payment of household expenses[9];

(ii)  as agreed between them, D “paid for rental of the matrimonial home shared between [P] and [D] in the sum of HK$8,800.00 per month and later in the sum of HK$9,800 per month at the material time.  The said rental payment was paid by [D] in addition to the Housekeeping Monies”[10];

(iii)  P had herself used the services.  Further, as D had paid his fair share of expenses, P was not entitled to claim for such household expenses[11].

19.  P’s Re‑Amended Reply is dated 10 June 2016.  D’s defences are mostly denied.

E.  The main issues

20.  Despite the very long list of issues which parties have come up with, the main issues are (1) whether the Alleged Loan Agreements existed, and if so (2) whether they are legally enforceable in the sense that parties intended to be legally bound thereby.

21.  The issue of past consideration has been raised.  However:

(a)  at §20 of P’s Re‑Amended Reply, P pleads that:

“… [P] strenuously denies she enforced any promise made by [D] in the telephone messages. [P] only reiterated and confirmed the previous loan agreements made between her and [D] in the telephone messages which [D] also admitted clearly and expressly to such loan agreements. As a result, the rule or principle of past consideration does not apply.”

(b)  at §10 of her written closing submissions.  Ms Lau states that:

“… [P] is no longer claiming under a subsequent repayment agreement for HK$1M (basing on the WhatsApp messages) and hence there would be no issue of past considerations.”

Given the pleadings and Ms Lau’s clarifications, the doctrine of past consideration appears to have no further relevance.

F.  The evidence

F.1.   THE WITNESS STATEMENTS

22.  P has made 2 witness statements.  They are dated 5 October 2015 (“P/1”) and 22 June 2016 (“P/2”).

23.  D has also made 2 witness statements.  They are dated 25 May 2016 (“D/1”) and 28 September 2017 (“D/2”).

24.  Both gave oral evidence before me.

F.2.   CREDIBILITY OF WITNESSES

25.  When considering the credibility of a witness, I remind myself of the importance of considering the inherent likelihood or unlikelihood of the witness’ evidence, the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence.  I need to consider the totality of the evidence.  I warn myself against attaching undue weight on demeanour, though demeanour is obviously relevant when considering credibility. 

26.  For the following reasons, I find that D is neither a credible nor reliable witness.

27.  D was not forthcoming when answering questions. “I have forgotten” was a common answer.  He blamed it on the lapse of time.  A lot of questions on facts which were capable of straightforward answers were qualified by words like “my impression was”.  He would only give a clear answer when confronted by documents.

28.  On many material aspects, his pleaded case and the contents of his witness statements are contradicted by his own answers given under cross‑examination.

29.  In respect of his income:

(a)  At §21 of D/1, D claimed that his income at the material time was about HK$35,000, and described how it was spent: about $8,800 and subsequently $9,800 as rental for the home they co‑habited in, $10,000 as household expenses, $5,000 for repayment of the Citibank Credit Card, $4,000 to 5,000 to his parents, and $5,000 as his own savings;

(b)  he claimed when giving evidence that he received his pay on every 7^th of the month, that he would then make withdrawal from his account and pay into his joint account with P for payment of rent;

(c)  however, upon further cross‑examination, he accepted that he received no regular pay from Ronis.  In fact, from the time of the incorporation of Ronis in April 2008 till early 2010 when he took up employment again, his income had been unsteady;

(d)  But in about March 2010 when he took up employment again, his pay was only about $28,000 to $29,000.

30.  D denied on pleadings P’s case that the Citibank Credit Card was applied for so that D could use it mainly as an Octopus Card[12].  However, D accepted under cross‑examination that due to his credit history, he could not himself get a credit card.  He said that he had to top up his Octopus Card in cash every time.  He accepted that the Citibank Credit Card was obtained so that his Octopus Card could be topped up automatically through it.

31.  Payment of Ronis’ subcontractors:

(a)  D gave contradictory evidence on whether P had used her funds to pay Ronis’ subcontractors;

(b)  When first cross‑examined on the issue, and when referred to a number of payment slips produced by P[13], D claimed that the funds with which P used to pay those sub-contractors belonged to Ronis;

(c)  However, upon further cross‑examination, and when pointed out to him that Ronis had its own account, and that those payment slips (in so far as the number of the paying account were shown) show that the monies came from P’s account, D changed his evidence and accepted that P indeed used her own funds to pay the sub‑contractors.

32.  D lied as to whether he had made payments and incurred expenses for his ex‑girlfriend:

(a)  at §§20 and 52 of D/1, D said categorically that P’s suggestion that he had used the incurred expenses for his ex‑girlfriend was false and ridiculous (“無稽”);

(b)  but upon cross‑examination and when confronted with documents, he had to accept that his denial was incorrect.  He had paid rent for his ex‑girlfriend.  He had settled with the Citibank Credit Card bills relating to his ex‑girlfriend’s dog.  He had even been shown to have settled a supermarket bill in respect of groceries sent to the place occupied by his ex‑girlfriend[14].

33.  Contradictory and inherently improbable evidence relating to the Wedding Expenses:

(a)  In P/1[15], P said that D originally promised to bear all the Wedding Expenses.  But in the course of preparing for the wedding, D told her that his mother had suffered loss speculating in futures.  He had to give to his mother the money which he and P had saved up for wedding and purchase of their matrimonial home so that his mother could repay her debts;

(b)  In D/1[16], D claimed that the Wedding Expenses were to be shared.  He denied having told P that his mother had suffered any investment loss.  He claimed that he got a loan of HK$140,000 from his mother for the Wedding Expenses.  He further claimed that the Gift Money from the guests (he estimated to be about $144,000) had been agreed to be used towards the Wedding Expenses;

(c)  Under cross‑examination, D initially accepted on several occasions that the groom’s side would be responsible for all the Wedding Expenses;

(d)  He gave an incredible and inherently improbable story about how he went to a bank with his mother to withdraw $140,000 in cash and how $100,000 out of that sum was on the next day deposited back into his joint account with P as聘金.  I note that no statement from his mother’s account has been produced;

(e)  Under cross‑examination, he further accepted that his mother round about that time had indeed suffered investment loss, and he had indeed given to his mother their savings (savings of P and D) so that his mother could pay off her debt;

(f)  Given the admitted investment loss by his mother and the fact that she had to take the money saved upon by P and D, it is inherently most improbable that she had the funds to lend $140,000 to D;

(g)  In respect of the balance of the $140,000, D claimed in D/1 that it was to be used towards the Wedding Expenses.  However, when under cross‑examination, he claimed that it was only left at home with P as “spare” money;

(h)  When confronted by the contents of D/1 (and in particular §41 thereof), D reversed his early oral evidence that it was the groom’s side who should be responsible for the Wedding Expenses.  His evidence in this regard is as follows:

「 問： 唔。我向你指出之所以有咁嘅唔一致嘅地方，其實就係因為你從來都冇畀過呢個$140,000出嚟畀樂小姐做結婚錢嘅，從來都只係話喺恒生銀行借咗錢，然後跟住就用嚟到找，你同唔同意呀？

答： 唔同意。

問： 而你從來都係話畀樂小姐知，結婚嘅錢係你畀晒嘅，同唔同意呀？

答： 唔同意。

問： 所以而家你就話結婚錢唔係你畀晒喇。

答： 唔。

問： 同你今日較早我問過你好幾次，你確認嘅而家你推番翻喇，係咪？

答： 係。」

 (i)  In respect of the total value of the Gift Money (人情) that had been received from the guests, D accepted under cross‑examination that it was only about $39,000. That is very different from the sum of $144,000 he gave in D/1;

 (j)  In my view, D’s evidence in relation to the Wedding Expenses is a pack of lies.

34.  I have on the other hand considered P’s evidence.  Her evidence on all material aspects are consistent with the documents.  There is no internal or external inconsistency.  Her evidence is inherently probable.  She also testifies in a straightforward forthcoming manner. 

35.  For the reasons given above, I find that P is an honest and reliable witness.  I find that D is neither a credible nor reliable witness.  In so far as there is any difference between the evidence given by P and D, I accept the version given by P, and reject that given by D.

G. My findings of facts on the existence of the Loan Agreements

36.  I summarize P’s evidence, which I accept, as follows.

37.  On about 11 March 2008, P and D began their romantic relationship.   Ronis was established about three weeks after that.  P accepted that the name “Ronis” was a combination of their respective English names, but denied that the company was established in anticipation of their future family.  They had only just begun dating when Ronis was incorporated. 

38.  In or around March 2008, P was working as a project manager at a company called Elite House Design Limited (“Elite”).  P introduced Ronis to Elite.   Elite did subsequently hire Ronis for construction projects.

39.  P agreed to become the company secretary of Ronis at D’s request so as to assist with the company’s paperwork.  P did so without remuneration.  D provided her with a list of contractors and their bank account numbers so as to make it more convenient for her to pay them.

40.  The workmanship of the construction works performed by Ronis for Elite was initially acceptable.  It progressively deteriorated.  Ronis failed even to complete some projects.  P eventually quitted Elite because it was embarrassing and she could not answer to her supervisor as to why Ronis (ie her boyfriend’s company) was delivering such poor workmanship. 

41.  D’s financial position had been poor.  He frequently failed to pay contractors.  D had requested P to lend him money to pay the contractors and had promised to repay P.  As a result, P kept the list of contractors for her own records. 

42.  Whenever D needed P to lend him money to pay a contractor, he would provide her with the name of the contractor and the sum of money needed.  Pursuant to such instructions, P would transfer money from her account to the contractor.   

43.  Between 3 June 2008 and 10 November 2008, P had transferred a total sum of HK$73,600 to various contractors.  While P made repeated demands for D to repay, D had only repaid 2 sums of HK$500 and HK$5,000, leaving the outstanding balance in the sum of HK$68,100.00. 

44.  Due to D’s poor credit, he was unable to get credit cards.  In around June 2008, D asked P to provide him with a supplementary credit card so that his Octopus card might be topped‑up automatically through it.  D promised he would pay such credit card bills.  Consequently, P successfully applied for a Citibank supplementary credit card and gave it to D.

45.  For the first few payment instalments, D was able to pay off what he had spent on the supplementary credit card.  However, D’s spending progressively increased to a point where he could only manage to pay the minimum amounts. P understood that if she failed to repay the Citibank Credit Card bills, her own credit record would be adversely effected.  She would be regarded as the guarantor.  P had requested D to pay off the outstanding as soon as possible.  D told P that he did not have money to repay and requested P to pay on his behalf first and that he would repay her.  Seeing no alternative, she did so at his request.

46.  As there would be one combined statement for P’s Citibank credit card and D’s supplementary credit card, P stopped using her Citibank credit card so as not to mix up their respective spending. 

47.  Between 28 September 2008 and 18 August 2013, P had on behalf of D paid HK$393,954.66 to Citibank.  Despite repeated demands made orally and via phone messages, D has failed to repay P. 

48.  In or around October 2008, P and D agreed to get marry.  D promised to pay for all Wedding Expenses.  They started to prepare for their wedding.  

49.  In the course of the preparation, D told P that his mother had suffered loss speculating in futures, and that he needed to lend his mother the money they (P & D) had saved up for their wedding and the deposit for the purchase of their home. 

50.  D has never informed P that he had borrowed HK$140,000 from his mother for the wedding.   

51.  Due to his poor credit, D could not obtain any personal loans from banks.  He suggested to P that she should obtain bank loans to pay for the Wedding Expenses and that he would repay those loans and the associated interests and handling fees.   

52.  P was reluctant to raise such loans.  But because they had already announced their marriage and preparation therefor had begun, P did not want the wedding to be cancelled because of money. Furthermore, D had promised to repay the said loan and any associated interest and handling fees.  P therefore proceeded to borrow loans from Hang Seng Bank.

53.  P obtained 3 loans from Hang Seng Bank on 9 March 2009, 14 September 2009 and 16 September 2009.  They were in the sums of HK$57,000.00, HK$46,000.00 and HK$38,000.00 respectively.  The loans were respectively repayable in 24, 36 and 36 monthly instalments.  

54.  Between 9 March 2009 and 12 April 2013, P repaid the 3 Hang Seng Bank Loans.  Interests and handling fees paid were in the total sum of HK$12,302.62.  Despite repeated demands, D has failed to repay P the 3 loans and the Wedding Expenses. 

55.  There has been no agreement between P and D that the wedding banquet would be paid for with the Gift Money to be received from the guests, or that the balance would be paid by both of them.  Of the 18 tables at the banquet, 15 tables were for D’s relatives.  P denied that she was responsible for handling the gift money as D had his own people doing that.  Her side of the family only had several tables and her mother collected the gift money.

56.  Around March or April 2010, D requested P to pay for certain utility bills and purchases.  P subsequently discovered that those bills included some for D’s ex‑girlfriend, grandmother and parents.  That had led to arguments between P and D.  Between 12 April 2010 and 25 February 2013, P paid HK$254,602.58 on behalf of D.  Despite P’s demands for repayment, D has failed to do so. 

57.  D had such poor credit record and in such financial troubles that banks refused to lend him money.  D was only able to borrow money from UA Finance (by using a property in Lok Wah Building, Whampoa Estate, passed down from D’s grandfather to D’s father and himself as security) or P.  P had lent D money by way of cash or through bank transfers and D had promised to repay her.  D asked P to keep a clear record of each loan transaction.  At the time, P trusted D and did not want to spoil their intimate relationship.  Ultimately, P has lent him the total sum of HK$692,994.00.  D did make some repayments to her, leaving the balance of HK$542,994.60.

58.  Save certain specific (and relatively small) amounts, there is little dispute that P had in fact provided money for D’s use.  On the evidence before me, P clearly has.

59.  P has also kept clear records on those sums, which records I also accept.

60.  On the evidence before me, I also accept P’s testimony that all those Loans (the Ronis Loans, the Citibank Credit Card Loans, the Wedding Loans, the Hang Seng Bank Loans, D’s Expenses Loans, and D’s Personal Loans) were incurred upon the request of D, which D has promised to repay.

61.  I find that the Loan Agreements existed.  I find that the related loans were repayable upon demand. 

62.  The issue then is whether those Loan Agreements, albeit exist, are legally enforceable.

H. Intention to be legally bound — the applicable law

63.  I have been cited a considerable number of authorities on the law relevant to the question of intention to be legally bound in the context of domestic arrangements.  I have considered all of them.

64.  The Court of Appeal has recently in Ho Lai King v Kwok Fung Ying and another [2020] HKCA 657 (31 July 2020) explained the legal principles on the question of intention to create legal relations.  In particular, at §§41 to 49 of the Judgment, the Court of Appeal observed that:

“ 41. There is no dispute in this appeal that an agreement that would otherwise be a contract may not be binding if it was made without any intention of creating legal relations. This is sometimes found to be the case for agreements between family members. In the context of agreements between spouses, Atkin LJ said in Balfour v Balfour [1919] 2 KB 571, 578‑579:

‘ … one of the most usual forms of agreement which does not constitute a contract appears to me to be the arrangements which are made between husband and wife. It is quite common, and it is the natural and inevitable result of the relationship of husband and wife, that the two spouses should make arrangements between themselves — agreements such as are in dispute in this action — agreements for allowances, by which the husband agrees that he will pay to his wife a certain sum of money, per week, or per month, or per year, to cover either her own expenses or the necessary expenses of the household and of the children of the marriage, and in which the wife promises either expressly or impliedly to apply the allowance for the purpose for which it is given. To my mind those agreements, or many of them, do not result in contracts at all, and they do not result in contracts even though there may be what as between other parties would constitute consideration for the agreement. … Nevertheless they are not contracts, and they are not contracts because the parties did not intend that they should be attended by legal consequences. … They are not sued upon, not because the parties are reluctant to enforce their legal rights when the agreement is broken, but because the parties, in the inception of the arrangement, never intended that they should be sued upon. Agreements such as these are outside the realm of contracts altogether. …’

42. The same approach has been applied to dealings between other relations, such as parent and child. In Jones v Padavatton [1969] 1 WLR 328, Salmon LJ said that:

‘ as a rule when arrangements are made between close relations, for example, between husband and wife, parent and child or uncle and nephew in relation to an allowance, there is a presumption against an intention of creating any legal relationship. This is not a presumption of law, but of fact. It derives from experience of life and human nature which shows that in such circumstances men and women usually do not intend to create legal rights and obligations, but intend to rely solely on family ties of mutual trust and affection.’

43. It is not in dispute that the question is to be resolved by considering what was communicated between the parties in all the circumstances and deciding whether, as understood by a reasonable person, the true inference is that they intended to create legal relations: Jones v Padavatton, at p 332G; RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) [2010] 1 WLR 753, §45. Evidence of subsequent conduct is admissible for the purpose of determining the parties’ intention at the material time: Blue v Ashley [2017] EWHC 1928 (Comm), §64; Jones v Padavatton, p 336H. It has been said that evidence of the subjective understanding of the parties is also admissible in so far as it tends to show whether, objectively, the agreement was intended to be legally binding: Blue v Ashley, §64.

44. As to the ‘presumption’ referred to in Jones v Padavatton, Mr Cheung, relying on Butterworths Common Law Series, The Law of Contract (1999) at para 2.168, submitted that the presumption is a strong one. The Judge also expressed a similar view at §59 of the judgment.

45. But as Salmon LJ said in Jones v Padavatton, it is but a rebuttable presumption of fact. Like many such presumptions found in the law, it is based on generalised notions of human behaviour viewed in the prevailing social mores and conditions, and provides no substitute for an examination of the circumstances of the individual case. The subject matter of agreements between close relations may vary infinitely, as do the situations of individual families.

46. As Baroness Hale pointed out in Granatino v Radmacher (formerly Granatino) [2011] 1 AC 534 at §142, an agreement between spouses to share the ownership or tenancy of the matrimonial home, bank accounts, savings or other assets may be treated quite differently from agreements for housekeeping or personal allowances. Ultimately, the question of intention is a question of fact that must be determined on the basis of the facts of each case.

47. In our judgment, it is not very profitable to proceed on the basis that the presumption is a strong one as if this is a legal presumption. Since it is only a presumption of fact, the strength or usefulness of such presumption must depend very much on the facts and circumstances of each case.

48. The better view is that in respect of agreements between family members, the presumption means that (as opposed to agreements between commercial parties) the onus is reversed: it lies on the party who contends there was an intention to create legal relations to establish such intention. What will satisfy the court in a particular case must depend on the circumstances, including (without being exhaustive) the relationship between the parties, whether they are in amity or estranged, the subject matter of the agreement, the language used in the agreement, the manner in which the agreement has been made. The Judge also alluded to some relevant factors at §60 of the judgment. For oral agreements on maintenance support or other daily domestic arrangements, it may be that convincing evidence is required to discharge that burden: see Gould v Gould [1970] 1 QB 275 at p 281C (contra the case of a written agreement on transfer of ownership of a matrimonial home upon separation in Merritt v Merritt [1970] 1 WLR 1211).

49. Mr Cheung also relied upon §39 of the judgment of Yeung J (as he then was) in Sun Er Jo v Lo Ching [1995‑2000] HKCLRT 14. We do not think the judge was stating a general proposition of law in that paragraph. In any event, with great respect, insofar as that paragraph is read as suggesting as a matter of law that there had to be some prior declaration or statement that an agreement between family member may give rise to legal obligation before it could be legally enforceable, that is plainly wrong as a matter of law.

…

51. One has to be careful in this regard in distinguishing what was subjectively felt or considered by the defendants from the objective facts.  The defendants’ subjective thinking is not relevant unless it is probative that the agreement was objectively intended to be legally binding.  In cases such as Blue v Ashley, supra, it is the subjective understanding the parties derived from the oral communication that the court looked at as being potentially relevant to ascertaining the nature and content of the oral exchange.  Here, the sentiments and internal reasoning of the defendants are not states of mind generated by the agreement and are not relevant for present purposes.”

65.  On 31 July 2020, I brought the Court of Appeal’s decision in Ho Lai King to the attention of the parties and invited Ms Lau and Mr Chai to make submissions on the same.  They both did.  Ms Lau’s are dated 24 August 2020 (“Ms Lau’s Further Submissions”).  Mr Chai’s are dated 27 August 2020 (“Mr Chai’s Further Submissions”).

66.  In both of his opening and closing submissions, Mr Chai has cited to me Sun Er Jo v Lo Ching [1996] 1 HKC 1.  He in particular highlighted to me the following paragraph (unnumbered in the version Mr Chai cited to me), that:

“ I have to make it clear that arrangements or agreements on the family affairs between parents and children, wife and husband, or brothers and sisters have no binding effect in law, unless they have specifically stated in advance that such arrangements or agreements are subject to claims by either party, which clearly shows that both parties have an intention to establish a legal relationship so as to create a situation that they shall be attended by legal consequences.”

The above passage is §39 of the judgment in Sun Er Jo as reported in [1995‑2000] HKCLRT 14, which is precisely the passage the Court of Appeal in effect disapproved at §49 of Ho Lai King.

67.  Mr Chai has further cited to me Lee Sai Nam v Li Shu Chung, unrep, HCA 1711/2009 (9 December 2015).  In Lee Sai Nam, §39 of Sun Er Jo was, amongst other paragraphs, cited and applied (see §208 thereof).  Lee Sai Nam will therefore also have to be read in the light of the Court of Appeal decision in Ho Lai King.

68.  Ms Lau has cited to me Ma Chi Wing Wendy v the Personal Representative of the Estate of Ma Vincent:

(a)  At §21 of her written closing submission, Ms Lau puts down the case number of that case as being “Civil Appeal case No 283 of 2004”.  That is not correct.  Ma Chi Wing Wendy is not a decision of the Court of Appeal.  The correct case number is HCA 3913/2001 (20 May 2005);

(b)  In Ma Chi Wing Wendy, at §21, Deputy Judge Muttrie observed that:

“ Of course, a family arrangement to look after aged parents may never be intended as a legal contract. The parties may never intend to enter into a legal relationship. Very often that is what happens. Where that happens, the courts will not enforce the agreement. See Balfour v Balfour [1919] 2 KB 571. But there is no presumption that this must be so, simply because the agreement is within the family. The intention of the parties is a question of fact and to be inferred from the terms of the agreement and the surrounding facts and circumstances. See Parker v Clark [1960] 1 WLR 286 and Tanner v Tanner [1975] 1 WLR 1346.” (Emphasis added)

(c)  In my view, by making those observations at §21, the learned Deputy Judge was not suggesting that no rebuttable presumption of the sort discussed existed.  What the learned Deputy Judge observed was that there is no presumption that “this must be so”.  In any event, Ma Chi Wing Wendy and the strength and operation of any presumption in this area of the law will also have to be read in the light of the Court of Appeal decision in Ho Lai King.

I.   Intention to be legally bound — Discussion

I.1.PARTIES’ SUBMISSIONS

69.  I remind myself of §48 of the Court of Appeal judgment in Ho Lai King, that it lies on the party who contends there was an intention to create legal relations to establish such intention.

70.  Ms Lau submits[17] that given the following matters, P has proved on balance of probabilities that the Loan Agreements are legally enforceable:

(a)  the timing of the various loans (relative to the commencement of the romantic relationship between P and D and the time when they got married),

(b)  P’s demands for repayment,

(c)  the records of the payments kept by P,

(d)  P’s own financial situation (that according to her she only made HK$13,000 a month with which she needed to support her own family),

(e)  the nature of the expenses incurred,

(f)  the pattern as to how D incurred the expenses (including some for his ex‑girlfriend which suggests that D should himself repay them), and

(g)  the format in which D’s Personal Loans were made (through a joint account so that there could be clear records, when their finances were otherwise independent).

71.  Mr Chai submits otherwise.  He[18] points principally to what he described to the loose and uncertain language which the parties employed, the trust and affection between P and D which he submits was the basis of the transactions, the state of the records kept, and P’s support to D notwithstanding limited repayment from D.

I.2.GENERAL CONSIDERATIONS

72.  I start off with some general considerations.

73.  To start with, I do not accept Mr Chai’s submissions that the parties used loose and uncertain language in relation to the Loan Agreements.  They are not complicated commercial loans which require detailed discussions and meticulous documentations.  They are all in the nature of simple loans agreements.  There is sufficient evidence from P on the requests for loans and promises for repayment from D.  I am also satisfied that it is sufficiently certain that, whilst there was no definite term for repayment, the loans were repayable on demand.  I accept also Ms Lau’s submissions[19] that payment on demand means payment within a reasonable time after the demand, and hence is certain.

74.  Nor do I accept that the records kept by P were poor.  She has kept good record.  Payments are also mostly evidenced by bank statements.

75.  There is no dispute that there had been a romantic relationship between P and D leading to their marriage.  There is also no dispute that P had wanted to give D support.  But such relationship between the parties, while capable of grounding a rebuttable presumption on facts against an intention of creating any legal relationship, is not conclusive. Other considerations are at play.  As observed by Warrington L.J in Balfour v Balfour at p.574:

“ … It may be, and I do not for a moment say that it is not, possible for [a legal contract] to be made between husband and wife. The question is whether such a contract was made.”

In any event, as the Court of Appeal has observed in Ho Lai King, since the presumption is only a presumption of fact, the strength or usefulness of such presumption must depend very much on the facts and circumstances of each case.

76.  P’s own financial position at the material time is in my mind an important objective consideration.  I have referred to Ms Lau’s submission in that regard.  P’s following answer, though given when being cross‑examined in the context of D’s Expenses Loans, in my view bears upon all the Loan Agreements:

「 同埋有一個立場，我希望喺呢件事上面清晰嘅就係，當時搬出嚟住，我收入並唔高，而我需要供養父母，如果被告唔係承諾做呢一啲嘢，根本我冇能力去交租、交水、電、煤喇，搬出嚟住呢個說法係根本唔成立㗎，咁我根本冇錢去交租、交水、電、煤，交呢樣嗰樣，仲要養屋企，自己生活，根本我嘅收入都唔足夠應付所有嘅開支，咁如果被告唔承諾，根本就唔會搬出嚟住囉，而唔係搬咗出嚟住先諗水、電、煤、租究竟點交，呢一個係衍生到呢一件事發生嘅始祖。」

77.  While the presence or otherwise of the parties’ intention to be legally bound is in dispute, the fact that P has been out of pocket for more than $1 million in total is not (and at least cannot be).  Viewed objectively, that was a very large sum for a person in P’s position. 

78.  The consequences of D not honouring his promises to repay would be grave for a person in the position of P.  As submitted by Ms Lau[20], which I accept, unless D repaid her the loans, she, and a person in her position, would not be able to shoulder those debts or expenses on her own unless she were to raise funds elsewhere.

79.  The above suggest objectively that P would have relied heavily on the Loan Agreements.  This is one factor which suggests the existence of an intention to be legally bound.

80.  I accept P’s evidence that she kept records of the loans[21]. I accept also her evidence that she has consistently been making demands to D for repayment of the loans[22], which include the WhatsApp and other telephone messages that have been produced before me[23]. Such conduct, though some subsequent, is admissible for the purpose of determining the parties’ intention at the material time: see §43 of the Court of Appeal Decision in Ho Lai King, and see Blue v Ashley, and is, in my view, and as understood by a reasonable person, consistent with and supports objectively P’s case and the inference that they had at the time when the monies were advanced the intention to be legally bound.

I.3.SPECIFIC CONSIDERATIONS

81.  I now move on to certain considerations specific to the loans.

82.  Specifically in relation to the Ronis Loans, I note that they were first made in early June 2008.  That was well before the marriage of P and D, and was only about 3 months after they had started a romantic relationship.  Those loans related to the business of Ronis.  P was neither a director nor shareholder of Ronis.  She had no interest in it.  In my view, the objective implication from the circumstances of the parties and the transactions generally is that P and D did intend the Loan Agreements in relation to the Ronis Loans to be legally binding. 

83.  In relation to the Citibank Credit Card, there were specific reasons for its application.  D could not get a credit card.  He had to top up his Octopus Card in cash every time.  The Citibank supplementary card was obtained so that D could have his Octopus Card topped up automatically through it.  It was for this specific purpose that it was obtained.  It was obtained sometime in August or September 2008, and the expenses first incurred in September 2008.  That was before the parties’ decision to get married (though they were in a romantic relationship).  D also promised to repay P the related expenses (though he subsequently failed to do so).  In my view, the objective implication from the circumstances of the parties and the transactions generally is that P and D did intend the Loan Agreements in relation to the Citibank Credit Card Loans to be legally binding.

84.  Specifically in relation to the Wedding Loans and Hang Seng Bank Loans:

(a)  The 1^st Hang Seng Bank Loan was obtained in March 2009, and the other 2 in September 2009, all before P and D got married (though in a romantic relationship);

(b)  The Wedding Loans and Hang Seng Bank Loans were obtained under a very special set of circumstances.  D had promised to be responsible for the Wedding Expenses.  Then, not only did he fail to, he in fact gave his and P’s savings for their marriage to his mother as she had incurred loss speculating in futures;

(c)  D then suggested P to raise a loan for the Wedding Expenses.  He himself could not because of his credit history;

(d)  It was in such circumstances that P reluctantly raised the Hang Seng Bank Loans.  She had to repay them by instalments over the following several years;

(e)  D had promised P to be responsible for the repayment of those loans together with interest and handling fees;

(f)  Had D been able to, and had he himself raised the loans, he would have been legally liable for repayment of the same.  P in effect only raised them on D’s behalf as he could not.  Assessed objectively, why would the parties have intended D to be in a better position merely because it was P who raised the loans for him?  They in my view would not have;

(g)  In my view, the objective implication from the circumstances of the parties and the transactions generally is that P and D did intend the Loan Agreements in relation to the Wedding Loans and Hang Seng Bank Loans to be legally binding.

85.  In relation to the D’s Expenses Loans:

(a)  It was in March or April 2010 when D requested P to pay for his utility bills and purchases;

(b)  I have considered the nature of those expenses, which fall into the following 10 categories:

(i)  water bills,

(ii)  electricity bills,

(iii)  Town Gas bills,

(iv)  phone services bills,

(v)  Pay TV service bills,

(vi)  internet service bills,

(vii)  instalments of a certain Sony electronic appliance,

(viii)  D’s credit card bills;

(ix)  part of the Wedding Expenses, and

(x)  rental expenses;

(c)  Those 10 categories involve different considerations;

(d)  In so far as categories (i) to (vi) are concerned:

(i)   they are utilities bills;

(ii)  as shown in Section E of the Revised Scott Schedule, most of the items were incurred after P and D had been married;

(iii)  They are very much domestic in nature;

(iv)  The majority of them related to the household of P and D.  While some were not (which related to D’s ex‑girlfriend and D’s own family), P initially was not aware of that;

(v)  Given their nature, and given the time when they were incurred, and despite the general considerations which I have discussed above, I am not satisfied that a couple in the position of P and D would have had any intention to be legally bound in relation to those expenses;

(e)  I will come back to category (vii);

(f)  In so far as the D’s credit card bills (category (viii)) are concerned, 3 of them (Items 142, 143 and 144 on the Revised Scott Schedule) related to the Wedding Expenses.  Category (ix) (Item 149 on the Revised Scott Schedule) is itself part of the Wedding Expenses.  They have been taken into account (as credits to D) at Section C of the Revised Scott Schedule dealing with Wedding Expenses.  I have considered above the issue as to whether the parties had the intention to be legally bound in relation to the Wedding Loans;

(g)  In relation to category (vii) and the balance of category (viii):

(i)  they related inter alia to a Sony appliance (category (vii), being 24 installment repayments between April 2010 and March 2012), a Sony television set (Item 146 on the Revised Scott Schedule, apparently incurred in March 2011), a buffet meal (part of Item 147 on the Revised Scott Schedule, incurred in May 2011) and a sum of $48,664 (Item 148, incurred in July 2011);

(ii)  the evidence is not clear as to their nature.  But as submitted by Mr Chai[24], they could have been domestic in nature.  I highlight P’s answer upon cross‑examination in respect of Item 148, that:

「 問： 唔緊要，係，okay。咁就692頁，都有個(i) 嘅，$48,664，見唔見到？

答： 唔。

問： 冇乜印象呢個係咩嘢嚟，係咪？

答： 呢個應該係--唔敢好老--好實際，我有印象嘅，但係唔敢好落實咁答你，因為答你問題要好小心。

問： 唔緊要，唔係好肯定，唔緊要，係。

答 係呀，我唔想答錯。」

(iii)   given their possible nature, and given the time when they were incurred, and despite the general considerations which I have discussed above, I am not satisfied that a couple in the position of P and D would have had any intention to be legally bound in relation to those expenses;

(h)  In relation to category (x), it related to the rental expenses of their matrimonial home.  I am not satisfied that a couple in the position of P and D would have had any intention to be legally bound in relation to those expenses;

(i)  In summary, in relation to D’s Expenses Loans, with the exception of those items which related to Wedding Expenses (part of category (viii) (ie Items 142, 143 and 144 on the Revised Scott Schedule) and category (ix) (ie Item 149 on the Revised Scott Schedule), I am not satisfied that a couple in the position of P and D would have had any intention to be legally bound in relation to those other expenses. Viewed another way, I am not satisfied that the evidence before me is convincing enough for P to discharge the burden of proof on her in relation to those items — see Ho Lai King at §48.

86.  Specifically in relation to D’s Personal Loans:

(a)  I accept P’s evidence at §20 of P/2, that:

「 我和被告人曾經共同擁有聯名戶口，最初開戶口的目的是用作支付日常家庭開支，但不久我發現被告人沒有入錢到聯名戶口，還經常在戶口提款。由於被告人經常向我借貸，而被告人向我借錢前承諾會還款，還叫我記錄借款，所以我故意由自己的個人戶口轉款到聯名戶口，好讓銀行有記錄方便我向被告人追討還款，而被告人亦可自己從戶口提款。」

(b)  An example of such requests for loans from D can be found in the WhatsApp message from D to P of 16 August 2011 (11:00:57)[25], that:

“ Hey love, just found out only a few hundred in my account … forgot lose a thousand at macau and transferred 2000 from ur account to our account, pls noted down and i will pass back to u before end of month.”

(c)  Those withdrawals from their joint accounts are set out in Section G of the Revised Scott Schedule;

(d)  I accept P’s case that those loans were for the personal use of D, but were not otherwise domestic in nature (like the utilities bills);

(e)  In my view, the objective implication from the circumstances of the parties and the transactions generally is that P and D did intend the Loan Agreements in relation to D’s Personal Loans to be legally binding;

(f)  In respect of D’s Personal Loans, Mr Chai has raised one legal point.  He submits[26], relying on Yung Shu Wu v Vivienne Sung Wu (2011) 14 HKCFAR 39, that in the absence of circumstances indicating a limited purpose, money withdrawn from a joint account by one account holder becomes his or hers outright;

(g)  On this point, I accept Ms Lau’s submission[27] that given D’s requests for loans, and given P’s use of the joint account for that purpose (so that there would be records and D could withdraw the monies himself), there is clear evidence of “limited purpose” — and see also Marshal v Crutwell (1875) L.R. 20 Eq. 328 at 330;

(h)  I reject Mr Chai’s submissions in this regard.

J.   The Conclusion on P’s claim based on the Loan Agreements

87.  For the reasons set out above, I find that P has succeeded in establishing the existence of the Loan Agreements.  I find also that in so far as the Ronis Loans, the Citibank Credit Card Loans, the Wedding Loans, the Hang Seng Bank Loans, the part of D’s Expenses Loans relating to Wedding Expenses, and D’s Personal Loans, P and D had the requisite intentions to be legally bound, and those related agreements and loans are legally enforceable.  In respect of those Loans and items, P has been successful in discharging the onus on her to establish the intention to create legal relationship.

K.  Quantum

88.  In so far as quantum is concerned, Ms Lau has at §15 of her closing written submissions indicated that to save time and costs, P is prepared to waive certain items which D disputes, namely Items B1, B2, E3 (E3 related to Water Bills which I have dismissed in any event), and E151‑153 (E151‑153 related to the rental expenses which I have dismissed in any event).  The total amount which D should repay comes down to $1,405,130.74 LESS $1,898.1 (B1), $2,804.1 (B2) and $181,262.86[28], which is equal to $1,219,165.68.

L.  P’s alternative claims

89.  P is no longer pursuing her alternative claim based upon a separate agreement between her and D for the repayment of HK$1 million[29].

90.  In respect of P’s alternative claim based on Unjust Enrichment:

(a)  P relies on the principles the Court of Final Appeal explained in Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79.  Her alternative claim is predicated on the total failure of consideration of the Loan Agreements;

(b)  Given my conclusion that P is successful in her claim based on the Loan Agreements, her alternative claim is not only not engaged, but is inconsistent with my conclusion;

(c)  In the circumstances, I do not deem it appropriate for me to make any alternative findings in relation to P’s alternative claim.

M. Disposition

91.  For the reasons set out above, I allow P’s claim to the extent of $1,219,165.68.

92.  I make a costs order nisi that D shall bear the costs of the action, to be taxed if not agreed.