YANG SHUBIN v. LAI KUK WA

DCCJ 5859/2020

[2021] HKDC 857

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5859 OF 2020

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BETWEEN

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JUDGMENT

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A. INTRODUCTION

1.  This is the plaintiff’s application by summons dated 5 February 2021 for summary judgment on his claim as pleaded in the Statement of Claim and for judgment to be entered against the defendant for the sum of HK$1,650,000 with interests and costs (the “Application”).

2.  The defendant opposes the application and contends that the she should be granted unconditional leave to defend. 

B. THE PARTIES’ PLEADED CASES

3.  In summary, the plaintiff’s case as pleaded in the Statement of Claim is as follows:-

(1) The plaintiff claims that he had, on 10 January 2020, and on the defendant’s request, made a personal loan of HK$2 million without interest to the defendant (the “Alleged Loan”) by way of a cheque drawn in favour of the defendant dated 10 January 2020 (the “Cheque”).

(2) The plaintiff further contends that he demanded repayment of the Alleged Loan from the defendant in around July 2020, whereupon the defendant made partial repayment of the Loan in the sum of HK$350,000.

(3) The plaintiff therefore claims the repayment of the balance of the Alleged Loan in the sum of HK$1,650,000, which the defendant has refused to repay, with interests and costs.

4.  The defendant’s pleaded defence can be summarised as follows:-

(1) The defendant admits that the plaintiff issued the Cheque in her favour which was cleared on or around 10 January 2020.

(2) However, the defendant contends that the HK$2 million was not a personal loan from the plaintiff to the defendant, but a shareholders’ loan from plaintiff to a company in the name of Paramount Euphoric Banquet Limited (“Paramount”), of which the plaintiff, the defendant and another person in the name of Mr Lu Jian Jiong were shareholders, and was for the purpose of supporting Paramount’s operations.

(3) The defendant further denies that there was any partial repayment of the Alleged Loan in July 2020 as alleged by the plaintiff, and contends instead that the defendant had advanced a loan to the plaintiff (at the plaintiff’s request) in the sum of HK$350,000 on or about 6 June 2020 for the payment of the school fees of the plaintiff’s grandson, and that such loan was advanced by way of a cheque issued by the defendant in the sum of HK$350,000 in favour the plaintiff’s daughter-in-law.  This alleged loan of HK$350,000 is also the subject of the defendant’s counterclaim against the plaintiff.

APPLICABLE LEGAL PRINCIPLES

5.  The applicable principles for summary judgment applications are well-settled, and have been summarised by DHCJ Lisa Wong SC (as she then was) in the case of Lau Chun Kam v Lai Tak Shing (HCA 2126/2007, 9 December 2008) at paragraph 12:-

(1) The Order 14 machinery works on the basis that if the plaintiff’s application is properly constituted, it is prima facie entitled to judgment unless the defendant shows cause to the contrary.

(2) The mere assertion in an affidavit of a given situation by the defendant responding to an application for summary judgment does not, ipso facto, ground leave to defend.

(3) The burden is on the defendant to show a real or bona fide defence or some other reason for a trial.  The defendant must satisfy the Court that his evidence is capable of being believed and that on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence.

(4) In deciding whether there is a fair or reasonable probability of the defendant having a real or bona fide defence, the Court does not isolate each factual issue and consider whether it is possible that the defendant’s story on that issue is credible. Rather, the Court must look at the whole situation.

(5) In assessing the credibility of the defendant’s factual case, while the Court will not embark upon a mini-trial on affidavit evidence, the Court is not obliged to suspend its critical faculties and assume the defendant’s evidence is accurate.

(6) If having regard to inherent plausibility, inconsistency with contemporaneous documents and other compelling evidence, the defence is not credible, the Court must say so.

(7) If the defendant’s evidence is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence.

C. THE PARTIES’ AFFIRMATION EVIDENCE

6.  It is trite that affidavit evidence should, where possible, be sworn by the person with the most direct knowledge of the matters deposed to. Solicitors should only give evidence on his/her client’s behalf in exceptional circumstances which should be justified; the court may require solicitors to explain why it is proper for them to make an affidavit on behalf of their client; and the fact that a party may be outside Hong Kong would rarely be a satisfactory explanation: see Hong Kong Civil Procedure 2021 Volume 1 paragraph 41/5/4.

7.  Further, specifically in the context of summary judgment applications, unless there is some very good reason not to do so, affidavits should be made by the parties themselves rather than by their solicitors: Hong Kong Civil Procedure 2021 Volume 1 paragraph 14/2/5.

8.  In support of the Application, the plaintiff’s solicitor Mr Tang Wing Lam David of Messrs Fung, Wong, Ng & Lam filed an affirmation on the plaintiff’s behalf. No affirmation evidence has been filed by the plaintiff himself.

9.  No explanation has been provided in Mr Tang’s affirmation as to why the plaintiff has not himself filed any affirmation in support of the Application, despite that it is the plaintiff and not Mr Tang who has direct knowledge of the relevant events pertaining to the plaintiff’s claim.  At the hearing, Mr Kaiser Leung (Counsel for the plaintiff) explained that because the plaintiff resides in the Mainland, the travel restrictions caused by the Covid-19 pandemic prevented him from coming to Hong Kong to swear an affirmation.  This is clearly not a satisfactory explanation given that the plaintiff could have arranged for an affirmation to be notarised in the Mainland.  Mr Leung further drew attention to the fact that the contents of Mr Tang’s affirmation contain largely the matters which have been pleaded in the Statement of Claim filed herein (which have been verified by a Statement of Truth signed by the plaintiff) or are otherwise objective facts which are not in dispute. 

10.  Mr Taylor Li (Counsel for the defendant) argued that as the plaintiff had not provided any good reason to explain why he had not provided a supporting affirmation himself, the Application is defective and should be dismissed on this ground alone.

11.  Whereas it is unsatisfactory that the plaintiff had not himself provided an affirmation in support of the Application, I do not consider that this would render the Application defective as such. But the absence of a supporting affirmation from the plaintiff himself will be taken into account by the Court in assessing the weight of the evidence given by Mr Tang on his behalf.  I also take into account the fact that the contents of Mr Tang’s affirmation are largely based on (i) the facts which have been pleaded in the Statement of Claim and verified by the plaintiff’s Statement of Truth, and (ii) documentary evidence exhibited thereto, including (inter alia) contemporaneous text messages between the plaintiff and the defendant in relation to the events in question, the existence and authenticity of which are not disputed by the defendant. 

12.  On the defendant’s part, she has filed an affirmation to oppose the Application.  The plaintiff was given leave to file an affirmation in reply, but no such reply affirmation has been filed.

D. UNDISPUTED FACTS

13.  The following events and contemporaneous correspondence between the parties via text messages are not in dispute:-

(1) On 30 December 2019, the defendant sent a text message to the plaintiff stating:

“你要幫我湊錢，500萬，我細房買出即刻還給你”

(2) On 5 January 2020, the defendant sent a further text message to the plaintiff stating:

“早安楊總，我10號需要錢，麻煩你幫我一下”

(3) On 10 January 2020, the plaintiff issued a personal cheque in the sum of HK$2 million with cheque number 100087 drawn in favour of the defendant (i.e. the Cheque), which was cleared on the same day.

(4) On 10 January 2020, the defendant sent to the plaintiff a photograph of the Cheque with the text message stating:

“謝謝楊總，感恩有你”

(5) On 21 July 2020, the plaintiff sent a text message to the defendant stating:

“華姐你好，現在疫情嚴重我又回不去天津，之前我借給你的2百萬是我找朋友借的你也知道，現在朋友找我急還錢，你能不能先還我一部分緩解一下”

(6) On 28 July 2020, the plaintiff sent another text message to the defendant stating:

“華姐，你找我借的2百萬朋友又問我要了，你什麼時候能還”

(7) In response, the defendant sent the plaintiff a text message on the same day on 28 July 2020 stating:-

“楊總你不是說要計算

公司帳號也給你搞封了，員工發工資也發不了，貨款全彈票了”

(8) In response, the plaintiff immediately replied to the defendant stating: “借錢還錢”

14.  I shall make references to these undisputed text messages in the analysis below.

E. WHETHER THE DEFENDANT HAS SHOWN A BONA FIDE DEFENCE

15.  In my view, the aforesaid contemporaneous text messages which undisputedly passed between the parties do establish at least a prima facie case that the plaintiff had, on the defendant’s request, advanced a personal loan of HK$2 million to the defendant on 10 January 2020 by way of the Cheque. 

16.  The burden is on the defendant to show that her evidence is capable of being believed and that on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence to the plaintiff’s claim. 

The defendant’s contention that the HK$2 million advanced by the plaintiff was a shareholders’ loan to Paramount

17.  The defendant’s contention that the HK$2 million advanced to her by the plaintiff on 10 January 2020 was not a personal loan, but a shareholders’ loan from the plaintiff to Paramount to support its operations, is not supported by any contemporaneous evidence, and contradicts the undisputed contemporaneous text messages between the parties.

18.  In the text message on 30 December 2019 from the defendant to the plaintiff, it was clearly stated that the defendant herself (not Paramount) was requesting a loan from the plaintiff in the sum of HK$5 million, which the defendant herself promised to repay immediately after the sale of her apartment.  

19.  In an attempt to explain this text message, the defendant alleged (at paragraph 21 of her Affirmation) that:-

“到2020[1]年12月30日，我本人亦需要支付我以親人名義購買的單位的款項，所以當時我的現金緊缺，未能向百樂門提供營運資金。有見及此，我要求原告人向百樂門支付500萬元的資金，並希望我賣出另外一個物業套現之後向原告人歸還我應出資的份額。所以我2019年12月30日向原告人發了一則微信信息：『你要幫我湊錢，500萬，我細房買出即刻還給你』”(emphasis added)

20.  However, the aforesaid explanation from the defendant simply does not accord with:-

(1) the defendant’s text message to the plaintiff on 30 December 2019, which made no reference to Paramount, nor was the defendant’s promise to repay restricted to a proportion of the loan requested;  

(2) the defendant’s text message to the plaintiff on 5 January 2020, which clearly stated that she needed funds by 10 January 2020, and asked the plaintiff to help her (again the defendant made no mention of Paramount at all); and

(3) the defendant’s text message to the plaintiff on 10 January 2020 after receiving the Cheque, in which the defendant thanked the plaintiff for his help (again no mention was made of Paramount).

21.  There was not a single mention of any loan to Paramount in the contemporaneous text messages between the parties:-

(1) The fact that there may have been discussions between the parties at the material time as to Paramount’s financial problems, or (on the defendant’s evidence) that the plaintiff knew of Paramount’s financial difficulties at the material time, go nowhere to support the defendant’s case that the HK$2 million advanced by the plaintiff to the defendant on 10 January 2020 was a shareholders’ loan made by the plaintiff to Paramount, which is simply not borne out by the contemporaneous text messages.

(2) Similarly, the defendant’s text message on 28 July 2020 in response to the plaintiff’s demand for repayment of the Alleged Loan (referring to Paramount’s financial difficulties) also does not support the defendant’s case that the HK$2 million advanced by the plaintiff to the defendant on 10 January 2020 was a shareholders’ loan. In fact, in none of the defendant’s text messages to the plaintiff did she ever deny that the HK$2 million was a loan to her, nor did she ever contend that the plaintiff should look to Paramount for repayment.

22.  Further, the Cheque of HK$2 million was made payable to the defendant herself (not Paramount), and was undisputedly paid into her own personal bank account and not that Paramount. 

23.  The defendant alleged (at paragraph 23 of her Affirmation) that:-

“在我多番要求下，原告人亦只願意向我開出HK$2,000,000元支票，以用作支付他作為股東應該支持百樂門的營運的份額。該款項以我的個人戶口收取。該款項並非任何借款。” (emphasis added)

24.  While the defendant further asserted (at paragraph 24 of her Affirmation) that the HK$2 million loan allegedly advanced by the plaintiff to Paramount was all used to pay for its expenses, no evidence whatsoever has been adduced by the defendant to support this assertion.  In particular:

(1) No documentary evidence has been provided by the defendant to show that the HK$2 million was transferred to Paramount from the defendant’s personal bank account or otherwise used for its operational expenses as alleged. 

(2) There is also no evidence at all to show that the HK$2 million was recorded as a shareholders’ loan from the plaintiff in the books and accounts of Paramount or that Paramount had ever received this HK$2 million.  

(3) Mr Li confirmed to the Court at the hearing that the defendant is and was at the material time a director of Paramount and had access to the books and accounts of the company, and could have produced evidence of the aforesaid matters if she wished to do so.

25.  Further, it is the defendant’s evidence (at paragraph 13 her Affirmation) that the 3 shareholders of Paramount, namely, the plaintiff, the defendant and Mr Lu Jian Jiong held 30%, 40% and 30% of the shares in the company respectively.  If the HK$2 million paid by the plaintiff to the defendant on 10 January 2020 was indeed the agreed contribution proportionate to the plaintiff’s shareholding as alleged by the defendant in paragraph 23 of her affirmation (referred to in paragraph 23 above), the defendant could have provided evidence of the respective contributions made by the defendant and Mr Lu proportionate to their respective shareholdings in Paramount, but no such evidence has been provided.

26.  Therefore, on the evidence before the Court, I am of the view that the defendant has failed to show any credible or arguable case that that HK$2 million advanced by the plaintiff to the defendant on 10 January 2020 was a shareholders’ loan made by the plaintiff to Paramount.  Rather, the undisputed evidence before the Court, including the contemporaneous text messages between the parties, clearly show that the sum was advanced by the plaintiff to the defendant as a personal loan.

27.  Mr Li invited the Court to note that the plaintiff never replied to the defendant’s text message on 30 December 2019 requesting for the sum of HK$5 million, and that the Cheque issued to the defendant on 10 January 2020 was not HK$5 million, but HK$2 million.  I do not consider that these contentions would assist the defendant’s case, as it is clear from the text messages (in particular the Defendant’s text message on 10 January 2020 sent with the photograph of the HK$2 million Cheque from the plaintiff) that:-

(1) the plaintiff issued the Cheque in response to the defendant’s requests for a personal loan on 30 December 2019 and 5 January 2020 respectively; and

(2) the defendant accepted the Cheque issued by the plaintiff on 10 January 2020, and paid it into his bank account on the same day.

28.  Insofar as the defendant is asserting that there were oral conversations between the parties which led to up to the issuance of the Cheque by the plaintiff on 10 January 2020, this is not supported by any objective evidence and is no more than a mere assertion. In fact, in answer to the plaintiff’s requests for further and better particulars of paragraph 4(c) of the Defence and Counterclaim, where the defendant was requested to state whether the defendant’s alleged request to the plaintiff to inject HK$5 million as shareholders’ loan to Paramount was made orally or in writing, and to provide particulars of such request, the defendant stated that the request was made in writing in the form of the defendant’s text message dated 30 December 2019 “together with oral conversations between the plaintiff the defendant at the time” but without provide any particulars as to such alleged “oral conversations”.

29.  Mr Li further submitted that the text messages do not constitute a loan agreement and the plaintiff would have to rely on oral conversations between the parties to substantiate his case on the Alleged Loan.  However, it is clear from the text messages that the defendant requested a personal loan from the plaintiff by her text messages on 30 December 2019 and 5 January 2020, and the plaintiff agreed to provide such loan by issuing the Cheque to the defendant on 10 January 2020.  Mr Leung confirmed that the plaintiff is not relying on any oral conversations between the parties in support of the Alleged Loan, which is evident from the plaintiff’s pleaded case in his Statement of Claim.

30.  Mr Li also submitted that the plaintiff has not pleaded a case that the debt was due or payable on demand.

(1) As Mr Leung submitted, where a loan was made without any stipulation as to time for repayment, the obligation on the borrower for the repayment accrues once the loan is made: see Chuang Eugene Yue Chien v Kevin Ho Yau Kwong (HCA 1904/2001, 8 November 2002) at paragraph 15; Chitty on Contracts (33^rd Edn) at §§28-036, 39-267, 39-269, 39-270.

(2) The Statement of Claim has sufficiently pleaded the material facts which gave rise to the Alleged Loan, and in paragraphs 10 and 12 specifically pleaded that the sum of HK$1,650,0000 is due and owing. 

(3) I do not consider that the Statement of Claim is defective as alleged by the defendant.

The defendant’s contention that the payment of HK$350,000 was a loan to the plaintiff

31.  The defendant contends, as part of his defence to the plaintiff’s claim, that there was never any partial repayment of HK$350,000 by him of the Alleged Loan in July 2020, but that he had advanced a loan of HK$350,000 to the plaintiff (by way of a cheque issued to the plaintiff’s daughter-in-law on or about 6 June) for paying the school fees of the plaintiff’s grandson.  I note that the plaintiff has not provided any affirmation evidence in response to the defendant’s version of events as to the nature of this payment, as stated in the defendant’s affirmation.

32.  Mr Leung submitted on behalf of the plaintiff that:-

(1) the defendant’s case as regards the nature of the HK$350,000 payment is not directly relevant to the plaintiff’s claim for repayment of HK$1,650,000 as claimed under the Statement of Claim, as the Plaintiff’s claim is only for the balance of the Alleged Loan after deducting the HK$350,000; and

(2) the defendant’s assertion that sum of HK$350,000 was a loan from him to the plaintiff is not supported by the text messages between the defendant and the plaintiff’s wife from 5 to 10 June 2020 exhibited to the defendant’s Affirmation and relied on by her in support of such assertion.

33.  I agree with Mr Leung’s submissions that the text messages between the defendant and the plaintiff’s wife do not indicate that there was any loan of HK$350,000 made by the defendant to the plaintiff on or about 6 June 2020 as alleged, nor did the defendant produce a copy of the cheque allegedly issued by the defendant to the plaintiff’s daughter-in-law in the sum of HK$350,000 to show that the sum was advanced in June 2020 (as opposed to July 2020 as alleged by the plaintiff).  Insofar as the defendant contends that there were oral conversations between the parties which led to the agreement for such loan, this is not supported by any objective evidence before the Court. 

34.  In any event, even if there was no partial repayment of the Alleged Loan, I am of the view that this does not affect the plaintiff’s case for repayment of HK$1,650,000 under the Statement of Claim, nor does the defendant’s case on the nature of the payment of HK$350,000 go anywhere to support her case that no personal loan was made to her by the plaintiff on 10 January 2020.

35.  Mr Li submitted that the nature of the payment of HK$350,000 is relevant to the existence of the Alleged Loan in that if the Alleged Loan existed, the plaintiff would have asked for repayment of such loan rather than request another loan of HK$350,000 from the defendant in June 2020 when he was in need of funds to pay for his grandson’s school fees.  However, even leaving aside the fact that the alleged loan of HK$350,000 is not supported by any objective evidence before the Court, I do not see any inherent inconsistency between the existence of the Alleged Loan and the plaintiff’s alleged request for a separate loan of HK$350,000. 

F. CONCLUSION

36.  For the above reasons, I am of the view that the defendant has failed to show a real or bona fide defence or any other reason why the plaintiff’s claim should proceed to trial.

37.  I therefore grant the following orders:-

(1) Judgment be entered against the defendant for the sum of HK$1,650,000 in favour of the plaintiff, with interest at judgment rate from the date of judgement until full payment.

(2) Costs of the plaintiff’s claim against the defendant in this action (including costs of and incidental to the plaintiff’s summons dated 5 February 2021) be paid by the defendant, to be taxed if not agreed, with certificate for counsel.