BRIAN NICOLAS GAY v. YIP SHUT YUEN

HCA 3064/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3064 OF 2002

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J U D G M E N T

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1. The Plaintiff in this action is a financial advisor and he has been in the financial industry for almost 30 years. He got his first broker's licence in 1976 from the CFTC, a regulatory body in the United States. Over the years, he got other relevant qualifications in the industry, including what he described to the court as the "ultimate licence" in the United States called the Futures Commission Merchant licence in 1999. Obviously, the Plaintiff is very experienced in the field. He first worked in Hong Kong in 1992 and in about late 1992, he settled here and had his own business until mid 1998. He moved to live in Dubai since August 1998.

2. The Defendant was also in the financial business and the Plaintiff came to know him for almost nine years prior to 1999. As far as the Plaintiff was aware, the Defendant was a successful businessman and had a brokerage firm and businesses in various countries in the Far East. He used to see the Defendant about once a week or every 10 days on casual social occasions where there were other friends present.

The dispute

3. On 11 May 1999, the Plaintiff through the bank account of a company controlled by him called Mascot Investment Limited remitted a sum of $1,000,000 to the Defendant. A few months later, the Plaintiff through the same account remitted another $500,000 to the Defendant on 20 September 1999.

4. By this action, the Plaintiff is seeking the return of these sums. It is common ground that the dispute between the parties is essentially a question of fact, viz. what was the nature of those remittances. The Plaintiff said these sums were advanced by him to the Defendant by way of loans whilst the Defendant said there were injection of capital into a joint venture between the two of them. If this court finds that the remittances were loans from the Plaintiff to the Defendant, the Plaintiff must be entitled to repayment thereof, there being no suggestion by the Defendant that the loans were not yet due for repayment. On the other hand, if this court finds that the remittances were not made by way of loans, the Plaintiff's claim in this action would fail since no other claim has been advanced in the Statement of Claim. The burden is on the Plaintiff to prove on the balance of probabilities that the monies were in fact advanced by way of loans.

The Note

5. The transactions between the Plaintiff and the Defendant in respect of the remittances had been carried out informally. Apart from the bank withdrawal slips evidencing the transfer of funds, the only contemporaneous document pertaining to the transactions is a handwritten note ["the Note"] signed by the Defendant dated 11 May 1999. It is common ground that the Note was written by the Plaintiff. It is in the following terms,

"I Yip Shut Yuen (Peter) confirm receipt of one million HK Dollars from Brian Nicolas Gay of Mascot Investment Ltd for the purpose of organizing fund raising activities. I shall make sure that Mascot will participate in receiving a 5% commission payout from these fundraising activities."

6. This Note being the only document evidencing the transaction on 11 May 1999, it is obvious that this court should attach great significance to it in the resolution of the factual dispute about the nature of the transactions between the parties. It is particularly so when neither side called any independent witnesses to support their respective version of events notwithstanding witness statements of two other witnesses had been prepared. Both the Plaintiff and the Defendant had signified agreement with the contents of the note: the Plaintiff wrote the note (and I shall discuss later about the circumstances under which the note was written) and the Defendant signed on the same.

7. It is also noteworthy that the note was not disclosed by the Plaintiff in his List of Documents. It was disclosed by the Defendant in a supplemental List of Documents dated 18 December 2002.

Plaintiff's evidence

8. The Plaintiff's evidence about these transactions is as follows. After he had moved to Dubai in mid 1998, the Plaintiff came back to Hong Kong occasionally. On those occasions, he maintained contacts with the Defendant. In 1999, about two or three weeks prior to 11 May 1999, the Defendant approached the Plaintiff and asked if the Plaintiff could provide him with funds. There were a couple of meetings at places like Captain Bar of the Mandarin Hotel, Ritz Carlton Bar, Furama Bar and Grappas Restaurant. On further probing, the Plaintiff said he met the Defendant not more than three times during that period. The Defendant told him that he was dealing with a scheme for the initial public offering of a company engaged in an eel business and the Defendant showed him a brochure. The Defendant wished to promote that in Taiwan but he was short of fund. He understood that the Defendant was asking him for a loan. He also had discussion with his wife about the request of the Defendant.

9. The Plaintiff said he himself was actually not interested in what the loan would be for. He worked on simple trust and confidence placed on the Defendant. He found the Defendant to be a person of good character and therefore he trusted him.

10. The Plaintiff agreed to lend $1,000,000 to the Defendant for about 6 months at an interest of 5%. He said at that time he had substantial liquid cash in the bank earning about half of that rate by way of interest. Hence, he was quite happy with a loan which carried 5% interest. He did not quite specify in his evidence whether the 5% was 5% per annum. Since he compared that with the bank interest rate, I take it that he was referring to 5% per annum. Counsel did not clarify the matter presumably because the Plaintiff did not seek interest on that basis in the Statement of Claim. He only seeks interest from date of writ at a different rate, a topic I will need to address later on.

11. The Plaintiff said the Defendant offered him something better. When the parties discussed about 5%, the Defendant suggested to give to the Plaintiff 5% out of what he would be making from the business he would be doing with this sum of money and that would be better than interest at the rate of 5%. The Plaintiff thought that was fine for him although he was primarily looking for interest calculated at 5%. The Plaintiff said he considered the Defendant to be generous in offering him 5% of whatever it was. He was not sure if it was a reference to 5% of the Defendant's profit or how they would be generated when he was asked by his own counsel about the "5% commission payout" referred to in the Note.

12. The Plaintiff said he did not regard this as a business transaction. Had this been a business deal (as opposed to a loan to an individual based on trust), he would be more involved and would require where his investment had gone and ask lawyers to look at the contractual document.

13. The Plaintiff used a rather odd expression in his evidence in chief to describe the Note. He said he took the Note as "my receipt with giving him the money"¹. He said it was a receipt written by him when he asked the Defendant what the Defendant wanted him to put on it. He regarded it as an additional confirmation of the bank slip, an additional piece of paper elaborating on the receipt of money and setting out what the return to him would be. Under cross-examination², the Plaintiff testified that the Defendant said he would give the Plaintiff a note although the Plaintiff was not interested in having any additional documentation apart from the bank slip. It was the Defendant's wish to have the Note, not his. The Plaintiff said the content of the Note was written by him under the guidance of the Defendant.

14. After the first loan, the Plaintiff came to Hong Kong frequently and he was in touch with the Defendant and asked about what he described as "the status of the money that I have given him"³ and he perceived that "things were progressing fine". Later on, he learnt that "the venture was not proceeding too well" and the Defendant asked him for money again. He believed the Defendant asked for the same amount but he was not prepared to lend another $1 million to the Defendant because the Plaintiff felt he should not put up that much more money. However, the Plaintiff said he had neither concern nor misgivings about repayment until March 2000 as he understood that this sort venture took time to yield returns. In the end, the Plaintiff only agreed to lend another $500,000 to the Defendant and that was how the second loan came to be advanced on 20 September 1999.

15. The Plaintiff denied that he had entered into any joint venture with the Defendant. There was evidence showing that between September 2001 and August 2002, the Plaintiff was involved in the businesses of the Defendant in Indonesia and Taiwan. The Plaintiff explained these came about in the following circumstances.

16. The Plaintiff said in his evidence in chief that he did not ask the Defendant for repayment of the loans prior to March 2000 although he had enquired with the Defendant how his situation was⁴. In March 2000, due to a fraud case, the Plaintiff became illiquid overnight and he was therefore in need of cash. At a meeting in Dubai slightly after March 2000, the Plaintiff explained to the Defendant his situation and said he was "in definite need of any financial return whatsoever"⁵. The Defendant told him that the Defendant had no money but he was working on something he was expecting return. Apart from the eel business, the Defendant told him of a business in Oman. The Plaintiff made a trip to Oman with his family in September 2000 to look at the Defendant's company which was dealing in currency products. The Plaintiff said he offered some advice to the business with the hope that if the Defendant yielded something from the business, he would have the means to repay the Plaintiff.

17. For similar reason, the Plaintiff assisted the Defendant with regard to his other businesses in Taiwan and Indonesia after a meeting in Bangkok in February 2001. The Plaintiff even allowed the Defendant to set up a company called Mascot Fortune Limited ["MFL"] to do business in the financial market in apparent association with the Plaintiff's own Mascot group of companies. The Plaintiff was adamant that he had no interest in MFL. He was hoping that this would help in term of generating return to the Defendant so that the Plaintiff would get his money back from the Defendant. A website launched for MFL in which it was introduced as part of the Mascot group including Mascot Global Holdings Limited (a BVI company), Mascot Capital Investments Limited (a US Regulated Futures Commission Merchant, viz. the company which held the ultimate licence), Mascot Financial Services Limited, Mascot Investment Limited. All these (except MFL) were companies controlled by the Plaintiff. The Plaintiff agreed that the Defendant had sent him a minidisk containing the contents of this website and he had no objection to the same.

18. The Plaintiff did not do much in terms of pressing the Defendant for repayment until the commencement of the present action. He agreed that he had not made a single demand in writing. He explained that up to October 2002, his options were limited as he was tied up in other litigation. At the same time, he was hoping that by his assistance rendered to the Defendant in those other ventures, he was indirectly helping himself to get his money back. Hence, he made trips to Indonesia as well as Taiwan to assist the Defendant in his businesses.

Defendant's evidence

19. The Defendant had been in the financial business since 1973. He had businesses all over the world. He knew a Tony Yu ["Yu"] of Kingman International Holdings Limited ["Kingman"] and that was the holding company of a group of companies. In May 1999, he intended to promote bonds issued by Kingman in the financial markets. He invited the Plaintiff to join in the venture. The proposal was that the Plaintiff would put in $1,000,000 by way of capital investment for this venture. Apart from Kingman bonds, the venture would also promote a fund set up by the Plaintiff called the Aspire Fund and some U. S. futures. The primary market would be Taiwan. The Defendant said the expected return from the venture was a commission of 10% for promotion of a US$50 million Kingman bond, viz. US$5 million.

20. The Defendant discussed with the Plaintiff about this venture on two separate occasions. He showed the Plaintiff some documentation regarding the Kingman bond including a CD about Kingman. He gave the Plaintiff some information about this company. The Defendant said the Plaintiff had knowledge about the Taiwan market because the Plaintiff had given a talk there on promotion of bond in 1996 or 1997. The Defendant told the Plaintiff that how he proposed to do the promotion in Taiwan through some Taiwanese companies with which he was able to establish some connections. He said the success or failure of the exercise could be gauged in three months' time. If they could raise subscription for the bond in the sum of US$5 million within that period, it was likely that they could reach their target within 9 months or one year.

21. The Plaintiff agreed to join in the undertaking and contributed the $1,000,000 by way of capital. The Note was the evidence of the agreement between the Plaintiff and the Defendant. The Defendant said the Plaintiff wrote this note after hearing the Defendant's proposal. The Plaintiff asked the Defendant to sign the Note. The 5% commission payout referred to in the Note was half of the 10% commission.

22. The Defendant explained why no further document was signed regarding this venture. He said neither side considered it necessary to have more elaborate documentation. The Defendant could not produce a single document at the trial in respect of the Kingman Bond. He said that due to lapse of time, those documents were no longer kept by him. He was however able to produce a copy of Explanatory Memorandum for the Aspire Fund. He said 10 to 20 copies of this document were supplied to him by the Plaintiff through the fund custodian Butterfield Trust (Hong Kong) Limited to enable the venture to sell the fund. According to that document, Mascot Capital Investment Limited was the manager for that fund. When the Plaintiff gave evidence, he testified that the Aspire Fund had never been launched. The Defendant said the Plaintiff had never told him that.

23. The Defendant reported to the Plaintiff the progress of the venture orally in two or three meetings between May and September 1999. The venture was a failure. The $1,000,000 was used up and there was no return. $800,000 was spent in Taiwan and the Defendant gave the breakdown as follows. $100,000 was spent on personnel's lodging and entertainment. Expenses were also incurred at three marketing points: $200,000 in Taipei, $200,000 in Tai Chung and $300,000 in Kaoshiung. The balance of $200,000 was spent in Hong Kong with $100,000 on printing and promotional material and the balance spent on air tickets and entertainment with partners in China. The Defendant said he had explained to the Plaintiff about all these.

24. On his own part, the Defendant said he himself incurred about $100,000 in respect of preparations for the venture prior to the Plaintiff joining in. Thereafter, the expenses were paid by the Plaintiff's contribution. He did not keep any proper accounts as to these expenditures although he had shown some receipts to the Plaintiff. He said the Plaintiff did not require proper accounts to be prepared. According to the Defendant, the idea was to be a personal joint venture between the Plaintiff and the Defendant and no company would be set up for that purpose. It was also meant to be a short term venture and once profit was generated, they would just split it between them on a half and half basis. The Defendant said his contribution to the venture should include his time and connection being utilized. Because of the potential return, the Plaintiff was prepared to take the risk. The Defendant said the Plaintiff did not have the time to maintain a close surveillance of the venture.

25. The Defendant said there were a number of people working for him on the project although they were not his employees. He mentioned some names but none of them had been called to give evidence before me.

26. After a few months, when it was apparent that the venture failed, the Defendant told the Plaintiff that it would be difficult to make money in Taiwan and proposed to shift to the Indonesian market. The focus would be shifted to the Aspire Fund and commodities. The Plaintiff agreed to participate and a further sum of $500,000 was injected by the Plaintiff. The Defendant gave some breakdowns as to how that $500,000 was spent in his evidence but none of those was supported by any documentations.

27. The Indonesian venture also failed and no income whatsoever had been generated from all these activities. The Plaintiff and the Defendant reviewed the situation at a meeting in Bangkok on 25 February 2001. The Defendant had a new plan for the promotion of foreign exchange options in Indonesia and Taiwan. It was concluded that MFL was to be set up for that purpose. The Plaintiff would also provide support to the business of MFL regarding information pertaining to prices of the options. The Defendant agreed that he was the only shareholder of MFL.

28. The Defendant agreed under cross-examination that the business he conducted in Indonesia in 2001 had nothing to do with the joint venture between him and the Plaintiff. He accepted that the joint venture was all over by the time of meeting in Bangkok in February 2001. The Defendant accepted that the Plaintiff did not make any investment into the activities of the Defendant in Taiwan and Indonesia in 2001 and 2002 although he put in some efforts. The Defendant said the Plaintiff had 5% in the foreign exchange option business. For other businesses introduced by the Plaintiff, there could be negotiation but nothing agreed in writing. The Defendant denied the Plaintiff had demanded to have his money back prior to the issue of writ.

29. The Defendant agreed that prior to May 1999, the Plaintiff had not made any investment in any of his business.

My assessment and findings

30. For reasons given below, I am of the view that neither party had told me all the truth in their evidence. For present purposes, the crucial issue is whether the Plaintiff has satisfied me on the balance of probabilities that the two sums were transferred to the Defendant's account by way of loans from the Plaintiff.

31. Although I have misgivings about the evidence of the Defendant in other respects, I prefer the Defendant's version to the Plaintiff's version as to how the Note was prepared. For reasons given below, it would be apparent that I come to this conclusion primarily by reference to the documentary evidence, viz. the Note itself and the inherent probabilities of the matter instead of the evidence of the Defendant. I reject the Plaintiff's evidence that the Note was written at the request of the Defendant and its content was suggested by the Defendant. I find it difficult to accept that a borrower would request a lender to give him a receipt for the loan. Usually it is the other way round. It is even harder to believe that a lender would oblige such a request from a borrower and prepare a receipt on the terms dictated by the borrower and the terms do not even suggest that the transaction is a loan. If it were a document requested by the Defendant, one would expect that at least the Plaintiff would be asked to sign on the same together with the Defendant and it would contain some promise by the Plaintiff, e.g. duration of the loan.

32. On the face of it, the Note is a receipt signed by the Defendant and evidenced a promise by the Defendant to ensure that Mascot Investment Limited would get a 5% commission payout from the fund raising activities. The Note is not an acknowledgment of a loan. Given the Plaintiff's background and experience in the financial industry, it is difficult to believe that when he was asked to write a note to evidence the transaction between the parties (and that would be the only written evidence as to the nature of transaction), he would agree to write a note in these terms instead of asking the Defendant to give him an acknowledgment of the loan or something in the nature of a promissory note.

33. From the point of view of the Plaintiff, if he was a lender, the most essential terms of the transaction must be the date of repayment, interest rate and security for the loan. Even accepting that the Plaintiff did not deem it necessary to have any security for the loan, there was no reason why if he were asked to write a document to evidence the transaction, he did not record the term as to repayment. Yet nothing whatsoever was written in the Note with regard to repayment of the principal within 6 months. As to interest, there is clearly a great difference between "5% commission payout" and "interest on the principal calculated at 5%". Commission could only be generated if there were successful transactions in term of the fund raising activities. If there were no successful deal, there would not be any commission. Hence, there was also a risk that 5% commission payout would yield nothing or something less than 5% of the principal sum.

34. I do not believe the Plaintiff's story as to how the Defendant successfully persuaded him to accept 5% commission payout. The Plaintiff tried to impress this court in his evidence that he had no concern as to the business the Defendant proposed to carry out with the $1,000,000. If that were so, I see no basis for him to accept the Defendant's purported assurance that 5% commission payout would be better than an interest at the rate of 5%. Further, if such assurance were actually given, it is difficult to see why the Plaintiff did not record such assurance in the Note.

35. Since the Defendant was the borrower according to the Plaintiff's version, he was in no position to dictate the terms of the Note. The Plaintiff was a seasoned trader in the financial market and it is inherently unlikely that he would write such a note to evidence a loan advanced by him to the Defendant.

36. For all these reasons, I reject the submission of Mr Collin that the Note only purported to describe the Defendant's reason for asking for a loan. I am also not impressed by his submission that the way the Plaintiff conducted himself with regard to these transactions could be explained by the fact that these were personal loans advanced on the basis of trust and confidence.

37. One can also test the inherent probabilities of the matter by reference to the circumstances under which the May 1999 transaction took place. By then, the Plaintiff had moved to Dubai. On the evidence before me, the two might have been acquaintances and might have common interests in their business or professional capacities, I am not satisfied that they were so close a friend to each other that the Plaintiff would naturally lend money to the Defendant without asking any questions. The Plaintiff himself testified that he did not lend the money right away. He had discussed with his wife and they met a couple of times before the fund was transferred to the Defendant's account. The amount involved is not insignificant. Even if the Plaintiff had a lot of spare capital and a lot of regard as to the standing of the Defendant, I do not find it inherently probable that he would agree to advance $1,000,000 to the Defendant without written evidence to document the terms of the loan.

38. Moreover, the indisputable conducts of the parties after May 1999 also indicated that the transactions were not by way of loans. The Plaintiff testified that he had enquired with the Defendant about the status of the money he had given to the Defendant after May 1999. This seems to me to be more in line with the case of the defence that the money was meant to be investment than the Plaintiff's case of loan with he having no interest whatsoever about the Defendant's business. Anyway, the Plaintiff accepted that before the September 1999 transfer of $500,000, the Defendant told him that the venture was not proceeding well. He should therefore be alerted at least to the possibility that the 5% commission payout would end up with nothing. Although the first purported loan had not yet been mature by that stage, the fact that the Defendant needed to ask him for more money was not a healthy sign. The Plaintiff said the Defendant asked him for another $1,000,000. Against such background, it is most unlikely that the Plaintiff would be agreeable to advance another $500,000 without any security and without clear documentation as to how and when he would receive his repayment and how interest was to be calculated. It would be naïve to simply take the Defendant's words as good enough and I do not think the Plaintiff was so ignorant and gullible. On the Plaintiff's case, he had no obligation to advance further sums. He was therefore in a good bargaining position to require everything to be done on his terms if the Defendant wanted to borrow from him.

39. Even after March 2000 when the Plaintiff, according to him, became anxious for the return of his money, the Plaintiff did not make any written demand for repayment before the issue of writ in this action. By then, the loans would have been overdue. The Plaintiff said he had made oral demands and due to his personal circumstances, he had little option in terms of pursuing the matter with the Defendant. I am not impressed by these explanations. There must come a point in time when the Plaintiff must have appreciated that oral demands did not work. Even if the Plaintiff were not in a position to commence legal action against the Defendant there and then, there is no reason why he could not make a written demand by himself. He could at least put the matter on record.

40. This is particularly so when according to the Plaintiff, the Defendant was still on fairly good terms with him after March 2000. In fact, the Defendant asked for his assistance with regard to the Defendant's other businesses in Oman, Indonesia and Taiwan. Under such circumstances, if his version of the transactions were true, I fail to see why the Plaintiff did not insist the Defendant to at least give him something like a promissory note to acknowledge his indebtedness to the Plaintiff before the Plaintiff provided such assistance to the Defendant after March 2000.

41. Since the Defendant also accepted in his evidence that the activities after February 2001 had nothing to do with the alleged joint venture between him and the Plaintiff in 1999, I need not dwell much on those later activities. For present purposes, as I see it, those activities showed that the Plaintiff and the Defendant were at least on friendly basis and the Plaintiff had at least provided assistance to the Defendant's businesses between 2001 and 2002. I note the Plaintiff's explanation about why he rendered such assistance. However, I do not think that could explain why the Plaintiff did not take some more positive actions in seeking the recovery of his loans as outlined by me in Paragraphs 39 and 40 above.

42. I therefore do not find the Plaintiff to be a truthful witness and I do not accept his evidence.

43. As I said above, I do not think the Defendant had been entirely truthful. In several respects I find his evidence unreliable. The inability of the Defendant to produce any documentary evidence relating to the Kingman Bond and the promotion of the same in Taiwan cast serious doubts on the Defendant's assertions that such business had been conducted. The Defendant seems to be fairly ignorant about the details of the finance of Kingman and how the bondholders' interest could be protected. He said he was not familiar with the regulatory regime in Taiwan and he just left the promotion to the Taiwanese companies. He could not remember if any auditors had been appointed for the exercise and he said this was not his responsibility. He could only tell this court that he understood Kingman to have assets in the region of RMB 200 million and was the largest supplier of eel in Asia. He confessed that he had not marketed this type of bond before. It would appear, according to his evidence, that the Defendant was only relying on the Taiwanese companies to market the bond and he only acted as an intermediary. If that were so, it is difficult to see how he could be confident about the potential success of this exercise to justify substantial capital input.

44. The lack of proper accounts and in fact complete lack of documents evidencing the expenses said to be incurred regarding the joint venture activities again cast serious doubt as to whether such expenses had actually been incurred in the manner as testified by the Defendant. This problem with the evidence of the Defendant is compounded by the Defendant's testimony that he did not directly use the Plaintiff's monies for these ventures since he had some US$ savings himself and he used those to cover those expenses.

45. There were inconsistencies between the Defendant's oral evidence and what he said in his witness statements. He accepted he made mistakes in his pleadings and witness statements. There were mistakes about the date of the Bangkok meeting and the Plaintiff's trips to Taiwan and Indonesia. It is fair to say the corrections by the Defendant as to the date of these trips of the Plaintiff are quite material in view of what is pleaded in Paragraph 7 of the Defence.

46. Mr Collin made a submission based on the omission on the part of the Defendant to call witnesses who might corroborate his story, viz. Eleven Law, Tony Yu (who had made a witness statement in this action), Jimmy Wong, George Chiu, Chris Wong, Danny Yip (Defendant's brother). I think it is a fair criticism bearing in mind the unsatisfactory state of documentary evidence regarding the joint venture and its expenses.

47. On the whole, I do not find the Defendant to be a reliable witness and I would not decide this case on the basis on his evidence.

48. On the evidence before me, the only findings I would make are as follows. The Note was prepared by the Plaintiff on his own volition and its content accorded with the Plaintiff's then understanding as to the nature of the transaction. The monies were to be used for some fund raising activities and the Plaintiff expected a 5% commission derived from such fund raising activities. In September 1999, the Defendant indicated further capital was needed for such activities and the Plaintiff injected another $500,000 for the same. The monies were not paid to the Defendant by way of loans.

49. Mr Collin submitted that it was incredible that the Plaintiff would enter into a joint venture on the scanty information provided by the Defendant. He also emphasized that it was unlikely that the Plaintiff would invest into such a joint venture with no control over the business and lack of proper account as to the expenditure relating to the same. The lack of formal structure as to the Plaintiff's interest in the business was urged upon me as an indication of there being no joint venture between the parties.

50. These are points I have taken into account in considering the inherent probability of the matter. They are certainly relevant in assessing whether there was any joint venture between the Plaintiff and the Defendant in the manner as described by the Defendant. However, that is not the crucial issue here. Even if I am not satisfied that there was a joint venture between the Plaintiff and the Defendant as described by the Defendant, the Plaintiff still had to satisfy me that the transactions were by way of loans. I do not think one can say that because there was no joint venture in the manner described by the Defendant, the transactions could only be loans but nothing else.

51. Since I am not satisfied that the transactions were loans, it is neither here nor there that there was no joint venture between the parties as described by the Defendant. It is not for me to speculate what were the real purposes for the transfer of funds. But one possibility which is consistent with the Note is that the Plaintiff had placed these monies in the hands of the Defendant as monies on account for some fund raising activities. It is again not for me to analyse whether the Plaintiff has other causes of action if that were the true state of affairs. In this connection, the Court of Appeal in Poon Hau Kei v. Hsin Chong Construction Co Ltd, CACV 167 of 2002, 30.1.2003 (see in particular Paras. 41 to 43 of the judgment of Ma JA) has set out the proper approach this court should adopt when it finds the evidence does not support the Plaintiff's case. Applying that approach to the facts of the present case, I do not think this court should determine whether the Defendant would be liable to the Plaintiff on a scenario other than the one which had been argued before me. The Plaintiff chose to put forward his case on the exclusive basis of loans and for reasons already given, I am not satisfied that the transactions were loans by the Plaintiff to the Defendant.

Outcome

52. The Plaintiff's claim is therefore dismissed. I also make an order nisi that the Plaintiff bears the costs of the Defendant in this action, such costs to be taxed if not agreed.

1 Evidence of the Plaintiff on 20 May 2003 from 12:37:49 to 12:39:50 pm

2 Evidence of the Plaintiff on 21 May 2003 from 10:37:58 to 10:39:20 am; and 10:45:05 to 10:47:05

3 Evidence of the Plaintiff on 20 May 2003 from 12:50:29 to 12:52:01 pm

4 Evidence of the Plaintiff on 20 May 2003 from 2:41:48 to 2:42:20 pm

5 Evidence of the Plaintiff on 20 May 2003 from 2:44:33 to 2:45:10 pm