LAU LAI SHAN LISA v. ZHANG QI AND OTHERS

HCA 1395/2018 &
HCA 1992/2019
(Consolidated)

[2026] HKCFI 5064

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS. 1395 OF 2018 AND 1992 OF 2019

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(Consolidated pursuant to the Order of the Honourable
Madam Justice Cheng dated 28 February 2022)

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J U D G M E N T

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CONTENTS

A.  INTRODUCTION 4

B.  THE FACTS 6

B1.  The Lau families 6

B2.  The establishment and funding of Kidbrooke 10

B3.  Management of Kidbrooke 11

B4.  Use of Kidbrooke’s funds 14

B5.  Forged bank statements 15

B6.  Transfer of the Share from Lisa to Zhang Qi on 8th May 2017; appointment of Zhang Qi as additional director 17

B7.  The Oi Wah Loan of June 2017 18

B8.  Instruction of Idy Chui and IC Accounting in lieu of TLC 22

B9.  Undated resignations as director 24

B10.  Zhang Qi’s agreements with Allied Way to sell the Share 24

B11.  The Future Stars Loan 28

B12.  Further signing of documents relating to the sale 30

B12.1  Signing of documents on 21st May 2018 31

B12.2  Signing of documents on 24th May 2018 32

B12.3  Signing of documents on 30th May 2018 33

B13.  Other events leading up to the completion of the sale of the Share 35

B14.  Remuneration for IC Accounting and Success Time 36

B15.  Lau Senior’s discovery of the sale of the Share 37

B16.  Police investigations 40

B17.  The Sale Proceeds 43

B18.  The course of these proceedings 49

C.  THE ISSUES 50

C1.  Factual issues 52

C2.  Issues relating to the relief claimed by Lisa 54

D.  FINDINGS OF FACT 55

D1.  Relevant principles 55

D2.  How Kidbrooke was set up and funded 59

D2.1  The actual setting up of Kidbrooke 59

D2.2  Whether Lau Junior’s family had the means to fund Kidbrooke’s acquisition of Fu Hing Property 73

D3.  How Kidbrooke was operated and managed 78

D3.1  Alan’s role 78

D3.2  Zhang Qi’s role; Lisa’s trust in Zhang Qi 80

D3.3  The nature of payments from Kidbrooke to Lau Senior 82

D3.4  Kidbrooke’s bank statements 84

D3.5  Use of Kidbrooke’s funds for Zhang Qi’s and Alan’s personal expenses 85

D3.6  Whether representations that Lisa managed Kidbrooke on behalf of Alan 86

D4.  The Share Transfer 87

D4.1  Whether agreement that Share would be transferred to Zhang Qi 87

D4.2  The Disputed Instruction 93

D4.3  The execution of the documents effecting the Share Transfer 98

D4.4  Whether Lisa signed documents to effect the Share Transfer by reason of Zhang Qi’s undue influence 103

D5.  The Oi Wah Loan 103

D6.  The sale of the Share to Allied Way 109

D7.  The Future Stars Loan 110

D7.1  Whether Lisa knew and approved the Future Stars Loan 110

D7.2  Whether the $5m paid by Kidbrooke to Lau Senior from the Future Stars Loan was paid as a loan or for some other reason 112

D8.  Other documents signed by Lisa relating to the sale of the Share 114

D9.  The time when Idy Chui learnt of the contents of the 04.06.2018 Police Letter 116

D10.  The nature of the payment of $5.9m received by Success Time 124

D11.  Assessment of witness: Zhang Qi 129

D12.  Assessment of witness: Alan’s evidence 131

D13.  Assessment of witness: Lisa 133

D14.  Assessment of witness: Lau Senior 134

D15.  General observations 134

D15.1  The reactions to the news of the sale of the Fu Hing Property 135

D15.2  Inherent probabilities 137

E.  RELIEF CLAIMED BY LISA 140

E1.  Damages for fraudulent misrepresentation 140

E2.  Non est factum 142

E3.  Whether Zhang Qi was agent of, and/or owed fiduciary duties to, Lisa in relation to the execution of documents for the Share Transfer 143

E4.  Whether Zhang Qi held the Share or Sale Proceeds on constructive trust for Lisa 144

E5.  Whether 2nd to 6th Defendants hold Sale Proceeds, and whether 6th Defendant holds Carparks and Storage Units, on constructive trust for Lisa 146

E6.  Whether Zhang Qi unjustly enriched at Lisa’s expense by the Share Transfer and receipt of the Sale Proceeds 148

E7.  Whether IC Accounting, Idy Chui, Success Time, Victor Cheng and/or Zheng Yiling have been unjustly enriched at Lisa’s expense by the receipt of part of the Sale Proceeds 148

E7.1  The relevant principles in relation to unjust enrichment 149

E7.2  The $1.4m received by IC Accounting beneficially 152

E7.3  The $2,053,000 received by Idy Chui 154

E7.4  The $5.9m received by Success Time 159

E7.5  The $4.9m received by Victor Cheng 161

E7.6  The $1.89m received by Zheng Yiling 162

E8.  Whether IC Accounting or Idy Chui is liable in knowing receipt for $13.28m 163

E8.1  The relevant principles in relation to knowing receipt 163

E8.2  The $13.28m received by IC Accounting 165

E8.3  The claim against Idy Chui in knowing receipt 166

F.  VICTOR CHENG’S CONDUCT 167

F1.  Oi Wah Loan 167

F2.  Success Time 169

F3.  Zhang Qi’s police interview on 6th June 2018 172

F4.  Receipt of Sale Proceeds 172

F5.  Acting for Zhang Qi in present proceedings 173

F6.  Referral to Bar Association 173

G.  DISPOSITION 173

A.  INTRODUCTION

1.  In these proceedings, the Plaintiff (“Lisa”) claims that she was deceived into transferring her share (“the Share”) in Kidbrooke Group Limited (“Kidbrooke”) to her sister-in-law the 1st Defendant (“Zhang Qi”), who then sold it for $140m to a third party.  Lisa claims against Zhang Qi and other defendants who received part of the proceeds of sale of the Share.

2.  In a nutshell, Lisa says that Kidbrooke was established and funded by her uncle (“Lau Senior”), the elder brother of her father (“Lau Junior”).  Lisa says that she was asked by Lau Senior to manage various matters relating to Kidbrooke, and for that purpose was made the sole director and shareholder of Kidbrooke.  She says that she unknowingly signed various documents which effected a transfer of the Share to Zhang Qi because of the latter’s fraudulent misrepresentations, and Zhang Qi then sold the Share without her knowledge or consent.

3.  Zhang Qi, on the other hand, says that Kidbrooke was established and funded by Lau Junior, and that thereafter, Lau Junior and his wife (“Madam Wong”) decided to use Kidbrooke to hold and manage their assets for the benefit of their only son (“Alan”), the husband of Zhang Qi.[1]  She says that Lisa and Lau Senior were well aware of the sale of the Share but that this did not concern them, since Kidbrooke belonged to Lau Junior and Madam Wong.

4.  The 2nd to 6th Defendants received, directly or indirectly, part of the proceeds of sale of the Share.  The 2nd to 5th Defendants had varying degrees of involvement in the sale.

B.  THE FACTS

5.  The nature of this case has meant that the parties have put forward irreconcilable versions of certain events.  In this section, I set out (1) some basic undisputed or indisputable facts, which I find as fact, and also, where necessary to enable the chronological narrative to be understood, (2) an overview of the parties’ rival versions of some of the disputed events, which disputes I will determine in subsequent sections where relevant.  To avoid doubt as to what is being found as fact in this section, the disputed parts will be prefaced along the lines of “Lisa says” or “Zhang Qi’s case is that…”.

B1.  The Lau families

6.  In the 1940s, Lisa’s grandparents ran a small retail clothes business (“Tung Wah”) in Sheung Shui from a rented shop.  They had three children: Lau Chun Cheong (Lau Senior), Lau Fook Tin (Lau Junior), and a daughter.

7.  In about 1958, Lau Senior joined Tung Wah at his mother’s request, but he says that after a while, he realised that the clothes business could not provide him with a “good life” in the long run.  He set up a glove factory which he says was quite successful (but this is challenged by Zhang Qi).  He also started trading in farm land, and eventually made enough profit by about 1968 to start a property development business.

8.  Lau Junior worked in Tung Wah for the entirety of his working life.  In 1968, Lau Junior married Madam Wong.  They lived together with Lau Junior’s mother.  The parties differ as to Tung Wah’s prosperity.

8.1  Lisa says that Tung Wah did not yield much income and was insufficient to support her (Lau Junior’s) family.  They had to rely on regular contributions from Lau Senior all along, for which she and her family have been very grateful.  Lau Senior further says that Lau Junior was introverted and would not deal with customers at the shop, and that Madam Wong had not received much education and did not know how to run the business, so that Tung Wah was not profitable.

8.2  Zhang Qi says that the business was profitable and enabled Lau Junior’s family to accumulate enough wealth to purchase properties with cash and without ever borrowing.  She also says that Lau Junior and Madam Wong had various investments.

9.  In 1969, Lau Senior acquired land in Sheung Shui.  He built two Chinese tenement buildings on the land, which were later registered as 41A and 41B Fu Hing Street, 15/19 San Fat Street, Sheung Shui, New Territories (“the Fu Hing Property”).  Units in the property were let out for rent.

10.  Also in 1969, Lau Senior acquired land at 28 San Lok Street in Sheung Shui.  He developed another Chinese tenement building there, which was completed in about 1971.  In December 1971, Lau Senior transferred Flat A (and flat roof), 1/F (“the San Lok Flat”) to Lau Junior; the consideration for the transfer was stated to be $40,000.  The parties differ as to the circumstances in which this was done.

10.1  Lau Senior says that as the eldest in the family, he felt he had an obligation to look after his younger brother and his mother, and he gifted the San Lok Flat to Lau Junior (despite the stated consideration of $40,000) for him, their mother, and Madam Wong to live in.

10.2  Zhang Qi says that Lau Junior bought the San Lok Flat from Lau Senior for $40,000.

11.  In about 1977, Lau Senior emigrated to Canada with his wife and children.  Lau Senior says that he enjoyed a happy retirement life there.  He says, and was not challenged, that his sister-in-law Madam Wong then helped him to collect rent from tenants of the Fu Hing Property until about 1997, and also kept his bank statements, title deeds and share certificates for him in Hong Kong.

12.  After Lau Senior emigrated, he would return to Hong Kong around twice a year, staying with his mother, Lau Junior and Madam Wong at the San Lok Flat and later the Noble Hill Flat (defined below), until about 2016 when he came back permanently to Hong Kong.

13.  Lau Senior has three sons: Lau Hon Cheung (“Andrew”), Lau Hon Man, Lau Hon Nin; and a daughter Lau Hon Ching.  In 2005, Andrew returned to Hong Kong and lived with Lau Junior’s family.  Andrew had an eye disease and in about 2017 he lost his eyesight.  He subsequently moved out to live with his parents.

14.  Lau Senior’s nephew Choi Man On (“Andy Choi”) also features in these proceedings.

15.  Lau Junior has three daughters: Lau Lai San Lisa (Lisa), Lau Lai Yan (“Lillian”), and Lau Lai Ming (“Ming”); and a son (Alan).  Lisa is the eldest of the siblings.  In 1997, she was a houseman at Kwai Chung Hospital, doing her medical internship.  In the evidence, Ming’s husband Henry (“Henry”) was also mentioned.

16.  In 2002, Alan met Zhang Qi.  The two of them, together with Lillian, were classmates studying for a degree in Chinese medicine.  In February 2003, Alan and Zhang Qi began a relationship, and sometime that year started cohabiting as husband and wife.  They got married in December 2006.

17.  In about 2007 or 2008, Alan bought Flat A, 10/F, Tower 8, Noble Hill (“the Noble Hill Flat”) as the new family home for the Lau Junior family.

18.  In 2016, Lau Senior returned permanently to Hong Kong with his wife to look after Andrew.  Lau Senior and his wife initially stayed in rented accommodation.  In 2016, he sold his property in Vancouver.  In March 2019, Lau Senior’s wife and Andrew bought a property in Whampoa Gardens.

B2.  The establishment and funding of Kidbrooke

19.  Kidbrooke was incorporated in Western Samoa on 16th September 1997.  It has one issued share (the Share).  The parties differ as to how it came to be established and funded.

19.1  Lisa says that it was incorporated and funded by Lau Senior.  Lau Senior says that he set it up for tax purposes and to hold his properties on trust for his sons (“Lau’s Trust”). 

19.2  Zhang Qi says that it was incorporated and funded by Lau Junior and Madam Wong, to hold their properties, which were eventually to be taken over by Alan.

20.  On 8th December 1997, Lisa became the sole shareholder, the sole director and company secretary of Kidbrooke.  She passed a resolution to authorise the opening of an account in the name of Kidbrooke with Bank of America in Jersey, with the sole signing authority vested in Lisa.  At some point, Kidbrooke also opened a bank account with the China Construction Bank (Asia) Corporation Limited (“the China Construction Bank”) for receiving rental income and paying expenses.  Again, Lisa was the sole authorised signatory for the account.

21.  At all material times prior to 8th May 2017, Lisa was the sole shareholder, director and company secretary of Kidbrooke.

21.1  Lisa says that this was because when Lau Senior established Kidbrooke, he was not then living in Hong Kong, and he asked Lisa to handle Kidbrooke’s affairs for him, such as signing documents and cheques for Kidbrooke.

21.2  Zhang Qi says that Lisa was doing this on behalf of her brother Alan.

22.  On 17th December 1997, Lau Senior and Kidbrooke entered into an Agreement for Sale and Purchase whereby Kidbrooke would acquire the Fu Hing Property from Lau Senior for $20m.  The Fu Hing Property was assigned to Kidbrooke on 23rd December 1997.

22.1  Lisa’s case is that this transfer was part of Lau Senior’s arrangement for setting up Lau’s Trust.

22.2  Zhang Qi’s case is that the Fu Hing Property was purchased by Lau Junior from Lau Senior.

23.  On 17th October 1998, Kidbrooke acquired the Cockloft at 3 San Lok Street (“the Cockloft”) from Andrew at a consideration of $900,000.

23.1  Lisa’s case is that the acquisition was part of the exercise of injecting properties into Lau’s Trust.

23.2  Zhang Qi’s case is that funds for the acquisition were transferred by Madam Wong to Lisa, who then transferred the same to solicitors for completion of the transaction.

B3.  Management of Kidbrooke

24.  From around January 1998 until some time in 2017, Thomas Lee & Co Ltd, TLP Corporate Services Limited, or Thomas Lee & Partners Limited provided company secretarial, accounting and taxation services to Kidbrooke.[2]  Throughout this period, Elaine Chung’s staff were responsible for the work.  They contacted Lisa by fax or telephone regarding the review and signature of tax filing documents.

25.  Messrs Philip SW Chan & Co (“PSWC”), a law firm, handled conveyancing and tenancy matters for properties held by Kidbrooke until about 2014.  The solicitor dealing with Kidbrooke matters was one Thomas Szeto (“Thomas Szeto”).

26.  In July 1998, Lisa became a psychiatrist trainee, and was very busy with her work and studies.  At some point thereafter, Alan took on some of the tasks related to managing Kidbrooke, including liaison with the staff at TLC.  However, Lisa remained the sole signatory of Kidbrooke’s bank accounts and its sole shareholder.  She would sign some blank cheques and let Alan fill them in.

26.1  Lisa’s case is that the delegation to Alan was at Lau Senior’s request, and that Alan was simply assisting in liaising between Lisa, Lau Senior and third parties.  She says she trusted Alan to accurately relay Lau Senior’s wishes.

26.2  Zhang Qi’s case is that Alan took over management since he was entitled to Kidbrooke.  Alan says that he never took instructions from Lau Senior and made all the decisions himself.

27.  From about 2003, Zhang Qi started helping with the operations of Kidbrooke.  She reported to Lisa, the director and shareholder of Kidbrooke.  Her involvement gradually grew, until by 2009 she took over the management of Kidbrooke, including dealing with third parties, such as liaising with the staff at TLC.

28.  It is Lisa’s case that over time, she came to trust Zhang Qi, and would sign documents relating to Kidbrooke presented by Zhang Qi without reviewing them or consulting Lau Senior.  Lau Senior says that he also came to trust Zhang Qi and was content for her to replace Alan in carrying out tasks in relation to the management of Kidbrooke, with Lisa continuing to be Kidbrooke’s sole director and shareholder.  It is Zhang Qi’s case that Lisa carefully read documents before signing, and that Zhang Qi kept Lisa informed of the use of Kidbrooke’s funds, and of any significant decisions relating to Kidbrooke, including the transactions which are in issue in these proceedings.

29.  The signing of documents and cheques would typically take place on Saturday nights at the Lau Junior family home.  By 2005, Lisa and Ming had moved out of the family home, and all three sisters had gotten married in 2008.  They would go back to the family home on Saturday nights for dinner, although they did not always necessarily meet as they might arrive and leave at different times.  Furthermore, since about 2009, Zhang Qi and Alan did not often join the dinners.  However, documents and cheques would be left for Lisa to sign on these occasions.  Lisa and her sisters say that Madam Wong would also tell Lisa to sign the documents, saying that Lau Senior had asked for this to be done.

30.  In addition, from about 2013, Zhang Qi started going to Lisa’s place of work at Kwai Chung Hospital, sometimes with a clerk said to be from a solicitors’ or accountants’ firm, asking her to sign documents.  Lisa says that this was done at short notice by way of WhatsApp messages or phone calls.  Zhang Qi’s case is that it was legal documents and urgent or important documents which she took to Kwai Chung Hospital for Lisa to sign.

B4.  Use of Kidbrooke’s funds

31.  In about 2007 or 2008, Zhang Qi and Alan opened a Chinese medicine clinic in Sheung Shui.  $1.5m was paid from the funds of Kidbrooke for the decoration and purchase of equipment for the clinic.

32.  Also in about 2007 or 2008, Alan purchased the Noble Hill Flat.  $1.4m (towards the down payment) and $300,000 (for decoration expenses) were paid from the funds of Kidbrooke.

33.  In about 2008 or 2009, Alan opened a branch clinic in Wanchai.  $3m was paid from the funds of Kidbrooke for the rent, decoration and purchase of equipment for the clinic.

34.  In these proceedings, Zhang Qi provided a table setting out the persons in whose favour Kidbrooke’s cheques had been drawn during the period from 2011 to 2018.  It shows that there were numerous payments made for Zhang Qi’s and Alan’s personal expenses, such as payments for Zhang Qi’s investments in stocks and a restaurant, and repayment of Alan’s loans.  Lisa’s case is that such payments started from about this time; Zhang Qi’s case is that Kidbrooke’s money had been used for Lau Junior’s family expenses much earlier.

35.  The parties differ as to whether the rest of the family knew that Kidbrooke’s funds had been spent in this way: Lisa says they did not, whereas Zhang Qi says that they did.

36.  Lau Senior said that when he wanted to withdraw money from Kidbrooke’s account, a cheque would be drawn in his favour.

B5.  Forged bank statements

37.  It will be recalled that Kidbrooke’s bank statements were sent to the Lau Junior family home.  After Zhang Qi took over management of Kidbrooke, she was the one who opened the envelopes containing the statements when they arrived in the post, and she was the one who kept them.

38.  The parties differ as to whether these were passed to Lau Senior to review.

38.1  Lau Senior says that after Zhang Qi took over management of Kidbrooke, she was the one who would pass him its bank statements, although with the benefit of hindsight, he noted that in later years, Zhang Qi often came up with excuses to delay showing him up-to-date statements, which, coupled with the fact that he spent most of his time outside Hong Kong, meant that he lost track of Kidbrooke’s financial status.

38.2  Zhang Qi says that she never passed Kidbrooke’s bank statements to Lau Senior, and that she only passed them to the accountants for tax reporting purposes.

39.  Lau Senior says that the only complete set of China Construction Bank statements which he was given by Zhang Qi was for the period from April 2016 to March 2017.  As mentioned, Zhang Qi denies that these came from her.  What is not in dispute, however, is that this set of bank statements in Lau Senior’s possession were forged (“the Forged Bank Statements”), bearing an outdated title which the China Construction Bank says it had stopped using after December 2015.  The Forged Bank Statements show a different financial position to the actual bank statements, which Lisa’s solicitors obtained from the China Construction Bank in August 2018, after the commencement of the current proceedings.  For example, the Forged Bank Statements show $2,265,719.39 as Kidbrooke’s total deposits as at 30th April 2016, when in fact the true bank statements show Kidbrooke’s total deposits to only have been $4,498.82 at that date.

40.  Lau Senior said that he realised the forgery only after the commencement of the present proceedings, when Lisa’s then solicitors obtained Kidbrooke’s bank statements from China Construction Bank.  Lau Senior says that he also noticed from the true bank statements that payments had been made to third parties from the account without his consent.

41.  As to who had prepared the Forged Bank Statements:

41.1  Zhang Qi denied that she was responsible;

41.2  it was not suggested to Lisa or Lau Senior that they did this.

B6.  Transfer of the Share from Lisa to Zhang Qi on 8th May 2017; appointment of Zhang Qi as additional director

42.  The transfer of the Share from Lisa to Zhang Qi on 8th May 2017 (“the Share Transfer”) was effected by virtue of the following documents:

42.1  a written resolution of Kidbrooke’s sole director to (1) appoint Zhang Qi as director of Kidbrooke and (2) approve the transfer of the Share to Zhang Qi;

42.2  an instrument of transfer pursuant to which Lisa apparently transferred the Share to Zhang Qi for US$1;

42.3  a share certificate naming Zhang Qi as a shareholder.

43.  It is not disputed that Lisa signed the three documents over lunch with Zhang Qi at Kwai Chung Hospital on 8th May 2017.  The parties differ as to how Lisa came to sign them.

43.1  Lisa says that Zhang Qi misrepresented to her that there were insurance documents which required her signature and which Lau Senior had pressed Zhang Qi to get signed.  She had no idea that she was in fact signing documents to effect a transfer of the Share.

43.2  Zhang Qi says that Lisa all along knew what the documents were for, and that she had explained their purpose to Lisa at the meeting.

44.  In addition to these three documents which Lisa accepts that she signed, there is a further document which relates to the transfer of the Share which Zhang Qi alleges that Lisa signed.  This is a document entitled “申請公司股東及董事變動” (“the Disputed Instruction”).  It stated, in Chinese, that Kidbrooke’s director and shareholder Lisa was, for personal reasons, transferring all of her shares in the company to Zhang Qi, and adding Zhang Qi as a director of the company; and that she was retaining her position as director and company secretary.  Zhang Qi says that the document was signed by Lisa.  Lisa says that the signature on the document purporting to be hers is not, in fact, hers.

B7.  The Oi Wah Loan of June 2017

45.  Shortly after the Share Transfer, Kidbrooke borrowed $10m from Oi Wah Property Credit Limited (“Oi Wah”), a finance company (“the Oi Wah Loan”).

46.  The parties differ as to Lisa’s contemporaneous awareness of the decision to obtain the loan.

46.1  Lisa says that she did not know that the Oi Wah Loan was made.

46.2  Zhang Qi says that Lisa knew about the loan and had been unwilling to provide a personal guarantee to secure the loan; however, she had agreed that the loan was necessary, since Kidbrooke had been having financial problems since 2013, and it did not have many other options.  In the circumstances, Lisa proposed, and Zhang Qi and Alan agreed, that Lisa would transfer the Share to Zhang Qi, and Zhang Qi would then give the personal guarantee.

47.  The Oi Wah Loan came about as follows.

48.  Zhang Qi was introduced to Oi Wah by an intermediary, “18 finance consultancy ltd” (“18 Finance”).

49.  On 10th May 2017, Zhang Qi attended a meeting with Henry Lui of 18 Finance at the office of 18 Finance.  There, Henry Lui introduced Zhang Qi to his friend Cheng Yee Chung Victor, the 5th Defendant (“Victor Cheng”), and to Daniel Ng of Oi Wah (“Daniel Ng”).  Victor Cheng, a practising barrister, suggested the terms on which a loan could be granted to Kidbrooke, including the requirement of a shareholder’s guarantee.  He proposed that Ng Wai Kit (“Ng Wai Kit”) of Messrs Lui & Law (“Lui & Law”) could act for Oi Wah, and that another friend and business partner of his, the 3rd Defendant Chui Pui Man Idy (“Idy Chui”), could also assist Oi Wah in relation to company secretarial matters, as Kidbrooke was an offshore company.[3]  Daniel Ng agreed with all of Victor Cheng’s suggestions, and part way through the meeting, Idy Chui joined the meeting.  Victor Cheng introduced Idy Chui to take part in the transaction to help Kidbrooke obtain corporate documents and change its administrator.  He admitted in cross-examination that he brought in Idy Chui unnecessarily in order to give her some work; what she was to do could simply have been done by Kidbrooke’s own accountant and administrator.

50.  The Oi Wah Loan was effected after the signing of the following documents:

50.1  a written special resolution of Kidbrooke’s directors dated 2nd June 2017 to approve amendments to Kidbrooke’s memorandum and articles of association (which, inter alia, removed Kidbrooke’s power to borrow money, and fixed the quorum for transaction of directors’ business as the total number of the company’s directors);

50.2  a written resolution of Kidbrooke’s directors dated 2nd June 2017 to execute a loan agreement and deed of debenture to take out the loan;

50.3  a written resolution of Kidbrooke’s directors dated 2nd June 2017 that Oi Wah issue a loan to Kidbrooke upon Oi Wah’s request for a loan;

50.4  a confirmation dated 2nd June 2017 that Lisa had no right or interest in Kidbrooke’s issued share capital;

50.5  a deed of debenture dated 2nd June 2017 granting Oi Wah a first floating charge over (inter alia) Kidbrooke’s receivables;

50.6  an undertaking and indemnity dated 2nd June 2017, pursuant to which Zhang Qi and Lisa undertook to comply with Buildings Department orders registered against the Fu Hing Property and to remove illegal structures on and alterations to the property, and to indemnify Oi Wah against all losses arising out of illegal structures on and alterations to the Fu Hing Property (“the Oi Wah Undertaking”);

50.7  a personal guarantee dated 2nd June 2017, pursuant to which Zhang Qi guaranteed Kidbrooke’s repayment of the Oi Wah Loan;

50.8  a shares charge dated 2nd June 2017, pursuant to which Zhang Qi charged the Share to Oi Wah as security for the Oi Wah Loan;

50.9  a loan agreement dated 2nd June 2017 (“the Oi Wah Loan Agreement”), pursuant to which Oi Wah granted Kidbrooke a loan of $10,000,000 for a term of two years, with monthly interest of $100,000 for twenty-four months (that is, a 12% per annum interest rate);

50.10  a letter of authorisation dated 2nd June 2017, pursuant to which Zhang Qi and Lisa authorised Prudential Surveyors (Hong Kong) Limited (“Prudential”) to deal with the Lands Department and other government departments in relation to their intended application for a certificate of compliance for the Fu Hing Property; and

50.11  an undated document providing the specimen signatures of Zhang Qi and Lisa.

51.  All the documents, except for the personal guarantee and the shares charge (which were signed by Zhang Qi only) and the confirmation of no interest and the letter of authorisation (which were signed by Lisa only), were signed by both Zhang Qi and Lisa.

52.  Zhang Qi’s case is that these documents were signed at the offices of Lui & Law on 2nd June 2017.  Lisa accepts that she went to Lui & Law that day and that she signed some documents, but apart from the letter of authorisation to Prudential, she is not sure what she signed on that particular occasion.  She accepts that it is her signature appearing on the aforesaid documents.  Idy Chui says that Lui & Law required Lisa to be present on this occasion and to sign the documents as she had not attended the earlier meeting with Oi Wah on 10th May 2017 and as Kidbrooke’s articles of association would be amended to require all directors to attend to transact business; Idy Chui relayed this to Zhang Qi who initially queried the necessity for this, but later said that it could be arranged.

53.  The Oi Wah Loan was drawn down on 5th June 2017.

54.  Zhang Qi had been introduced to Oi Wah by 18 Finance.  Zhang Qi paid 18 Finance $1m for the introduction, using two cheques she drew on Kidbrooke’s account, cleared on 6th June 2017, the day after the drawdown.

B8.  Instruction of Idy Chui and IC Accounting in lieu of TLC

55.  On 7th April 2017, Zhang Qi asked TLC to send the original certificate of incorporation and register of members to a law firm, Messrs Cheung & Choy.

56.  On 28th April 2017, Zhang Qi emailed Cindy Shao of TLC asking her to prepare documents to change Kidbrooke’s director and shareholder.  I return to this below.

57.  On 16th May 2017, TLC received an email from Kidbrooke’s registered agent, informing it that the administrator had been changed from TLC to Richful Deyong International Investment Limited, and asking for consent to the change.  TLC called Zhang Qi to ask whether Kidbrooke wished to terminate the company secretarial services provided by TLC, to which Zhang Qi said yes.  TLC therefore gave consent to the registered agent.

58.  On 14th August 2017, Zhang Qi asked TLC to deliver Kidbrooke’s company kit to the 2nd Defendant IC Accounting Limited (“IC Accounting”).  The sole director and 90% shareholder of IC Accounting was Idy Chui.  Zhang Qi was introduced to Idy Chui when taking out the Oi Wah Loan.  She engaged IC Accounting to handle Kidbrooke’s company secretarial matters and tax affairs and to act as Kidbrooke’s tax representative in place of TLC.

59.  Idy Chui says that she obtained the Kidbrooke company kit from TLC, and that this contained (1) a written resolution dated 8th May 2017 to appoint Zhang Qi as director and transfer the Share to her, and (2) a set of undated resolutions with Lisa resigning as director and Lau Senior’s three sons being appointed as directors.

60.  In November 2017, Zhang Qi did not respond to TLC’s requests for instructions regarding the preparation of financial statements and tax returns for 2016/17.  TLC wrote to the Inland Revenue Department on 2nd November 2017 to say that it was ceasing to act as Kidbrooke’s tax representative.

B9.  Undated resignations as director

61.  It is Idy Chui’s case that in February 2018, Zhang Qi told her that Lisa wished to resign as a director, and she prepared a formal resolution to this effect in triplicate for Zhang Qi to take to Lisa to sign.  Idy Chui says that these documents were returned by Zhang Qi to her, signed by Lisa and Zhang Qi, in February 2018.

62.  Lisa accepts that she signed the documents, but does not agree that they were signed in the circumstances alleged.

B10.  Zhang Qi’s agreements with Allied Way to sell the Share

63.  The parties differ as to Lisa’s awareness of the sale of the Share at the time Zhang Qi entered into agreements for the sale.

63.1  Lisa says that the Share was sold without her knowledge or consent.

63.2  Zhang Qi says that Lisa is the one who proposed to sell the Fu Hing Property and the Cockloft because the properties were getting old and the cost of maintaining them was increasing, and Kidbrooke could not break even in its financial position, having started to have financial problems since 2013.

64.  On 20th October 2017, Zhang Qi signed a Confidential Offer Application Form, appointing an agent for the sale of the Fu Hing Property at $120m.  The appointment expressly stated that the owner asked for the sale to be handled in a low-key manner and that the offer for sale could not be made public; nor could Zhang Qi’s telephone number be made public.

65.  On 31st October 2017, Zhang Qi entered into a provisional sale and purchase agreement with Allied Way International Investment Limited (“Allied Way”) for the sale of the Share at a consideration of $110m (“the PSPA”).[4]  The agent was named as Centaline Property Agency Ltd (“Centaline”).

66.  In about late November 2017, Zhang Qi engaged IC Accounting to assist in the sale.  The work involved included the preparation of audited accounts for Kidbrooke for 2015/16 and 2016/17 (Kidbrooke being an offshore company, it did not previously have to prepare audited accounts).

67.  In about December 2017, Idy Chui had a meal with her friend Sam Fung and his girlfriend Annie Ma, both of whom were estate agents at Midland Realty.  She told them about the intended sale.  Sam Fung expressed a view that the sale price of $110m was an undervalue, and asked for an opportunity to find a seller who would offer a higher price.  Idy Chui subsequently relayed this view to Zhang Qi.  Rather than putting Zhang Qi directly in touch with Sam Fung, Idy Chui discussed the matter with Victor Cheng, with whom she had started a real estate consultancy business since July 2017.  In the end, Idy Chui managed to position herself as the go-between between Zhang Qi and Sam Fung, with Sam Fung and Annie Ma looking for buyers who could offer a higher price.  She also got Victor Cheng involved.

68.  The 4th Defendant Success Time Properties Limited (“Success Time”) had been acquired by acquired by Idy Chui and Victor Cheng in 2017 for their estate agency business.  Idy Chui and Victor Cheng appointed themselves as directors of Success Time with effect from 2nd January 2018 (Victor Cheng resigning on 10th July 2018), and became shareholders as well on 5th and 4th June 2018 respectively.

69.  Sam Fung prepared an estate agency agreement for the sale of the Fu Hing Property, which stated that Zhang Qi appointed the 4th Defendant Success Time Properties Limited (“Success Time”) to market the property at the price of $130m and that the commission to be paid to Success Time was to be $5.6m (“the Estate Agency Agreement”).  However, neither Success Time, Idy Chui nor Victor Cheng were actually the ones looking for buyers.  In cross-examination, Idy Chui said that she and Victor Cheng were not the ones looking for buyers as they did not have the necessary network.  Furthermore, the Estate Agency Agreement was not signed by anybody on behalf of Success Time.  Idy Chui and Sam Fung gave evidence that the purpose of the document was for Sam Fung to show potential buyers of the Fu Hing Property that Zhang Qi was serious about selling, rather than to act as an agreement between Zhang Qi and Success Time.

70.  Between about December 2017 and February 2018, Sam Fung and Annie Ma found three interested potential buyers:

70.1  the first offered $120m, but withdrew this on learning that the Fu Hing Property had no certificate of compliance;

70.2  the second offered $130m and did not mind that the Fu Hing Property had no certificate of compliance;

70.3  the third offered $145m but on condition that there must be a certificate of compliance for the property.

71.  Idy Chui says that during the same period of about December 2017 to February 2018, Success Time liaised with surveyors to explore the possibility of getting a certificate of compliance for the Fu Hing Property, with a view to increasing the price that could be achieved on a sale.  No certificate of compliance was ever obtained.

72.  The original deadline of 27th April 2018 for completion of the sale to Allied Way was not met.

73.  Zhang Qi told Allied Way that another purchaser wanted to buy Kidbrooke for $130m.  Allied Way then increased its offer to $140m.

74.  On 3rd May 2018, Zhang Qi and Allied Way entered into a Supplemental Agreement (“the Supplemental PSPA”), increasing the price agreed in the PSPA to $140m, and extending the completion date to 17th May 2018.  Subsequently, there were further postponements of the completion date.  Zhang Qi says that she kept Lisa and her family informed of the progress of sale of Kidbrooke.  Lisa denies this.

75.  The Share was eventually transferred to Allied Way on 29th May 2018.

B11.  The Future Stars Loan

76.  Going back a little earlier in time, in March 2018, Zhang Qi borrowed $26m from Future Stars Finance Limited (“Future Stars”), a finance company introduced by Victor Cheng (“the Future Stars Loan”), pursuant to a loan agreement dated 20th March 2018 (“the Future Stars Loan Agreement”).  The loan agreement provided that the loan was to bear interest at the rate of 11% per annum and that Zhang Qi was to repay the loan within twelve months.

77.  Zhang Qi says that she had contemplated selling the Share to the buyer offering $130m, rather than to Allied Way.  She says that she would have needed funds to refund the deposit paid by Allied Way and pay liquidated damages, pay Centaline’s agency fee, and repay the Oi Wah Loan.  She says that she engaged Success Time to look for a money lender, and eventually Success Time introduced Future Stars to Zhang Qi.

78.  The parties differ as to Lisa’s contemporaneous awareness of the decision to obtain the loan.  Zhang Qi says that Lisa knew about it; Lisa says that she did not know that the Future Stars Loan was made.

79.  In relation to the Future Stars Loan, Lisa signed the following documents:

79.1  a written special resolution of Kidbrooke’s directors dated 20th March 2018 to accept the resignation of Oi Wah as a director of the company;

79.2  a written special resolution of Kidbrooke’s directors dated 20th March 2018 to appoint one Cheung Tak Shing (now known to be a representative of Future Stars) as a director of the company; 

79.3  a letter dated 20th March 2018 to Vistra (Samoa) Limited (“Vistra”), informing it that Messrs Cheng & Cheng Corporate Services Limited (“Cheng & Cheng”) had been appointed as a service representative of the company;

79.4  an acknowledgement dated 20th March 2018 that Lisa had been informed that she was required to sign in advance (1) a resignation as Kidbrooke’s director, (2) a resignation as Kidbrooke’s secretary, and (3) minutes of a board meeting of Kidbrooke approving Lisa’s resignations as director and secretary, Zhang Qi’s resignation as director, and the transfer of all her company shares to Future Stars for US$1; that Lisa had been informed of a right to legal advice; and that Lisa had not been subject to any undue influence, coercion or misrepresentation when signing;

79.5  an undated letter resigning as Kidbrooke’s director, signed in escrow;

79.6  an undated letter resigning as Kidbrooke’s secretary, signed in escrow;

79.7  an undated letter approving the transfer of the Share from Zhang Qi to Future Stars, accepting the resignations of Zhang Qi and Lisa as directors, accepting the resignation of Lisa as secretary, and appointing Cheng & Cheng as secretary.

80.  Zhang Qi’s case is that these were signed by Lisa at Kwai Chung Hospital on 20th March 2018, with Zhang Qi taking Mr Wu Chi Wai, a clerk from Messrs Cheung & Liu (“Wu Chi Wai”), to the hospital to have the documents signed.

81.  The Future Stars Loan was drawn down on the same day, with the proceeds paid into Zhang Qi’s personal account on the same day.  According to Zhang Qi, about $11.34m was used to repay the Oi Wah Loan, and $5m was paid to Lau Senior on 26th March 2018 (she says as a loan, which Lau Senior denies).

B12.  Further signing of documents relating to the sale

82.  Lisa signed further documents relating to the sale of the Share on a number of further occasions.  According to Idy Chui, these were related to the further postponements of the completion of the sale of Kidbrooke.  Lisa’s pleaded case is that she signed documents on 24th May 2018 and 30th May 2018 pursuant to misrepresentations made by Zhang Qi and Idy Chui as to the nature of the documents, and was unaware of the sale of the Share to Allied Way.  Zhang Qi and Idy Chui, IC Accounting, and Success Time[5] say that Lisa was aware of and approved the sale.

83.  At trial, there was a conflict of evidence as to whether there were only two occasions as pleaded by Lisa (on 24th and 30th May 2018), or whether there were in fact meetings on 21st, 24th and 30th May 2018.  After all the witnesses’ evidence had been heard at trial, counsel for Lisa, Mr Toby Brown (appearing with Ms Nicola Ho) accepted that it was likely that there were in fact three occasions on which these further documents were signed.  I find that Lisa conflated the meetings of 21st and 24th May 2018, but do not consider that this affects her credibility, as explained below.

B12.1 Signing of documents on 21st May 2018

84.  According to Idy Chui, she learnt that Lisa would not be present at the completion of the sale of Kidbrooke, which was then scheduled for 23rd May 2018; Tam & Partners (the firm acting for Allied Way in the purchase of the Share) said that it would accept Lisa pre-signing a resignation letter, but also required her to sign a deed to guarantee Kidbrooke’s performance.  I accept this evidence which was not challenged.

85.  On 21st May 2018, Maggie Leung (“Maggie Leung”), a clerk of Messrs L&W Solicitors (the firm acting for Zhang Qi in the sale of the Share, introduced by Victor Cheng through Idy Chui) (“L&W”), was taken by Zhang Qi and Idy Chui to Kwai Chung Hospital to meet Lisa, outside the hospital.  Lisa initially took the position that there was no meeting on that day and that she met Maggie Leung only on 24th May 2018, but Mr Brown now accepts in the light of the evidence that it is likely that there was a meeting on both days, and I so find.

86.  Idy Chui for D2-D4 (and Zhang Qi, relying on Idy Chui’s evidence) says that two documents were signed by Lisa on that occasion.  Lisa accepts that these documents were signed by her (whether on this or some other occasion), but she says that she did not know or approve of the sale of the Share to Allied Way.

87.  The two documents said to have been signed by Lisa on this occasion were:

87.1  a letter dated 23rd May 2018 resigning as director and confirming that she had no claim against Kidbrooke;

87.2  a Deed of Guarantee and Indemnity in favour of Allied Way, guaranteeing (inter alia) Zhang Qi’s performance of her obligations under the PSPA (“the Allied Way Guarantee”).

B12.2 Signing of documents on 24th May 2018

88.  According to Idy Chui, the then scheduled completion date of 23rd May 2018 was postponed again to 24th May 2018; Kidbrooke’s management accounts had to be revised to cover the period up to 24th May 2018; in addition, Kidbrooke’s management accounts for 2016/17 had to be filed with its tax return for 2016/17; Zhang Qi said that she would arrange for Lisa to sign the latter.  I accept this evidence which was not challenged.

89.  On 24th May 2018, Idy Chui went to meet Lisa at Kwai Chung Hospital at the hospital’s car park.  Lisa initially took the position that Maggie Leung was also present on this occasion, but Mr Brown now accepts in the light of the evidence that it was likely that this was not the case, and I so find.  There is no dispute that prior to the meeting, Zhang Qi had told Lisa that there were documents relating to Kidbrooke’s tax matters which needed to be signed.

90.  Idy Chui for D2-D4 (and Zhang Qi, relying on Idy Chui’s evidence) says that two sets of each of the management accounts for (1) 2016/17 and (2) the period 1st April 2018 to 24th May 2018 were signed by Lisa on that occasion.  Lisa accepts that these documents were signed by her (whether on this or some other occasion), but she says that she did not know or approve of the sale of the Share to Allied Way.

B12.3 Signing of documents on 30th May 2018

91.  According to Idy Chui, at the completion of the sale of the Share on 29th May 2018 (which she, but not Zhang Qi or Lisa, attended):

91.1  Tam & Partners took issue with the resignation letter signed on 21st May 2018 (dated 23rd May 2018), which had been prepared by Idy Chui, and required a different version to be signed;

91.2  Tam & Partners also required that Lisa resign as secretary;

91.3  Tam & Partners also required that Lisa and Zhang Qi should sign board minutes authorising Zhang Qi’s earlier making of statutory declarations declaring the loss of title deeds and a share certificate; and

91.4  Eric Wong, the handling solicitor at L&W, required that Lisa sign a further two copies of the Allied Way Guarantee.

92.  Idy Chui further said that the lawyers passed to her copies of the documents for signing by Zhang Qi and Lisa.  Idy Chui first went to see Zhang Qi to get her to sign the board minutes (referred to below); Zhang Qi told her that she had arranged with Lisa for her to sign documents on the following day.

93.  I accept this evidence of Idy Chui which was not challenged.

94.  On 30th May 2018, Idy Chui went to meet Lisa at Kwai Chung Hospital at the hospital’s car park.  There is no dispute that prior to the meeting, Zhang Qi had told Lisa that there were documents to be signed, although Lisa says that Zhang Qi said they were documents that needed to be submitted to the Inland Revenue Department, whereas Zhang Qi says that she told Lisa they were documents relating to the sale of Kidbrooke.

95.  The documents said to have been signed on this occasion were:

95.1  four copies of Kidbrooke’s audited accounts for 2016/17;

95.2  two copies of Kidbrooke’s management accounts for 2017/18;

95.3  a revised letter dated 23rd May 2018 resigning as director of Kidbrooke; 

95.4  a letter dated 29th May 2018 resigning as secretary of Kidbrooke;

95.5  three copies of undated board minutes of a meeting cancelling share certificate no.2 of Kidbrooke reported as lost by Zhang Qi;

95.6  three copies of board minutes of a meeting dated 10th May 2010 authorising Zhang Qi to make a statutory declaration regarding the loss of title deeds relating to the Fu Hing Property;

95.7  two copies of the Allied Way Guarantee (additional to the copy previously signed).

96.  Lisa accepts that these documents were signed by her (whether on this or some other occasion), but she says that she did not know or approve of the sale of the Share to Allied Way.

B13.  Other events leading up to the completion of the sale of the Share

97.  On 23rd May 2018, Zhang Qi caused Kidbrooke to transfer the Cockloft to Full Tide Investment Group Limited (“Full Tide”), a BVI company which she wholly owned.

98.  Prior to the completion of the sale of the Share, Zhang Qi withdrew funds from Kidbrooke’s bank account; the last withdrawal (of $29,788.42) was made on 21st May 2018, leaving the account with a de minimis balance.  Zhang Qi says that the withdrawal was made as Allied Way was purchasing Kidbrooke for the Fu Hing Property, not its other assets.  I note that under the PSPA, Zhang Qi was to cancel Kidbrooke’s bank accounts.

99.  Zhang Qi executed a deed of assignment dated 29th May 2018 pursuant to which she assigned to Allied Way the shareholder’s loan owed by Kidbrooke to her.[6]  The deed stated the amount of the loan to be $26m.[7]

B14.  Remuneration for IC Accounting and Success Time

100.  Some time in May 2018, prior to the completion of the sale of the Share to Allied Way, Idy Chui proposed, and Zhang Qi agreed, that the latter would pay a fee of $1.4m to IC Accounting for accounting services in relation to the sale of the Share.  The basis of the fee was that it was 1% of the sale price of the Share.

101.  On about 9th May 2018, which was after Zhang Qi and Allied Way entered into the Supplemental PSPA on 3rd May 2018, Victor Cheng asked Zhang Qi to pay Success Time a fee of $6.8m for having introduced Midland Realty’s buyers, as without the competing bid from the buyer for $130m, Allied Way would not have increased its offer to $140m.  Zhang Qi says[8] that Victor Cheng told her that the fee covered, amongst other things, dealing with the legal issues of “kicking the title” and legal costs for dealing with court proceedings which Allied Way had at one point threatened.  (Victor Cheng denied that the fee was sought for legal work.)

102.  There was a subsequent meeting on or about 18th May 2018 between Zhang Qi and Idy Chui[9] at which Zhang Qi asked for a discount, and Idy Chui proposed $5m, to which Zhang Qi agreed.  The figure of “$5,600,000” on the Estate Agency Agreement was crossed out and replaced with the figure of “$5,000,000”.

103.  Shortly afterwards, on 21st May 2018, Idy Chui persuaded Zhang Qi to add a further $900,000 “bonus” to this amount, saying that she and Victor Cheng had done a lot of work to facilitate the deal with Allied Way.

104.  There is a dispute about the nature of the payment of $5.9m.

B15.  Lau Senior’s discovery of the sale of the Share

105.  In the morning of 2nd June 2018, Lau Senior was reading the Sing Tao Daily newspaper published on 31st May 2018 when he was shocked by a report about the purchase of the Fu Hing Property by a buyer for $140m.  He got his family members to carry out a land search and discovered the existence of the PSPA.  He also called his nephew Andy Choi, who in turn called Thomas Szeto to ask whether he knew what had happened; Thomas Szeto said that his firm had not been acting for Lau’s Trust for years.  Lau Senior also called Lisa, who told him that she did not know about the sale of the Fu Hing Property.

106.  At about noon that day, Lau Senior went to the Chinese medicine clinic run by Alan and Zhang Qi; when he arrived, he saw Alan.  Lau Senior says that Alan told him that Zhang Qi was in the toilet; Alan says that he went to look for Zhang Qi in the rooms of the clinic and the toilet.  On both accounts, Zhang Qi did not appear, and eventually it transpired that she had slipped out without telling Alan, even though she had patients waiting to see her.  Alan tried to call her several times, but he was not able to get in touch with her.  Lau Senior told Alan that the Fu Hing Property was his and the sale proceeds were his; he wanted to know whether the proceeds had been deposited to Zhang Qi’s account, and wanted Zhang Qi to give him the proceeds.  Alan says that he told Zhang Qi about this later that afternoon when he managed to get in touch with her.  However, Zhang Qi says that neither she nor Alan was aware of Lau Senior’s complaint on that day.

107.  As Zhang Qi was not at the clinic, Lau Senior wanted to go to the police station.  Alan accompanied Lau Senior to Sheung Shui Police Station to make a report, but the police did not accept Lau Senior’s complaint and did not open a file on this occasion.

108.  Lau Senior then went to the Noble Hill Flat, where Madam Wong, Zhang Qi and Alan lived, and asked Madam Wong to open the safe, as that was where he had kept the title deeds to the Fu Hing Property and Kidbrooke’s company chop.  Both of these were no longer in the safe, although the building plans, which he had kept for memorial purposes, were still there.

109.  Later that night, after discussing the matter with his family, Lisa and Henry (Ming’s husband) accompanied Lau Senior to the police station again.  This time the police opened a file in relation to Lau Senior’s complaint.  Since at the time Lisa and Lau Senior could not get in touch with Zhang Qi, they also reported her as a missing person.

110.  Zhang Qi did not return home to the Noble Hill Flat, and went to a hotel in Wanchai to stay.

111.  At 8:07pm on 2nd June 2018, Lisa sent a message to one of Zhang Qi’s mobile phone numbers:

“ Kiki, 你返嚟啦，你大肚呀，凡事好商量呀”

  (Agreed translation: “Kiki, you come back.  You are pregnant, and everything can be settled through discussion.”)

112.  Then at 8:15pm on 2nd June 2018, Lisa sent two messages to the other of Zhang Qi’s mobile phone numbers:

“Kiki, 你返嚟啦，凡事好商量，可以傾㗎

  你大肚呀”

  (Agreed translation: “Kiki, you come back la, everything can be settled through discussions.  Can be talked [about].

  You are pregnant ah.”)

113.  At 8:26pm, Lisa sent a further message to the first number:

“Kiki, 你肯返嚟，［凡] 事可以解決”

  (Agreed translation: “If you are willing to return, everything can be settled through discussion.”)

114.  Zhang Qi responded at 8:27pm:

“ 對不起，照顧好媽同倫倫”

  (Agreed translation: “Sorry, take good care of mum and Lun Lun [Alan]”)

115.  It is Zhang Qi’s evidence that she was saying sorry for having previously spoken to Lisa on the phone in a tone that was “not that good”, and asking Lisa to look after Madam Wong, as Lau Senior had been scolding her and Alan, and Madam Wong had high blood pressure and kept crying.  She further said that her message was not a response to Lisa’s messages.

B16.  Police investigations

116.  Lisa gave statements to the police on 3rd June 2018, 4th June 2018, 7th June 2018 and 16th October 2018.

117.  Lau Senior gave statements to the police on 4th June 2018, 7th June 2018 and 16th October 2018.

118.  In the evening of 4th June 2018, L&W received a letter from Tai Po Police Station requesting it to withhold any money involved in the sale of the Share as it was suspected to be crime proceeds (“the 04.06.2018 Police Letter”).  The letter stated as follows.

“ To whom it may concern,

Request for Withholding Crime Proceeds

  District Crime Squad Team One of Tai Po District are currently investigating a case of “Fraud” … In this case, a female F/ZHANG Qi, who is believed to be your client, is suspected to have sold properties, worth $140,000,000-HKD, without permission of the owner of the properties.  Since the transaction was dealt with by your firm, I am hereby writing to ask you to withhold any money involved in the transaction as [the] money is suspected to be crime proceeds.

2.  Should you have any query, please contact Detective Inspector….”

119.  In the evening of 4th June 2018, Eric Wong of L&W called Victor Cheng, regarding a call he had received from a police officer at Tai Po Police Station, asking him to help invite Zhang Qi to attend the police station.  Victor Cheng says that he asked Eric Wong to get more information from Zhang Qi, but that he did not hear further until the evening of 5th June 2018.

120.  The 04.06.2018 Police Letter was forwarded by a clerk at L&W to Idy Chui and Victor Cheng, with a copy to Eric Wong, in an email of 5th June 2018 at 9:54am.  The email read: 

“ Dear Idy / Victor,

  Please see attached.”

121.  Victor Cheng says that he did not receive this during the day as he was conducting a trial that day.  He did however read it later in the day as Eric Wong called him to tell him about the letter, and to ask for his availability to attend Zhang Qi’s police interview.

122.  Idy Chui says that she did not receive the email with the 04.06.2018 Police Letter on the day of 5th June 2018.  As I will explain below, I find this piece of evidence to be untrue, and find that Idy Chui received and read the email, and the 04.06.2018 Police Letter, before she went to the bank on 5th June 2018 to “mark good” the cheques for $1m, $1.68m and $5m referred to below.

123.  Meanwhile, Zhang Qi received a call from the police telling her that she had been reported as a missing person, and that she needed to go to a police station to cancel the report – any police station would do.  She went to the police station in Wanchai to cancel the report, but the officer there told her to go to Tai Po Police Station.  Zhang Qi says that she found this strange so she called Eric Wong of L&W, being the only solicitor that she knew at the time, and asked him to accompany her to Tai Po Police Station.  The call was made on 5th June 2018.

124.  In the evening of 5th June 2018, Eric Wong called Victor Cheng, asking for his availability to join Zhang Qi’s interview at the Tai Po Police Station regarding Zhang Qi’s sale of the Share.  Victor Cheng said that he could be available for this purpose in the evening of 6th June 2018.  Victor Cheng said that whilst Eric Wong had indicated that it was not actually necessary for him (Victor Cheng) to go as he himself could go, the “usual practice” of Eric Wong (and also Daniel Ng of Oi Wah) was that “they would honour me to participate in those work related to the lay client that introduced by me, so Eric proposed that I better go, because I [Eric Wong] am willing to share the cost [fees] with you”.[10]

125.  After talking to Eric Wong, Victor Cheng then called Idy Chui to tell her that Zhang Qi, a client of Success Time, had been invited to the police station the next day.  Idy Chui told Victor Cheng that Zhang Qi had told her on the previous day (4th May 2018) that she had been reported as a missing person.  Victor Cheng called Eric Wong again to pass on this information.

126.  In the late afternoon of 6th June 2018, Zhang Qi, accompanied by Eric Wong of L&W and Victor Cheng, attended her first cautioned interview at Tai Po Police Station.  Victor Cheng says that prior to the interview, the police informed him and Eric Wong about the allegation against Zhang Qi, namely, that she was suspected of having used dishonest means to procure Lisa to sign documents leading to the transfer of the Share, and that the police did so in accordance with their usual practice so that the lawyers could take instructions from their client ahead of the interview.  The transcript of the interview, together with the transcripts of her subsequent cautioned interviews on 11th June 2018, 18th October 2018, 28th February 2019 and 10th April 2019, were disclosed in these proceedings.  At these subsequent interviews, Zhang Qi exercised her right to silence and did not answer the questions put to her.

B17.  The Sale Proceeds

127.  As mentioned, the sale of the Share was completed on 29th May 2018.  L&W received the proceeds of $140m (“the Sale Proceeds”) on behalf of Zhang Qi.

128.  $80m of the Sale Proceeds was stakeheld by L&W pending completion of all formalities and confirmation from the Samoan agent that all was in order.  This amount was subsequently caught by the injunction obtained against Zhang Qi on 25th June 2018, and was paid into court on 29th October 2020.

129.  $1m was further stakeheld by L&W for payment of any tax liabilities in connection with the sale of the Share.

130.  $100,000 was retained by L&W as security money for settlement of the apportionment account.  This amount, together with the aforesaid $1m, was subsequently paid into court on 7th July 2022, on the basis that the sums formed part of the Sale Proceeds held by L&W for Zhang Qi.

131.  $26,963,332 of the Sale Proceeds was paid by L&W to Future Stars to repay the Future Stars Loan and associated costs and disbursements.

132.  $966,100 was paid to Tam & Partners as transfer of rental deposits to Allied Way.

B17.1 Transfer to Zhang Qi

133.  The remaining amount of $30,970,568 of the Sale Proceeds was deposited by L&W into Zhang Qi’s Standard Chartered savings bank account (which had a negligible balance prior to being credited with this deposit).

B17.2 Transfer to IC Accounting

134.  Zhang Qi then drew a number of undated cheques on her current account (which had a nil balance prior to receipt of any part of the Sale Proceeds) in favour of IC Accounting as follows.

134.1  a cheque for $1.4m credited to IC Accounting’s account on 31st May 2018, to settle IC Accounting’s debit note of 29th May 2018 to Zhang Qi for services relating to the sale of the Share (it will be recalled that Zhang Qi had agreed a fee of $1.4m to IC Accounting for services in relation to the completion of the sale of the Share);

134.2  a cheque for $1.3m credited to IC Accounting’s account on 31st May 2018, for costs on account for IC Accounting to assist in Zhang Qi’s acquisition of a property at Po Shing Mansion in Tai Ho Road;

134.3  a cheque for $2m credited to IC Accounting’s account on 31st May 2018, for IC Accounting to handle in connection with the purchase of a property on Zhang Qi’s behalf;

134.4  a cheque for $900,000 credited to IC Accounting’s account on 31st May 2018, in payment of the “bonus” for services rendered by Success Time to Zhang Qi;

134.5  a cheque for $1m, credited to IC Accounting’s account on 5th June 2018, to pay (on behalf of Zhang Qi) for legal fees charged by L&W in relation to the sale of the Share;

134.6  a cheque for $1.68m, credited to IC Accounting’s account on 5th June 2018, to make payments on behalf of Zhang Qi;

134.7  a cheque for $5m, credited to IC Accounting’s account on 5th June 2018, to pay for services rendered by Success Time to Zhang Qi.

135.  In other words, IC Accounting received $13.28m of the Sale Proceeds, of which $1.4m was received beneficially, $5.9m was received on behalf of Success Time as it did not have a bank account, and the remainder ($5.98m) was to be dealt with on behalf of Zhang Qi (or her company Sharp Control Limited).

B17.3 Disposal of the $13.28m

136.  The $13.28m received by IC Accounting was further paid out as follows.[11]

137.  $250,000 (of the $1.4m received beneficially by IC Accounting) was used to pay various expenses of IC Accounting.

138.  $2,053,000 was received by Idy Chui.

138.1  She transferred a total of $1.15m (of the $1.4m received beneficially by IC Accounting) to her own account:

(a)  $600,000 on 4th June 2018;

(b)  $100,000 on 5th June 2018;

(c)  $400,000 on 6th June 2018;

(d)  $50,000 on 29th June 2018.

138.2  Success Time resolved to pay Idy Chui in her capacity as director a sum of $1m as remuneration for the Fu Hing Property transaction.  Idy Chui caused IC Accounting to pay out the total sum of $903,000 (being part of the $5.9m received on behalf of Success Time) at her direction between the dates of 7th June 2018 and 8th November 2018).  (The remaining $97,000 was not dealt with.)

139.  $4,900,000 was received by Victor Cheng.

139.1  Success Time resolved to pay Victor Cheng in his capacity as director a sum of $400,000 as remuneration for the Fu Hing Property transaction.  Idy Chui caused IC Accounting to pay out the total sum of $400,000 to Victor Cheng on 7th, 14th and 28th June 2018.

139.2  Out of the $920,000 paid by IC Accounting to L&W on about 25th June 2018 (see below), $500,000 was on-paid to Victor Cheng, as counsel’s fee for advising Zhang Qi in relation to the transfer of the Share.

139.3  On about 9th July 2018, Success Time resolved to lend $4m to Victor Cheng.  Idy Chui caused IC Accounting to pay $4m to the account of L&W as directed by Victor Cheng.  Victor Cheng used part of this sum to acquire properties in the name of his former wife, the 6th Defendant, Zheng Yiling (“Zheng Yiling”).

140.  On 20th June, 26th June, 13th July and 26th July 2018, a total of $600,000 was paid out at the direction of Success Time, being remuneration to one Lam Kam On Keith, and loans to one Lam Choi Kee Limited.

141.  $920,000 was paid to L&W on about 25th June 2018.

142.  $201,100 was paid to Lui & Law in May and June 2018 in relation to the transfer of the Cockloft to Full Tide.

143.  $684,320 was paid to the Hong Kong Government on 21st June 2018 to settle Kidbrooke’s tax liabilities.

144.  $281,891, said to have been held for Zhang Qi, has been paid into court pursuant to the court’s order of 6th June 2022.

145.  $2,593,689, remaining in IC Accounting’s account, has been frozen by the Joint Finance Intelligence Unit (“the JFIU”).

B17.4 Involvement of Zheng Yiling

146.  From the $4m which Victor Cheng borrowed from Success Time, Victor Cheng used $850,000 (in July 2018) and $1,040,000 (in September 2018) to buy two car park spaces and a storage unit in the name of Zheng Yiling (“the Carparks and Storage Unit”).

147.  In closing submissions, each of the Defendants confirmed that the payments which they had received, and which were claimed by Lisa, were traceable as being proceeds from the sale of the Share.  More specifically:

147.1  Zhang Qi agreed that the $140m received by L&W on her behalf from Allied Way could be traced as being proceeds of the sale of the Share;

147.2  D2-D4 and Victor Cheng agreed that the $13.28m deposited into IC Accounting’s account from cheques drawn on Zhang Qi’s account, and the onward payments therefrom to Idy Chui, Success Time and Victor Cheng, could be traced as being proceeds of the sale of the Share;

147.3  Zheng Yiling said that she did not know the source of Victor Cheng’s funds used to provide her with the amount used to purchase the Carparks and Storage Unit, but she did not dispute that they could be traced as being proceeds of the sale of the Share.

148.  The parties also lodged an “Agreed Funds Flow Document” which set out the identities of persons to whom the Defendants say they made further payments from the aforesaid receipts, together with the dates and amounts on which these payments were made. Some of these have been set out above.

B18.  The course of these proceedings

149.  Lisa commenced the current proceedings on 15th June 2018.  She obtained ex parte injunctive relief against Zhang Qi on 25th June 2018, including a proprietary injunction restraining Zhang Qi from disposing of the Sale Proceeds, and a Mareva injunction restraining Zhang Qi from removing any of her assets up to $110m from Hong Kong.  The injunction was continued on an inter partes basis on 29th June 2018.  As mentioned earlier, $80m in the L&W clients’ account was frozen, and subsequently paid into court on 29th October 2020; and a further $1.1m, said to be held by L&W for Zhang Qi, was paid into court by L&W on 7th July 2022.

150.  $281,891 was paid into court by IC Accounting on 6th June 2022, also as mentioned earlier.

151.  In view of his advanced age, Lau Senior’s evidence was taken in the form of a deposition over two days in December 2024.  The parties thereafter agreed that the witness statements of Lau Senior filed herein and the transcript of the deposition would stand as Lau Senior’s evidence, and that he would be excused from giving further evidence at trial.

C.  THE ISSUES

152.  The indiscriminate pleading of claims has unnecessarily shrouded the real issues which arise in this case, with a corresponding loss of focus in the evidence and submissions.  

153.  I take this opportunity to remind practitioners that they would do their clients a service by carefully considering at an early stage of the proceedings what causes of action can properly be pleaded and sustained both on the facts and in law, rather than adopting a “kitchen sink” approach.  A plaintiff’s claim should be thought out before it is committed to paper, and should not be left until trial to be refined.  Defendants should equally be realistic about what can and ought to be resisted.  Cluttering up the real issues with unnecessary ones not only increases costs, but causes delay by generating additional interlocutory steps and evidence, and lengthening trial time.

154.  During the course of the trial,[12] Mr Brown indicated that he would no longer be pursuing:

154.1  the claim against Zhang Qi for negligent misrepresentation or breach of the Misrepresentation Ordinance (Cap.284);

154.2  the claim against Zhang Qi for conversion of the Share;

154.3  the claim against Zhang Qi that the transfer of the Share failed for failure of consideration;

154.4  the claim against Zhang Qi for misrepresentation on 23rd May 2018, against Idy Chui for misrepresentation on 24th May 2018, and against Zhang Qi for “rescission” of the letter signed by Lisa dated 23rd May 2018 giving notice of resignation as Kidbrooke’s director;

154.5  the claim against Zhang Qi for misrepresentation on 29th May 2018, against Idy Chui for misrepresentation on 30th May 2018, and against Zhang Qi for “rescission” of the letter signed by Lisa dated 29th May 2018 giving notice of resignation as Kidbrooke’s secretary;

154.6  the claim against Idy Chui for breach of fiduciary duty;

154.7  the claim against Zhang Qi for relief arising out of the transfer of the Cockloft to Full Tide;

154.8  the claim against Zhang Qi for knowing receipt in relation to the Sale Proceeds;

154.9  the claim of conspiracy against Zhang Qi and Idy Chui;

154.10  the claim that Zhang Qi and Idy Chui were in breach of a duty of utmost good faith to Lisa;

154.11  the claim relying on the doctrine of non est factum in relation to a number of documents signed by Lisa, including her resignation as secretary and resignation as director of Kidbrooke;

154.12  the claim of dishonest assistance against IC Accounting and Idy Chui;

154.13  the claim for unlawful means conspiracy against Zhang Qi, IC Accounting and Idy Chui;

154.14  the claim that Success Time acted in breach of the Estate Agents Ordinance (Cap.511) such that it could not be a bona fide recipient for value of the $5.9m paid to it; and

154.15  the claim against Zheng Yiling for repayment of a $50,000 loan.

155.  Doing the best that I can, it seems to me that the following of the parties’ sixty-four agreed issues remain live and necessary for determination.

C1.  Factual issues

156.  Was Kidbrooke set up and funded by Lau Senior as “trustee” for “Lau’s Trust” with the ultimate beneficiaries being Lau Senior’s sons, or by Alan’s parents to hold and manage assets for the benefit of Alan?

157.  How was Kidbrooke operated and managed?

158.  In relation to the transfer of the Share from Lisa to Zhang Qi:

158.1  whether it had been agreed between Lisa, Zhang Qi, Alan and Alan’s parents that the Share would be transferred to Zhang Qi;

158.2  whether the Disputed Instruction purporting to state Lisa’s reasons for transferring the Share was signed by Lisa;

158.3  whether Lisa signed documents to effect the Share Transfer (of the Share to Zhang Qi) by reason of Zhang Qi’s fraudulent misrepresentations;

158.4  whether Lisa signed documents to effect the Share Transfer by reason of Zhang Qi’s undue influence.

159.  Whether Lisa signed documents to enter into the Oi Wah Loan by reason of Zhang Qi’s fraudulent misrepresentations.

160.  Whether Lisa was aware of and consented to the sale of the Share to Allied Way, and the execution of the PSPA and Supplemental PSPA for the sale of the Share.

161.  In relation to the Future Stars Loan:

161.1  whether Lisa knew of and approved the loan;

161.2  whether the $5m paid by Kidbrooke to Lau Senior from the proceeds of the Future Stars Loan was paid as a loan or for some other reason;

162.  Whether Lisa understood the further documents relating to the sale of the Share signed by her on 21st May, 24th May and 30th May 2018.

163.  The time at which Idy Chui learnt of the contents of the 04.06.2018 Police Letter.

164.  The nature of the payment of $5.9m received by Success Time.

C2.  Issues relating to the relief claimed by Lisa

165.  Whether Zhang Qi is liable in damages to Lisa for fraudulent misrepresentation.

166.  Whether Lisa can rely on the doctrine of non est factum in relation to the documents signed to effect the Share Transfer.

167.  Whether Zhang Qi is liable for breach of fiduciary duty to Lisa by reason of being the latter’s agent.

168.  Whether Zhang Qi held the Share or Sale Proceeds on constructive trust for Lisa after 8th May 2017.

169.  Whether the 2nd to 6th Defendants hold any part of the Sale Proceeds, and Zheng Yiling the Carparks and Storage Units, on constructive trust for Lisa.

170.  Whether Zhang Qi was unjustly enriched at Lisa’s expense by the Share Transfer and receipt of the Sale Proceeds.

171.  Whether the 2nd to 6th Defendants were unjustly enriched at Lisa’s expense by the receipt of part of the Sale Proceeds.

172.  Whether IC Accounting or Idy Chui is liable to Lisa in knowing receipt for $13.28m.

D.  FINDINGS OF FACT

173.  In this section, I resolve the factual issues identified above.

D1.  Relevant principles

174.  The credibility of the parties and their witnesses is of critical importance in the present case.

175.  Counsel for Zhang Qi, Mr Andrew Lynn (appearing with Mr Peter Chung and Miss Karvis Lam), rightly points out that the main difficulty facing Lisa in the present case is that she signed the documents for the Share Transfer, and indeed other documents; and Lisa is an educated professional sufficiently conversant in English to have been able to understand the documents she signed.  I have therefore closely scrutinised her claims of having been deceived, and applied a healthy dose of scepticism to those claims.

176.  I have also borne in mind that even if I should reject Zhang Qi’s evidence, it does not necessarily follow that Lisa’s version of events is more probable than not, or that it should be accepted.  Cf. Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd, unreported, HCA 1957/2005, 28th July 2011 (Poon J, as he then was) at [16] to [19].

177.  Furthermore, Lisa’s allegation of having been deceived by Zhang Qi is a very serious one.  The more serious an allegation is, the less likely it is to have occurred, and hence, the more cogent the evidence will need to be to overcome the unlikelihood of what has been alleged and to establish the allegation on the balance of probability: Re H and others (Minors) [1996] AC 563 at 586E-H (Lord Nicholls).

178.  At the same time, however, I have borne in mind that “Fraudsters rarely sit down and reduce their dishonest agreement to writing.  Frauds are commonly proved on the basis of inviting the fact-finder to draw proper inferences from the primary facts”: Dadourian Group International Inc v Simms [2009] 1 Lloyd’s Rep 601 at [89] (Arden LJ).

179.  In this regard, in China Medical Technologies, Inc and others v Wu Xiaodong and others [2026] HKCFI 276 at [124], E Fung J identified a number of relevant principles in relation to the drawing of inferences, including the following:

“(1)  “[In a civil case] you need only circumstances raising a more probable inference in favour of what is alleged.  In questions of this sort, where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture … But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise ...”: Luxton v Vines (1952) 85 CLR 352 at 358 (Dixon, Fullagar and Kitto JJ) citing Bradshaw v McEwans Pty Ltd (1951) (Unreported), quoted in Nina Kung at [185] (Ribeiro PJ).

(2)  Accordingly, an inference may be drawn from “documentary evidence and known or probable facts” (Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) at §22 (Leggatt J)).

(3)  Where the court is invited to reach a conclusion of fraud or forgery “as an inference to be drawn on the basis of circumstantial evidence, any suchinferencemust be properly grounded in the primary facts found.  The court guards against indulging in conjecture under the guise of drawing aninferencewhere the primary evidence does not logically and reasonably justify the particularinferencein question”:Nina Kungat [185] (Ribeiro PJ).

(4)  Inferences of fraud or serious misconduct are to be drawn only where they are compelling: Nina Kung at [187] (Ribeiro PJ)….”

180.  With these preliminary observations in mind, I set out the general principles I have also followed when assessing the witnesses’ evidence.  These were summarised in Hui Cheung Fai v Daiwa Development Ltd, unreported, HCA 1734/2009, 8 April 2014 at [77] to [83] (DHCJ Eugene Fung SC, as he then was).  In particular:

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

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

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

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

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

181.  I have also had regard to the summary of relevant principles made by HH Judge Simon Barker QC in Northampton Borough Council v Cardoza and others [2019] BCC 582:

“ 36. As to the considerations applicable to evaluating evidence, a useful starting point is Goff J’s (as he then was) observation as to resolving conflicts of evidence in Armagas Ltd v Mundogas SA (The Ocean Frost) [1985] 1 LL Rep 1 at p.57:

‘ … Where there is a conflict of evidence … reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth’.

37. Factors relevant to the evaluation of a witness’s evidence were identified by Lewison J (as he then was)in Painter v Hutchinson [2007] EWHC 758 (Ch) at [3] when addressing the unsatisfactory nature of the defendant’s approach to giving evidence.  These included: evasive and argumentative answers, tangential speeches avoiding the question, blaming legal advisers for pleading, disclosure and evidence shortcomings, self-contradiction, internal inconsistency, shifting case, new evidence, and selective disclosure.  This was not intended to be an exhaustive list, but it is important and very helpful.

38. A useful recent reminder or guidance on the approach to the evidence of factual witnesses, and expanding on the guidance given by Goff J in The Ocean Frost, was given by Leggatt J (as he then was)in Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm).  After noting that human memory is fallible and that the process of litigation and preparing for trial tends to interfere further with the reliability of human memory, particularly where a lawyer has had a hand in drafting a witness’s evidence and the witness’s memory has been refreshed by reading documents, Leggatt J concluded that the best approach for a judge to adopt at the trial of a commercial case is to base factual findings on documentary evidence and known or probable facts and the inferences to be drawn therefrom.  Witness evidence, written and oral, is not without purpose; but, its principal uses are to subject the documentary record to scrutiny and to evaluate the witness’s motivations, personality and working practices.[13]

39.  In similar vein, in the recent case of Freemont (Denbigh) Ltd v Knight Frank LLP [2014] EWHC 3347 (Ch) reference was made to an article written by Bingham J (as he then was) entitled ‘The Judge as Juror: The Judicial Determination of Factual Issues’ published in [1985] 38 Current Legal Problems 1-27.  Bingham J considered the approach to deciding upon the reliability of a witness’s evidence and regarded the following to be helpful indicators of where the truth lies: the consistency of the witness’s evidence with what is agreed, or clearly shown by other evidence, to have occurred; the internal consistency of a witness’s evidence; and, the consistency of a witness’s evidence with what (s)he has said or deposed on other occasions. Bingham J considered that the credit of a witness in matters not germane to the litigation was of less assistance, and that the demeanour of a witness was on the whole not a reliable pointer to a witness’s honesty.”

182.  I have further borne in mind the reminder of K Yeung J in Siao Miu Hua v Wu Ching Kuen [2024] HKCFI 232 at [84] that:

“ It is essential to have regard to the entirety of a witness’ evidence.  A witness can make mistakes, but the mistakes do not necessarily affect other parts of his evidence.  Likewise, a witness may lie.  However, lies themselves do not mean necessarily that the entirety of that witness’ evidence is to be rejected.  A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie”.

D2.  How Kidbrooke was set up and funded

D2.1  The actual setting up of Kidbrooke

183.  Lau Senior gave evidence that he was interested in reducing the estate duty payable on his death.  He said that in about November 1997, he was advised by his nephew Andy Choi, who was an accountant in Hong Kong, that he could avoid estate duty by setting up a trust.  It is not disputed that Andy Choi introduced him to his former tax practitioner colleague Thomas Lee (“Thomas Lee”), who had helped other clients to set up such trusts.  Thomas Lee, and (solicitor) Thomas Szeto from PSWC, helped Lau Senior to set up Kidbrooke, a company incorporated in West Samoa.  Thereafter, PSWC was responsible for handling conveyancing and tenancy matters relating to Kidbrooke’s properties, and Thomas Lee was responsible for dealing with accounting and secretarial matters.

184.  When Andy Choi gave evidence at trial, he was challenged as to the inconsistency between his saying (in his statement) that Lau Senior had wanted to deal with the high rate of estate tax in Canada and Lau Senior’s witness statement saying that he was advised by Andy Choi when Hong Kong still had estate duty.  I accept Andy Choi’s explanation that there was no inconsistency in that what he had been talking about in his statement was advising Lau Senior to set up a trust to assist with Canadian estate duty (Lau Senior being a Canadian citizen), whereas Lau Senior had been talking about setting up a trust to achieve his purpose of reducing estate duty generally, including Hong Kong estate duty.

185.  It is not disputed (and I find) that in late November or early December 1997, Andy Choi arranged a meeting between Lau Senior, Thomas Lee, and a manager working under Thomas Lee, Chung Kit Ling Elaine (“Elaine Chung”).  Andy Choi also attended the meeting.  He says, and I accept, that there was discussion about Lau Senior’s wish to set up a trust for (inter alia) succession planning and asset protection, the assets in question consisting mainly of real property in Sheung Shui held for rental purposes, the structure of the trust, the procedures for transferring the properties to the trust, and the beneficiaries of the trust being Lau Senior’s sons and mother.  I also accept Andy Choi’s evidence that at this meeting, Elaine Chung advised Lau Senior to use an offshore company as the trustee vehicle and not to appoint a professional trustee to save costs, and that Lau Senior asked to appoint Lisa as shareholder and director of the company.

186.  It is Elaine Chung’s undisputed evidence (and I find) that at this meeting, she advised Lau Senior to consider the sale of the Fu Hing Property to the trustee vehicle; that at the time, it was common to use an offshore company for reasons of confidentiality, administrative convenience and cost; that Lau Senior told her that he had liquid funds of about $4.6m which could be used; and that Elaine Chung suggested to Lau Senior that he could gift the cash to the trustee vehicle which would then buy the Fu Hing Property at the market value of $20m by having the liquid funds flow around in five to six rounds.

187.  It is not disputed (and I find) that about one or two weeks later, there was a second meeting between Lau Senior, Lisa, Andy Choi and Elaine Chung, at the latter’s office.  At this meeting, Lisa was introduced to Elaine Chung, who explained to Lisa her role in handling matters relating to Kidbrooke for Lau Senior.  It was put to Andy Choi that there was an inconsistency between (on the one hand) his saying that Lisa indicated that she understood the trust structure, her role in the trust and her willingness to manage the trust, and (on the other hand) Lisa saying in her affidavit evidence that she did not know why Lau Senior set up Kidbrooke and that she had no concept of a trust; all that she knew was that Kidbrooke’s properties belonged to Lau Senior and that she was to act as Kidbrooke’s sole director and shareholder, signing documents on his behalf as he was not always in Hong Kong.  It did not seem to me that there was any real inconsistency.  The point is that Lisa was told what her role was, and she agreed to perform it.

188.  It is Elaine Chung’s undisputed evidence (and I find) that she set up Kidbrooke, with Lisa appointed as the sole shareholder and director on 8th December 1997; that she arranged for Lau Senior to open accounts at the Jersey Branch of the Bank of America with Lisa as Kidbrooke’s sole authorised signatory; that there were discussions between her, Lau Senior, Lisa and the officer of the Bank of America regarding the opening of time deposit accounts in the name of Lau Senior and the timetable for fund transfers from Lau Senior to Kidbrooke for the purchase of the Fu Hing Property; that Elaine Chung prepared a chart showing a summary of the trust arrangement and fund flow statement accordingly; that she prepared instructions for Lau Senior to transfer funds from his time deposit account at the Bank of America to Kidbrooke as cash gifts in six rounds, totalling $20m; that she prepared instructions for Kidbrooke to transfer funds in six rounds, totalling $20m, to Lau Senior in settlement of the purchase price of the Fu Hing Property; that she prepared an instruction for Kidbrooke to the Bank of America to transfer $576,410 to PSWC to pay the legal fees and stamp duty for the purchase; that the various draft instructions were sent to the Bank of America for checking; that Elaine Chung arranged for Lau Senior and Lisa to sign the instructions thereafter; that the Fund Flow Chart was sent to Thomas Szeto for his reference and comments; and that the funds used in the purchase exercise were transferred to and from Lau Senior’s time deposit account and Kidbrooke’s account in a series of round-robin transactions.

189.  It is also not disputed that Lau Senior (as settlor) and Lisa (on behalf of Kidbrooke as trustee) signed a Deed of Settlement for “The Lau’s Trust” dated 15th December 1997, pursuant to which Lau Senior settled money and other property on trust for his three sons as beneficiaries, with Kidbrooke as the trustee.

190.  What Elaine Chung was cross-examined about was the fact that she did not prepare a set of trust accounts for Kidbrooke in addition to a set of corporate accounts.  The suggestion was that there was not really a trust as claimed.  I did not find this to be particularly significant.  As Elaine Chung explained, Kidbrooke simply owned some properties which earned rental income; Kidbrooke had expenses such as the payment of management fees and rates for the property.  There was no real need for a separate set of accounts (in addition to Kidbrooke’s accounts).

191.  Pausing here, I would observe that the present claim is not one for breach of the trust known as Lau’s Trust.  Thus questions of whether or not Lau’s Trust was a trust properly so called or a mere “phantasm”, whether not the trust was professionally set up and managed, whether or not the trust was operated simply on the orders of Lau Senior contrary to the terms of the trust deed or the beneficiaries’ interests, whether or not the establishment of the trust meant that Lau Senior could no longer have any interest in the properties transferred to Kidbrooke, and so on, are beside the point.  Rather, the importance of the evidence regarding the setting up of Lau’s Trust lies in its showing the source of the funds for Kidbrooke’s acquisition of its properties, and how it therefore sheds light on whether Lisa’s or Zhang Qi’s version of events is the true one.

192.  The most important property held by Kidbrooke was the Fu Hing Property.  Alan’s first witness statement claimed that Lau Junior (his father) had bought Lau Senior’s properties from him in the name of an overseas company to avoid being harassed by property agents, that they had asked Lau Senior to help them set up the overseas company, and that they had asked Lisa to hold the company in her name as Alan was still studying and his parents worried that he would be cheated.  His second witness statement sought to supplement this by saying that his mother obtained the funds to buy Lau Senior’s property by selling all their stocks and withdrawing a large amount of money from the bank.  He claimed to recall that over $6m in cash was withdrawn from two time deposits for this purpose, that he accompanied his mother to carry out the withdrawals and that she transferred the money to Lisa’s account, with Lisa then transferring the money to a law firm to complete the transaction.

193.  It was in response to this claim of Alan’s that Elaine Chung made her supplemental witness statement, saying that Alan’s claim of his mother having withdrawn $6m and deposited it in Lisa’s account who then transferred it to a law firm in order to buy the Fu Hing Property from Lau Senior was inconsistent with what she (Elaine Chung) did.  Elaine Chung explained (as outlined above) her advice to Lau Senior regarding the use of an offshore company, her setting up of Kidbrooke, the opening of Kidbrooke’s bank account, and the round-robin transactions with Lau Senior’s cash to effect Kidbrooke’s property purchase from Lau Senior.  Elaine Chung further produced a number of documents in support of her account, explaining that she had retrieved them from a hard disk which had all along been kept in her office and which recorded all of her professional work from since before 1997.  She was cross-examined as to how she could be sure that the printouts placed before the court were faithful reproductions of what was stored on the hard disk.  I accept her evidence that they were accurate reproductions, given her personal involvement in handling matters relating to Kidbrooke from inception until 2017, given that the hard disk had all along been stored in her office, and given that she was the one who personally recovered the documents from the hard disk.

194.  The documents produced were:

194.1  a written directors’ resolution of Kidbrooke, signed by Lisa and dated 8th December 1997, resolving to open a bank account with the Bank of America with Lisa as Kidbrooke’s sole authorised signatory;

194.2  a chart summarising the trust arrangement, showing Lau Senior as gifting cash to Lau’s Trust to purchase various properties including the Fu Hing Property;

194.3  a fund flow statement (“the Fund Flow Statement”) with a detailed timetable showing that $4.6m of funds were to be deposited by Lau Senior into his offshore bank account, and then multiple round-robin transfers of part or all of these funds to Kidbrooke’s offshore bank account and back, with part of the funds used to pay stamp duty and legal fees, and interest being earned on a monthly basis;

194.4  draft instruction letters to the Bank of America to be signed by Lau Senior to effect transfers to Kidbrooke’s account;

194.5  draft instruction letters to the Bank of America on behalf of Kidbrooke to effect transfers to Lau Senior’s account and to transfer funds to PSWC (in the amount identified in the Fund Flow Statement for stamp duty and legal fees);

194.6  a fax cover sheet from Elaine Chung to a Bank of America trustee company, asking for comments on the draft instruction letters prior to their being signed;

194.7  a fax cover sheet from Thomas Lee to Thomas Szeto of PSWC, enclosing proposed payment terms for the $20m purchase, a fund flow statement between Lau Senior and Kidbrooke (presumably the Fund Flow Statement), corporate documents relating to Kidbrooke such as its certificate of incorporation, and a request for details of the account to which the amount of stamp duty and legal fees were to be remitted; and

194.8  an index of these and other documents prepared between December 1997 and March 1998.

195.  Elaine Chung further explained that the funds transferred by Lau Senior to Kidbrooke were gifts, and that Kidbrooke then used the funds to pay Lau Senior for the purchase of his properties.  She said that she told Thomas Szeto that the settlement of the purchase price would be done at her side as she had Kidbrooke’s authorisation to transfer funds.  She said that on the dates of the transfers, she gave the pre-signed instruction letters to her staff to send to the Bank of America to effect the transfers.  She explained that she therefore believed that Lisa did not actually make any payment (as claimed by Alan) for the purchase of the Fu Hing Property.  She pointed out that Kidbrooke’s bank statements would show that the funds had come from Lau Senior’s account, but Zhang Qi had failed to disclose the critical statements from December 1997 and February to March 1998.[14]  Elaine’s understanding of Kidbrooke’s purchase of the Fu Hing Property, as just explained, was not challenged in cross-examination.

196.  I generally accept Elaine Chung’s evidence, in particular where it was not challenged.  She was the one who set up Kidbrooke and who handled its affairs from inception until 2017; the one who set up the trust arrangement, and the one who arranged for the transfers of funds between Lau Senior’s account and Kidbrooke’s account. She has no interest in the outcome of the present litigation.  No possible motive has been put forward as to why she should not be telling the truth.  She was unshaken in cross-examination.

197.  I reject Alan’s version of events as to how Kidbrooke was set up and funded, for a number of reasons.

198.  First, it is inconsistent with the unchallenged evidence of Elaine Chung and the contemporaneous documents produced by her.  I consider that this evidence is of great probative value.  Elaine Chung is a disinterested witness.  The documents were created long before the disputes between the parties arose.

199.  Second, Alan’s evidence about the matter was (at best) uninformative and (at worst) illogical.

199.1  He said he was not involved in the discussions about who would be Kidbrooke’s shareholder and director.

199.2  He did not know who set up Kidbrooke’s bank account or who would be its authorised signatory for its bank account.  He could not explain why, if his parents liked banking with Dao Heng Bank at the time and were familiar with its manager, Kidbrooke opened an account with Bank of America rather than with Dao Heng.

199.3  He could only put forward surmises as to why, if his mother was worried that he would be cheated, Kidbrooke’s share was not held by Lau Junior instead of Lisa, particularly since (on his case) his parents had experience dealing with property but Lisa was only just starting her career as a doctor.

199.4  He had no idea that one of the first things Kidbrooke was to do upon its establishment was to buy the Fu Hing Property.

199.5  He claimed in his second witness statement that he accompanied his mother to withdraw over $6m in cash to pay for Lau Senior’s properties.  When asked about this (since the Fu Hing Property was acquired for $20m), he claimed that in fact he had already said in his first statement that $20m had been saved for the purpose, but in fact his first statement did not say this, and he could not identify where he had supposedly said it.  In re-examination, Alan embellished his evidence to say that he was tasked by his mother with ensuring that the money to be transferred from his mother’s account to his sister’s account was more than $20m, and to take out the physical shares from the safe deposit box and to realise the shares.  He went into great detail about how unexpectedly complicated it had been for him to count the number of shares referred to in each share certificate, to buy a newspaper to check the share price, to deposit the share certificates with a brokerage, to wait for payment for shares successfully sold, to check the amounts of the cheque payments received against his list of shares, and so on.  None of this had been mentioned in either of his witness statements.  It is difficult to see why he would not have mentioned these matters if they had made the vivid impression on his memory that he sought to portray in the witness box.

199.6  He could not explain why the money for purchase of Lau Senior’s properties had to be transferred (as he claimed) by his mother to Lisa, and then by Lisa to the solicitors’ firm, rather than transferred directly to the solicitors.  If Lau Junior’s parents were providing the purchase price for the Fu Hing Property, it is difficult to understand why they would not have provided this to the solicitors directly.  This is particularly so if, as Alan sought to emphasise in the witness box, his mother tasked him with checking that the money was being transferred to the correct account number for Lisa’s account.  It is difficult to see why his mother did not avoid the risk of inaccuracy by simply transferring funds directly to the solicitors rather than routing it through Lisa.[15]

199.7  He claimed in his witness statement that if Lau Senior had really set up Lau’s Trust as claimed, then he must have done so secretly, concealing the matter from Lau Junior’s family.  He agreed that this would include concealment from Lisa, but then he was unable to reconcile this evidence with the documents signed by Lisa in 1997 showing that she must have known about the trust.

199.8  He could not provide any explanation as to why Lau Senior would have been gifting substantial amounts of money to Kidbrooke.

200.  Incidentally, as regards Alan’s evidence, it is noteworthy that Alan did not initially put forward any witness statement in these proceedings.  It was only after the parties had exchanged and filed two rounds of witness statements, spanning November 2019 to March 2021, that Alan finally made a witness statement in April 2021.  He claimed that he did not speak out earlier as he “could not make up [his] mind to break with [his] eldest sister”, valued “family love”, and did not want his family members becoming enemies over money.  He said that he had thought that he should stay silent to protect his family, even though this was cruel and unfair to his wife.  In cross-examination, he claimed that he had refrained from making a statement as this would have made it more difficult for Lisa to have withdrawn her claim as his conflict with her would then have become obvious.  I do not accept that he refrained from making a statement to avoid fanning the flames, since he himself said that he “spent a lot of time” checking bank account information, and reviewed with his mother and Zhang Qi “the special events of the family and the use of [Kidbrooke’s] funds over past years to help [Zhang Qi] prepare [her] supplemental witness statement”,[16] which can hardly have helped to de-escalate the parties’ dispute.  If he had evidence to support Zhang Qi’s claim that Lau Junior had provided $20m to purchase the Fu Hing Property, it is difficult to see why he refrained from putting that forward whilst at the same time he looked for bank account and other evidence to support her claim.

201.  Third, Andy Choi says that at the two meetings in late 1997 with Thomas Lee and Elaine Chung, Lau Senior did not say anything to the effect that either Lau Junior or Alan had any interest in the properties to be injected into Lau’s Trust.  I accept this evidence, and indeed accept Andy Choi’s evidence generally, bearing in mind that (1) Andy Choi had, and has, no interest in Kidbrooke; (2) no reason has been suggested as to why Andy Choi might be giving untruthful evidence to favour Lau Senior rather than to tell the truth in support of Lau Junior, both of whom are his maternal uncles (Alan did suggest that Andy Choi might have some bias against his parents, but he could not explain why that might be).

202.  Fourth, Lau Senior was not shaken in cross-examination as to the basic thrust of his evidence, namely, that he was the one who arranged to set up Kidbrooke and injected the Fu Hing Property into it.

203.  Apart from Alan, Zhang Qi had no witness who could purport to speak directly to the setting up of Kidbrooke and the provision of funds for the purchase of the Fu Hing Property.  She herself did not even meet Alan until some years after Kidbrooke was set up.  Neither Lau Junior nor Madam Wong gave evidence at trial.  Whilst I do not draw any adverse inference from their absence,[17] their absence means that neither of the persons who Zhang Qi says earned the money to fund Kidbrooke’s purchase of the Fu Hing Property gave evidence.

204.  Zhang Qi gave hearsay evidence that her understanding was that Lau Junior purchased the Fu Hing Property from Lau Senior, but the hearsay nature of the evidence means that it carries little weight.  Quite apart from that, I find Zhang Qi’s evidence to be unreliable and untruthful, a matter to which I return below.  It is also notable that Zhang Qi (1) did not tell the police, when questioned, that Kidbrooke was set up to hold properties for Alan, or that Madam Wong had supposedly bought the Fu Hing Property from Lau Senior for $20m in 1997, and (2) had initially (wrongly) pleaded that it was Lau Junior who incorporated Kidbrooke to purchase the Fu Hing Property from Lau Senior; it was only later in her witness statement (after discovery of documents) that she said that Kidbrooke was set up by Lau Senior.  She simply did not have first hand knowledge.

205.  I would also observe that my finding that it was Lau Senior who set up Kidbrooke and injected the Fu Hing Property into it for his own purposes is entirely consistent with his shock on discovering the sale of the Fu Hing Property, and Zhang Qi’s evasion of the family at that time and the fact that she never claimed to the police that Kidbrooke was a company owned beneficially by Alan.

206.  Insofar as it was said that Lau Senior did not have more documentary proof of the setting up of Kidbrooke, his ownership of Kidbrooke and Lau’s Trust, Lau Senior explained that after his emigration to Canada, Madam Wong kept bank statements, records of investments, title deeds, share certificates and so on for him at the Lau Junior family home, and this was why Zhang Qi, who lived there, had access to them.  This was not challenged, and I accept it.

D2.2  Whether Lau Junior’s family had the means to fund Kidbrooke’s acquisition of Fu Hing Property

207.  In the absence of direct evidence that Lau Junior’s family provided the funds to buy the Fu Hing Property, Zhang Qi sought to lead evidence to show that Lau Junior’s family had the means to do it.

208.  In the light of my findings above, it is not necessary to go into this issue comprehensively.  Nor is it necessarily probative: even if Lau Junior’s family had the means, this does not mean that it actually funded the purchase.

209.  I will simply address a number of key points relied on by Zhang Qi in support of her argument that Lau Junior’s family was wealthy and owned substantial properties.

210.  Zhang Qi said that the Tung Wah business was profitable and enabled Lau Junior’s family to accumulate wealth to buy properties with cash and without borrowing.  However, she would not have had any direct knowledge of this.  It may be said that Alan was able to speak to this to some extent, since at least he would have been aware, growing up, of his family circumstances.  However, I prefer the evidence of Andy Choi, a disinterested witness, that (1) Lau Junior was an introverted person who did not have the ability to run the Tung Wah business, (2) Lau Senior, as the eldest son of the family, generously looked after his younger siblings’ families (that is, Lau Junior’s family and Andy Choi’s mother’s family) – Andy Choi gave evidence that his mother always spoke of Lau Senior’s generosity to both, purchasing a residential property and shops for Lau Junior’s family.

211.  I also prefer the evidence of Lisa’s two sisters, Lillian and Ming, that they had always understood that their family was not wealthy, and that Lau Senior had generously supported them, for which their family was very grateful.  Lillian said that her and Alan’s university tuition fees were paid for by Lisa (it is true that Alan claimed otherwise, but for reasons I give elsewhere I do not find him a credible witness).  Ming recounted an instance of when her mother was unable to provide even $10,000 towards Alan’s wedding.  Lillian and Ming were not shaken in cross-examination.  I have reminded myself that whilst they are not parties to the proceedings, it may be said that they may have some reason to side with their sister Lisa against their sister-in-law Zhang Qi; indeed, Alan suggested that his sisters might have grievances that he would inherit all the family wealth.  On the other hand, they really have nothing to gain from siding with Lisa: they would not benefit financially; their evidence involved a degree of negative comments as regards Alan and their own parents; and before the events in question, they were by all accounts part of a close-knit family and on good terms with Zhang Qi.  No real reason was identified in cross-examination as to why they might be lying in their testimony.

212.  A number of properties or interests in land were acquired in the name of Lau Junior and/or Madam Wong.

212.1  In 1971, Lau Senior transferred the San Lok Flat to Lau Junior; the stated consideration was $40,000.  Zhang Qi says that Lau Junior bought the flat with his own funds.  However, I accept Lau Senior’s evidence that he gifted this property to Lau Junior, so that he and his mother would have somewhere to live.  He was cross-examined as to why he did not transfer the property by way of a deed of gift.  He explained that he did not need to do something so complicated; he had developed other flats on the piece of land at 28 San Lok Street and he simply wrote down the same price for it as the selling price of the neighbouring flat.

212.2  In 1979, three Letters B were assigned to Lau Junior for the consideration of $40,416, $92,480 and $54,595 respectively.  The parties differed as to the source of the funds for the acquisition and the beneficial ownership of these.  Lisa’s case is that Lau Senior provided the funds for the acquisition.  Zhang Qi’s case is that they were purchased by Alan’s parents using money earned from Tung Wah.  I accept Lau Senior’s evidence that he was the one who provided the funds for the acquisition, having left a portion of his money in Hong Kong for such investments prior to emigration.  He said that as a developer with good relationships with property agents, he would be contacted by such agents when investment opportunities arose.  He would then task Lau Junior to make the acquisitions on his behalf.  He said that the reason Zhang Qi was able to produce documents in these proceedings relating to the investments in the Letters B and other property investments was because he arranged for them to be kept by Madam Wong.  I reject Alan’s evidence as to the acquisition, being merely hearsay.  Furthermore, he claimed that his mother had told him that in the early 1980s, his parents had earned $3 to 5m from the sale of letters of exchange.  Lau Senior pointed out that if this was true, then Lau Junior and Madam Wong would have been rich enough to have bought more than thirty flats to rent out in the 1980s.  There is no evidence to suggest that Lau Junior and Madam Wong enjoyed this level of wealth.

212.3  In 1987, a shop and cockloft at 39A San Hong Street, opposite the original Tung Wah shop, were acquired for the consideration of $250,000 in the name of Madam Wong.  Thereafter, the Tung Wah business was run from that shop.  The parties differed as to the source of the funds for the acquisition and beneficial ownership of this.  Lau Senior said that he provided the funds for the acquisition.  Zhang Qi did not admit this.  I accept Lau Senior’s evidence that if Lau Junior and Madam Wong had been making profits at Tung Wah, they would not have needed to move from their shop of some one thousand square feet to the smaller shop at 39A San Hong Street.  I bear in mind that Alan said that his mother had said that in the early 1980s, Tung Wah earned $200,000 to $300,000 a month.  In oral evidence, Alan said that his mother told him that the shop could earn $100,000 per month from trading in cloth during certain times when parallel trading was booming.  However, this is ultimately hearsay evidence, without particulars as to when and for how long such profits were earned, and no contemporaneous evidence of actual income from Tung Wah has been put forward.  I accept Lau Senior’s evidence that he was the one who had paid the rent of the original shop, which was about $3,000 per month, and that if Tung Wah had yielded the level of profit claimed, Lau Junior and Madam Wong could have afforded the rent.

212.4  In 1992, a shop at G/F, 19 San Tsoi Street was acquired in the name of Lau Junior and Madam Wong for the consideration of $4m.  The parties differed as to the source of the funds for the acquisition.  Lau Senior said that this was a gift to Lau Junior and Alan, but as Alan was a minor at the time, the property was acquired in the name of Lau Junior and Madam Wong.  Alan says that it was funded by his parents, but this is merely hearsay.  I accept Lau Senior’s evidence that whilst the purchase was in the name of Lau Junior and Madam Wong, he was the one who provided the funds for the purchase, as a gift.  The shop was not sold until 2011 and could not have been the source of funds for the purchase of the Fu Hing Property.

213.  Reliance was placed on the fact that the conveyancing documents showed that the properties were purchased in the names of Lau Junior or his wife.  But this does not necessarily shed any light on who funded the purchases.

D3.  How Kidbrooke was operated and managed

D3.1  Alan’s role

214.  It is not disputed that after Lisa became busy with her work after July 1998, Alan started to take on some of the tasks of managing Kidbrooke, although Lisa remained Kidbrooke’s sole bank signatory and shareholder.  I accept Lisa’s case that the delegation was at Lau Senior’s request and that Alan was simply helping out, rather than Zhang Qi’s case that Alan took over the management by reason of being entitled to Kidbrooke.  Alan’s evidence in this regard was self-inconsistent.  In his witness statement, he claimed that he made all the decisions relating to Kidbrooke by himself, at least until 2006 when he gradually handed over management to Zhang Qi.  However, in his cross-examination, he shrank from saying that he had any role in management.

214.1  Alan was shown a resolution dated 18th September 2000, executed by Lisa, resolving that Kidbrooke would enter into a deed for variation of a lease with the tenant of the Fu Hing Property, and that it would execute a power of attorney appointing Andy Choi to act as manager of the property and authorising Andy Choi to execute the deed on behalf of Kidbrooke.  Alan said he did not know about the resolution, and he surmised that his mother Madam Wong handled this transaction.

214.2  Alan rejected the proposition that by September 2000, if Kidbrooke needed to appoint somebody to do things on its behalf, he would have been the obvious choice.

215.  Indeed, if Alan was the true owner of Kidbrooke and made all the decisions about it sometime after July 1998, and Lisa was too busy to handle Kidbrooke’s matters, it is inexplicable why Lisa remained Kidbrooke’s sole director, shareholder and bank signatory.

216.  Alan was also unable to explain why persons outside the Lau Junior family were appointed to act on behalf of Kidbrooke.

216.1  He could not explain why Andy Choi was appointed as Kidbrooke’s attorney in September 2000 to handle the lease variation and manage the Fu Hing Property, when he (Alan) was supposedly the owner and when (as he surmised) his mother handled the transaction (so that at least either he or his mother would have been more natural attorneys), save to give the nonsensical answer that his mother was appointing a law firm rather than a particular lawyer.

216.2  He could not explain why Lisa would have signed an undated resolution appointing Lau Senior’s sons in her place as directors.  It is significant that Idy Chui says that she found this document in the Kidbrooke company kit when she obtained it from TLC on or about 25th August 2017.  This document came into existence well before the dispute between the parties arose.  It is consistent with Lisa ’s case, but inconsistent with Zhang Qi’s.

D3.2  Zhang Qi’s role; Lisa’s trust in Zhang Qi

217.  It is not in dispute that Zhang Qi started helping with the operations of Kidbrooke from about 2003.  She dealt with third parties, such as Kidbrooke’s tenants, accountant and lawyers.  Zhang Qi herself says that (at least at the start), she would report to Lisa, who was the director and shareholder of Kidbrooke.  It is not in dispute that from about 2009, Zhang Qi completely took over the management of Kidbrooke, and dealt with all of its affairs, including in relation to rental, property maintenance, taxation, government orders, bank accounts, and so on.[18]

218.  In other words, it is not disputed that Zhang Qi was entrusted with dealing with all of Kidbrooke’s affairs.[19] It also cannot be disputed that Zhang Qi did so on behalf of someone else, since she herself had no interest or position in Kidbrooke.  The dispute is therefore who she was acting for.  Zhang Qi says that she did it on behalf of Alan or his parents.  Lisa says that it was on her behalf, as the director and shareholder.

219.  I have rejected Zhang Qi’s claim that Kidbrooke belonged to Alan or his parents.  It follows that I also reject her claim that she managed Kidbrooke on behalf of Alan or his parents.  It also follows, and I find, that she managed Kidbrooke on behalf of Lisa, Kidbrooke’s shareholder and director.  She took on the task as she was a member of the family, Lisa was too busy to handle Kidbrooke, and Lau Senior and Lisa approved the delegation to her.

220.  I accept Lisa’s evidence that over time, she came to trust Zhang Qi, and would sign documents relating to Kidbrooke presented by her without reviewing them or consulting Lau Senior.  Lisa was very busy as a trainee doctor, and the whole point of delegating her responsibilities to Zhang Qi was to save her the time of having to deal with Kidbrooke’s matters herself; she simply had to sign certain documents because she was the one authorised to do so.  Lau Senior was aware of the delegation and approved it, and dealt with Zhang Qi directly for various matters (for example, to see Kidbrooke’s bank accounts when he was back in Hong Kong for a visit).  Indeed, he was the one who had suggested to Lisa that she sign blank cheques and give them to Alan so that he could fill in the details when Lau Senior needed money or Kidbrooke needed to make payments.  By all accounts, the family was a close-knit one before the events in question, with Lisa and Zhang Qi having a good relationship.  Lisa explained how she developed her trust in Zhang Qi over the years, including in 2006 when Lisa’s grandmother passed away and Zhang Qi voluntarily helped out with the funeral arrangements as if they were for her own family member – Lau Junior’s family, and Lau Senior, were greatly impressed by her efforts.

221.  In the aforesaid circumstances, it is not surprising that Lisa relied on and trusted Zhang Qi.  It may have been negligent or foolish of her to do so, but that is a different point.

222.  As I explain at various points in this judgment, I do not accept Zhang Qi to be a witness of truth.  I prefer and accept Lisa’s account of how she relied on Zhang Qi rather than the latter’s claim that Lisa carefully reviewed documents before signing them.

D3.3  The nature of payments from Kidbrooke to Lau Senior

223.  An important point of contention between the parties is whether the payments from Kidbrooke to Lau Senior constituted loans, or withdrawals by Lau Senior of what he considered to be his own funds.[20]  In this regard, Zhang Qi and Alan claimed that Lau Senior needed to borrow funds to buy properties.  Zhang Qi claimed that Lau Senior borrowed a total of $11,910,000 between 2014 and 2018 ($110,000 of which was repaid), and Alan expressly stated that he had reviewed and adopted this evidence.  This may be contrasted with Zhang Qi’s police interview on 6th June 2018, in which she did not claim that Lau Senior borrowed money from her, Alan or Kidbrooke.  Lau Senior produced account statements[21] to show the extent of his savings, securities holdings and dividend income therefrom for the relevant periods, and demonstrated amply that he would not have needed to have borrowed the amounts alleged.  Of course, the fact that Lau Senior had ample available funds does not necessarily mean that he did not ask for a loan.  However, Zhang Qi claimed[22] that Lau Senior did not have sufficient funds for his property purchases, which was clearly not the case.  It is of course also possible that Lau Senior claimed to be impecunious when he was not.  But this was never suggested to Lau Senior, and no basis has been advanced to suggest that this was the case.

224.  Furthermore, Lau Senior provided evidence from the relevant Canadian land registry to show that rather than purchasing a property in Vancouver in 2014 as alleged (and therefore asking to borrow money from Alan for this purpose), he in fact had bought his Vancouver property back in 2005 and sold it in 2016 (when he and his wife decided to go back to Hong Kong to look after Andrew), and deposited the proceeds into his bank account.

225.  I accept Lau Senior’s evidence that he has never borrowed, and did not need to borrow, money from Lau Junior or his family.  I reject Zhang Qi’s evidence that the cheques drawn on Kidbrooke in favour of Lau Senior were loans made to him.

226.  In giving her account, Zhang Qi did not simply blandly state that the cheques drawn on Kidbrooke in favour of Lau Senior were for loans borrowed from Kidbrooke.  She sought to give an elaborate story as to when and how Lau Senior had asked for loans, to explain the dates on which the cheques to Lau Senior had been drawn and the amounts of the loans, and to give details of what Lau Senior had said as to his need for funds.  This was not a case of Zhang Qi being carelessly mistaken or incomplete in her evidence, but an example of her giving false evidence.

D3.4  Kidbrooke’s bank statements

227.  It will be recalled that Zhang Qi opened the envelopes containing Kidbrooke’s bank statements when they arrived in the post, and kept them.  She denied that she ever showed them to Lau Senior.  Lau Senior said that when he came to Hong Kong, he would be shown the bank statements for Kidbrooke – initially by Lisa, and later on by Zhang Qi.  I accept Lau Senior’s version of events.  It will be recalled that he had the Forged Bank Statements in his possession, which he did not realise were forged until after the commencement of these proceedings.  There was no suggestion that either Lau Senior or Lisa had prepared (or arranged for the preparation of) the Forged Bank Statements.  How then did Lau Senior come to have this set of forged statements?  The only possibility is that he was given them by the person who, to everyone’s knowledge, was responsible for opening and keeping Kidbrooke’s bank statements, namely, Zhang Qi.  Whether or not Zhang Qi herself prepared the Forged Bank Statements is beside the point.  She must, however, have known that they were forged, since she would have received the genuine statements and would have known that these were not the documents she passed to Lau Senior.

228.  It was suggested by Mr Lynn that it made no sense for Zhang Qi to have prepared the Forged Bank Statements bearing an outdated title (“Portfolio Statement”) which was different to the one used on the genuine statements (“Statement of Accounts”), and therefore, the Forged Bank Statements must have been produced by someone without access to the genuine bank statements.

229.  First of all, the difference in title is not necessarily that obvious.  But more importantly, there would not have been someone else, without access to the genuine bank statements, who would have produced (or directed the production of) the Forged Bank Statements: (1) it was not suggested that Lau Senior or Lisa (or any other witness at trial) did so; (2) nobody else would have had the motive to do so.

230.  It was also said that there were no allegations that bank statements were forged in respect of other periods of time.  However, Zhang Qi was the one who kept the statements; Lau Senior was shown them from time to time.  He did not have complete copies of the statements, or indeed the documents relating to Kidbrooke.  Lisa’s case is that it is simply unknown whether there may have been other forged statements.  I agree.

231.  The fact that Lau Senior was provided with the Forged Bank Statements at all supports Lisa’s case that Kidbrooke was Lau Senior’s – why would he have been given Kidbrooke’s bank statements if the company belonged to Alan?  The fact that the Forged Bank Statements overstated the amount of money in Kidbrooke’s bank account further shows that Zhang Qi (and Alan) were not entitled to use Kidbrooke’s funds, and that she knew as much.  I agree with Mr Brown that the Forged Bank Statements speak volumes as to the depths of Zhang Qi’s dishonesty.

D3.5  Use of Kidbrooke’s funds for Zhang Qi’s and Alan’s personal expenses

232.  I accept Lisa’s evidence that she (and the rest of the family) did not know that Kidbrooke’s money was being spent on Zhang Qi’s and Alan’s personal expenses.  There is no dispute that she was being asked to sign blank cheques, so it is not surprising that Lisa was not aware what the amounts were being spent on.

233.  It is also not surprising that Lau Senior did not know that Kidbrooke’s money was being spent on Zhang Qi’s and Alan’s personal expenses.  The Forged Bank Statements show that at least for the period of time covered by the statements (April 2016 to March 2017), Lau Senior was being told that Kidbrooke had over $2m in its China Construction Bank account, when in fact it had less than $5,000 in its account. Furthermore, Lau Senior gave evidence (which I accept) that Zhang Qi told him that she was making a lot of money, using Chinese medicine to provide beauty treatments, and she hired a driver and bought a new car, which also led him to believe that she was earning a lot of money from her Chinese medicine practice.

D3.6  Whether representations that Lisa managed Kidbrooke on behalf of Alan

234.  Zhang Qi claimed that Lisa and her family had represented to her “over the years” that she held and managed Kidbrooke on behalf of Alan, and that Alan would eventually own Kidbrooke.  When cross‑examined about what these representations were, Zhang Qi could not concretely identify any specific occasion on which these representations were made to her, aside from that (1) at the time of Zhang Qi’s wedding to Alan in 2006, when Lisa said that it was great that she did not need to be troubled by Kidbrooke’s matters any more, and (2) Lisa’s refusal to provide a guarantee for the Oi Wah Loan in 2017 on the grounds that Kidbrooke was Alan’s company.

235.  As regards (1), even if Lisa had ever said anything along these lines, this hardly amounted to a representation that Kidbrooke belonged to Alan.  It would have equally been consistent with Lisa’s expression of gratitude that Zhang Qi was helping to look after Kidbrooke’s matters.  Insofar as Zhang Qi sought to suggest that Alan’s wedding was a watershed moment in that he had established his own family and he and Zhang Qi could thereafter take over Kidbrooke, it does not make any sense that Lisa nevertheless remained the sole shareholder of Kidbrooke until the Share Transfer in 2017, over ten years later.

236.  As regards (2), if Lisa’s stance was truly that she was unwilling to act as guarantor in relation to the Oi Wah Loan because she did not want to take on potential liabilities for Alan’s company, or to have a relationship with a finance company, then she would not have signed the Oi Wah Undertaking of 2nd June 2017 pursuant to which she agreed to indemnify Oi Wah against losses arising out of illegal structures on and alterations to the Fu Hing Property.

237.  I reject the claim that Lisa and her family had represented that she (Lisa) held and managed Kidbrooke on behalf of Alan and that Alan would eventually own Kidbrooke.

D4.  The Share Transfer

D4.1  Whether agreement that Share would be transferred to Zhang Qi

238.  Zhang Qi says that the reason for the Share Transfer was that Lisa was unwilling to give a personal guarantee to secure the Oi Wah Loan, so the Share was transferred to Zhang Qi so that she could give such a guarantee.

239.  In her witness statement, Zhang Qi claimed that since the beginning of 2013, Kidbrooke began to have financial problems, and that she used her own funds to pay for Kidbrooke’s expenses.  She claimed that the financial problems were due to the fact that Kidbrooke’s properties were relatively old, and funds were needed to carry out repair work, comply with orders from the Buildings Department to remove unauthorised building works and building inspections.  She went on to claim that by January 2017, Kidbrooke could still not maintain a breakeven in its financial position, so Lisa proposed, and Zhang Qi and Alan agreed, that Lisa would “return” the Share to Kidbrooke to Zhang Qi, and this was done in May 2017.

240.  The claim that Kidbrooke could not break even is simply untrue.  Its profits tax computations:

240.1  for 2014/15 (year ending 31st March 2015) showed assessable profits of $3,571,610;

240.2  for 2015/16 (year ending 31st March 2016) showed assessable profits of $3,788,889;

240.3  for 2016/17 (year ending 31st March 2017) showed assessable profits of $3,408,868;

240.4  for 2017/18 (year ending 31st March 2018) showed assessable profits of $2,016,619.

241.  Kidbrooke’s audited financial statements for 2017/18 (year ending 31st March 2018) showed its profits before tax as $3,472,970 for the year ending 31st March 2017 and $1,987,307 for the year ending 31st March 2018.

242.  As Lisa explained in her testimony, Kidbrooke (to her knowledge) earned a steady rental income (which she said was about $3m a year), which would have been sufficient to deal with any maintenance requirements or Government orders, so there would not have been any need to obtain any loan from a finance company.  Furthermore, she said that Lau Senior had other assets and funds, so he could have funded maintenance costs for the Fu Hing Property if necessary; he would not have needed a loan.

243.  Furthermore, whilst the amount that was borrowed from Oi Wah ($10m) was said to be needed to finance Kidbrooke’s compliance with mandatory building orders and removal of unauthorised building works,[23] Zhang Qi was unable to explain how the work involved required this level of lending.  When asked about it, she initially claimed that she had to set aside around $3m to $5m to engage surveyors to sort out the Fu Hing Property’s lack of a certificate of compliance,[24] $1m to rectify the non-compliant canopy, and $1m to replace the windows.  This fell well short of $10m.  (And this is leaving aside the fact that in Zhang Qi 1st, Zhang Qi had not actually claimed that any part of proceeds of the Oi Wah Loan was for the purpose of obtaining a certificate of compliance at all; she had only claimed that the loan was to finance compliance with the building orders and removal of unauthorised building works.  The reference to the absence of the letter of compliance was made only to explain why it was necessary to borrow from a finance company rather than a bank.)

244.  Not only that, but the actual amounts incurred were nowhere near the claimed oral quotations obtained:

244.1  $19,000 was spent on a consultation fee “for mandatory building inspection”[25] (and had been paid in May 2014, years before the Oi Wah Loan).

244.2  $10,000 was spent on inspection of windows in December 2016.

244.3  $566,400 was spent on window work between July and December 2017.

244.4  $100,000 was the amount agreed with the surveyors (Prudential) on 2nd June 2017, with only $30,000 being payable at the time, $40,000 upon submission of Prudential’s report, and the remaining $30,000 payable of the Government’s issue of the certificate of compliance.

245.  In other words, the immediate need for funds for payment for building-related issues as at mid-2017 was nowhere near $1m, let alone $10m.

246.  Bearing in mind that the loan from Oi Wah bore a high interest rate of 12% per annum and that Kidbrooke was supposedly in dire financial straits, it makes no sense that an amount substantially in excess of what was needed for the supposed building work was borrowed from Oi Wah for this purpose.  (And this does not take into account the $1m introduction fee which needed to be paid to 18 Finance.)

247.  I therefore do not believe Zhang Qi’s and Alan’s claim that there was a discussion along the lines that Kidbrooke was unable to pay its property-related expenses, that a loan of $10m was needed for these purposes, and that Lisa was unwilling to act as a guarantor and therefore proposed transferring the Share to Zhang Qi.

248.  Alan claimed that the discussion took place during Chinese New Year in 2017.  He said that Lisa said that she did not want to be a guarantor, or have any relationship with a finance company.  However, it was only on 10th May 2017 that Zhang Qi met representatives from Oi Wah, and it was only at that meeting that Victor Cheng (who was invited to join the meeting by the intermediary 18 Finance) proposed that there be a personal guarantee.  This is another reason why Zhang Qi’s explanation as to why Lisa transferred her Share to her does not hold water.  Mr Lynn submitted that all lending institutions would have required such a guarantee and Zhang Qi would have known this as she was making inquiries by Chinese New Year 2017 with financial institutions.  I do not agree that Zhang Qi’s witness statements should be read in this way.  Zhang Qi 1st[26] expressly stated that Oi Wah asked Kidbrooke’s shareholders to act as guarantors, and that Lisa was unwilling to do so, and that it was only then that Lisa proposed to “return” the Share to Zhang Qi.

249.  Since the time of the making of Zhang Qi’s (first) witness statement, it transpired that in fact, Zhang Qi had spent much of Kidbrooke’s money on personal matters such as holidays, gambling money for Alan, payment of Zhang Qi and Alan’s clinic expenses, and investments for Zhang Qi.

250.  Furthermore, after the Oi Wah Loan was obtained, the amounts were not in fact used for complying with the mandatory building orders against the Fu Hing Property or removing unauthorised work.  The most significant payments made from Kidbrooke’s account after receipt of the $10m were:

250.1  $1m fee to 18 Finance paid on 6th June 2017;

250.2  $800,000 for Zhang Qi’s and Alan’s clinic staff salaries on 6th June 2017;

250.3  $1.2m for Zhang Qi on 6th June 2017, who used it to pay Kidbrooke’s tax and for stock investments;

250.4  $1.73m for repayment of Alan’s private loan on 7th June 2017;

250.5  $1m for Lau Senior on 30th August 2017; and

250.6  $2m for Lau Senior on 31st August 2017.

251.  When Alan was cross-examined about these payments, he claimed that if Kidbrooke did not have enough money to pay for work in relation to the building orders, he and his family could inject money back into Kidbrooke to pay for the building work to comply with the orders; also, he had his stocks and shares investment and savings which could be used to pay for the building work or inject it into Kidbrooke.  This evidence is nonsensical: Alan apparently had sufficient investments and savings to pay for the building work required by the building orders, but chose to get a loan from a finance company at a high interest rate and requiring a $1m intermediary fee to obtain funds for the building work, but then did not use the funds from the loan for the building work after all, and instead used them to repay his personal loan of $1.73m.

D4.2  The Disputed Instruction

252.  I turn to the undated Disputed Instruction, which Lisa supposedly signed to say that she was transferring her shares in Kidbrooke to Zhang Qi for personal reasons.

253.  Lisa’s witness statement of November 2019 said that the document was not prepared or typed by her; she was not conversant with Chinese typing and seldom typed Chinese documents.  Zhang Qi 2nd (of December 2020) claimed that she (Zhang Qi) was the one who prepared the Disputed Instruction and left it at the family home for Lisa to sign.  This was also her pleaded case.  However, shortly before the trial, Zhang Qi applied to amend her pleadings and witness statement to say that Lisa was, after all, the one who prepared the document.

254.  I reject Zhang Qi’s allegation that Lisa prepared the Disputed Instruction.

255.  First, it was never put to Lisa that she was the one who prepared the document.  Lisa’s evidence that Disputed Instruction was neither prepared nor typed by her, and that she seldom typed documents in Chinese as she was not conversant with the inputting of Chinese characters, was not challenged (on the contrary it was read out to her, unchallenged; and Lisa repeated that she did not know how to type Chinese characters).  Instead, what was put to Lisa on the basis of this piece of evidence was that she was competent in English.

256.  Second, the contemporaneous documents are inconsistent with the allegation that Lisa prepared the Disputed Instruction.  They indicated that whatever documents were needed for the change of shareholder and director were to be prepared by TLC.  (They did not suggest that the Disputed Instruction was one such document.)

256.1  On 28th April 2017, Zhang Qi emailed Cindy Shao of TLC asking her to help urgently prepare documents to change Kidbrooke’s director and shareholder and saying that she (Zhang Qi) did not know what information was required.

256.2  On 2nd May 2017, Cindy Shao replied, giving a quotation for the work and asking for a confirmation.  She also asked for the ID card and address proof of the new director and shareholder so that she (Cindy Shao) could prepare the necessary documents.

256.3  Zhang Qi replied on the same day saying that she was fine with the application fees and asking for Cindy Shao to handle the matter as soon as possible.

256.4  Later that day, there was a further email from Cindy Shao, saying that she had received faxes of the director(s)’ ID card and documents, but as the ID card was too dark, it should be re-sent, along with proof of address of the new shareholder and director.  Cindy Shao said that she could prepare documents for effecting the changes only after receipt of the same.

257.  Third, Zhang Qi’s oral testimony about the matter is not credible.  In her oral testimony, Zhang Qi said, for the first time, that Cindy Shao had called her in the morning of 29th April 2017 asking for a letter of authorisation from the original shareholder and director.  Zhang Qi said that she had told Cindy Shao that she would ask Lisa to prepare the document.  It is difficult to understand why Cindy Shao would have made such a request, when she was the one who would be preparing the necessary documents for a fee.  It is also difficult to understand why Zhang Qi would have said that she would ask Lisa to prepare the document, when she had asked Cindy Shao to prepare the documents and would pay her for doing so.  It is also inexplicable that this conversation was not mentioned in the revisions which Zhang Qi sought to make to her witness statement, when those revisions focused on how the Disputed Instruction came to be prepared, and when she well knew that Lisa’s allegation was that the document was a forgery.

258.  Fourth, Zhang Qi’s account in her revised witness statement is also not credible.  She said that she told Lisa to prepare the Disputed Instruction on 28th or 29th April 2017; Lisa told her that Zhang Qi could either pick up the document from her at Kwai Chung Hospital, or she (Lisa) could give the document to Zhang Qi when she went home for dinner.  Zhang Qi says that she told Lisa she preferred to collect the document in case Lisa forgot to take it home with her; accordingly, on 2nd May 2017, Zhang Qi asked her driver to pick it up from Lisa.  This does not make sense, since dinner at the family home took place on Saturdays and therefore would have taken place on 29th April 2017: it made no sense to turn down Lisa’s offer to pass it to her on 29th April 2017 on the basis that Lisa might forget to do so, and instead arrange to pick it up later (and it will be remembered that Zhang Qi had told Cindy Shao that the matter was urgent).  There is also no reason why Zhang Qi, having asked Lisa to go to the trouble of drafting the document, could not also have asked her to fax it directly to Cindy Shao.

259.  Fifth, Zhang Qi’s evidence in relation to the matter at an earlier stage of the proceedings was untrue.  In Lisa’s 6th Affidavit of 3rd April 2019, opposing Zhang Qi’s application to vary the injunctive relief granted against her, Lisa referred to the Disputed Instruction which she had recently seen for the first time, and said that she was shocked by it and that someone must have forged her signature on the Disputed Instruction and sent it to TLC; she had reported it to the police.  Zhang Qi swore her 6th Affirmation of 24th April 2019 in response, saying that she had told Lisa prior to 28th April 2017 to prepare the document, and she had then asked her driver to pick it up on 28th April 2017 (ahead of the dinner on 29th April 2017), which was why she was sure that the document was prepared by Lisa.  She then claimed that when she was contacted by the police about the matter, she attended a thirty-minute interview in which she had explained these events to the police, and had ended up leaving the police station without being charged.  Later on, when the records of the police interviews were disclosed, it transpired that in fact, in response to the police’s series of questions relating to the Disputed Instruction, Zhang Qi had simply said that she would not answer the questions.  In other words, it was false for her to say that she had explained the events to the police.

260.  I also note that at the time of Zhang Qi’s affirmation, the time sequence of the events given by Zhang Qi was not illogical: the request to Lisa to prepare the Disputed Instruction was prior to 28th April and the pick up was arranged for 28th April rather than leaving it to Lisa to take it with her on 29th April as she might forget to do so.  However, once the correspondence between Zhang Qi and Cindy Shao came to light as only starting on 28th April 2017, it no longer made sense for Zhang Qi’s request to Lisa to have happened prior to that date.  The dates were then postponed in Zhang Qi’s amended witness statement, but this resulted in the illogical sequencing that Zhang Qi preferred (on 28th or 29th April) to turn down Lisa’s offer to take the document home with her (on 29th April), and to pre‑arrange to pick up the document later (on 2nd May) on the basis that Lisa might forget to bring it with her on an earlier date (29th April).

261.  There is no dispute that Zhang Qi faxed the Disputed Instruction to TLC on 2nd May 2017.  Lisa did not prepare it.  Cindy Shao did not prepare it.  There is nobody else who could have prepared it other than Zhang Qi.  The inescapable conclusion is that Zhang Qi prepared the document and forged Lisa’s signature on it.

262.  Mr Lynn submitted that the allegation of forgery is a serious one, that any inference drawn must be properly grounded on primary facts and there should be no conjecture, and that no expert evidence is before the court to establish the allegation.  I agree with all of these submissions.  They do not detract from my conclusion.

263.  Mr Lynn submitted that if Lisa’s case is that her signature on the other three documents relating to the Share Transfer were obtained by misrepresentation (see next subsection), there is no reason why Lisa’s signature on the Disputed Instruction was not also obtained in this way.  However, the other three documents were prepared by Cindy Shao and given to Zhang Qi later.  It is evident that Zhang Qi took the view that the Disputed Instruction was a document that needed to be sent to Cindy Shao as part of the instructions, rather than a document which Cindy Shao would prepare.  Thus Lisa’s signature of the Disputed Instruction could not await the signing of the documents prepared by Cindy Shao.  Furthermore, it was the documents prepared by Cindy Shao which would have legal effect to transfer the Share, and which therefore needed Lisa’s genuine signature; the same did not apply to the Disputed Instruction, which was simply a one-off instruction to Cindy Shao.

D4.3  The execution of the documents effecting the Share Transfer

264.  The other three documents relating to the Share Transfer were:

264.1  a written resolution of Kidbrooke’s directors to (1) appoint Zhang Qi as director of Kidbrooke and (2) approve the transfer of the Share to Zhang Qi;

264.2  an instrument of transfer pursuant to which Lisa apparently transferred the Share to Zhang Qi for US$1;

264.3  a share certificate naming Zhang Qi as a shareholder.

265.  These were signed by Lisa at a lunch with Zhang Qi on 8th May 2017.  Zhang Qi sent Lisa a WhatsApp message on 6th May 2017, asking her where she would be on Monday as there were documents to be signed.  Lisa told Zhang Qi that she would try to book the Princess Margaret Inn (the hospital canteen at Princess Margaret Hospital), and asked her to arrive at 12:15pm.

266.  Lisa’s evidence was that on 8th May 2017, Zhang Qi called her at 12:15pm to say that she had arrived at the hospital, asked for directions to the Princess Margaret Inn and said that she had brought Lau Senior’s company insurance documents for her to sign; as Lisa was still seeing patients, she told Zhang Qi to go ahead and order food and message her when she had done so.

267.  Zhang Qi sent Lisa a WhatsApp message at 12:41, saying that she had arrived and had ordered food.  Lisa says that she had had forty patients to see in the morning, and had ward rounds at four different wards in the afternoon, so she was in a rush, and talked to Zhang Qi whilst eating.  She said that Zhang Qi presented her with many sheets of paper, the first one being related to insurance matters; there were about ten documents to sign; that she asked whether they were insurance documents which Lau Senior had asked her to sign; that Zhang Qi had replied that they were insurance documents and that Lau Senior had kept asking Zhang Qi to get Lisa to sign them, so she had contacted Lisa urgently; that she trusted Zhang Qi and assumed that she was telling the truth when she said that they were documents for insurance purposes; that she had no idea that the documents related to the Share Transfer and that she would not have signed any document to transfer the Share to Zhang Qi had she known about it.  She said that Zhang Qi did not hand over the documents to her and instead flipped over the pages to the places where her signature was required.

268.  Zhang Qi’s account of the lunch at the Princess Margaret Inn as set out in her witness statements[27] is not only that she handed the documents silently to Lisa for the latter to read and review.  She says that she positively explained to Lisa that Lisa was to transfer the Share to her, but that she would still remain as the director of Kidbrooke; that she showed and explained each of the documents; and that Lisa knew about the Oi Wah Loan.  Her account is inextricably bound up with the premise that Lisa was all along holding the Share for Alan, and that Lisa had proposed the transfer of the Share to Zhang Qi; on her version of events, the documents being signed on 8th May 2017 were to give effect to Lisa’s proposal, and Lisa knew it.

269.  I cannot accept Zhang Qi’s version given that I have already rejected the claims that Kidbrooke was all along held for Alan and that Lisa had proposed the transfer of the Share to Zhang Qi.

270.  I reject Zhang Qi’s version for the additional reason that it is tellingly different to what she told the police when asked about it.  She claimed that it was the accounting firm, which she said was TLP (the predecessor of TLC) at the time, located in Allied Kashima Building, which gave Lisa the documents to sign.  I do not see how Zhang Qi can have said this by mistake, since she is the one who wrote to Cindy Shao asking for the documents for the Share Transfer to be prepared urgently, and subsequently making arrangements to pick up hard copies from Cindy.  If Zhang Qi truly believed that Kidbrooke belonged to Alan and that Lisa was simply “returning” the Share, Zhang Qi would surely have explained this to the police, and that she arranged for Lisa to sign the documents prepared by Cindy Shao for this purpose.

271.  I should briefly mention the incredible evidence that Zhang Qi gave about the lunch.  In order to counter Lisa’s suggestion that it was a rushed occasion, Zhang Qi claimed that WhatsApp exchanges between her and Lisa at 1:40pm about buying omega-3 supplements took place when they were still seated together at lunch.  From the contents of the exchanges, it is inconceivable that they took place between two people who were sitting across the table from each other; they must have taken place after the end of the lunch when the two were not within speaking range.  Whether the lunch lasted for only half an hour (as Lisa said) or one and a half hours (as Zhang Qi said) is not really to the point – either way, Lisa had sufficient opportunity to read the documents; and either way, Zhang Qi could have effected her deception.  The point about this episode is that it is yet another example (albeit one of the milder ones) of why I could not place any reliance on what Zhang Qi said in the absence of corroboration.

272.  It is true that in the witness box, Lisa alleged that Zhang Qi remained in control of the documents whereas in her witness statement, she had said that she signed the documents and handed them back to Zhang Qi.  I bear in mind that rejecting Zhang Qi’s version of the events at the lunch on 8th May 2017 does not necessarily mean that I should accept Lisa’s evidence.  However, having listened to the evidence, I believe and accept Lisa’s core complaint that Zhang Qi misrepresented to her that the documents were all about Kidbrooke’s insurance and that Lau Senior wanted her to sign them, a complaint that is consistent with what she told the police on 16th October 2018.  I cannot see why she would otherwise have signed them.  She had nothing to gain by transferring the Share to Zhang Qi.  She knew that she was supposed to help Lau Senior – an elder to which she and her family were grateful – to look after Kidbrooke’s affairs, and she must have signed the documents thinking that this was what she was doing.  She frankly accepted that she was free to refuse to sign the documents had she had any doubt about them, and that it was not difficult to realise what the documents were about.  I believe her when she says that she signed them in a rush, relying on what Zhang Qi told her about them, and not thinking that there was any need to check the documents or ask for copies.

273.  Mr Lynn submitted that it was senseless and absurd for Zhang Qi to take the risk of making the misrepresentations as it would have been easy for Lisa to realise the truth, and could also have called Lau Senior to discuss.  As Mr Brown pointed out, it is inherent in any case of fraud that the perpetrator runs a risk of getting caught out.  The risk in the present case was not necessarily that high.  It should be remembered that in the present case, Zhang Qi had known Lisa for many years, and had also been involved in handling Kidbrooke’s affairs for many years.  She would have been able to gauge to what extent Lisa did or did not pay attention to documents that she was asked to sign.  She would have known that she had been able to use Kidbrooke’s funds for her personal expenses for many years without Lisa or Lau Senior realising.

D4.4  Whether Lisa signed documents to effect the Share Transfer by reason of Zhang Qi’s undue influence

274.  Lisa was misled into signing the documents to effect the Share Transfer.  It was not a case of her knowing the nature of the documents and being improperly influenced by Zhang Qi into signing them; it was a case of her signing them by reason of Zhang Qi’s misrepresentations as to what they were about.  She simply did not even know that she had transferred the Share to Zhang Qi.

D5.  The Oi Wah Loan

275.  It will be recalled that the Oi Wah Loan was made upon the signing of a number of documents by Lisa and Zhang Qi.  The signing was carried out at the offices of Lui & Law (solicitors acting for Oi Wah) on 2nd June 2017.

276.  Lisa does not seek to set aside the documents signed at the meeting.  The relevance of the 2nd June 2017 meeting is that Zhang Qi relies on it to say that Lisa must have known of, and agreed to, the Transfer.

277.  As already explained above, I reject the claim that the Oi Wah Loan was needed in order to fund Kidbrooke’s compliance with orders from the Buildings Department and removal of unauthorised building works.  It follows that Lisa could not have been aware that the loan was “needed” for such purposes, or that she approved of getting the loan for these purposes.  In any event, most of the proceeds of the loan were not even used for these purposes.

278.  Zhang Qi says Lisa must have known, when signing the documents on 2nd June 2017, that the Share had by then been transferred to Zhang Qi, since (1) the documents included a confirmation that Lisa had no right or interest in Kidbrooke’s share capital,[28] and (2) Ng Wai Kit, the solicitor, had explained the documents.

279.  Prior to that day, on 29th May 2017, Zhang Qi had sent a WhatsApp message to Lisa asking when she was free on Friday 2nd June 2017, as she had to briefly visit a solicitors’ firm to sign her name, with Zhang Qi saying that she would drive her there and back.  Zhang Qi did not say what was to be signed.  It was then agreed that Zhang Qi would pick up Lisa from Kwai Chung Hospital at 5:30pm.

280.  Lisa’s evidence was that during a call later that day (29th May 2017), Zhang Qi said that:

280.1  there were problems with the plans and structure of the Fu Hing Property, which would affect the sale or rental of the property in future; that several solicitors had already said they would not handle the sale or rental of a property with such problems; that fortunately, through her patient, she had been introduced to a solicitor who was willing to help solve the problems by setting up an overseas company; and that

280.2  separately, Lau Senior had requested that Zhang Qi’s name be added as signatory for Kidbrooke so that she could help sign documents as Lisa was very busy.

281.  Lisa said that she trusted Zhang Qi as a member of the family and did not query what she was told.  She knew that the Fu Hing Property was very old and did have problems with the plans and structure, but she did not know how to fix them.  As regards the request to add Zhang Qi as a signatory, she believed Zhang Qi when she said that this was Lau Senior’s request.  She said that in hindsight she should have asked Lau Senior about it.

282.  Zhang Qi’s evidence is that Lisa had wanted to resign as Kidbrooke’s director; that she (Zhang Qi) had explained to Lisa that as a condition of lending money to Kidbrooke, Oi Wah required its own director to be appointed to Kidbrooke’s board; that if Lisa resigned, Oi Wah would be able to veto board resolutions; and that Lisa had said that Kidbrooke needed the loans and did not have many other options, so she would remain as a director of Kidbrooke to support Zhang Qi.  I reject this evidence: Lisa would not have wanted to resign as Kidbrooke’s director as she was tasked with being Lau Senior’s signatory, and she was not aware that any loan was to be obtained.

283.  Lisa’s evidence is that on the way to the solicitors’ firm, which she later learned was Lui & Law, Zhang Qi repeated her explanation about the problems with the Fu Hing Property, and that Lau Senior had requested the addition of Zhang Qi as a signatory for Kidbrooke.  She says that at Lui & Law, they were shown into a conference room.  It was Zhang Qi who reviewed the papers, and said that they were in order.  Zhang Qi only showed her an engagement letter from a firm of surveyors.  Lisa says that she had a brief look at the first page of the letter, and felt that it was to engage the surveyors to fix the structural problems of the Fu Hing Property as represented by Zhang Qi.  She says that a man then entered the conference room, whose name she could not recall but who she later learned was Ng Wai Kit, and asked whether everything was clear.  She answered “yes”, as she believed that what was being done was what Zhang Qi had explained to her.  She signed the documents as instructed by Ng Wai Kit.  She says that she had no idea what documents she signed.  The whole meeting took about half an hour (Zhang Qi said it lasted about two hours).

284.  Ng Wai Kit, subpoenaed by Zhang Qi to give evidence, says that he explained all of the documents to be signed clause by clause.  I do not accept this evidence.  Zhang Qi and Victor Cheng both said that he did not explain the documents paragraph by paragraph.

285.  Even if Ng Wai Kit gave some general explanations about the nature of the documents being signed (which he said took a few minutes only), I find that Lisa did not understand or appreciate what she was signing.

285.1  I have earlier already observed that if (as Zhang Qi claimed) Lisa was unwilling to act as guarantor in relation to the Oi Wah Loan because she did not want to take on potential liabilities for Alan’s company, or to have any relationship with a finance company, then she would not have signed the Oi Wah Undertaking of 2nd June 2017 pursuant to which she agreed to indemnify Oi Wah against losses relating to illegal structures and alterations of the Fu Hing Property.  Indeed, on Zhang Qi’s case, Lisa did not want to be bothered by Kidbrooke matters any more since she considered it to be Alan’s company, so it is difficult to understand why she would still be retaining her directorship and not asking Alan to take it up instead, and why she would be willing to take time out of her busy schedule to travel to a solicitors’ firm and attend a meeting which (on Zhang Qi’s case) lasted two hours to sign documents.

285.2  Since, as I have found, Lisa understood her role to be one of acting as handling Kidbrooke matters for Lau Senior, she would not have signed documents for borrowing money from a finance company at a high rate of interest for unknown purposes and when she did not think that Kidbrooke needed funds.

286.  In cross-examination, Lisa fairly accepted that given that Ng Wai Kit was a solicitor, he may have explained something about the documents, but if he did, she did not pay attention as she was tired and hungry after her work day; she already had the preconception in her mind that the exercise was about resolving the issues with the Fu Hing Property.

287.  I accept Lisa’s evidence that she saw the surveyors’ engagement letter and that this was consistent with her understanding that she was at Lui & Law to sign documents to resolve issues with the Fu Hing Property, and she thereafter signed the documents presented to her believing that they all related to the same matter.

288.  I accept Lisa’s evidence that she had understood from Zhang Qi that the documents being signed were to do with fixing the problems with the plans and structure of the Fu Hing Property, and that Lau Senior wanted to appoint Zhang Qi as an additional signatory.  I find that she was therefore not put on alert when Zhang Qi also signed documents at the meeting of 2nd June 2017.

289.  In making these findings, I have not overlooked the fact that Lisa did, apparently, sign documents such as the Oi Wah Loan Agreement, and indeed, initial each page.  Much has been made of the fact that she did not notice words such as “loan” in the documents, or query what she was signing.  It has also been pointed out that representatives of Oi Wah were present, and presumably they wanted to check that the loan transaction was properly carried out so as to avoid disputes over enforceability in future.  However, Lisa trusted Zhang Qi, and believed the explanation which she had given to her.

290.  Insofar as Zhang Qi relies on the confirmation signed by Lisa that she had no right or interest in Kidbrooke’s share capital as an indication of her awareness that the Share had been transferred to Zhang Qi, this does not necessarily follow.  Lisa simply did not understand the documents she was signing.  In any event, for the aforesaid confirmation, this would have been consistent with Lisa’s understanding that Kidbrooke belonged to Lau Senior rather than herself.

291.  For completeness, I should also record that there are a number of unresolved puzzles over the documents which were said to have been signed on 2nd June 2017.  For example, the written special resolution of Kidbrooke’s directors to approve amendments to Kidbrooke’s memorandum and articles of association, said to have been signed on that occasion (although they stated a different time and place of signing), were not recognised by Ng Wai Kit as having been prepared by him (and presumably then were also not explained by him).  To take another example, the two written resolutions of Kidbrooke’s directors regarding the loan were contradictory, with one of them referring to Oi Wah’s request for a loan from Kidbrooke.  If Ng Wai Kit had explained this document clause by clause as he claims, it is unlikely that he would not have spotted that this document was wrong.  These puzzles cast further doubt over Zhang Qi’s case that the documents were explained to Lisa.

D6.  The sale of the Share to Allied Way

292.  Zhang Qi says that Lisa is the one who proposed to sell the Fu Hing Property and the Cockloft because the properties were getting old and the cost of maintaining them was increasing, and Kidbrooke could not break even in its financial position, having started to have financial problems since 2013.  Zhang Qi then started taking steps to sell the Fu Hing Property.

293.  Given that I have rejected Zhang Qi’s case that Kidbrooke was all along held for Alan, I reject Zhang Qi’s claim that Lisa proposed that Zhang Qi sell the property.

294.  I also reject it given that, as already explained above, it was untrue that Kidbrooke could not break even.  Lisa would not have thought that Kidbrooke had any financial problems, since she knew that Kidbrooke had a steady income which would have been sufficient to deal with maintenance costs; in any event, she also knew that Lau Senior had the financial resources to fund maintenance costs if necessary.

295.  Furthermore, according to Zhang Qi 1st, Lisa’s proposal was made in January 2017 – at about the same time[29] that Alan claimed that Lisa was unwilling to act as guarantor for a loan for Kidbrooke and therefore proposed to transfer her Share to Zhang Qi so that she could act as guarantor when taking out a loan.  These two pieces of evidence, given in support of Zhang Qi’s case, are contradictory.

296.  Had Lisa proposed the sale, it is difficult to see why Zhang Qi sought to hide the fact that she was selling the Fu Hing Property.  When appointing an agent for the sale of the Fu Hing Property, the appointment form expressly asked for the sale to be handled in a low-key manner and not to make the offer for sale public.

297.  Again, Zhang Qi’s claim that Lisa was aware of the sale of the Fu Hing Property is undermined by Lau Senior’s shock on discovering the sale, and Zhang Qi’s reaction in evading the family and failing to claim to the police (contrary to her claim now) that she was simply selling Alan’s property with the blessing of Alan and his parents.

298.  I reject the claim that Lisa was aware that Zhang Qi entered into the PSPA or the Supplemental PSPA to sell the Share.

D7.  The Future Stars Loan

D7.1  Whether Lisa knew and approved the Future Stars Loan

299.  Zhang Qi borrowed $26m from Future Stars pursuant to the Future Stars Loan Agreement of 20th March 2018.  Lisa says that she did not know that the loan was made.  Zhang Qi says that Lisa approved the loan, and indeed the purposes of the loan (to refund the deposit paid by Allied Way and pay liquidated damages to it, pay Centaline’s agency fee, and repay the Oi Wah Loan).

300.  Zhang Qi says that she took Wu Chi Wai to Kwai Chung Hospital to meet Lisa to sign the relevant documents.  Originally, Lisa had no recollection of the meeting.  She recalled the meeting when shown WhatsApp records of her conversation with Zhang Qi on 19th March 2018, where the latter said that there was an urgent document Lisa needed to sign, and if Lisa had time that day or the next, then she (Zhang Qi) would go to look for her.  However, she recalled the meeting as being one where she met Zhang Qi, without Wu Chi Wai being present.

301.  Wu Chi Wai came to give evidence.  He said that he did meet Lisa at the Prince of Wales Hospital.  He did not have particular recollection of the documents provided to Lisa for signature.  He could only say that generally, when providing documents for signature, an explanation would be offered, although if the document was in Chinese, it might not be necessary to give an explanation.  He would also ask for the identity card number of the signing party.  He would not have given any legal advice.  He could not recall who wrote the identity card number on the acknowledgment dated 20th March 2018.  He said that Lisa did not ask anything.

302.  Mr Lynn submitted that Lisa must have noticed the nature of the documents she was being asked to sign.  He further submitted that she must have realised from the documents that she was no longer sole director and shareholder.

303.  I accept that Wu Chi Wai provided the documents for Lisa to sign.  I also accept that Lisa raised no queries and simply signed the documents which Zhang Qi had told her urgently needed to be signed, and did not realise what she was signing.  It would not have made any sense for her to knowingly sign documents to (for example) appoint a representative of Future Stars to be a director of Kidbrooke (when she did not even know about Future Stars, and when she did not think that Kidbrooke needed to borrow money), or to resign as Kidbrooke’s director and secretary, or to approve the transfer of the Share from Zhang Qi to Future Stars.

D7.2  Whether the $5m paid by Kidbrooke to Lau Senior from the Future Stars Loan was paid as a loan or for some other reason

304.  In Section D3.3 above, I rejected Zhang Qi’s and Alan’s claim that payments made from Kidbrooke to Lau Senior were loans. I now deal in more detail with the $5m paid to Lau Senior from the Future Stars Loan. Zhang Qi says that $5m of the proceeds of the Future Stars Loan was on-lent to Lau Senior.  Lisa says that Lau Senior was simply withdrawing his own money.  Alan claimed that Lau Senior borrowed money to buy property: $1m and $2m in 2017, and $5m in 2018.  Zhang Qi claimed that she helped Lau Senior look for a suitable property in several locations, all at the price of about $15m, and in the end, Lau Senior bought a property in Whampoa for $13m to live in.  Zhang Qi further claimed that Lau Senior said that he had no money to live on in his old age, so Alan lent him money and did not intend to ask him to repay it, knowing that he had no ability to do so.  I reject these assertions.  Lau Senior adduced evidence[30] showing that (1) he had ample financial means at all material times, including about $54.6m in August 2017, so that he had no need to borrow $3m in August 2017, (2) he had about $50m in cash and securities in 2018 without taking into account the $8m that Zhang Qi claimed to have lent to him, (3) he did not buy a property in Hong Kong after his return from Canada, but he provided $16.38m to his wife and Andrew in March 2019 to buy a property in Whampoa.  I accept Lau Senior’s evidence that Zhang Qi’s claims[31] about Lau Senior’s borrowing of $8m to buy a property in Hong Kong were lies in order to explain why Kidbrooke paid $8m to Lau Senior in 2017 and 2018.

305.  Zhang Qi also claimed that earlier on, in 2014, Lau Senior had asked for a loan in order to buy a house in Canada, as he did not want to rent a house in Canada any more, having been forced to move from his Vancouver rental property.  I reject this assertion.  Lau Senior 4th set out the evidence (as earlier mentioned) showing that Lau Senior had bought a house in Vancouver in 2005 and had all along lived in it with his family, without renting any property in Canada.  I accept Lau Senior’s evidence that Zhang Qi’s claims[32] about Lau Senior’s borrowing of funds to buy a property in Canada were lies in order to explain why Kidbrooke paid $3.8m to Lau Senior in 2014 and 2015.

306.  Indeed, it was only in Zhang Qi 2nd that Zhang Qi first claimed that money was lent to Lau Senior to buy property in Vancouver.  Prior to that, in Zhang Qi’s six affirmations and her first witness statement, this claim had not been made.  Earlier, when the police asked Zhang Qi about it, she said that she felt that Lisa had not been paid for the transfer of the Share, so when Lisa made the request, Zhang Qi paid $5m to Lau Senior.

307.  It is also noteworthy that for the $5m “loan” to Lau Senior in March 2018, Zhang Qi first paid $5m from the proceeds of the Future Stars Loan from her account to Kidbrooke’s account, and then drew a cheque on Kidbrooke’s account.  If Alan and Zhang Qi had been lending money to Lau Senior, there is no reason why the funds had to be channelled through Kidbrooke’s account.  I infer that the reason for doing so was to keep up the appearance to Lau Senior that the funds were Kidbrooke’s.

308.  I therefore reject Zhang Qi’s claim that the $5m transferred to Lau Senior from the Future Stars Loan was done so as a loan.  Rather, Zhang Qi paid it to him at his request because Kidbrooke had been set up by Lau Senior for his own purposes, not for Alan.

D8.  Other documents signed by Lisa relating to the sale of the Share

309.  Mr Lynn submitted Lisa must have known about the sale to Allied Way because of various documents that she signed, such as the Allied Way Guarantee dated 21st May 2018.  Ms Siu further pointed to Kidbrooke’s management accounts signed by Lisa on 24th May 2018, and a reformatted letter of resignation as Kidbrooke’s director and a letter of resignation as Kidbrooke’s secretary on 30th May 2018.

310.  I have found that Lisa did not know, let alone approve, the sale of the Share to Allied Way.  She may have been careless in not paying attention to what she was signing on 21st May 2018, 24th May 2018 and 30th May 2018, but I accept her evidence that she did not know what she was signing, and more importantly, that anything she was signing had any relation to the sale of the Share to Allied Way.  She conflated the meetings of 21st May 2018 and 24th May 2018, but this is probably not surprising given that she was busy at work at the time and was not paying attention to what she was signing.

311.  In relation to the meeting of 24th May 2018, I accept Lisa’s evidence that she was told by Zhang Qi on 23rd or 24th May 2018 that Idy Chui would be taking documents to Kwai Chung Hospital relating to Kidbrooke’s tax reporting to be signed.  It is Zhang Qi’s own evidence that she told Lisa that she needed to sign tax documents relating to Kidbrooke.  Idy Chui’s evidence is that she showed Kidbrooke’s 2016/17 management accounts to Lisa and explained some of the figures; that she explained that Kidbrooke was late in filing its 2016/17 tax return and that there was no need to prepare any audited report tax return, it being sufficient for the directors to approve the accounts; that she also showed Kidbrooke’s 2018 management accounts (for the period 1st April to 24th May 2018) to Lisa and explained some of the figures.  On Zhang Qi’s and Idy Chui’s evidence, none of what they said would have alerted Lisa to the fact that there was a sale of the Share to Allied Way.

312.  In relation to the meeting of 30th May 2018, I accept Lisa’s evidence that she was told by Zhang Qi on 28th May 2018 that she needed to sign documents needing to be submitted to the Inland Revenue Department on 29th May 2018; that she was then told that the deadline was 30th May 2018; and that Idy Chui would take the documents to her on 30th May 2018.  I reject the evidence of Zhang Qi, whom I generally disbelieve, that she told Lisa that the documents related to the sale of Kidbrooke.  Idy Chui says that she explained to Lisa the 2016/17 auditors’ report in detail, the 2017/18 management accounts, that the purchaser’s solicitors had asked for a reformatted form of resignation as Kidbrooke’s director and secretary, that there were missing title deeds and share certificates relating to Kidbrooke and that the purchaser’s solicitors had asked for board minutes in relation to the same to be signed, and that further sets of the Allied Way Guarantee signed on 21st May 2018 were required.  I have reservations about the reliability of Idy Chui’s evidence, given her significant financial interest in the outcome of this litigation, and given that she demonstrably lied in court about a material matter, as I explain below.  Insofar as Idy Chui gave any explanation, I find that the explanation given did not alert Lisa to the sale of the Share.

D9.  The time when Idy Chui learnt of the contents of the 04.06.2018 Police Letter

313.  It will be recalled that the 04.06.2018 Police Letter, addressed to L&W, had stated that Zhang Qi was suspected to have sold property worth $140m without the owner’s consent, and that L&W had been asked to withhold any money involved as it was suspected to be crime proceeds.

314.  The email was forwarded to Idy Chui at 9:54am on the morning of 5th June 2018.  Idy Chui claimed that she did not read this email until later that night.  She said that she went to the bank that morning to have the three remaining cheques drawn by Zhang Qi (for $1m, $1.68m and $5m) “marked good”, and that she did not go to her office the whole day.

315.  Idy Chui’s evidence as to the events leading to her taking the cheques to the bank to be marked good was as follows.  She said that (1) in the morning of 4th June 2018, Zhang Qi had called her to say that she had been reported as a missing person, which led Idy Chui to start thinking about “many strange things”, (2) all along, she had been receiving pressure from Victor Cheng to deposit the cheques which she had in her possession (which included the $5m cheque intended for Success Time), (3) during the call, Zhang Qi agreed to let her deposit the remaining cheques (which she had earlier asked Idy Chui not to deposit yet), (4) she (Idy Chui) was too busy that day to deposit the cheques, (5) she thought about the cheques overnight and was worried that since she had received Zhang Qi’s “negative” call, maybe the cheques would bounce, (6) therefore, early the next morning she went to the bank to have the cheques “marked good” to ensure that she would be able to get the money.

316.  Idy Chui was asked further about this evidence.

316.1  When asked to identify the “strange things” she had thought about, Idy Chui gave a rambling explanation about a normal person being pregnant, there being two lives, it being odd that there was a missing person, and where might Zhang Qi be.

316.2  When asked why she worried that she could not get the money, since from her point of view (1) all the work had been done, (2) L&W had indicated that it would release the remaining $80m upon receipt of the opinion from the Samoan lawyer, which was on the way, (3) Zhang Qi had agreed to the deposit of the cheque, and (4) the four cheques presented on 31st May 2018 had all been honoured, Idy Chui said that Victor Cheng had pestered her to deposit the cheques and Zhang Qi could go back on her words, and then she (Idy Chui) got Zhang Qi’s call on 4th June 2018 and “the bad news”.

316.3  When reminded that she had previously said that Zhang Qi was trustworthy, so that there had been no need to put the agreement for IC Accounting’s $1.4m fee in writing, Idy Chui said that it was in fact Victor Cheng who was worried that Zhang Qi would not pay, and also, Zhang Qi’s call on 4th June 2018 give her “a little bit of suspicion”.

316.4  When asked why her suspicions would have been aroused by Zhang Qi saying that she was the subject of a missing persons’ report and agreeing (after assurance that the Samoan legal opinion was on the way) to let Idy Chui bank the cheques, Idy Chui said “why would a normal person with a baby call me in the morning saying I don’t know why police say that I am a missing person?” and that it was difficult for her not to think of “other things”.

316.5  When asked why she had to take the cheques to the bank herself, given that the earlier four cheques from Zhang Qi (for $1.4m, $1.3m, $2m and $900,000) had been deposited by Idy Chui’s staff, in accordance with her general practice, Idy Chui claimed that it was because the amount of $5m was large.  When it was pointed out that the process of depositing a cheque would be the same no matter how large the cheque, Idy Chui repeated her answer about the call with Zhang Qi and how she thought it was strange.  She also said that it was because she had the cheques with her in the evening of 4th June 2018, but she did not explain why she did not give the cheques to her staff to deposit that day after Zhang Qi had already agreed that they could be deposited, and despite her concern, after the call, that the cheques would not be honoured.

317.  Idy Chui’s explanation as to why she suddenly felt the need to take the cheques to be marked good was both telling and unconvincing.

317.1  Telling, in that something had suddenly caused her to think that she might not get paid, so that she needed to take the cheques to the bank quickly to have them “marked good”.  Moreover, she had to take them personally – the earlier four cheques (for $1.4m, 1.3m, $2m and $900,000) had been deposited by Idy Chui’s staff, in accordance with her general practice.

317.2  Unconvincing, in that there was nothing in her description of the call with Zhang Qi on 4th June 2018 that could account for this sudden concern.  It could not be explained by Victor Cheng’s nagging either, since supposedly he had been doing that all along.  Furthermore, if the call in the morning of 4th June 2018 did trigger her concern, it is difficult to see why she did not take them to the bank at any point in time that day (she did say that she was too busy to go, but then she could have instructed her staff to go).

318.  Idy Chui was then asked about the 04.06.2018 Police Letter which had been forwarded to her work email address at 9:54am.  She claimed that she was not in her office all day on 5th June 2018 and therefore did not read it until the evening, and that her mobile phone did not have access to her work email account.  She gave a detailed account that (1) she did not know how to set up “these domain emails” and was therefore unable to read work emails on her phone, (2) after this incident, she asked her IT technician to help her set up the necessary domain to enable her to read work email on her phone, (3) even today (ie. the time at which she was giving evidence), she was unable to receive work email on her phone, whether for the work email address to which the 04.06.2018 Police Letter had been sent, or the email address of another company of hers.[33]  Idy Chui then confirmed, unequivocally, that she was unable to either receive or send emails on her phone using her work email address – even though she had supposedly been working intently and incessantly on the sale of the Share for Kidbrooke.

319.  Idy Chui was then shown an email that she had received, and which she had then forwarded, on 23rd May 2018 from her work email address, using her iPhone.  She had to accept that her claim of not having set up her work email account on her phone and not having been able to access the account on her phone was all untrue.

320.  In re-examination, she sought to renege from this admission.  She claimed that (1) sometimes she was able to receive emails on her phone, but also (2) during the period of time in question she had bought a new phone but she was not very sure about it so she had not dared to put it in her witness statement, yet also (3) it was “a fact” that she did not receive the email on 5th June 2018.  These claims about sometimes receiving emails and maybe having bought a new phone were new and only served to further dent her credibility.

321.  I find that Idy Chui was not telling the truth when she claimed not to have received or read the 04.06.2018 Police Letter until the evening of 5th June 2018.  I find that she read it in the morning of 5th June 2018 and learnt that the Sale Proceeds were suspected to be proceeds of a crime involving the sale of properties without the owner’s consent, and that this was what prompted her to suddenly decide to take the remaining cheques from Zhang Qi to the bank to have them “marked good” and then to deposit them.

322.  I should record that Idy Chui then accepted that from her telephone conversation with Victor Cheng on 6th June 2018, after he attended Zhang Qi’s interview at the police station, she was aware that the police were investigating the claim that the Share did not belong to Zhang Qi.

323.  Idy Chui was also asked about the Success Time board resolutions, signed by her and Victor Cheng, of (1) 7th June 2018 in which it was resolved that Success Time would pay $1m to her and $400,000 to Victor Cheng, and (2) 6th July 2018 in which it was resolved that Success Time would lend $4m to Victor Cheng.  She was aware that the funds for these purposes came from the Sale Proceeds.  In answer to the question of whether, since she was aware that the Sale Proceeds were being treated by the police as proceeds of fraud, it had occurred to her that she should not be dealing with the funds, she said that she and Victor Cheng had discussed the matter and considered that Success Time was entitled to the funds as it had finished its work.

324.  Idy Chui accepted that although she had notified the JFIU that she was holding funds for Zhang Qi, supposedly because the Sale Proceeds had been identified as proceeds of crime, she did not, in fact, tell the JFIU about the amounts received beneficially by IC Accounting[34] or Success Time.

325.  It is convenient to address here Mr Brown’s submission that Zhang Qi was aware of Lisa’s claim to, and interest in, the Sale Proceeds, even earlier than the time when she learnt of the contents of the 04.06.2018 Police Letter.  Mr Brown submitted that Zhang Qi’s agreement to pay a $1.4m fee to IC Accounting for work in relation to the sale of the Share to Allied Way was a sham, as it was a grossly excessive amount for three days of work (Idy Chui said that the agreement was made on 14th May 2018, when completion was contemplated to take place on 17th May 2018).  Mr Brown also pointed to (1) the disproportionality of the amount when compared to the $60,000 charged by IC Accounting through L&W for “company secretarial and account services fees” in relation to the sale, (2) Idy Chui’s earlier failure to make enquiries of Lisa as to why the Share was being transferred to Zhang Qi for US$1, (3) Idy Chui’s earlier failure to make enquiries into the links between the Fu Hing Property and Kidbrooke and the Lau family, (4) Idy Chui’s willingness to find ways to profit from her dealings with Zhang Qi, and (5) Idy Chui’s dishonest character.

326.  I have no doubt that Idy Chui was greedy and opportunistic in seeking to extract as much as she could from Zhang Qi.  Idy Chui had first been introduced to Zhang Qi by Victor Cheng in setting up the Oi Wah Loan to earn fees for carrying out unnecessary work.  When Sam Fung expressed the view that the Fu Hing Property could fetch more than $110m, rather than putting Zhang Qi in touch with Sam Fung directly, Idy Chui discussed the matter with Victor Cheng, and in the end, the two of them also got involved in the sale of the Share to Allied Way, so as to position themselves to seek further payments from Zhang Qi.  It is also clear from the evidence, particularly that of Victor Cheng, that the two of them had been planning to get further business from Zhang Qi after the sale of the Share to Allied Way.

327.  I have also found that Idy Chui was clearly prepared to give false evidence in court to suit her case.

328.  Nevertheless, I do not consider that it has been established on the evidence that the agreement for payment of $1.4m was a sham.  Zhang Qi would have been keen to secure the completion of the sale of the Share to Allied Way, and it is conceivable that she was prepared to offer 1% of the anticipated $140m to Idy Chui to ensure that hitches – and there were hitches, as the repeated postponements of completion showed – were ironed out.

D10.  The nature of the payment of $5.9m received by Success Time

329.  I turn to the $5.9m paid to Success Time.  This was received by IC Accounting on behalf of Success Time on 31st May 2018 (as to $900,000) and 5th June 2018 (as to $5m), supposedly for having enabled Zhang Qi to sell the Share on better terms than originally agreed, and for having introduced Future Stars.  However, unlike the case of the $1.4m fee paid to IC Accounting, I find that the $5.9m paid to Success Time was a gratuitous payment, not made pursuant to any agreement with Zhang Qi that it should carry out any engagement for reward.

329.1  In cross-examination, Idy Chui said that Success Time was not the one responsible for finding a bidder who would pay more than $110m for the Share; it was “impossible” for Success Time to do so as neither Victor Cheng nor she knew how to do this or knew the necessary clients.  (Furthermore, neither Success Time, Idy Chui nor Victor Cheng had the necessary licence to carry out an estate agency business.)

329.2  Idy Chui was evasive as to when Zhang Qi was even told about the existence of Success Time.  She said it was not when she introduced Sam Fung to Zhang Qi in December 2017 as there was no need to do so (since Success Time did not have the means to find a new buyer for the Share).  She said that she did not even need to tell Zhang Qi about Success Time prior to the revised deal with Allied Way.  She said it was only at a “very late stage” that Success Time was mentioned to Zhang Qi.  In the end, she said that it was in May 2018 that she and Victor Cheng talked to Zhang Qi about Success Time – after Zhang Qi had already agreed the revised price of $140m with Allied Way.

329.3  As to why she told Zhang Qi about Success Time, Idy Chui said that she and Victor Cheng went to Sheung Shui to look for Zhang Qi to ask for a fee for Success Time (in effect, for Victor Cheng and Idy Chui), since it was through their efforts, or Sam Fung’s efforts, that Zhang Qi was able to make an extra profit of $30m from the sale of the Share, avoid having to pay for the costs of aborting the original sale (since the buyer remained as Allied Way and there was no need to pay any compensation to any jilted buyer or estate agent), investigate the certificate of compliance issue, and get the Future Stars Loan.

329.4  The evidence of Idy Chui and Sam Fung was that the Estate Agency Agreement was not in fact an agreement between Zhang Qi and Success Time.  Sam Fung explained that (1) he was the one who had decided to prepare it, for his own convenience and purposes, namely, to produce to potential buyers so that they would know that he actually had a vendor; (2) the fee of $5m was simply written in as a “reference number” as the main purpose of the document did not concern the fee, but was to show buyers that there was really a vendor seeking to sell the Fu Hing Property; (3) whilst Success Time was described as the “agent”, it was not actually to be the party introducing buyer and seller, and it made no difference to Sam Fung what company name was put on the document; (4) were a buyer to be found, he would be asked to sign a standard form Midland Realty provisional sale and purchase agreement (indeed, this is what he asked the second interested potential buyer to do) and that buyer would be asked to pay commission in accordance with that agreement, not the Estate Agency Agreement; (5) the Estate Agency Agreement was useless and had no legal effect; and (6) another purpose of the Estate Agency Agreement was to hide the identity of potential buyers from Zhang Qi – he would get such buyers to sign on the Midland Realty provisional agreement and commit to paying a deposit thereunder, without first having to disclose the identity of the buyer to Zhang Qi – he worried that Zhang Qi might tell Centaline about the new buyer so as to get it to find yet another higher bidder (in the same way that Zhang Qi had sought to find a bidder offering more than Allied Way’s original $110m).

329.5  Idy Chui said that (1) Sam Fung simply wanted to use the Estate Agency Agreement to let buyers know that Zhang Qi was really selling the Fu Hing Property and not just testing the waters, to see how determined Zhang Qi was in not completing with Allied Way under the original agreement to sell at $110m, and to let Zhang Qi know that she could not look for agents elsewhere; (2) the Estate Agency Agreement was not dated as the purpose was just to show Sam Fung that Zhang Qi meant to sell and to show buyers, nor was the document signed by anyone from Success Time, (3) Idy Chui was the one who gave the Estate Agency Agreement to Zhang Qi to sign, and at the time, Idy Chui told her that it was to give to Sam Fung to find a higher bidder.

329.6  As earlier mentioned, it is undisputed that it was only on about 9th May 2018, which was after the Supplemental PSPA of 3rd May 2018, that Victor Cheng asked Zhang Qi to pay Success Time a fee of $6.8m; Zhang Qi asked for a discount on or about 18th May 2018, and the figure of $5m was then agreed; the figure of $5.6m on the Estate Agency Agreement was crossed out and replaced with the figure of $5m; later, on 21st May 2018, Idy Chui persuaded Zhang Qi to add a further $900,000 to this amount.

329.7  Victor Cheng’s evidence was that Zhang Qi could simply have refused to pay anything to Success Time; indeed, he worried about this.

330.  I find that there was never any agreement by Zhang Qi to engage Success Time for reward as alleged.  Whilst Success Time had claimed that Zhang Qi had engaged it in about January 2018 to explore the possibility of selling the Share on better terms and to find a lender,[35] and Idy Chui in her witness statement[36] had claimed that the Estate Agency Agreement evidenced the engagement and the orally agreed terms that “Success Time [would] look for offers at a price equal or higher than HK$130,000,000 and should Success Time successfully procure a sale on better terms, Zhang Qi shall pay Success Time a service fee of HK$5,600,000” and that Zhang Qi signed the agreement, the evidence given at trial made it clear that the Estate Agency Agreement was simply not to embody the terms of any agreement between Zhang Qi and Success Time at all.  It was only after Zhang Qi had successfully agreed with Allied Way the revised price of sale of the Share of $140m that Victor Cheng and Idy Chui sought to approach Zhang Qi to ask for a payment.  And even then, there was back and forth negotiation, with Victor Cheng asking for $6.8m, and then Zhang Qi agreeing only to $5m, and then later agreeing to add a further $900,000.

331.  Idy Chui and Victor Cheng sought on the one hand to give an impression that a lot of work was done on their part, so that the fee of $5.9m was well justified; in this regard, I consider that Idy Chui’s account of what she did as regards the certificate of compliance was exaggerated.  On the other hand, Idy Chui and Victor Cheng were also trying to skirt around the allegation that they had acted as estate agents without a proper licence, and that Victor Cheng had given legal advice without proper instruction.  By the time of Victor Cheng’s cross-examination, he took the position that he hardly did anything.  (For example, he shrank from saying that he had a big role in securing a loan from Future Stars, saying that he simply helped introduce the lender but did not have any role; he also shrank from saying that he advised about the loan agreement and said that he “just have a look, didn’t involve in anything”.)  I do not feel able to rely on any part of Idy Chui’s or Victor Cheng’s evidence as to what was supposedly done by Success Time.  In any event, whatever they did is not relevant for present purposes.  They may have told Zhang Qi they did a lot of work in order to persuade her to give them a share of her windfall after the event, but it does not follow that there was any agreement in the first place to engage Success Time.

332.  The $5.9m was therefore nothing more than a gift to Success Time.  Ms Siu and Victor Cheng complained that this point was not put in evidence to Success Time’s witnesses.  However, the point is simply the effect and logical conclusion of the witnesses’ evidence.

D11.  Assessment of witness: Zhang Qi

333.  It will be apparent by now that I consider Zhang Qi not to be a credible witness, and indeed a dishonest one.  I set out some further examples to show why I place no credence whatsoever on her assertions save where they have been corroborated by other, more reliable evidence.

334.  I have mentioned above that after Zhang Qi made her first witness statement, it transpired that in fact, Zhang Qi had spent much of Kidbrooke’s money on her and Alan’s personal expenses.  When the police asked her where Kidbrooke’s rental income had gone, Zhang Qi claimed that Lisa took away the money every few months by writing cheques, that she (Zhang Qi) did not know to whom the cheques were written, and that Kidbrooke had only a small amount of money left in its account as Lisa took away all the money every year.  Zhang Qi had not at that point started to claim that Kidbrooke belonged to Alan, so she said that it was Lisa who wrote the cheques and spent Kidbrooke’s funds.  She said that Kidbrooke was owned by Lisa, and she (Zhang Qi) was helping Lisa to take care of her business.  This may be contrasted with Zhang Qi 2nd, where she claimed that Kidbrooke belonged to Alan, so that Kidbrooke’s income was spent on her and Alan’s personal expenses – she set out a lengthy table detailing the items on which Kidbrooke’s money had been spent.

335.  When cross-examined as to why she did not tell the police that Alan was the true owner of Kidbrooke, Zhang Qi gave a variety of reasons one after the other, some of which were contradictory.  She claimed that she did not want to involve Alan in the investigation, because she would have to explain the family story from 1997 onwards, because it would be faster for the police to look for Lisa to ask her about it (even though, at the same time, she said that Lisa had framed Zhang Qi for fraud), because she did not think that the police would believe her, because Alan was introverted and would not be able to cope with a police investigation, because it would not be possible to get the police to understand that she held Kidbrooke on behalf of Alan (even though she agreed that it was difficult for the police to understand that Alan was the true owner if she did not tell them this).

336.  Zhang Qi claimed that she was taken by surprise to learn, after the police interview started, that the police were interviewing her about an alleged fraud.  She used this excuse to seek to explain why she did not understand what the police were asking, and to justify why her answers at the interview were fundamentally at odds with her case in the present proceedings.  However, when Victor Cheng came to give evidence, he explained that prior to the interview, the police had already told him and Eric Wong what they were investigating (namely, that they suspected that Zhang Qi had used dishonest means to get Lisa to sign documents for the transfer of the Share to Zhang Qi, who then sold it), so that he (as Zhang Qi’s barrister) and Eric Wong (as Zhang Qi’s solicitor) would have the chance to talk to Zhang Qi about the intended topic of the interview.  Furthermore, Victor Cheng said that he told the police that he would get instructions from Zhang Qi before the interview started.  That evidence was not challenged in cross-examination.  (Indeed, Zhang Qi had agreed in cross-examination that she had had an hour to speak to Eric Wong and Victor Cheng at the police station before the start of the interview.)  In fact, Zhang Qi must have known about the subject matter of the interview long before that day – Alan said in cross-examination that (1) when Lau Senior had stormed into the clinic on 2nd June 2018, he had told Alan that the Fu Hing Property and sale proceeds were his and was demanding that Zhang Qi give the proceeds to him, and (2) he (Alan) had told Zhang Qi about this when he managed to get in touch with her later that afternoon.  I do not believe Zhang Qi’s claim that she only knew about the fraud allegation once the interview started, and I do not accept that this can explain why the version of events she told the police differs in material aspects to the version she sought to advance in these proceedings.

D12.  Assessment of witness: Alan’s evidence

337.  I also do not find Alan to be a reliable witness.  I have given some examples above.  I give one more here.  He was shown a number of contemporaneous WhatsApp exchanges with Ming (after Lau Senior had discovered the sale of the Share), where the latter sought to comfort him, expressing support, reminding him to keep an eye on his own money and property, asking him to take care of himself and assuring him that she would look after their mother.  Alan’s response at the time was inconsistent with his current claim to be the owner of Kidbrooke.  For example, when Ming told him to protect himself and take his money out of the clinic, Alan’s response at the time was to tell Ming not to worry as there was not much money; it was not to say that Ming was casting unfounded aspersions on Zhang Qi.

338.  In cross-examination, Alan gave contrived explanations as to what was being discussed in these messages.

338.1  For example, Ming said that she was worried about the mortgage of Alan’s flat, and suggested that he go to the bank to ascertain the current situation.  When asked in cross‑examination what he thought Ming might be worried about, Alan claimed that because he had suddenly come into money (from the proceeds of sale of the Share), people might target his money.  This does not make sense.

338.2  A bit further on in the conversation, Ming said that the three sisters would stand by Alan.  When asked what this meant, Alan said that this meant Zhang Qi being about to give birth, his mother having high blood pressure and Lau Senior’s condition being different, so that Alan had more work to do at the clinic.

338.3  Alan messaged “It is disturbing that such thing happens in the family.”  In cross-examination, he said that this was a reference to these very matters.  When pressed, he said that it was disturbing that his wife was about to give birth but could not live at home; his mother could see her grandchild but not her daughter-in-law; and his mother had high blood pressure but refused to go to the hospital.

338.4  He had also messaged “Uncle Lau depends on you all”.  He claimed that he meant that he was hoping his sisters would convince Lau Senior that the Fu Hing Property belonged to him (Alan), his mother (Madam Wong) and Zhang Qi and was sold to them in 1997, as he had been unsuccessful in doing so and he did not want to be troubled.

339.  Alan is of course not a disinterested witness in these proceedings.  Zhang Qi’s claim, if successful, would mean that he is the owner of Kidbrooke.  He will also no doubt be aware that Lisa’s claim is that his wife Zhang Qi has been guilty of fraud, and that there are pending criminal proceedings against Zhang Qi.

D13.  Assessment of witness: Lisa

340.  There were various inconsistencies and imperfections in Lisa’s evidence, but ultimately, she was unshaken in her evidence that Lau Senior had helped her family a great deal, for which she was grateful; Lau Senior had asked her to help with Kidbrooke and she had readily agreed; Kidbrooke belonged to Lau Senior and his sons; and she would not have done anything to harm his interests, such as selling the Share.

341.  Understandably, much was made of the fact that there were contemporaneous documents signed by Lisa, an educated doctor conversant in English.  Her claim was attacked for being incredible.  I have scrutinised closely her claim not to have read and understood them.  It has to be remembered that Lisa’s claim is that she was the victim of deceit.  I have to consider the documents she signed in the light of the circumstances in which she claimed to have signed them.  There is no inflexible rule of law that contemporaneous documents must be accorded “very substantial weight” in assessing credibility; it depends on the nature of the documents and the circumstances in which they came into being: see Hoh Han Keyet v Artimax Investment Ltd and others, unreported, CACV 161/2016, 3rd March 2017 at [19] (Kwan JA, as she then was).

D14.  Assessment of witness: Lau Senior

342.  Lau Senior was a garrulous witness.  He often rushed to answer questions without having heard the question completely, and may have had a bit of a tendency to exaggeration.  He may not have been able to recall with precise accuracy details of events that happened many decades ago.  However, he was unshaken in his account that he had set up Kidbrooke for his own estate planning purposes; that the funds for Kidbrooke and its properties had all come from him; that he had been a successful businessman and property developer and had provided financial support for his mother and Lau Junior’s family; that Lau Junior was introverted and had been unable to run Tung Wah profitably with his wife Madam Wong; that he had asked Lisa to act as shareholder and director of Kidbrooke; that he had trusted Zhang Qi and thought that Kidbrooke had all along been profitably earning income, as shown by the bank statements which Zhang Qi had given him (including the Forged Bank Statements which he later discovered to have been forged); that he had not asked or received financial assistance from Zhang Qi or Alan to buy property in Canada; that Zhang Qi had never told him about the Oi Wah Loan; and that he was shocked to find out that the Fu Hing Property had been sold.

D15.  General observations

343.  It may be said that both Lisa’s and Zhang Qi’s stories have elements that are difficult to believe.  Standing back to consider the evidence that was given at trial in a more general way, I consider that on the whole it supports Lisa’s account.

D15.1 The reactions to the news of the sale of the Fu Hing Property 

344.  In my judgment, the reactions of Lau Senior and Zhang Qi, and the other members of the family, in the immediate aftermath of the news of the sale of the Share, are telling.  All are consistent with Lisa’s version of events, but not Zhang Qi’s.

345.  Lau Senior was shocked to find out that the Fu Hing Property had been sold.  He went straight away to look for Zhang Qi to find out what had happened; he went to look for the title deeds to the Fu Hing Property; he went to the police station to report the matter.

346.  Zhang Qi, in contrast, ran away.  She slipped out of the clinic when Lau Senior went to look for her, even though she had patients waiting, and without telling her husband.  Alan could not contact her even though he called a few times.  At some point Zhang Qi switched off her phone.  She went to stay in a hotel without so much as packing – she said that Alan had to take her a change of clothes.  She stayed there for some time, at least until the police interview of 6th June 2018.  She was heavily pregnant and about to give birth, but felt unable to go home.  She expressed regret in her messages to Lisa.  When she was interviewed by the police on 4th June 2018, she did not once say, during the (almost) three-hour interview, that Kidbrooke was Alan’s company and there had simply been a misunderstanding or false accusation on Lisa’s part.  All of this behaviour is inexplicable if Kidbrooke belonged to Alan and he was free to do whatever he wished with it.

347.  In her cross-examination, Zhang Qi gave contrived explanations of what happened during that period of time.  For example:

347.1  she claimed that although Alan was in regular contact with other members of the family, and Alan was in regular contact with her, he never told her that Lisa and Lau Senior had alleged that Zhang Qi had improperly sold Kidbrooke.  This is improbable on either Lisa’s or Zhang Qi’s version of who set up Kidbrooke.  In any event, Alan said that he told her that Lau Senior had complained that the Fu Hing Property was his, the sale proceeds were his, and that he wanted Zhang Qi to give him the sale proceeds;

347.2  she claimed that she knew that Lisa, her sisters and Lau Senior went to the police station, but she did not know why, and she did not try to find out, because Alan was exhausted and Madam Wong was unwell, and all that she (Zhang Qi) wanted was for everyone to be fine;

347.3  when shown the part of her witness statement where she had said that Alan did tell her at the hotel roughly what had happened,[37] that Lau Senior had gone to look for her at the clinic and that he had said that something valuable of his was missing and had been stolen, Zhang Qi then said that in fact it was not the case that she only found out that Lau Senior had found out about the sale on 2nd June 2018; rather, the point was that Lau Senior had suddenly thrown a tantrum about the sale of the Fu Hing Property, and he had known about the sale all along, so Lau Senior’s response was strange;

347.4  she claimed that it was Lisa who had called her on 2nd June 2018 to tell her to leave the clinic, avoid Lau Senior, turn her phone off, and that something had happened but that she (Lisa) would deal with it.  Zhang Qi did not ask what was going on, or ask anyone else in the family what was going on.  However, after Alan visited her (Zhang Qi) in the evening of 2nd June 2018, she knew that Lisa’s attitude had changed, and she (Zhang Qi) did not need to listen to her any more, so she turned her phone back on;

347.5  she claimed that whilst she understood Lisa’s message to her in the evening of 2nd June 2018, saying that everything could be settled through discussions, was a reference to the proceeds of sale of the Fu Hing Property, the message did not make sense to her as there was nothing to discuss, as the property and proceeds belonged to her and Alan.

348.  Lisa sought to coax Zhang Qi to return, assuring her that things could be talked through.

349.  Ming was concerned for Alan, and worried that he might also be a victim.

D15.2 Inherent probabilities

350.  If, as Zhang Qi says, it was Lisa’s understanding all along that Kidbrooke belonged to Alan, and Lisa wanted to rid herself of the hassle of dealing with it, it is difficult to see why Lisa would have commenced these proceedings.  Alan made some insinuations about possible jealousy on the part of Lisa and her sisters at the amount for which the Share was sold (and also claimed in cross-examination that the sisters had asked for a share of the Sale Proceeds, a claim that he never mentioned in his witness statements).  It is difficult to see why Lisa’s jealousy would only have surfaced in 2018 and not during the prior twenty-odd years, and in particular the time when she had to look after Kidbrooke but for no reward.  Whilst the Share was sold in 2018, Kidbrooke had all along been earning a substantial annual rental income, so that the reason for jealousy would always have existed.  The claimed jealousy is also not reflected in the messages between Lisa and Zhang Qi, and between Ming and Alan.

351.  Similarly, if Zhang Qi had all along been openly using Kidbrooke’s funds for her and Alan’s purposes, to everyone’s knowledge, it is difficult to see why Lisa would have minded when the Share was sold -  this would simply have been further dealings with Kidbrooke in accordance with everyone’s understanding of its ownership.

352.  Both Lisa’s and Zhang Qi’s accounts contained various discrepancies.  If Lisa’s is true, it is understandable why there may have been discrepancies in her account: she was deceived and simply did not know what was going on.  If Zhang Qi’s account is true, it would make the discrepancies stranger – for example, why did she not simply tell the police that Kidbrooke was Alan’s and that everybody knew about and had agreed with the sale of the Share?

353.  Mr Lynn submitted that if Lisa’s account were correct, then this would have been an extremely brazen fraud for Zhang Qi to have attempted, when it could have been detected by third parties involved, including two moneylenders, an accountant, and lawyers.  But it has to be remembered that Zhang Qi had for some years already been getting away with using Kidbrooke’s funds for her own expenses without detection.  Also, it cannot be assumed that a fraudster’s scheme is necessarily well thought‑out or pre-planned.  The evidence shows that Zhang Qi was not a sophisticated professional with experience and knowledge of property transactions.  It is apparent that Zhang Qi’s steps were not all well-thought out, as evidenced, for example, by her answers at the police interview, which were inconsistent with the story she subsequently sought to present.  The course of events was partly a result of happenstance: had the sale of the Share proceeded according to the original agreement with Allied Way, it would have been completed with much less involvement of third parties, but this changed because Idy Chui happened to discuss the sale with Sam Fung, who took the view that a higher price could be fetched.  There may well have been many points at which Zhang Qi’s deception could have been found out; it might have been found out earlier, or perhaps it might have continued for longer had Lau Senior not been reading an old newspaper of 31st May 2018 on 2nd June 2018.  It is not necessary to speculate.  But the fraud is not as far-fetched as Mr Lynn sought to portray.

354.  In saying all this, I bear mind that it is not a case of simply choosing between two worlds, as Mr Brown put it.  There is a third possibility: that Lisa’s case does not come up to proof.  But having seen and heard all the witnesses, I am left in no doubt that, implausible as it might at first blush have seemed, Lisa was deceived into transferring the Share as she claimed.

E.  RELIEF CLAIMED BY LISA[38]

E1.  Damages for fraudulent misrepresentation

355.  There is no dispute that the elements of fraud or deceit are as follows.

355.1  There must be a representation of fact made by words or conduct.

355.2  The representation must be made with knowledge that it is or may be false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true.

355.3  The representation must be made with the intention that it should be acted upon by the claimant, or by a class of persons which includes the claimant, in the manner which resulted in damage to him.

355.4  It must be proved that the claimant has acted upon the false statement.

355.5  It must be proved that the claimant suffered damage by so doing.

See Haifa International Finance Co Ltd v Concord Strategic Investments Ltd [2009] 4 HKLRD 29 at [15] (Cheung JA).

356.  As I have earlier found, Zhang Qi misrepresented to Lisa that the documents effecting the Share Transfer were all insurance documents which Lau Senior had wanted Lisa to sign and which he had asked Zhang Qi to get Lisa to sign; Zhang Qi must have known that her representations were false, and she must have intended that Lisa would act on them; Lisa signed the documents believing and relying on Zhang Qi’s false misrepresentations; as a result, Lisa lost the Share, which she unwittingly transferred to Zhang Qi.

357.  Mr Lynn submitted that Lisa did not suffer any loss in her personal capacity as her case is that neither she nor Kidbrooke held any beneficial interest in Kidbrooke’s properties.  However, Lisa was the legal owner of the Share, and she was deceived into transferring it to Zhang Qi, thereby losing it.  What Lisa seeks to recover is the value of the Share which was lost; whether or not she thereafter needs to account for such recovery to Lau Senior or the beneficiaries of Lau’s Trust is a matter between them.

358.  The proper measure of damages for fraudulent misrepresentation is to put the plaintiff into the position in which he would have been had the misrepresentation not been made: Clerk and Lindsell on Torts, 24th ed, paragraph 17-45.  Zhang Qi accepts that as a matter of quantification, loss is normally assessed by reference to the market value of the misappropriated item.[39]

359.  Zhang Qi has not put forward any valuation of the Share.  Notwithstanding that some time passed between May 2017 (when Lisa transferred the Share to Zhang Qi) and May 2018 (when the Supplemental PSPA to sell the Share to Allied Way for $140m was entered into), it seems to me that $140m is an appropriate value for the Share, being a value arrived at on the market between a willing buyer and seller.[40]  I bear in mind the evidence that as at December 2017, Sam Fung, a real estate agent, expressed the view that $110m was an undervalue, and that none of the parties have suggested that there was any difference in the value of the Share between May 2017 and May 2018.

360.  Lisa is therefore entitled to damages for fraudulent misrepresentation in the amount of $140m against Zhang Qi.

E2.  Non est factum

361.  For the signing of the documents to effect the Transfer, Lisa pleaded non est factum.  However, Lisa was not under a disability rendering her incapable of reading or understanding the documents.  Furthermore, she was careless and negligent in not checking the documents before she signed them.  The plea of non est factum is not open to her.  See Keswani Soshila v Keswani Motiram [2022] 2 HKLRD 822 at [34] (Chu JA, as she then was).

362.  Lisa’s claim of non est factum fails.

E3.  Whether Zhang Qi was agent of, and/or owed fiduciary duties to, Lisa in relation to the execution of documents for the Share Transfer

363.  I have accepted and found that Lisa entrusted the management of Kidbrooke to Zhang Qi, who was delegated to handle all matters relating to Kidbrooke, including dealing with third parties.  Whilst Lisa remained the signatory, this was essentially a formality, and she would sign documents as indicated by Zhang Qi.

364.  Lisa’s case is that Zhang Qi was therefore her agent, and that she owed Lisa fiduciary duties.

365.  Mr Lynn submitted that Zhang Qi was not Lisa’s agent as she was not able to affect Lisa’s legal relations with third parties, citing Bright Gold Ltd v Mega Well Development Ltd [2020] 4 HKLRD 26 at [94] (Lam VP).  He further pointed out that the only pleaded basis for the existence of the fiduciary relationship was that of agency.

366.  I would accept that Zhang Qi was not Lisa’s agent strictly so called.  However, the range of situations in which a fiduciary relationship may arise is not confined to agency in the strict sense.  The essence of a fiduciary relationship is that one party exercises power on behalf of another and pledges himself to act in the best interests of another; there are many different ways and contexts in which one may assume an obligation act in another’s interests.  Fiduciary duties may arise in a relationship of ascendancy or influence by one party over another, or dependence or trust on the part of that other.  See Libertarian Investments Ltd v Hall (2013) 16 HKCFAR 681 at [62] to [64] (Ribeiro PJ).

367.  It may perhaps be argued that the bounds of Lisa’s pleaded case could include an “ascendancy” situation.  However, an essential feature of the fiduciary relationship is that the fiduciary undertakes or agrees to act for or on behalf of, or in the interests of, another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense: Libertarian Investments Ltd at [67] to [68].  In the present case, it is difficult to say that Zhang Qi exercised any power or discretion for Lisa in presenting the documents for the transfer of the Share.[41]  She simply deceived Lisa as to what the documents were about.

368.  Lisa’s claim against Zhang Qi for breach of fiduciary duties fails.

E4.  Whether Zhang Qi held the Share or Sale Proceeds on constructive trust for Lisa

369.  Mr Lynn submitted that even if Lisa establishes the fraudulent misrepresentation claimed of, the Share Transfer was a valid transaction until such time as Lisa rescinded it.  Since Lisa did not rescind the Share Transfer prior to the transfer of the Share to Allied Way, a bona fide purchaser for value without notice of the fraudulent misrepresentation, no constructive trust could have arisen over either the Share or the Sale Proceeds.

370.  It is true that Allied Way must have taken the Share free from any claim by Lisa to recover it, since the Share Transfer was completed on 29th May 2018, prior to Lisa’s institution of proceedings in June 2018.  However, this should not be confused with Lisa’s right, in equity, to rescind the Share Transfer against Zhang Qi, so as to enable her to trace into the Sale Proceeds.  As explained in Snell on Equity, 35th ed, paragraph 15-015:

“ It is long established both at law and in equity that if A transfers an asset to B under a voidable contract, and, before the contract is avoided, B sells the asset to C who does not have notice of the circumstances that make the contract voidable, C will take the asset free from any claim by A to recover it.  The fact that the third party, C, has securely acquired an asset from the wrongdoer, B, has never, however, been treated in equity as barring rescission of the contract between A and B.  Following rescission the claimant A may be entitled either to trace into the proceeds of the sale if they remain identifiable in the B’s hands, or else to claim a financial accounting of those proceeds.”

371.  See also Chitty on Contracts, 35th ed, paragraph 10-151.

372.  As further explained in Shalson v Russo [2005] Ch 281 at [122] (Rimer J):

“ … There is, however, also a line of authority supporting the proposition that, upon rescission of a contract for fraudulent misrepresentation, the beneficial title which passed to the representor under the contract revests in the representee.  The representee then enjoys a sufficient proprietary title to enable him to trace, follow and recover what, by virtue of such revesting, can be regarded as having always been in equity his own property.  This may be an essential means of achieving a proper restoration of the original position if the representor has in the meantime parted with the property and is ostensibly a man of straw unable to satisfy the court’s orders for restoration of the original position.”

373.  Upon the rescission of the Share Transfer, equitable title to the Share revested retrospectively in Lisa, at least to the extent necessary to support an equitable tracing claim into the Sale Proceeds.  See Independent Trustee Services Ltd v GP Noble Trustees Ltd [2013] Ch 91 at [53] to [55] (Patten LJ);[42] El Ajou v Dollar Land Holdings plc (No 1) [1993] 3 All ER 717 at 734b-e.[43]

374.  Thus the fact that the Share was transferred to Allied Way did not preclude a constructive trust retrospectively arising over the Sale Proceeds when Lisa sought to rescind the Share Transfer by commencing proceedings.

375.  Insofar as Zhang Qi still holds the Sale Proceeds, she does so on trust for Lisa.

E5.  Whether 2nd to 6th Defendants hold Sale Proceeds, and whether 6th Defendant holds Carparks and Storage Units, on constructive trust for Lisa

E5.1  Idy Chui, Success Time, Victor Cheng

376.  There is no evidence that Idy Chui, Success Time or Victor Cheng still hold any part of the Sale Proceeds.  Indeed, Idy Chui’s evidence is that she and Success Time have paid away all of the amounts they originally received from the Sale Proceeds.  Victor Cheng paid $1.89m of the amount he received to acquire the Carparks and Storage Unit.  There has been no attempt to trace what has become of the rest of the Sale Proceeds which he received.

377.  In the circumstances, there is no identifiable part of the Sale Proceeds in the hands of these three Defendants over which Lisa can assert any proprietary claim.

E5.2  IC Accounting

378.  According to the parties’ Agreed Funds Flow Document:

378.1  of the $5.98m which IC Accounting had originally received and held for Zhang Qi (being part of the $13.28m received), $2,593,689 still remains in its bank account, frozen by the JFIU;

378.2  IC Accounting paid into court a further $281,891, which it said was held for Zhang Qi, pursuant to the court’s order of 6th June 2022.

379.  Given my findings above, these amounts are held on constructive trust for Lisa.

E5.3  Zheng Yiling

380.  There is no dispute that $1.89m of the Sale Proceeds was used by Victor Cheng to buy the Carparks and Storage Unit in Zheng Yiling’s name.

381.  Zheng Yiling’s testimony was that she had originally intended to pay for the Carparks and Storage Unit herself, but her friend told her to ask Victor Cheng to pay for them, as it might be difficult to get money from him if he started another family in the future.  At the time of her divorce, she had asked Victor Cheng to pay her $20,000 a month, but he sometimes missed the payments; for her part, she took a sympathetic attitude to this and did not press him.  She later persuaded him to buy the Carparks and Storage Unit to provide for the future living expenses of their two daughters.

382.  On this evidence, Zheng Yiling is a volunteer.  She provided no value for the Carparks and Storage Unit.  They were gifted to her by Victor Cheng.  Zheng Yiling therefore has no defence to Lisa’s claim to trace the Sale Proceeds into the Carparks and Storage Unit.

383.  Zheng Yiling holds the Carparks and Storage Unit on constructive trust for Lisa.

E6.  Whether Zhang Qi unjustly enriched at Lisa’s expense by the Share Transfer and receipt of the Sale Proceeds

384.  In the light of my finding above that Zhang Qi is liable to Lisa for damages for fraudulent misrepresentation, it is not necessary to consider the alternative claim against Zhang Qi in unjust enrichment.

E7.  Whether IC Accounting, Idy Chui, Success Time, Victor Cheng and/or Zheng Yiling have been unjustly enriched at Lisa’s expense by the receipt of part of the Sale Proceeds

385.  It will be recalled that Zhang Qi transferred $13.28m of the Sale Proceeds to IC Accounting.  I have earlier set out how there were then onward transfers to IC Accounting, Idy Chui, Success Time, Victor Cheng and Zheng Yiling.  As mentioned, there is no dispute that the various amounts were traceable as being proceeds from the sale of the Share.

E7.1  The relevant principles in relation to unjust enrichment

386.  The framework for approaching claims in unjust enrichment is to ask:

“ (a) Was the defendant enriched?

(b) Was the enrichment at the plaintiff’s expense?

(c) Was the enrichment unjust?

(d)  Are any of the defences applicable?”

See Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79 at [67] (Ribeiro PJ).

387.  For the defendant’s enrichment to be at the expense of the plaintiff, the benefit to the defendant would usually have been provided directly by the plaintiff.  There are, however, situations in which the parties have not dealt directly with one another, or with one another’s property, but in which the defendant has nevertheless received a benefit from the claimant, and the claimant has incurred a loss through the provision of that benefit.  These include: (1) where the agent of one of the parties is interposed between them, (2) where a set of co-ordinated transactions has been treated as forming a single scheme or transaction for the purpose of the “at the expense of” inquiry, and (3) where the defendant receives property from a third party into which the plaintiff can trace an interest, so that the defendant is treated as if he had received the plaintiff’s property.  See Investment Trust Companies v Revenue & Customs Commissioners [2018] AC 275 at [46] to [48].

388.  Where a defendant receives a benefit indirectly from the plaintiff who did not authorise or consent to the same, his enrichment may be unjust on the ground of want of authority.  See Relfo Ltd (in liquidation) v Varsani [2012] EWHC 2168 (Ch) at [88] (Sales J) (affirmed on appeal [2015] 1 BCLC 14 albeit without discussing the ground of restitution); CPE Diamond Holdco SRL v Sunwe Plastic HK Ltd [2024] HKCFI 3370 at [22] to [29] (E Fung J); Goff & Jones, The Law of Unjust Enrichment, 10th ed, paragraphs 8-01 to 8-03.

389.  One or more of the Defendants sought to rely on the defences of bona fide purchaser for value without notice and change of position.

390.  To establish a defence of bona fide purchaser for value without notice, a defendant would need to prove that:

“ (1) there is a purchase for value;

(2) of the legal title in property;

(3) in good faith;

(4) without notice;

(5) at the time of transfer of the legal estate”.

See Lewin on Trusts, 20th ed, volume II, paragraph 44-119.

391.  There is some controversy as to whether the defence is available in a claim in unjust enrichment: see Burrows, A Restatement of the English Law of Unjust Enrichment, paragraph 27(1).  However, as Mr Brown did not argue otherwise, I will proceed on the basis that it is.

392.  In the context of the defence of bona fide purchaser, notice includes actual notice, constructive notice and imputed notice: Snell’s Equity, 30th ed, paragraph 4-027.  For constructive notice, the test is whether a reasonable person in the recipient’s position either should have appreciated based on facts available to him that he was probably receiving money subject to another’s proprietary right, or should have made inquiries or sought advice which would have revealed the probable existence of the right.  He should make inquiries if there is a serious possibility of a third party having such a right, or if the facts known to him would give a reasonable person in his position serious cause to question the propriety of the transaction.  See Papadimitriou v Credit Agricole Corpn and Investment Bank [2015] 1 WLR 4265 at [14], [15], [20] (Lord Clarke).  Lord Clarke expressed the view that this was consistent with the formulation in Lewin on Trusts, 19th ed, paragraph 41-134[44] that in some commercial contexts a purchaser may be fixed with notice in the absence of actual knowledge, but only where in the particular commercial context involved he has failed to draw inferences which ought reasonably to have been drawn in that context or has been put upon inquiry by knowledge of suspicious circumstances indicative of wrongdoing on the part of the transferor, but has failed to make inquiries that are reasonable in the circumstances.

393.  To establish a defence of change of position, a defendant must prove that:

393.1  his position has changed in circumstances which make it inequitable for him to be required to make restitution to the plaintiff;

393.2  that there was a causative link between the receipt of the benefit and the defendant’s change of position, so that but for the receipt of the benefit, his position would not have changed; and

393.3  he changed his position in good faith.

See Zhang Kan v SPH (Hong Kong) International Trading Co Ltd [2023] 4 HKLRD 544 at [28] (G Lam JA).

394.  Good faith is a broad concept.  The lack of good faith can include a failure to act in a commercially acceptable way, and sharp practice of a kind that falls short of outright dishonesty, as well as dishonesty itself.  See Niru Battery Manufacturing Co v Milestone Trading Ltd (No 1) [2002] 2 All ER (Comm) 705 at [135] (Moore-Bick J).[45]

395.  The mere fact that a defendant has spent the money, in whole or in part, does not of itself render it inequitable that he should be called upon to repay, because the expenditure might in any event have been incurred by him in the ordinary course of things: Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 580G (Lord Goff).

E7.2  The $1.4m received by IC Accounting beneficially

396.  Of the $13.28m of the Sale Proceeds paid to IC Accounting, $1.4m was received by IC Accounting beneficially.  Lisa claims restitution of the $1.4m, relying on the unjust factor of want of authority.

397.  IC Accounting resists Lisa’s claim on the grounds that (1) the claim falls with Lisa’s case of fraudulent misrepresentation and (2) it can invoke the defences of bona fide purchase and change of position.[46]  Aside from (1), IC Accounting does not otherwise suggest that it was not enriched by the receipt of $1.4m of the Sale Proceeds, that such enrichment was not at Lisa’s expense, or that the enrichment was not unjust.

398.  I have dealt with (1) above.

399.  As to (2), since I have found that the $1.4m was paid as the agreed fee for IC Accounting’s work in relation to the sale of the Share, and that it was only on 5th June 2018 that IC Accounting (through Idy Chui) became aware that there might be someone other than Zhang Qi who had an interest in the Sale Proceeds, IC Accounting can rely on the defence of bona fide purchase.

400.  I do not consider that IC Accounting can rely on the defence of change of position, as there is no evidence to establish the necessary “but for” causal link between the receipt of the $1.4m and its payment out.  For example, Idy Chui’s evidence is that $250,000 of the amount was used to pay monthly salaries to IC Accounting’s staff and other business expenses.  Presumably these expenses would have been incurred anyway, whether or not IC Accounting had received the $1.4m.  However, this does not matter, given that IC Accounting can rely on the defence of bona fide purchase.

401.  Lisa’s claim in restitution against IC Accounting for this amount fails.

E7.3  The $2,053,000 received by Idy Chui

402.  Of the $1.4m of the Sale Proceeds received by IC Accounting, $1.15m was then transferred to Idy Chui.  IC Accounting also received $5.9m on behalf of Success Time, and of this amount, $903,000 was transferred to Idy Chui between 7th June and 8th November 2018.  Lisa claims restitution of the amounts paid to Idy Chui beneficially, totalling $2,053,000.

403.  However, as I have found that IC Accounting received the $1.4m as a bona fide purchaser without notice, IC Accounting took the amount free from Lisa’s equitable interest (and any after-acquired notice does not change this).  Lisa can no longer trace a proprietary interest into the $1.4m.  See Byers and others v Saudi National Bank [2024] AC 1191 at [162] (Lord Burrows JSC).  Lisa therefore cannot say that Idy Chui’s enrichment in receiving the $1.15m from IC Accounting was at her (Lisa’s) expense.

404.  Lisa’s claim in restitution would therefore at best relate to the $903,000 received by Idy Chui from Success Time.

405.  Idy Chui resists Lisa’s claim on the same pleaded basis as that relied on by IC Accounting, which relates to the $1.4m only.[47]  Thus in relation to the $903,000, which originated from Success Time rather than IC Accounting, there is no suggestion that Idy Chui was not enriched by its receipt, that it was not at Lisa’s expense, or that the enrichment was not unjust. Nor have any defences been pleaded.

406.  In any event, leaving aside the pleaded position, Idy Chui was clearly enriched by the receipt of the amount, which was paid to her without Lisa’s consent or authority. Idy Chui’s receipt was at Lisa’s expense: whilst the payment was not made directly by Lisa, the amount was traceable from the Sale Proceeds, so that Idy Chui should be treated as if she had received Lisa’s property (Investment Trust Companies).

407.  Furthermore, Idy Chui cannot rely on a defence of bona fide purchase in respect of the $903,000, as there is no evidence of any purchase.  All that Idy Chui did in her witness statement was to explain how the amount was subsequently disposed of.  She did not explain how she herself was a bona fide purchaser in relation to the funds.  Insofar as it might be suggested that she carried out some work for Success Time,[48] this nevertheless would not amount to a bona fide purchase.  I have earlier found that the payment by Zhang Qi to Success Time was in the nature of a gift, notwithstanding any work done by Success Time.  Idy Chui cannot rely on the same work to say that there was a bona fide purchase.

408.  Nor can Idy Chui rely on a defence of change of position in respect of any of the $903,000.  She did not explain how any part of the disposal of the amount was causally linked to her having received it, in the sense that but for her receipts, the disposals would not have been made.

409.  There is an additional reason why Idy Chui cannot rely on a defence of change of position.  She did not dispose of the funds until 5th June 2018 or thereafter,[49] at a time when Idy Chui should have made inquiries as to whether there was any third party interest in the Sale Proceeds.

409.1  The 04.06.2018 Police Letter must have given a reasonable person in Idy Chui’s position serious cause to query the propriety of Zhang Qi paying out the Sale Proceeds.  In the witness box, Idy Chui claimed that she thought the 04.06.2018 Police Letter to be “unbelievable”, as Zhang Qi had all along been in charge of Kidbrooke, and many firms had looked at the company kit, without raising any issue that there were trust documents; she wondered whether it might be that her family wanted to share the money.  In my judgment, Idy Chui’s failure to make inquiries amounted to a lack of good faith.  The 04.06.2018 Police Letter, whilst not amounting to any finding that a crime had been committed, was not merely a claim by an interested third party in the Sale Proceeds.  It was an indication that the police had basis to suspect that Zhang Qi had fraudulently sold the Share.  Insofar as she supposedly thought that the 04.06.2018 Police Letter was unbelievable or that Zhang Qi’s family was being greedy, she did not ask Zhang Qi or Lisa (whom she had met, whom she knew to be the previous owner of the Share, and whom she knew had transferred the Share to Zhang Qi for US$1) for further information to confirm her views.  Even if, up until the time of the 04.06.2018 Police Letter, Idy Chui had thought that everything had pointed to Zhang Qi as being the owner of the Share, the very point being made in the letter was that there had been a suspected fraud – in other words, that things might not be what they seemed.  Surely alarm bells should have gone off.  Indeed, I have found that alarm bells did go off: it is why Idy Chui hurried to the bank to have the remaining cheques in her possession “marked good” and then proceeded to deposit them.

409.2  Furthermore, the police had expressly asked that the transaction proceeds be withheld.  Idy Chui knew that the $903,000 had come from the Sale Proceeds – that is, the very proceeds which the police had asked to be withheld.  Yet she did not ask the police whether it would be alright to pay out a portion of the proceeds.  And this was despite the letter expressly providing a point of contact for queries.

409.3  Ms Siu submitted that Idy Chui’s good faith was evidenced by the fact that she voluntarily made reports to the JFIU about the funds held by IC Accounting on trust for Zhang Qi – Zhang Qi gave instructions that these should be used for settlement of various payments related to the sale of the Share to Allied Way.  However, these reports were about payments being made in June 2018 to settle the stamp duty payable in respect of the Cockloft and the legal fees in respect of the sale of the Share, and the amount which IC Accounting still held on behalf of Zhang Qi as at 19th July 2018.  They did not mention that Idy Chui had herself received a portion of the Share Proceeds through Success Time (and also through IC Accounting).  It was only when Idy Chui was interviewed by the police on 16th July 2018 that she listed out the various payments which Zhang Qi had made to IC Accounting and Success Time.[50]  She did not disclose her own personal receipts of the onward payments which she knew had come from the Share Proceeds, or the fact that she was paying away these amounts.

409.4  In re-examination, Idy Chui was shown her witness statement which stated that she had previously asked Zhang Qi who Lisa was after seeing Kidbrooke’s certificate of incumbency dated 12th May 2017 (which identified Lisa as one of Kidbrooke’s directors, and showed that Zhang Qi had become a director on 8th May 2017).  Idy Chui then claimed that she had also asked at the time why the Share had been transferred within such a short period of time (after Zhang Qi became a director), and Zhang Qi had explained that the Fu Hing Property was the family’s building.  I do not believe that Idy Chui made this inquiry, as she would surely have included it in her witness statement when she set out what queries she made of Zhang Qi, given her case in these proceedings that she was unaware of Lisa’s interest.  In any event, even if she had made this inquiry in May 2017, the fact that the 04.06.2018 Police Letter had been issued would surely have provided fresh grounds to indicate that Zhang Qi did not have a proper basis to pay out any part of the Sale Proceeds; yet Idy Chui made no inquiries.

410.  Idy Chui is liable in unjust enrichment in the amount of $903,000.

E7.4  The $5.9m received by Success Time

411.  Success Time received $5.9m of the Sale Proceeds through IC Accounting ($900,000 on 31st May 2018 and $5m on 5th June 2018), as it had not yet opened a bank account.  Lisa claims restitution of this amount.

412.  As with IC Accounting and Idy Chui, Success Time resists Lisa’s claim on the grounds that (1) the claim falls with Lisa’s case of fraudulent misrepresentation, and (2) it can invoke the defences of bona fide purchase and change of position.[51]  Again, aside from (1), there is otherwise no suggestion that Success Time was not enriched by its receipt, that it was not at Lisa’s expense, or that the enrichment was not unjust.

413.  For its defence of bona fide purchase, Success Time says that it was a bona fide service provider for value without notice.[52]  I have found that Success Time received the $5.9m as a gift rather than a purchaser.  I also find, at least in relation to the $5m received on 5th June 2018, that it had notice (through Idy Chui, if not Victor Cheng) that a third party might have an interest in the Sale Proceeds, and that it should have made inquiries about this.

414.  For its defence of change of position, Success Time says that it changed its position by disposing of the whole of the $5.9m.[53]  However, the dispositions all took place on or after 7th June 2018, by which time both Idy Chui and Victor Cheng (the two directors[54] and shareholders of Success Time) had learnt of the contents of the 04.06.2018 Police Letter.  As already explained, I do not consider that Idy Chui could have participated in dispositions of the Sale Proceeds in good faith from that time onwards.  This reasoning applies a fortiori in the case of Victor Cheng.  On his own evidence, he had had few dealings with Zhang Qi, so he had few first-hand observations to draw upon to say that he understood that she was the owner of Kidbrooke (for example, he cannot say that he observed that TLC dealt with Zhang Qi).  More importantly, he had accompanied Zhang Qi to the police interview on 6th June 2018, during which he learnt the details of the allegations being made against Zhang Qi, and he would have realised that they were not frivolous.  He was a practising barrister and should therefore have been well aware of the need to make inquiries.

415.  Success Time is liable in unjust enrichment in the amount of $5.9m.

E7.5  The $4.9m received by Victor Cheng

416.  Victor Cheng received:

416.1  $400,000 of the Sale Proceeds on or after 7th June 2018[55] pursuant to Success Time’s directors’ resolution to pay this to him, in his capacity as director, as remuneration for the Fu Hing Property transaction;

416.2  $500,000 of the Sale Proceeds through L&W as counsel’s fee some time after 25th June 2018;

416.3  $4m of the Sale Proceeds as a loan from Success Time on about 9th July 2018.

417.  There is no dispute that Victor Cheng received the $4.9m and that this is traceable from the Sale Proceeds.

418.  However, it transpires that Lisa’s pleaded claim in restitution relates only to the amounts received through Success Time, namely the $4m received as a loan, and the $400,000 received as director’s remuneration,[56] and these are the amounts addressed by Victor Cheng in his closing submissions.[57]  Mr Brown only indicated that a claim was being advanced in relation to the $500,000 in Annex 3 to his closing submissions.  As I cannot exclude the possibility that Victor Cheng may have had something to say in evidence about the funds received through L&W, Lisa should not be allowed to pursue this amount.

419.  Victor Cheng must have been enriched by the receipt of the $4.4m.  He has not suggested otherwise.  He does not dispute the unjust factors relied on.

420.  7" id="_Hlk238542987">420.  Victor Cheng has not advanced any defence to the claim.  He did plead that part of the loan of $4m was repaid, but I do not accept that any real evidence was provided in support.  In any event, insofar as this is sought to be relied on as a defence of change of position, he cannot do so, as he does not satisfy the requirement of good faith.  He was well aware that there was a serious basis to think that Lisa might have an interest in the Sale Proceeds: by the time he received the $4m, he had in fact acted for Zhang Qi in resisting Lisa’s claim for injunctive relief against Zhang Qi.

421.  Victor Cheng is liable in unjust enrichment in the amount of $4.4m.

E7.6  The $1.89m received by Zheng Yiling

422.  Zheng Yiling received $1.89m of the Sale Proceeds as Victor Cheng used this amount to purchase the Carparks and Storage Unit in her name.  Lisa claims restitution of this amount.

423.  There is no dispute that the amount is traceable from the Sale Proceeds.

424.  Zheng Yiling must have been enriched by the receipt.  She does not dispute the unjust factors relied on.

425.  As earlier explained, Zheng Yiling is a volunteer in respect of the $1.89m.  She did not provide value for the same.  No defences to Lisa’s claim are open to her.

426.  Zheng Yiling is liable in unjust enrichment in the amount of $1.89m.

E8.  Whether IC Accounting or Idy Chui is liable in knowing receipt for $13.28m

E8.1  The relevant principles in relation to knowing receipt

427.  IC Accounting and Idy Chui do not dispute the principles relied on by Lisa in relation to her claim of knowing receipt against them, as follows.

428.  In a claim for knowing receipt, a plaintiff must show (1) a disposal of his assets in breach of trust or fiduciary duty, (2) the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff, and (3) knowledge on the part of the defendant that the assets he received are traceable to a breach of trust or fiduciary duty.  See Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd (No 2) (2010) 13 HKCFAR 479 at [142] (Lord Neuberger NPJ).

429.  The recipient’s state of knowledge must be such as to make it unconscionable for him to retain the benefit of the receipt: BCCI (Overseas) Ltd v Akindele [2001] Ch 437 at 455E (Nourse LJ); Akai Holdings Ltd (in liq) v Kasikorn Bank PCL [2010] 3 HKC 153 at [243(1)] (Cheung JA).  See also Thanakharn Kasikorn Thai Chamkat (Mahachon) at [128] where Lord Neuberger NPJ proceeded on the basis that the unconscionability test is correct.

430.  In this context, knowledge is not confined to actual knowledge, but includes also actual knowledge that would have been acquired but for shutting one’s eyes to the obvious, or wilfully and recklessly failing to make such inquiries as a reasonable and honest man would make: Thanakharn Kasikorn Thai Chamkat (Mahachon) at [49] to [51] (Lord Neuberger NPJ).

431.  Where a defendant receives the property without notice of the breach of trust, he will nevertheless become liable to account for it if he subsequently discovers the facts, from the date he acquired notice (Agip (Africa) Ltd v Jackson [1990] Ch 265 at 291F-G;[58] Lewin paragraph 42‑083), but not if he acquired it as a bona fide purchaser for value: Byers and others v Saudi National Bank [2024] AC 1191 at [20], [23] (Lord Briggs JSC); [168] (Lord Burrows JSC).

432.  Where a defendant receives the property with notice of the breach of trust, but from a bona fide purchaser for value, there will be no claim in knowing receipt against him, because the plaintiff’s title will already have been overreached: Byers at [20], [23] (Lord Briggs JSC); [169] (Lord Burrows JSC).

433.  IC Accounting and Idy Chui rely on the defence of bona fide purchase.  In this regard, where a defendant does not have notice of a prior interest in the property in question, he would not be liable for knowing receipt in the first place, since the element of unconscionability would not have been satisfied: see Papadimitriou at [33], where Lord Sumption observed that the question of what constitutes notice or knowledge for the purpose of establishing unconscionability in knowing receipt is the same as the question of what constitutes notice for a bona fide purchaser of assets without notice of a prior interest in them.

434.  IC Accounting and Idy Chui further rely on the defence of change of position.  It is not clear that such a defence is available to a claim for knowing receipt (Lewin, paragraph 42-098), and no authority has been cited in support.  In any event, if it is unconscionable for a defendant to retain a receipt, it is unlikely that a defendant would be able to satisfy the requirement of good faith required to invoke the defence.  See Akindele at 456F (Nourse LJ).

E8.2  The $13.28m received by IC Accounting

435.  In the present case, $13.28m of the Sale Proceeds was transferred by Zhang Qi to Lisa in breach of trust.

436.  Only $1.4m was received by IC Accounting beneficially.  As explained earlier, of the rest, $5.9m was received on behalf of Success Time, and the remainder was received for IC Accounting or Idy Chui to handle on behalf of Zhang Qi (or her company).  Thus the claim for knowing receipt against IC Accounting could at most relate to the $1.4m only.

437.  However, IC Accounting received this amount on 31st May 2018 as an agreed fee for its services, at a time when Idy Chui had not yet become aware of Lisa’s claim to the Sale Proceeds.  IC Accounting took the $1.4m free from Lisa’s equitable interest, thus precluding any claim in knowing receipt; the fact that Idy Chui learnt of the 04.06.2018 Police Letter does not change this (Byers at [168]).

438.  The claim in knowing receipt against IC Accounting fails.

E8.3  The claim against Idy Chui in knowing receipt

439.  Lisa also claims for $13.28m against Idy Chui in knowing receipt.

440.  Out of the $13.28m, only $2,053,000 was received by Idy Chui beneficially ($1.15m from IC Accounting and $903,000 from Success Time).  Of this $2,053,000, Lisa can only trace into $903,000, as the $1.15m originated from IC Accounting, which was a bona fide purchaser without notice.

441.  Thus the claim for knowing receipt against Idy Chui could at most relate to the $903,000 only.

442.  For reasons similar to those explained in section E7.3 above, Idy Chui received this amount as a volunteer and is liable to account for it from the time she became aware of the 04.06.2018 Police Letter; furthermore, she cannot rely on any defence of bona fide purchase or change of position.

443.  Idy Chui is liable for knowing receipt in the amount of $903,000.

F.  VICTOR CHENG’S CONDUCT

444.  Victor Cheng was (and is) a practising barrister.  The nature of his participation in the events in question gives rise to considerable cause for concern as to the propriety of his conduct.

F1.  Oi Wah Loan

445.  Victor Cheng attended the meeting of 10th May 2017 at which Zhang Qi was introduced by Henry Lui of 18 Finance to Daniel Ng of Oi Wah (and to Victor Cheng himself).  In cross-examination of Victor Cheng, it emerged that that no solicitor was present at this meeting.  His evidence is that (1) in fact, it was he who suggested to Oi Wah at this meeting that his friend Ng Wai Kit of Lui & Law could act for  Oi Wah in the proposed loan to Zhang Qi (but Lui & Law was not instructed until afterwards); (2) at this meeting, he was the one (rather than Daniel Ng of Oi Wah) who suggested and explained the terms of the proposed loan to Zhang Qi, and the parties present were happy to be guided by him as to how the transaction was to be structured.  Such terms included, for example, the amendment of the memorandum and articles of Kidbrooke so as to enable Oi Wah to better control the company (by deleting the power to borrow, and adding a director to the board) – in Victor Cheng’s words, “as a lawyer I have to balance the interests of both parties”.  It is not clear on what basis he was instructed to act for Oi Wah at this meeting.

446.  At this meeting, Victor Cheng also introduced Idy Chui, his friend and business partner, to participate in the transaction by helping Kidbrooke to obtain corporate documents and change its administrator, work which he agreed could have been done by Kidbrooke itself or by its existing representatives.  Idy Chui then joined the meeting.  Victor Cheng agreed in cross-examination that he brought in Idy Chui “unnecessarily to give her some work”.

447.  After this meeting, Oi Wah engaged Ng Wai Kit, who then instructed Victor Cheng to draft documents for Oi Wah (such as the loan agreement, deed of debenture, share charge and personal guarantee).

448.  It is Victor Cheng’s testimony that (1) he asked for $98,000 for his fees, (2) Daniel Ng of Oi Wah said that as a listed company, it could not pay that much; there was a standard amount of $10,000 to $20,000 which they could pay; he suggested that Victor Cheng could prepare amendments to Kidbrooke’s memorandum and articles of association which could then be approved by the Samoan lawyers (who would also charge for their services), and ask to be paid for this work to be paid for by Zhang Qi, (3) he (Victor Cheng) called Zhang Qi directly to ask her to pay $98,000, (4) he viewed Oi Wah, not Zhang Qi, as his client, (5) he was not qualified in Samoan law, but the amendment work he did was not legal work and “could be done by anyone”, (6) his “groundwork” would then be reviewed by the West Samoan lawyer who would charge his own fee (but Victor Cheng claimed that this would be reduced because of his “groundwork”), and (7) he let Lui & Law charge Oi Wah the “standard” amount of $10,000 so that Ng Wai Kit could earn this amount.

449.  It is not disputed that the $98,000 was paid by Zhang Qi directly to Victor Cheng, using funds drawn from Kidbrooke’s account, on 7th June 2017.  Zhang Qi’s evidence is that she received a call from Victor Cheng after the Oi Wah Loan transaction was completed, and he told her that since she had not paid any legal fees for the transaction, she had to pay $98,000; she therefore deposited a cheque drawn in his favour for this amount in accordance with his instructions; he did not give her any fee note for this.

450.  Kidbrooke’s profits tax computation for 2017/18 was prepared by Idy Chui.  In this document, the $98,000 fee paid to Victor Cheng was described as “Oi Wah Money Lender – Share Charge – Legal Opinion”.

F2.  Success Time

451.  The evidence of Idy Chui is that she and Victor Cheng started a “real estate consultancy business providing various consultancy related services” in July 2017.  She and Victor Cheng provided “accounting and legal consultancy services”.  Success Time was acquired by acquired by Idy Chui and Victor Cheng in 2017 for their business.  Idy Chui and Victor Cheng became its directors on about 2nd January 2018.  Although Victor Cheng resigned as director on 10th July 2018, he continued to take an active interest in the company’s affairs.[59]

452.  The evidence of Zhang Qi is that Idy Chui promised to help her in relation to the sale of the Fu Hing Property to any bidder who could offer more than Allied Way, including to help her deal with “all related issues brought about by kicking the title, including legal issues and lawsuits”.[60]

453.  Whether or not Victor Cheng had the consent of the Bar Council to engage in a supplementary occupation was raised in the SOC and in Lisa’s fourth supplemental witness statement.  The issue was not directly explored at trial.

454.  At trial, when asked about the work which Success Time did to justify its $5.9m fee, Victor Cheng claimed that he did very little of the work.

455.  Leaving this aside, it will be recalled that Victor Cheng separately charged Zhang Qi $500,000 for advising her in relation to the sale of the Share: out of the $920,000 paid by IC Accounting to L&W on about 25th June 2018, $500,000 was on-paid to Victor Cheng, as counsel’s fee for advising Zhang Qi.

456.  Victor Cheng acknowledged in cross-examination that there were no written instructions as to what he was asked to advise about, and no quotation from him as to the fees payable; he came up with the figure of $500,000 in about early May 2018 after all his work as counsel had been completed, having advised Zhang Qi since about February 2018.[61]  He said that the fee was based not just on how much time he had spent but also on the size of the transaction.  L&W issued its feenote to Zhang Qi on 21st May 2018, stating “Counsel Fee” of $500,000; Victor Cheng did not issue his feenote to L&W until 3rd July 2018.[62]  By the time Victor Cheng was paid (which must have been after L&W was paid on about 25th June 2018), he was well aware that Zhang Qi was being investigated for fraud and that it was likely that the $500,000 originated from the Sale Proceeds.

457.  Victor Cheng was cross-examined about whether there might be any conflict of interest between his acting as counsel to Zhang Qi and his directorship of Success Time.  In particular, he “felt worried that [Zhang Qi] might sell the Fu Hing Property to Allied Way at the original price.  Then all our work [ie. that of Success Time] would be ruined”.[63]  He acknowledged being worried that if Zhang Qi went back to completing the sale of the Share to Allied Way at the original price of $110m, Success Time would not get paid.

458.  As for Success Time’s fee, it will be recalled that Zhang Qi’s evidence is that the $6.8m which Victor Cheng asked for (for Success Time) was to cover dealing with the legal issues of “kicking the title” and legal costs for dealing with court proceedings which Allied Way had at one point threatened. [64]  Victor Cheng denied that the fee was sought for legal work.  He repeatedly downplayed the extent of his work for Success Time (for procuring the Future Stars Loan, he says he only passed on the contact to Idy Chui; for the Future Stars Loan Agreement, he said he “just have a look, didn’t involve in anything”;[65] he proposed $6.8m “even though I am not participate a lot”; he did not introduce any new buyers; he did not advise Zhang Qi about how to deal with early repayment of the Oi Wah Loan even though she wanted to know what to do).

F3.  Zhang Qi’s police interview on 6th June 2018

459.  Victor Cheng was asked by Eric Wong of L&W to attend Zhang Qi’s police interview of 6th June 2018.  As mentioned above, Victor Cheng’s evidence was that Eric Wong had indicated that it was not actually necessary for Victor Cheng to attend, but “the “usual practice” of Eric Wong (and also Daniel Ng of Oi Wah) was that “they would honour me to participate in those work related to the lay client that introduced by me, so Eric proposed that I better go, because I [Eric Wong] am willing to share the cost [fees] with you.”

460.  Zhang Qi’s evidence in cross-examination was that she did not retain him and was surprised when he appeared; it was not her idea to ask him to attend.[66]

F4.  Receipt of Sale Proceeds

461.  Victor Cheng acknowledged in cross-examination that when, in his capacity as director of Success Time, he passed the resolutions (1) of 7th June 2018 resolving that he should receive $400,000 in his capacity as director for the Fu Hing Property transaction, and (2) of 6th July 2018 resolving that Success Time should lend him $4m, he recognised that the funds he was dealing with were proceeds from the sale of Kidbrooke, and that police were treating such proceeds as the proceeds of crime, and indeed had asked L&W to withhold the funds involved in the transaction.

462.  He had this knowledge also when he received the sums on 7th June 2018 ($200,000), 14th June 2018 ($150,000), 28th June 2018 ($50,000) and about 9th July 2018 ($4m).

F5.  Acting for Zhang Qi in present proceedings

463.  It will be recalled that Lisa applied for injunctive relief against Zhang Qi on 25th June 2018.  At the inter partes hearing on 29th June 2018, Zhang Qi was represented by Victor Cheng.

F6.  Referral to Bar Association

464.  It will be apparent from the recitation above that even on Victor Cheng’s own evidence of what he did, there is much cause for concern in relation to his conduct as a practicing barrister.  In the circumstances, I consider it appropriate to refer the matter to the Bar Council of the Hong Kong Bar Association for its consideration.

G.  DISPOSITION

465.  I therefore give judgment for Lisa as follows:

465.1  against Zhang Qi:

465.1.1  in the amount of $140m, as damages for fraudulent misrepresentation;

465.1.2  a declaration that the amounts of $80m and $1.1m paid into court on behalf of Zhang Qi were held by her on trust for Lisa;

465.2  against IC Accounting:

465.2.1  a declaration that it holds the amount of $2,593,689 which has been frozen in its bank account by the JFIU on trust for Lisa;

465.2.2  a declaration that the amount of $281,891 paid by IC Accounting into court pursuant to the court’s order of 6th June 2022 was held by IC Accounting on trust for Lisa;

465.3  against Idy Chui in the amount of $903,000, on the grounds of unjust enrichment and knowing receipt;

465.4  against Success Time in the amount of $5.9m, on the grounds of unjust enrichment;

465.5  against Victor Cheng in the amount of $4.4m, on the grounds of unjust enrichment;

465.6  against Zheng Yiling:

465.6.1  a declaration that she holds the Carparks and Storage Unit on trust for Lisa;

465.6.2  in the amount of $1.89m, on the grounds of unjust enrichment.

466.  I dismiss the other claims made by Lisa.

467.  The Defendants did not advance any basis to resist Lisa’s claim for interest.  Each of the Defendants should further pay to Lisa pre‑judgment interest at the rate of 1% over the best lending rate quoted by HSBC on the above amounts from the date of his/her/its receipt until judgment, and thereafter at judgment rate until payment.

468.  I further make a costs order nisi that the costs of and occasioned by the action, including all costs reserved, are to be paid by the Defendants to Lisa, with a certificate for two counsel, to be taxed if not agreed.

469.  The parties are to lodge an agreed draft order for approval within fourteen days to reflect the terms of the judgment, to deal inter alia with matters such as the $80m and $1.1m paid into court, the amounts held by Idy Chui on behalf of Zhang Qi which are subject to an injunction or freezing by the JFIU, and Lisa’s election as to remedies.  In case of disagreement, the parties should lodge a joint letter setting out the draft order containing both the agreed and non-agreed parts, with the parties’ respective explanations.

470.  I direct that a copy of this judgment be sent to the Bar Council of the Hong Kong Bar Association for consideration of the matters set out in section F above regarding the conduct of Victor Cheng.