楊曉英 v. SZE KAI LUNG

HCA 2452/2014

[2019] HKCFI 2089

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2452 OF 2014

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J U D G M E N T

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1.  This is a rather straightforward case. The plaintiff, as creditor,claims against the defendant, as debtor, for the repayment of an outstandingdebt in the sum of RMB 1,751,073.84 (“the Debt”). The plaintiff’s Statement of Claim was filed on 19 October 2016 and subsequently re-amended on 7 September 2018.

2.  The defendant has only filed a defence containing bare denials and puts the plaintiff to strict proof.  The defendant has not even filed any evidence to put forward a positive case.

3.  Apart from bare denials, the only defence put forward by the defendant is that the governing laws of the loan between himself and the plaintiffare the laws of the Mainland.  However, the defendant has not adduced any expert evidence on the laws of the Mainland to support his defence.

4.  One day before the trial, the defendant filed a notice to act in person and sought an adjournment of the trial so that he could find a new set of lawyers.

5.  On the very day of the trial, the defendant simply chose to be absent.

6.  In the circumstances, I am of the view that the proper course is to proceed with the trial as scheduled.  There are no good reasons as to why this trial should be adjourned.

7.  The plaintiff duly gave evidence in this trial. Her evidence is not challenged and I find her version of events to be credible.  In any event,her evidence is corroborated by contemporaneous evidence.  I make the following factual findings.

Factual findings

8.  In or around January 2014, one Chan Pik Fan (“Chan”), common friend of both the plaintiff and the defendant, asked the plaintiff whether she could provide a short-term loan to the defendant.

9.  As the defendant did not have a bank account in the Mainland,the loan was agreed to be deposited into the account of the defendant’s relative, a Mr Sze Chun Fai (“Mr Sze”).

10.  The basic terms of the loan were:

(1)	Principal sum	: RMB 2,000,000
(2)	Duration	: 2 months
(3)	Recipient’s account	: Mr Sze

11.  I also accept the plaintiff’s case that the plaintiff did tell the defendant that the defendant should first pay her a sum of RMB 100,000 as earnest money, and that the plaintiff should have a discretion to deduct part or whole of the sum as interest depending on the time of repayment.  If the defendant could repay the RMB 2,000,000 loan in time, the earnest money would be returned to the defendant.  The defendant duly accepted this arrangement.  The loan did not otherwise include interest as the plaintiff considered the loan to be a short-time loan advanced on a friendly basis.

12.  On 22 January 2014, the plaintiff sent a draft loan agreement to the Defendant.  On the same day, the defendant, through his secretary, by email, sent back a copy of the loan agreement duly signed by him.  Chan also signed as a guarantor for the loan.

13.  The original of this loan agreement (“the January Loan Agreement”) was then sent back to the plaintiff in Chengdu albeit that the agreement stated that it was signed in Chengdu.  The reason is that the plaintiff thought that the January Loan Agreement would be signed in Chengdu.

14.  On 24 January 2014, the earnest money in the sum of RMB 100,000 was duly transferred from Mr Sze’s account to the plaintiff’s account.  

15.  On 27 January 2014, the plaintiff transferred the sum of RMB 2,000,000 to Mr Sze’s account pursuant to clause 2 of the January Loan Agreement.

16.  On the same date, the defendant and Chan duly signed a receiptacknowledging that the defendant had received the loan of RMB 2,000,000.

17.  On 25 March 2014, the defendant again, through his secretary,emailed back a new agreement which in effect extended the time for repayment of the loan to 26 April 2014 (“the March Agreement”).

18.  In around late April 2014, the defendant failed to repay the loan.  He further requested the plaintiff to extend the time for repayment for one month.  Accordingly, the plaintiff and the defendant entered into a further new agreement dated 25 April 2014 extending the time for repayment to 26 May 2014 (“the April Agreement”).

19.  Once again, the defendant failed to repay by 26 May 2014. Naturally, the plaintiff kept chasing the defendant for repayment.

20.  The plaintiff said that she would agree to further extend the time for repayment to 26 June 2014, but a new agreement would have to be signed to replace the previous agreements.  The defendant duly accepted.  Accordingly, a new agreement backdated to 22 January 2014 was executed by the parties to supersede all previous agreements (“the July Agreement”).The July Agreement also attached a receipt from the defendant which duly recorded that the defendant had received the loan amount of RMB 2,000,000 on 27 January 2014.

21.  The July Agreement contains the following material terms:

(1)  The term of the loan shall be five months commencing from 27 January 2014 and expiring on 26 June 2014 (Clause 3).

(2)  Any repayment should be used to deduct the outstanding interest first before principal (Clause 5(1)).

(3)  The Defendant should pay interest on the loan at the rate of four times of the interest rate of the bank loan announced by the People’s Bank of China in the Mainland for the same period of time (Clause 4(1)).

22.  I accept the plaintiff’s evidence that on 16 July 2014, the plaintiff, the defendant and Chan met in the International Financial Centre,Central, Hong Kong. I also find that during the said meeting:

(1)  The Defendant initialled on each page of the July Agreement and signed the July Agreement and the attached receipt;

(2)  It was agreed that the July Agreement should be dated 22 January 2014 to show that the previous written agreements were superseded;

(3)  The Defendant further asked for 10 more days to repay the loan and the plaintiff orally agreed that the time for repayment be extended to 26 July 2014.

23.  I have no difficulties in finding that:

(1)  The defendant indeed received the entire sum of the loan in the amount of RMB 2,000,000.

(2)  He had only repaid four sums of RMB 100,000 to the plaintiff on 4 March 2014, 1 April 2014, 28 April 2014 and 4 June 2014 respectively.

24.  Further, in emails dated 7 January 2015 and 13 February 2015,from the defendant to Chan, the defendant unequivocally admitted that he owed the loan to the plaintiff and simply asked for more time to arrange the repayment.

The governing laws issue

25.  The defendant raised the point that the July Agreement is governed by the laws of the Mainland.  That is, of course, true. But I agree with Mr Man for the plaintiff that I do not know where it gets the defendant.  As the defendant chose not to adduce expert evidence on the laws of the Mainland, the legal position is that Hong Kong laws apply.  (See Johnston,The Conflict of Laws in Hong Kong (3^rd ed, 2017) at §§2.076 – 2.077.)

26.  Mr Man for the plaintiff further submitted that as a matter of our own domestic law, our contract laws is largely based on our common law jurisprudence albeit that some areas of our contract laws are governed by statutory provisions. I agree. In my view, the governing laws issue cannot legitimately operate as a defence to the defendant’s undisputable debt to the plaintiff.

Disposition

27.  For the above reasons, I find that the plaintiff has duly proved her case and a judgment should be entered in her favour.

28.  As far as interest is concerned, I agree with Mr Man for the plaintiff that parties are free to backdate a contract such that it can take effect retrospectively (see Northern & Shell plc v John Laing Construction Ltd[2002] EWHC 2258 (TCC) at §§38 and 40; affirmed by the English Court of Appeal in [2003] EWCA Civ 1035 at §§19, 23, 51 and 52.  These two decisions were cited with approval in Achieve Goal Holdings Ltd v Zhong Xin Ore-Material Holding Co Ltd [2018] HKCFI 2718 (HCA 1987/2005, unreported, 15 December 2018), at §267, per Au-Yeung J.

29.  As such, the plaintiff is entitled to claim interest at the contractual rate from 27 January 2014 up to the date of the judgment, and thereafter at the judgment rate.

30.  Accordingly, I make the following orders:

(1)  The defendant is to pay the sum of RMB 3,327,326.45 to the plaintiff (including the total outstanding sum of RMB 1,845,582.16 and the contractual interest in the sum of RMB 1,481,744.29) forthwith.

(2)  Costs of and occasioned by this action to be paid by the defendant to the plaintiff, to be taxed if not agreed, on a party to party basis.

31.  Finally, it remains for me to thank Mr Man for the plaintiff for his helpful assistance to this Court.