CHEN PUI CHI AND ANOTHER v. CAI YIFEN AND ANOTHER

HCMP 1096/2018

[2024] HKCFI 1022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1096 OF 2018

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J U D G M E N T

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A.  INTRODUCTION

1.  The central issue for this trial is whether the defendants had agreed to pay the plaintiffs interest at the rate of 1.68% per month for late repayments of sums due under a Tomlin Order, or whether the conventional pre-judgment rate should apply. 

2.  The 1^st plaintiff and the 2^nd plaintiff are wife and husband.  They started this action against the defendants in 2018 in respect of a series of loans advanced to the defendants in 2017 in the total sum of USD 412,000 (the “Loan”).  

3.  On 24 December 2018, parties settled the original claim by way of a Tomlin Order, that the proceedings were stayed save for the purpose of carrying out the agreed terms scheduled to the Tomlin Order (the “Schedule”). 

4.  Term (A) of the Schedule provides that (as translated to English) the 1^st defendant agreed to repay the 2^nd plaintiff USD 318,474 (inclusive of interests) in three equal instalments of USD 106,158 on or before the following dates (“第一被告人同意歸還第二原告人欠款一共美金318,474元 （已經包括利息），分為三期償還，每期均等為美金106,158元，詳細日期如下”):-

(1)  The 1^st instalment on or before 15 January 2019 (the “1^st Instalment”);

(2)  The 2^nd instalment on or before 15 February 2019 (the “2^nd Instalment”; and

(3)  The 3^rd instalment on or before 15 March 2019 (the “3^rd Instalment”).

5.  It is not disputed that the defendants paid the 1^st Instalment in full and on time.  Yet, in breach of the compromise under the Tomlin Order, they were late in the repayments of the 2^nd Instalment and the 3^rd Instalment.  

6.  The defendants made partial repayments in 2019 and 2023, until eventual full repayment on 6 June 2023. 

7.  The 2^nd Instalment was fully settled by three repayments in 2019:-

(1)  3 June 2019: USD 50,000;

(2)  12 June 2019: USD 38,000; and

(3)  9 July 2019: USD 18,158.

8.  The 3^rd Instalment was partially settled by one repayment in 2019, and it was not until 2023 that the remaining balance was settled by four repayments:-

(1)  16 July 2019: USD 20,000;

(2)  14 February 2023: USD 35,000;

(3)  1 March 2023: USD 20,000;

(4)  6 March 2023: USD 29,645; and

(5)  6 June 2023: USD 1,513.

(Repayments at §§7-8 collectively as the “Late Repayments”)

9.  The Tomlin Order has not provided for any interest upon default. 

B.  PARTIES’ RESPECTIVE CASES

10.  On 15 April 2019, the plaintiffs filed the original Statement of Claim (“OSOC”) for the then unpaid amount of the Loan (USD 226,530) with interests accruing from a certain date before the Tomlin Order (20 October 2017) at varying monthly interest rates of 1.5%, 1.6% and 1.68%.  

11.  On 11 November 2022, the plaintiffs took out a Summons for leave to enter judgment and to enforce the Tomlin Order. 

12.  On 18 May 2023, the plaintiffs filed an Amended Statement of Claim (“ASOC”) with leave to enforce the Tomlin Order for the balance of the 2^nd and 3^rd Instalments with a monthly interest rate of 1.68%.  

13.  In an overview, the plaintiffs’ case is that parties have reached an agreement whereby the defendants would, in respect of the Late Repayments, pay the plaintiffs interests accruing from 15 February 2019 (in respect of payments for the 2^nd Instalment) or 15 March 2019 (in respect of payments for the 3^rd Instalment) until their respective repayment dates (the “Alleged Accrual Period”), at a monthly interest rate of 1.68% (the “Alleged Agreement”).  

14.  The plaintiffs have relied on multiple bases to support their case of there being the Alleged Agreement, including the following documents and/or records (in chronological order):-

(1)  WhatsApp messages between the 2^nd plaintiff and the 1^st defendant (the “P2/D1 WhatsApp”), especially those on 21 March 2019. 

(2)  The OSOC dated 15 April 2019 (raised for the first time at the hearing).

(3)  The Defences dated 24 May 2019.

(4)  WhatsApp messages between the 1^st plaintiff and the 1^st defendant (the “P1/D1 WhatsApp”) on (i) 10 October 2019; (ii) 3 March 2020; (iii) 21 April 2020, as follow-up to the 1^st plaintiff’s email the same day (the “P1 Email”); and (iv) 22 May 2020.

(5)  The transcript of the court hearing on 1 December 2022 before Master Andy Ho (the “Court Transcript”).

15.  I shall elaborate on the plaintiffs’ case and/or arguments in relation to each of these bases below.  

16.  On 24 May 2019, the defendants filed their respective Defences which are identical in their content.  It is in issue as to whether, on a proper reading of the Defences, the defendants have admitted having entered into the Alleged Agreement.  

17.  Suffice it to say here that the defendants’ case is chiefly negative in that the parties had not entered into the Alleged Agreement at all material times.  As a result, pre-judgment interest rate of USD prime+1% should apply over the Alleged Accrual Period in respect of the Late Repayments. 

18.  By Master Phoebe Man’s order dated 30 August 2023, the issue of interest and rate of interest is tried before me. 

C.  ISSUES

19.  As the defendants had fully settled the Late Repayments by 6 June 2023, the outstanding issues are in relation to the interests for the Late Repayments:-

(1)  Whether the parties have reached the Alleged Agreement; and

(2)  If not, what the interest rate and accrual period should be.

D.  LEGAL PRINCIPLES

20.  As there is no agreement in the Schedule for interest payment in the event of default, the starting point is that the plaintiffs bear the burden to prove that the parties had, on the balance of probabilities, reached the Alleged Agreement. 

21.  It is trite that an offer and an acceptance are two fundamental elements for the constitution of a valid contract.  

22.  Acceptance of an offer means a final and unqualified expression of assent to the terms of an offer.  An objective test is applied in determining whether there is acceptance: Chitty on Contracts, 34^th Edition (2021)at §4-032. 

23.  Generally, silence, rejection or partial rejection of an offer is not considered as acceptance in the eyes of law.  A reply that varies or counter proposes the term(s) of an offer is also not acceptance, but a rejection of the offer accompanied by a counter-offer, which the original offeror may then accept or reject: Chitty at §§4-038 and 4-088.  

24.  Besides, if there is no specification as to how long the offer it will last, it will terminate after the lapse of a reasonable time.  What is a reasonable time depends on the circumstances such as the nature of the subject matter and the means used to communicate the offer.  In particular, where an offer is made by speedy means of communication, such as email, it will terminate after a relatively short time: Chitty at §§4-122 and 4-127. 

25.  Further, an agreement to negotiate and an agreement to agree is unenforceable: Chitty at §4-169. 

E.  ANALYSIS

26.  Whether the plaintiffs have established their case on each of the bases advanced shall be evaluated against the evidence before me, including the WhatsApp records, emails and other court documents, to be supplemented by parties’ oral evidence in Court.  

27.  At the outset, it is highlighted that the resolution of the issues ultimately hinges upon whether, objectively reading the documents, there were offer and acceptance of the Alleged Agreement.  The subjective understanding of the witnesses as to the legal effect of the relevant documents is not determinative.  

28.  At the hearing, the plaintiffs represented themselves and the defendants were represented by Ms Kwong.  Apart from the 2^nd defendant, the rest of the parties testified and gave live evidence.  

F.  FIRST BASIS – THE P2/D1 WHATSAPP

F1. The Relevant Messages

29.  Between 13 and 20 March 2019, there was a chain of text messages between the 2^nd plaintiff and the 1^st defendant, bargaining over the rate and the starting dates of accrual for the interest over the Late Repayments:-

(1)  On 13 March 2019, the 1^st defendant offered a 1.5% monthly interest rate without stating the starting date.

(2)  The 2^nd plaintiff then counter-offered “2.2% per month, calculate[d] from 24/12/2018”.

(3)  On 14 March 2019, the 1^st defendant rejected the 2.2% counter-offer and reiterated her offer of 1.5% (“Sorry, [i]t’s too much we only can pay 1.5%”).

(4)  On the same day, the 2^nd plaintiff counter-offered 2%.

(5)  The 1^st defendant then counter-offered 1.68% for the first time. 

(6)  On 15 March 2019, the 2^nd plaintiff rejected 1.68% and instead offered “1.8% per month calculate[d] from 24/12/2018”.  

(7)  The 1^st defendant did not reply. 

(8)  On 19 March 2019, the 2^nd plaintiff urged the 1^st defendant to reply, or it would leave him no choice but to continue with legal procedures against the defendants.

(9)  On the same day, the 1^st defendant counter-offered 1.68%, to be paid “from 15/02/2019 & 13/03/2019”.

(10)  The 2^nd plaintiff texted his disappointment and that interest should be paid “from 24 December 2018”.

30.  This then led to the messages on 20 and 21 March 2019, which are reproduced below:-

[20 March 2019, 10:42pm] 1^st defendant: “I am sorry pls cfm 1.68% from 15/02/2019 & 15/03/2019”.

[21 March 2019, 5:47pm] 2^nd plaintiff: “i am sorry too, but i cannot confirm either because it is unfair…we are a fair and honest people, if you said 1.8% interest rate per month is too high and it is difficult for you to afford, then we can still discuss this matter, but if you tell me you will not pay interest from 24 December, 2018 and enjoy my money for free without paying interest, then this is a dishonest way to behave and we will have no choice but to continue to sue you and Mr Lee in court…” (the “P2 5:47pm Message”).

[21 March 2019, 5:49pm] 1^st defendant: “I am sorry pls cfm 1.68% from 15/02/2019 & 15/03/2019”. (the “D1 5:49pm Message”).

[21 March 2019, 5:51pm] 2^nd plaintiff: “i (sic) understand, so I (sic) will continue with the case in court, and let the judge to explain to you what you need to pay!” (the “P2 5:51pm Message”).

F2. The Plaintiffs’ Case

31.  The plaintiffs argue that in the P2/D1 WhatsApp, the 1^st defendant had assured multiple times that the defendants would pay the plaintiffs interests.  

32.  In particular, the 2^nd plaintiff’s oral evidence during the hearing is that by the D1 5:49pm Message, the 1^st defendant made an offer of “1.68% from 15/02/2019 & 15/03/2019”, and the 2^nd plaintiff accepted it in the P2 5:51pm Message by saying “[I] understand, so [I] will continue with the case in court, and let the judge explain to you what you need to pay!”  

33.  During cross-examination, when it was suggested to him that the P2 5:51pm Message amounted to a rejection, the 2^nd plaintiff referred to the P2 5:47pm Message and said that this message showed that he was willing to compromise on the interest rate. Thus, by replying “[I] understand” at the P2 5:51pm Message, he accepted the “1.68%” as a compromise and only rejected the accrual period to be “from 15/02/2019 & 15/03/2019”. 

F3. Analysis

34.  For the period between 13 and 21 March 2019, I do not find that there was any acceptance of any offers.  The correspondence during this period constitutes a chain of offers, rejections and counter-offers, with no acceptance. 

35.  I also reject the plaintiffs’ case that the P2 5:51pm Message amounted to an acceptance of the 1^st defendant’s offer in the D1 5:49pm Message for the following reasons. 

36.  First, objectively interpreted, by the P2 5:51pm Message, the 2^nd plaintiff rejected the 1^st defendant’s offer.  

37.  By the P2 5:47pm Message, the 2^nd plaintiff did leave room for future discussion of the interest rate, should 1.8% be too high.  Yet, he clearly rejected the offer for interest to run from 15 February and 15 March 2019, saying that if that was the 1^st defendant’s intention, the plaintiffs “will have no choice but to continue to sue you and Mr Lee in court”.  This reference to Court is objectively expressing a rejection. 

38.  Thus, after the 1^st defendant had made the offer, by the P2 5:51pm Message “[I] understand, so [I] will continue with the case in court…” (emphasis added), the 2^nd plaintiff was once again referring to the Court as a way to express his rejection and disagreement.  The word “so” follows the words “[I] understand”, which means continuing the case in Court is what the 2^nd plaintiff would do as a result of him understanding the offer.  

39.  When a reasonable person reads the P2 5:51pm Message as a whole, it does not bear the meaning as the 2^nd plaintiff asserts, namely an acceptance only on the 1.68%, and a rejection over the starting dates of accrual.  

40.  The P2 5:51pm Message simply means that the 2^nd plaintiff understood the offer, and so, as a result, he rejected it as a whole and would continue the case in Court. 

41.  Secondly, even if the 2^nd plaintiff were right that the P2 5:51pm Message could be understood as accepting a 1.68% monthly interest rate, it would be a partial acceptance of the offer.  However, the terms of the offer included both the interest rate and the accrual period.  A partial acceptance does not qualify as proper acceptance in the present case as it is not an unqualified assent to the full or essential terms of the offer.  

42.  Unlike some sale of goods contracts where certain terms such as delivery dates or payment method can be left open to be determined after an agreement is concluded, in an offer to pay interest, both the interest rate and the accrual period are essential terms as they can lead to a drastically different agreement and payment obligation.  

43.  Thus, objectively construed, parties could not have intended to be bound by an agreement to pay interest without first determining a matter as crucial as the accrual period.  Such an agreement therefore can only have been formed with an acceptance to both of these terms.  

44.  Thirdly, the 2^nd plaintiff said at Court that by texting “[I] understand” in the P2 5:51pm Message, he affirmed the P2 5:47pm Message to discuss or negotiate the interest rate.  However, this could only be taken as far as an agreement to negotiate and an agreement to agree, which do not constitute an enforceable contract. 

45.  As such, no acceptance was made in the P2/D1 WhatsApp.  The P2 5:51pm Message constituted a rejection of the 1^st defendant’s offer. 

G.  SECOND BASIS – THE OSOC

G1. The Plaintiffs’ Case

46.  At the outset, it is important to point out that this basis had not been raised until the 2^nd plaintiff’s oral evidence during the hearing.  

47.  During cross-examination, the 2^nd plaintiff asserted that the offer of 1.68% contained in the D1 5:49pm Message was accepted and communicated to the defendants through the filing of the OSOC on 15 April 2019.  

48.  The 2^nd plaintiff relies specifically on:-

(1)  3, paragraph 5 of the ASOC, which reads that:- 

“After the Defendants had breached the Tomlin Order…the Plaintiffs contacted the Defendants and the Defendants urged the Plaintiffs to accept a delay and agreed to pay the Plaintiffs a monthly interest of 1.68% for all the remaining balance of the Tomlin Order which they did not pay on time.”

(2)  4, the second relief of the ASOC, where the plaintiffs claimed a “Monthly interst of 1.68% from 15/2/2019 until full settlement of the Tomlin Order.”

49.  However, when cross-examined by Ms Kwong as to whether the 2^nd plaintiff’s stance was that he had accepted the 1.68% offer in the P2 5:51pm Message on 21 March 2019, or in the OSOC on 15 April 2019, the 2^nd plaintiff’s answers were not entirely clear.  

50.  At first, he said he had accepted it in the P2/D1 WhatsApp.  Yet, he then added that if the 1^st defendant made an excuse and said she did not understand the 2^nd plaintiff’s meaning in the P2 5:51pm Message, then his case would be that he had expressed the acceptance again at the time of filing the OSOC, which was a clear document.

51.  In the end, the 2^nd plaintiff’s final answer under cross-examination was that he accepted the 1^st defendant’s offer of 1.68% monthly interest rate as contained in the D1 5:49pm Message by the filing of the OSOC on 15 April 2019.  The agreement on the Alleged Accrual Period was reached in April 2020 as evidenced in the Repayment Schedule (to be defined below). 

G2. Analysis

52.  I consider that the plaintiffs’ case on this basis has failed for the following reasons.  

53.  The allegation that the 1^st defendant’s offer was accepted by the filing of a document with the Court for the purpose of commencing a new round of proceedings is the most unusual one. 

54.  In any event, under the OSOC, the plaintiffs were not seeking to enforce the Tomlin Order.  On the contrary, the plaintiffs effectively sought to reopen the compromise under the Tomlin Order and to pursue the original claim for the then outstanding balance of the Loan after giving credits to all previous repayments made by the defendants, including those made after the Tomlin Order.  

55.  It was not until around February 2023, ie around four years later, that the plaintiffs sought leave to amend the OSOC to enforce the Tomlin Order, and to claim interest at the rate of 1.68% per month purportedly agreed by the defendants.  The existing paragraph 5 that was quoted above was only added in the ASOC.  So was the current version of the second relief for monthly interest at the rate of 1.68% per month.  The original paragraph 5 only set out the repayments made by the defendants between 5 December 2017 and 18 January 2019, which was completely irrelevant to any claim for interest.  The original second relief was for interest based on the original Loan. 

56.  In other words, the plaintiffs had neither pleaded nor asked for a relief of 1.68% monthly interest in respect of the Late Repayments in the OSOC.  Contrary to the 2^nd plaintiff’s evidence, I do not see any basis to assert that the filing of the OSOC could amount to an acceptance of the 1^st defendant’s offer set out in the D1 5:49pm Message. 

57.  For this reason alone, this basis can be disposed of.  The remaining reasons are provided below for the sake of completeness. 

58.  As I have ruled above, the offer in the D1 5:49pm Message had been rejected by the P2 5:51pm Message on 21 March 2019.  As such, the 1^st defendant’s offer had been terminated.  

59.  Further, even if there had been no rejection on 21 March 2019, I find that the offer in the D1 5:49pm Message had already been terminated before 15 April 2019 due to the lapse of a reasonable time.  The said offer was made through a discussion over WhatsApp, an instant messaging application, that lasted for less than 10 days.   

60.  From the parties’ pattern of conversation since 13 March 2019 at the P2/D1 WhatsApp, a reply was usually made in a matter of days.  As seen from the P2/D1 WhatsApp, the 2^nd plaintiff would urge the 1^st Defendant to reply when she failed to do so in 4 days (between 15 March 2019 and 19 March 2019).  Thus, in the absence of exceptional circumstances, I find that the 1^st Defendant’s offer in the D1 5:49pm Message had lapsed before 15 April 2019. 

61.  For completeness, I also find the 2^nd plaintiff’s oral evidence to be opportunistic and inconsistent, and I give little weight to it.  He shifted back and forth as to the timing of when he believed he had accepted the 1^st defendant’s offer of 1.68%, where the answer suited him.  He shifted between the filing of the OSOC dated 15 April 2019 and the P2/D1 WhatsApp on 21 March 2019, and thereafter suggested that both could be acceptance of 1.68% depending on how the 1^st defendant understood his intention behind the P2 5:51pm Message.  In the end, he chose to stick with the OSOC, a position which the plaintiffs had never pleaded previously until the 2^nd plaintiff’s oral evidence during cross-examination.  

H.  THIRD BASIS – THE DEFENCES

H1. The Plaintiff’s Case

62.  The plaintiffs submitted that the defendants admitted at §4 of their Defences that they had agreed to pay a monthly interest rate of 1.68%. 

63.  The crucial part of §4 of the Defences states that:-

“…他 [第二原告人] 説沒問題但要補回利息。並要求由2018年12月24日計，利率是2.2厘，我不同意，過幾天又提出2厘，我又不同意。我說我同意按1.68厘，並從2019年2月15日即法庭要求付款日開始計。然後過了段時間他又提出只接受1.8厘，執意要從2018年12月24日開始計。我說我不同意因為法院裁決所有利息只算到12月24日，我是同意未付款項按1.68厘/每月算回利息給他的，所以一直在溝通中。然後到2019年3月22日他就突然去法庭要求恢復案件。” (emphasis added).

H2. Analysis

64.  The Defences were drafted by the defendants themselves and they were not represented at that point of time.  

65.  I do not find that the Defences contain any admission of the Alleged Agreement.  

66.  Reading the paragraph as a whole objectively, when the defendants stated “我說我同意按1.68厘” and “我是同意未付款項按1.68厘/每月算回利息給他的”, the defendants were apparently referring to the offer(s) made by the 1^st defendant in the P2/D1 WhatsApp. 

67.  The earlier sentence “我說我同意按1.68厘” was immediately followed by “然後過了段時間他又提出只接受1.8厘” . 

68.  The next sentence “我是同意未付款項按1.68厘/每月算回利息給他的” was immediately followed by “所以一直在溝通中。然後到2019年3月2日他就突然去法庭要求恢復案件。”.

69.  Both references to “同意”, if read in context, referred to the offer made by the defendants. It meant that the defendants “would agree ” or “find it agreeable”, instead of “had agreed” in a legal sense as if there had been offer and acceptance to a 1.68% monthly interest rate. It is made clear immediately after both references that the plaintiffs rejected 1.68% by either a counter-offer of 1.8% per month or by the revival of the proceedings. This was consistent with the P2/D1 WhatsApp analysed above. 

I.    FOURTH BASIS – THE P1/D1 WHATSAPP

70.  The plaintiffs rely on the messages in the P1/D1 WhatsApp on (i) 10 October 2019; (ii) 3 March 2020; (iii) 21 April 2020 as follow-up of the P1 Email; and (iv) 22 May 2020.  

I1. 10 October 2019

71.  The plaintiffs rely on the message on 10 October 2019, where the 1^st defendant said “反正現在也只差8萬左右，你放心錢我們一定會計回利息和還回給你們的”.

72.  Although no interest rate was mentioned at the P1/D1 WhatsApp in respect of this message, the 1^st plaintiff supplemented in her oral evidence that there had already been a consensus for 1.68%.  

73.  The 1^st defendant was cross-examined by the 1^st plaintiff during the hearing.  When asked about this text, the 1^st defendant said the “利息” she referred to was to be confirmed, but there was never such confirmation (“同意按我哋確認，但無確認過”). 

74.  I accept the 1^st defendant’s explanation that this message only shows that they were willing to pay interest, but the message per se cannot remedy the shortcoming of the plaintiffs’ case, namely the lack of any act of acceptance to support the existence of the Alleged Agreement.  

I2. 3 March 2020

75.  The plaintiffs also rely on the following message to show that the Alleged Agreement had been made:-

[3 March 2020, 5:32pm] 1^st plaintiff: “那几時還錢？現在都三月”

[3 March 2020, 5:33pm] 1^st defendant: “就是現在暫時還不到錢才叫你有單就落D過來做等我們可以早點把錢還給你們”

…

[3 March 2020, 5:34pm] 1^st plaintiff: “那利息呢？”

[3 March 2020, 5:34pm] 1^st defendant: “到時照計”

[3 March 2020, 5:34pm] 1^st defendant: “今年情況不是很樂观這是最快的方法了”

[3 March 2020, 5:35pm] 1^st plaintiff: “為何不先付利息，那利息是否计在本金上呢？”

[3 March 2020, 5:35pm] 1^st defendant: “我們也想早點解決”

[3 March 2020, 5:35pm] 1^st defendant: “利息也是很貴的”

(emphasis added).

76.  The plaintiffs’ case is that the defendants acknowledged having entered the Alleged Agreement by saying “利息也是很貴的”.

77.  When asked what she meant in the P1/D1 WhatsApp on 3 March 2020 by saying “我們也想早點解決 利息也是很貴的”, the 1^st defendant said she meant all interests would be expensive to her.  However, the rate was yet to be agreed. 

78.  Although I find the 1^st defendant’s answer that all interest would be expensive to her to be defensive and evasive, I am not satisfied that by this message alone, one can jump to the conclusion that the Alleged Agreement had been reached on the balance of probabilities. 

79.  First, one cannot infer that the reference to interest being “expensive” must be to the 1.68%, and further that there must have been the Alleged Agreement.  At most, the message reflects that the 1^st Defendant had undertaken an obligation to pay interest which she found expensive, but the rate and accrual period remain unascertainable from the message. 

80.  Secondly, the 1^st defendant’s message was preceded by the 1^st plaintiff’s inquiry of whether the 1^st defendant would pay interest (“那利息呢？”), to which she replied it was to be calculated (“到時照計”). The 1^st plaintiff then inquired if interests were to be calculated on top of the principal sum (“那利息是否计在本金上呢？”). These inquiries from the 1^st plaintiff negate there having been the Alleged Agreement. 

I3. 21 April 2020

81.  On 21 April 2020, in the P1 Email, the 1^st plaintiff sent to the 1^st defendant a table listing the outstanding loan sum and interests due (“現列欠款及利息如下…”).  In the table, the monthly interest rate was 1.68% accruing from 24 December 2018 (ie the date of the Tomlin Order but not the respective due dates of the 2^nd and 3^rd Instalments). 

82.  Parties confirm that later that night, they followed up the matters in the P1 Email in the P1/D1 WhatsApp as reproduced below:-

[21 April 2020, 10:06pm] 1^st defendant: “我們只欠你們8萬和這八萬的利息, 和之前第二次所欠的利息，全部都有銀行資料可查”

…

[21 April 2020, 10:08pm] 1^st plaintiff: “我沒有計錯, 沒有人同意之前的數不用付利息”

…

[21 April 2020, 10:10pm] 1^st defendant: “之前雙方確認的三筆錢，我們已付清兩筆和另加第三筆兩萬,”

[21 April 2020, 10:11pm] 1^st defendant: “現在只余第三筆8萬多和利息”

[21 April 2020, 10:11pm] 1^st defendant: “還有第二筆的部分利息”

[21 April 2020, 10:12pm] 1^st defendant: “你自己算清楚”

…

[21 April 2020, unknown time] 1^st defendant: “我們只承認這幾個數, 其他概不承認” (emphasis added).

83.  The plaintiffs’ case is that in the P1/D1 WhatsApp on 21 April 2020, the defendants acknowledged the obligation to pay interests for the 2^nd Instalment and the 3^rd Instalment (“承認這幾個數”), confirming the 1.68% monthly interest in the P1 Email and reflecting the existence of the Alleged Agreement.  

84.  During the hearing, the 1^st plaintiff gave further oral evidence:-

(1)  In the P1/D1 WhatsApp on 21 April 2020, the 1^st defendant acknowledged therein to pay interest for the Late Repayments.  This corresponded to the 1.68% monthly rate in the P1 Email.  The 1^st defendant only disagreed the P1 Email insofar as it suggested the starting date of accrual to be 24 December 2018.  

(2)  When it was suggested to her that the 1^st defendant did not say explicitly in the P1/D1 WhatsApp that she only disagreed the P1 Email in respect of the starting date of accrual and agreed with everything else, the 1^st plaintiff asserted that the 1^st defendant had told her that she had reached a consensus with the 2^nd plaintiff to pay a 1.68% monthly interest that started to accrue on 15 February 2019 instead of 24 December 2018.  Thus, the 1^st plaintiff regarded the 1^st defendant as only disputing the starting date of accrual in the P1/D1 WhatsApp. 

(3)  When further questioned whether such a consensus could be seen from the P1/D1 WhatsApp on 21 April 2020, the 1^st plaintiff said it could not.  However, she said that according to her understanding, the 1^st defendant meant she had confirmed the Alleged Accrual Period with the 2^nd plaintiff.  Therefore, in the P1/D1 WhatsApp, she was only disputing when the interests should accrue, but did not dispute the interest rate to be 1.68%. 

(4)  In respect of the Alleged Agreement purportedly reached between the 1^st defendant and the 2^nd plaintiff, the 1^st plaintiff said she was told by the 2^nd plaintiff as they were living together as a couple.  However, she was not told of the format of the Alleged Agreement, be it oral or otherwise, nor did she inquire when it was made.  She did not doubt or question the 1.68% monthly rate (“我唔會有任何質疑，我唔會去問點解”) since they used to adopt this rate for the defendants, and so it was not strange to her. 

85.  As for the 1^st defendant, when she was asked what she was acknowledging (“承認”), her answer was that she was acknowledging the liability for the principal and interest but the interest rate was not confirmed (“利率無確認過” and “當時唔同意利率”). 

86.  Reading the P1 Email and the P1/D1 WhatsApp on 21 April 2020 together, I do not find them in support of the plaintiffs’ case that the Alleged Agreement had been reached. 

87.  First, the P1 Email and the P1/D1 WhatsApp were only secondary evidence that the plaintiffs rely upon to corroborate the existence of the Alleged Agreement, which had been purportedly reached no later than the filing of the OSOC on 15 April 2019.  It is the 1^st plaintiff’s own evidence that she was not privy to how the Alleged Agreement was reached, for she only heard from the 2^nd plaintiff that the Alleged Agreement had been reached in an unspecified format and at an unspecified date.  Therefore, the P1 Email and the P1/D1 WhatsApp could not salvage the flaw of the plaintiffs’ case that the Alleged Agreement had been reached by the filing of the OSOC on 15 April 2019 or before that as I have set out above.   

88.  Secondly, even by April 2020, parties were still quarrelling over when interest should start to accrue.  From the P1/D1 WhatsApp, it can be seen that the 1^st defendant asserted that the 1^st plaintiff had made a mistake and that the defendants were only owing (i) USD 80,000 and interest under the 3^rd instalment, plus (ii) interest from the 2^nd instalment.  

89.  However, the 1^st plaintiff insisted in the P1/D1 WhatsApp that she did not make a mistake for interests to be calculated from 24 December 2018, for nobody had agreed that sums due before the 2^nd instalment should not bear interest (“我沒有計錯，沒有人同意之前的數不用付利息”).  This contradicts the plaintiffs’ case in relation to the Alleged Accrual Period, which is an integral part of the Alleged Agreement. 

90.  Thirdly, I do not accept that the Alleged Agreement can be properly inferred from the 1^st defendant’s message “我們只承認這幾個數”.  This message merely reflects that the 1^st defendant acknowledged liability for the outstanding principal sum and interest.  However, it does not disclose any prior agreement to a 1.68% monthly interest rate over the Alleged Accrual Period. As such, this falls short of establishing the Alleged Agreement as the plaintiffs assert.  

91.  Fourthly, the plaintiffs submitted that the defendants did not argue or dispute in the P1/D1 WhatsApp about the 1.68% monthly interest rate that was requested in the P1 Email.  However, the 1^st defendant’s silence does not equate accepting P1 Email as evidence of a prior-agreement over the interest rate of 1.68%.  

I4. 22 May 2020

92.  On 22 May 2020, the 1^st defendant sent a photo to the 1^st plaintiff, which shows a handwritten repayment schedule (the “Repayment Schedule”). 

93.  In the Repayment Schedule, the 1^st defendant wrote down the outstanding balance of the 2^nd and 3^rd Instalments with certain periods of days which were apparently the number of days for interests to accrue, starting from 15 February 2019 and 15 March 2019 respectively:-

“第二．2月15日 106,158 (2月15日开始计)

6月3日 50000 3个月零17日

6月12日38000 3个月零26日

7月9日 18158 4个月零23日

第三 3月15日 （3月份开始计)

7月16日 20000 4个月

余数 86158 由三月计至今”

94.  The plaintiffs’ case is that the Repayment Schedule supports once again the existence of the Alleged Agreement.  

95.  When she was cross-examined upon the fact that on the Repayment Schedule, the 1^st defendant did not write down any interest rate, the 1^st plaintiff answered that it was unnecessary and there was an undeniable consensus of it. 

96.  I do not accept that the Alleged Agreement can be inferred from the Repayment Schedule, which did not touch upon the interest rate at all. 

J.   FIFTH BASIS – THE COURT TRANSCRIPT

97.  The crucial part of the Court Transcript relied on by the plaintiffs is the following:-

“第一被告人： 但係嗰個利息嘅話，我係唔接受嘅。

官：呢個問題就係睇下妳係咪同[意]咗係畀1.68嘅利息喇，係咪呢？

第一被告人：係。我係同意嘅，我當時我亦都同意，我係--我同佢講，我話--個WhatsApp嗰度，佢可以攞番出嚟嘅，我事實上我有講過，我話如果我遲咗嗰啲即係遲咗嗰部分，我可以畀番利息畀你，但係前提係你要畀番個租金畀我。” (emphasis added).

98.  The plaintiffs’ case is that by saying to Master Ho “係。我係同意嘅”, the 1^st defendant had admitted the agreement of 1.68% monthly interest and hence the existence of the Alleged Agreement.  

99.  When directed to this part of the Court Transcript, the 1^st defendant answered that she had suggested 1.68% but there was no confirmation (“係我係同意嘅，但係佢無確認，我係有提出過”).  She was then questioned that “suggested” was not the same as “agreed”.  What she told Master Ho was she “had agreed” (“唔係問你有無提議，個官係問你有冇同意，你回答同意”).  The 1^st defendant then maintained that she had suggested to agree to 1.68% but the 2^nd plaintiff did not confirm nor accept it (“我有提議過同意1.68 但佢無確認…佢一直唔接受我”).  The 1^st defendant then added that in any event, the pre-condition of rent (“但係前提係你要畀番個租金畀我”) was not fulfilled. 

100.  In the end, the 1^st defendant confirmed that in principle she was willing to pay interest for the Late Repayments, but there was no agreement on the rate and so she was unable to calculate the exact figure. 

101.  As for the 1^st plaintiff, when it was suggested to her that any agreement to pay a 1.68% monthly interest rate was subject to a pre-condition that the plaintiffs had to return the rent to the defendants, the 1^st plaintiff responded that Master Man had previously at a hearing questioned whether such a pre-condition existed and asked for proof, but none was provided by the defendants. 

102.  Having read the Court Transcript and parties’ written and oral evidence, I am unable to accept that the Court Transcript shows the existence of the Alleged Agreement, or that the 1^st defendant had admitted therein that parties had reached the Alleged Agreement.  

103.  First, the 1^st defendant was referring to certain WhatsApp messages between herself and the 2^nd plaintiff, which were apparently the P2/D1 WhatsApp that I have already set out in my analysis above.  Suffice it to reiterate here that it was the 2^nd plaintiff who refused to accept 1.68% per month as the interest for the arrears of the 2^nd and 3^rd Instalments at the end of that series of messages. 

104.  In any event, for the sake of completeness, the 1^st defendant was referring to a pre-condition of the plaintiffs returning certain rent to her.  Such assertion might be ill-considered (though I do not find it necessary for me to express any views on any substantive merits of this assertion, which is only very cursorily touched upon during the evidence), but the focus of the analysis remains that the 1^st defendant had not admitted to the existence of any agreement that she would unconditionally pay interest at the monthly rate of 1.68%. 

K.  THE ALLEGED AGREEMENT

105.  On the whole, I find that the plaintiffs have failed to establish the existence of the Alleged Agreement.  The 2^nd plaintiff refused to accept the 1^st defendant’s offer of 1.68% per month over the P2/D1 WhatsApp discussion in March 2019, and the subsequent filing of the OSOC was clearly intended to enforce the original Loan but not the Alleged Agreement.  When the plaintiffs sought leave to file the ASOC in February 2023, there was simply no basis to assert the existence of the Alleged Agreement as I have analysed above. 

L.  AMOUNT OF INTEREST PAYABLE

106.  In the absence of agreement, the general power for this Court to award simple interest in proceedings for the recovery of a debt is found in section 48(1) of the High Court Ordinance (Cap 4) (“HCO”). 

107.  The plaintiffs confirm that, should they fail to establish the Alleged Agreement, they would seek interest at the rate of 1% above the prime lending rate of US Dollars, which is the conventional pre-judgment rate to be awarded in the absence of a contractual arrangement. 

108.  The defendants do not contest such fall-back position of the plaintiffs. 

109.  I am satisfied that in the present case, discretion under section 48(1) of the HCO should be exercised in favour of the plaintiffs.  I order that the defendants shall pay interest to the plaintiffs at the rate of 1% above the prime lending rate of US Dollars in Hong Kong. This accords with the usual practice that, if judgment is given in foreign currency, the interest rate is usually one which that currency could be borrowed in the country where the debt should be paid: Hong Kong Civil Procedure 2023 at §6/L/15.  

110.  There is also no dispute that the accrual period should be the same as the Alleged Accrual Period. 

111.  Finally, both parties have submitted tables detailing their calculation of the amount of pre-judgment interests payable.  

112.  I accept the plaintiff’s calculation that in relation to USD prime rate in Hong Kong, the standard practice is to calculate it in 360 days instead of 365 days, and the effective dates of such USD prime rates in Hong Kong should be one day later than those set out by the defendants, which are in US time zone. 

113.  As such, I adopt the plaintiff’s calculation and rule that the total amount of interest payable on the Late Repayments is USD 21,013.04. 

M.   CONCLUSION

114.  For the foregoing reasons, I award the plaintiffs pre-judgment interest of USD 21,013.04. 

115.  Pursuant to section 49 of the HCO, there will be simple interest at the judgment rate over the USD 21,013.04 from the date of this judgment until the date of payment. 

116.  As to costs, on a nisi basis, I make no order as to costs for the following reasons:

(1)  This part of the proceedings was commenced in April 2019 as a result of the defendants’ breach of the compromise under the Tomlin Order.

(2)  The principal sums payable under the Tomlin Order were only fully settled in June 2023, ie more than 4 years after they fell due.   

(3)  The pleadings and most of the affirmations were filed in or before April 2023, ie before the 3^rd Instalment was fully settled.

(4)  Whilst interest is technically a different subject than the principal, the present dispute could have been avoided had the defendants honoured their obligations under the Tomlin Order.

(5)  I have not lost sight of the fact that the compromise under the Tomlin Order takes effect as a contract, the breach of which would not attract the sanction for contempt of Court.

(6)  On the other hand, the sums due under the Tomlin Order were liquidated sums.  Therefore, the plaintiffs could have resorted to a much more drastic means for enforcing the Tomlin Order, namely petitioning for the defendants’ bankruptcy.  The impact on the defendants could have been a lot more devastating. 

(7)  Balancing all factors above, I find that the present situation warrants a departure from the norm that costs should follow the event.  Making no order as to costs would best reflect the overall justice of the situation.