ZHAN YIFENG v. PANG KA SHING

HCA 1947/2023

[2025] HKCFI 4554

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1947 OF 2023

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DECISION

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I.  INTRODUCTION

1.  On 21 March 2024, a final judgment in default of notice of intention to defence was entered against the Defendant (the “Default Judgment”). On 18 December 2024, the Defendant filed Summons to set aside the Default Judgment (the “Setting Aside Summons”). On 11 April 2025, having heard arguments on the Setting Aside Summons, Master YW Hew made an order (the “Master’s Order”) that the Default Judgment be set aside upon the Defendant’s payment of HK$3,460,000 into Court within 28 days. This is the Defendant’s appeal against the Master’s Order.

II.  PARTIES

2.  At all material times, the Plaintiff was an asset manager. He graduated from university in the UK and read and write Chinese. He had lived in Hong Kong since 1996. He worked in an office on 19/F in Shun Tak Centre, Sheung Wan (the “Defendant’s 1901 Shun Tak Office”).

3.  The Defendant carried out the business of importing meats and electronic trading.

4.  The Plaintiff and the Defendant came to know each other through a mutual friend.

III.  CONTEMPORANEOUS EVIDENCE

5.  In this part, I shall set out the contemporaneous evidence from each party chronologically.

6.  A loan agreement dated 2 October 2021 (the “Loan Agreement”) read:-

“甲方 [that is, the Plaintiff] 於2021年10月2日借款給予乙方 [that is, the Defendant] 現金HK$3,460,000，如若乙方未能依時還款，甲方有權派員追討，可委託管理公司追收結欠之本金及利息或交律師行進行法律訴訟，有關追討之一切費用皆由乙方承擔及賠償。”

7.  There was no date of repayment of the loan (the “Loan”) stated in the Loan Agreement.

8.  On 15 January 2022, the Plaintiff sent the following voice message to the Defendant via WeChat:-

“你呢啲嘢要面對，你電話唔接，到嗰時俾我搵到就，就唔係咁搞㗎啦…”

9.  On 20 January 2022 at 5:15pm, the Defendant sent the following voice message to the Plaintiff via WeChat:-

“我而家追緊個老細俾錢我，咁佢轉咗人比我即刻攞到現金嫁啦，唔好意思啊我話咗聽日吖嘛。你等我一陣，晏少少覆到你㗎啦。”

10.  On 21 January 2022 at 8:15pm, the Defendant sent the following voice message to the Plaintiff via WeChat:-

“真係唔好意思，我仲忙緊，嗱今日呢應該就俾唔俾你住嘅，過年前即係來緊呢個禮拜我一定有比你，因為我尋日本身預個老細打錢，佢冇打。我今日先至沽咗啲股票，但個銀碼唔夠，我而家自己都度緊，因為我預多少少做完所有嘢，我親自打個電話俾你，真係唔好意思。”

11.  On 8 February 2022, the Defendant executed a Power of Attorney (the “Power of Attorney”) in favour of one Cai Jiongbiao (“Cai”) in respect of a property in Grand Central registered in the Defendant’s name (the “Grand Central Flat”). The Defendant signed the Power of Attorney at the office of Chan, Wong & Yip. A solicitor of the firm signed the Power of Attorney as witness and also signed the interpretation clause below his witnessing signature.

12.  On 23 February 2022, Cai on behalf of the Defendant entered into a provisional agreement for sale and purchase (the “PSPA”) in respect of the Grand Central Flat with a purchaser (the “Purchaser”) for HK$11,300,000. Under the PSPA, a formal agreement shall be signed on or before 8 March 2022, and the transaction shall be completed on or before 20 May 2022.

13.  On 1 March 2022, the Plaintiff sent the following voice message to the Defendant via WeChat:-

“你睇吓你要幾日你出嚟同我見過面，如果唔係我就交俾黑社會去做㗎啦，你自己睇吓，我搵人去搵你…搵你傾…你自己衡量吓啦，因為我嗌咗人呢就收唔到手㗎啦，你要搞清楚。” (emphasis added)

14.  On 7 March 2022 at 11am, the Defendant sent the following voice message to the Plaintiff via WeChat:-

“呢排我都頭痛緊，因為疫情搞到冇嘢返嚟，唔想退你嗰度，總之到數實應嘅。”

15.  Also on 7 March 2022 sometime after 2:30pm, the Defendant emailed Chan, Wong & Yip, stating that:-

(1)  The Defendant was the registered owner of the Grand Central Flat; and

(2)  The Defendant had instructed the firm’s secretary to stop the sale and purchase of the Grand Central Flat.

16.  On 8 March 2022, the Defendant emailed specifically to one Arnold Lam of Chan, Wong & Yip, stating that:-

(1)  The Defendant was the registered owner of the Grand Central Flat; and

(2)  In a conversation just before the email, the Defendant instructed Arnold Lam to stop all the sale and purchase of the Grand Central Flat.

17.  Then, the Defendant captured the image of this email (the “Captured Image of Instructions to CWY”) and sent this Captured Image to the Plaintiff.

18.  On 8 March 2022, Percy Yu of Chan, Wong & Yip replied to the Defendant by email stating that they had returned the cheque for the further deposit and seeking instructions from the Defendant as to how to deal with the initial deposit paid under the PSPA.

19.  On 8 March 2022, the Plaintiff sent the following voice message to the Defendant via WeChat:-

“如果你唔搵我呢，我就真係搵人去搵你㗎啦，到嗰時就收唔到手啦。” (emphasis added)

20.  On 8 March 2022, the Plaintiff and the Defendant signed a Supplementary Loan Agreement (the “Supplementary Loan Agreement”). It reads:-

“甲方（貸款人）：[the Plaintiff]

地址：观塘海滨道15号广生银行中心18楼12室

乙方（借款人）：[the Defendant]

地址：九龍塘又一村花園花圃街30号地下H室

 

前言:-

鑒於甲、乙雙方過往良好合作基礎，經雙方友好協商後，甲方於2021年10月2日拆借… (HK$3,460,00) 給乙方，以解決乙方的流動資金需求，並簽上了一份貸款聲明書，以茲證明上述借款（隨附）。為明確釐清及補充上述資金拆卸雙方的共同協議，特定立本補充協議聲明書，共同恪守。

第一條: 借款額度
1）雙方確認甲方已將上述金額… (HK$3,460,000)(“上述額度”)於2021年10月2日以現金方式拆借給乙方。

2）乙方亦確認乙方已於2021年10月2日從甲方收到上述額度港幣…

第二條：借款用途

1）本協議下的借款用於乙方的個人投資用途。

第三條：借款限期

1）本協議下的借款期限自2021年10月2日至2022年4月1日止。乙方同意須在2022年4月2日或之前，將上述額度全數歸還給甲方。

第四條：借款歸還

1）乙方必須在借款期限屆滿日或之前還清全數上述額度給甲方。

…

3） 如乙方沒能準時履行上述第三條及本條的還款限期，會被視為違反上述隨附貸款聲明書及本借款補充協議聲明書。甲方有權馬上向乙方追討一切未嘗還資上述額度。而一切所引起的追討費用，包括但不限於律師費用皆由乙方承擔及賠償。

第五條：保證

3）借款期間，如乙方便跟住所及聯絡方法等其他資料，應及時向甲方通知及提供。”

21.  A Hui Kui Chi (“Hui”) signed the Supplementary Loan Agreement as witness.

22.  The address of the Defendant provided in the Supplementary Loan Agreement is a Kowloon Tong address. I shall refer to it as the “Kowloon Tong Address”.

23.  To this Kowloon Tong Address the Plaintiff’s then solicitors C. H. Chan & Co. issued a demand letter demanding the Defendant to repay the Loan by 23 May 2022.

24.  There was no reply. On 26 May 2022, the Plaintiff issued Writ of Summons in HCA 630/2022 to claim for the repayment of the Loan. The Writ was served at the address of the Defendant’s Shun 1901 Tak Office (the “Shun Tak 1901 Office Address”) and the Kowloon Tong Address.

25.  On 9 June 2022, the Defendant made a statement to the police (subsequently supplemented by a further statement made on 14 June 2022) (the “Defendant’s Statement to the Police”), stating that:-

(1)  In September 2021, he came to know Cai through a business partner;

(2)  On 23 October 2021, he had operated a constructions company intending to develop small houses in the New Territories. Knowing that, Cai invited the Defendant to a flat in Kwun Tong. At about 11pm, the Defendant, Cai and the Plaintiff were there and someone then suggested playing poker and that one point was HK$1.

(3)  Having played for about 4 hours, about 4:15am, the Defendant had lost 346 points. Then, Cai and the Plaintiff told the Defendant that he had lost HK$3,460,000 because one point was HK$10,000.

(4)  The Defendant refused to pay. In response, Cai said that:-

“我知你住邊㗎，亦都知你老婆有咗，你知啦你做生意㗎嘛，你唔還錢嘅話我咪貼你大字報，到時候你去邊都唔使旨意搵食，加上你老婆有咗你都唔想佢有事㗎，你知我都做開收數，平時啲人唔找數我都係夾佢返大陸㗎啦”.

(5)  As a result, the Defendant was very terrified.

(6)  Cai then asked the Defendant to, and the Defendant did, give him his Patek Philip watch worth HK$500,000 he was wearing.

(7)  Cai also asked the Defendant to, and the Defendant did, sign a note of debt (“欠單”).

(8)  For the events recounted in §§(3) – (7) above, the Plaintiff was present.

(9)  In late October 2021, Cai met the Defendant to discuss the debt. Cai requested more security for the debt, and asked the Defendant to give him the Audemars Piguet watch worth HK$250,000 he was wearing. The Defendant recounted that “佢仲話如果我唔俾就會搵我老婆，由於我太太曾經流產，所以好怕佢會騷擾到我太太”.

(10)  In November and December 2021, Cai demanded the Defendant to make deposits to various accounts, saying that “如果我唔俾錢佢，佢就會搵我老婆”. The Defendant made the deposits as demanded, mostly by cash and some by bank transfer. The particulars were set out at §7 of the Defendant’s Statement to the Police.

(11)  On 8 February 2022, Cai demanded the Defendant to authorise mortgaging the Grand Central Property in his favour, saying that “如果…唔就範嘅話就會搵我老婆”. As a result, he followed Cai to an office in Gilman Street, Central and signed an English document of about 10 pages without reading.

(12)  On 5 March 2022 evening, the Defendant discovered from the news that his Grand Central Property was being sold at a low price. On 6 March 2022, through an agent he knew, the Defendant discovered that his Grand Central Property was really being sold. Through the agent, the Defendant discovered the estate agent and the solicitors responsible for the sale. The Defendant then contacted the solicitors, that is, Chan, Wong & Yip and found that it was Cai who was selling the Grand Central Property. The Defendant then instructed the solicitors to cease the transaction.

(13)  On 31 May 2022 evening, the Plaintiff brought a bald male (the “Male”) to the Defendant’s Shun Tak 1901 Office Address. The Plaintiff talked to the Defendant about his failure to settle the debt. Then, the Male told the Defendant:-

“我喺新義安跟林江嘅，你唔還錢我就去晒所有證券行貼你大字報，我知你個細路就嚟出世，我會搵你老婆㗎啦。”

(14)  The Male then said that if the Defendant would not agree to any solution to repay, he would “吹雞”, which means “asking the supporters to take action”.

(15)  The Male then took away the Defendant’s mobile phone, and used his own phone to take pictures of his family information and photos in the Defendant’s mobile phone. The Male found from the Defendant’s mobile phone that the Defendant held many stocks, and asked the Defendant to email instructions to the security forms for drawing stocks worth of HK$2,000,000. The Defendant sent the email, and then the Plaintiff and that male, having said that they would return on 10 June 2022 at 2:30pm to his office, then left.

26.  The instructions to draw the stocks were subsequently withdrawn.

27.  On 15 June 2022, the Plaintiff made a cautioned statement to the police, exercising his right to silence.

28.  On 23 August 2022, Hui made a statement to the police, saying, among others, that he did not hear any threat or reference to triad members on 31 May 2022.

IV.  PROCEDURAL HISTORY

29.  While it is not clear whether the Writ of Summons in HCA 630/2022 was served, on 22 September 2022, Justin Chow & de Bedin Solicitors LLP (“JCDB”) filed Notice to Act for the Defendant in HCA 630/2022, but did not file any acknowledgment of service.

30.  On 30 November 2023:-

(1)  The Plaintiff discontinued HCA 630/2022; and

(2)  The Plaintiff issued the Writ of Summons herein (subsequently amended on 28 December 2023).

31.  On 1 December 2023, the Plaintiff’s solicitors, Haldanes, asked whether JCDB had instructions to accept service on behalf of the Defendant. In reply, on 6 December 2023, JCDB only responded that the Plaintiff’s claim was frivolous and sought 14 days for them to consider whether to accept service or not.

32.  On 28 December 2023, the process server of the Plaintiff’s solicitors, Haldanes attempted to serve the Amended Writ of Summons on the Defendant at the following addresses known to the Plaintiff:-

(1)  The Shun Tak 1901 Address, which was stated on a sale and purchase agreement dated 3 November 2023 (the “November 2023 Agreement”) for the sale and purchase of the Defendant’s solely owned property defined as the Grand Central below, to be completed on 19 January 2024 (the “2024 Grand Central S&P”); and

(2)  The Kowloon Tong Address.

33.  The process server was told that (1) the Defendant was no longer a tenant of the Shun Tak 1901 Office; and (2) the Defendant did not live at the Kowloon Tong Address.

34.  On 9 January 2024, the Plaintiff filed an inter partes Summons for, among others, a Mareva injunction against the Defendant. In attempting to serve documents on the Defendant at the Shun Tak 1901 Office Address, the process server was informed that the Defendant had moved to Room 3001 of Shun Tak Centre (West Tower) (the “Shun Tak 3001 Address”). The documents were served by leaving at that address accordingly and also sent to the Defendant’s WeChat and WhatsApp.

35.  On 12 January 2024, in the Defendant’s absence, the following order (the “Interim Mareva Injunction”) were granted:-

(1)  an interim Mareva injunction against the Defendant for HK$3,460,000;

(2)  a disclosure order (the “Disclosure Order”) that had to be complied on or before 19 January 2024;

(3)  a substituted service order (the “Substituted Service Order”) of the Amended Writ of Summons, the Order, the Summonses on the Defendant:-

(a)  By leaving at the Defendant’s Shun Tak 1901 Office Address and the Sun Tak 3001 Office;

(b)  By sending a scanned copy via WeChat and WhatsApp; and

(c)  By leaving at the office of JCDB, solicitors for the Defendant in the sale and purchase under the November 2023 Agreement.

36.  The inter partes Summons was adjourned for substantive argument with 3 hours reserved. However, no such hearing had ever been fixed, and the Interim Mareva Injunction is still extant.

37.  From 12 – 15 January 2024, service was effected pursuant to the Substituted Service Order. Further, on 12 January 2024, Haldanes served the Interim Mareva Injunction on (1) the purchaser’s solicitors; and (2) the mortgagee which provided finance to the Defendant in respect of the Grand Central Property.

38.  On 15 and 25 January 2024, JCDB received the sale proceeds of the 2024 Grand Central Transaction, but never replied to Haldanes about the outcome of their consideration whether to accept service or not.

39.  On 21 March 2024, the Plaintiff obtained the Default Judgment. On 28 March 2024, the Plaintiff effected service of the Default Judgment pursuant to the Substituted Service Order.

40.  From 26 April 2024 to 30 August 2024, the Plaintiff attempted service of a statutory demand based on the Default Judgment (the “Statutory Demand”) at various addresses but to no avail.

41.  On 17 September 2024, Haldanes’ process server attempted to serve the Statutory Demand on the Defendant in Greenville Gardens, 17 Shiu Fai Terrace. The security guard at the lobby of Greenville Gardens informed the process server that the Defendant was an occupant of Apartment C1, 23/F, Block C (the “Greenville Gardens Address”). The process server arrived at the Greenville Garden Address, rang the doorbell and was told by a domestic helper that the Defendant was still in bed. Then, at the lobby, the Defendant’s wife appeared and told the process server that the Defendant was not in Hong Kong. The process server then approached the domestic helper again, who then called another person. Then, a lady purporting to be the Defendant’s mother-in-law appeared and informed the process server that the Defendant was not in Hong Kong.

42.  On 20 September 2024, the process server visited 6/F, Golden Resources Tower, Wan Chai, and served the Statutory Demand by placing it on the Defendant’s left forearm. The Defendant “did not take the documents and left through the fire exit in a hurry”.

43.  Further, in September 2024, Haldanes served the Interim Mareva Injunction on securities firms with which the Defendant held accounts.

44.  On 21 October 2024, the Plaintiff presented a bankruptcy petition in HCB 7279/2024 against the Defendant.

45.  On 11 November 2024, the Defendant instructed his current solicitors to act for him.

46.  On 18 December 2024, the Defendant filed Summons for an order to set aside the Default Judgment.

47.  On 23 December 2024, the Defendant filed Notice by Debtor of Intention to Oppose Petition in HCB 7279/2024.

48.  On 11 April 2025, the Master’s Order was granted.

49.  On 26 August 2025, the Defendant filed his 4^th Affirmation in compliance with the Disclosure Order.

V.  THEPLAINTIFF’S CASE AND LOAN AGREEMENTS IN SUPPORT

50.  According to the Statement of Claim specifically endorsed with it:-

(1)  The Plaintiff and the Defendant were acquaintances;

(2)  On 2 October 2021, at the request of the Defendant, the Plaintiff advanced the Loan;

(3)  On about the same date, the parties signed the Loan Agreement;

(4)  On 8 March 2022, the Plaintiff and the Defendant entered into the Supplementary Loan Agreement;

(5)  The Defendant failed to repay the Loan or any part of it by 2 April 2022, and despite the Plaintiff’s repeated demands including a demand letter dated 20 May 2022, the Defendant still failed to repay.

51.  Although on the face of it, the Loan Agreement stated that the sum of HK$3,460,000 was advanced on 2 October 2021, the Plaintiff’s evidence given in §§6-8 of his 1^st Affirmation filed on 8 January 2024 in support of his application for the Mareva injunction was that:-

(1)  Since mid-2021, he, the Defendant and other friends played poker from time to time, and for a few times, the Defendant lost and asked the Plaintiff to pay for him, and the Plaintiff did pay for him;

(2)  In or around October 2021, the Plaintiff advanced a loan of HK$2,000,000 to the Defendant for investment, after the Defendant persuaded the Plaintiff to do so and told the Plaintiff that he would share the profit on the investment with him;

(3)  The Plaintiff stipulated that he would advance the HK$2,000,000 by way of loan; and

(4)  Taking into account that the Plaintiff had also paid the Defendant’s loss in poker games, he requested the Defendant to signed the Loan Agreement for HK$3,460,000.

52.  Despite the Defendant’s Statement to the Police, in the present proceedings, there is, however, no record or any particulars of the sums which the Plaintiff paid for the Defendant in the poker games. There is also no record of the Defendant’s promise to share the profit on investment or any kind of request made by the Defendant for loans from the Plaintiff for investment. There is no explanation as to why for such substantial sum of money as HK$2,000,000, loan was advanced in cash.

53.  According to the Plaintiff, the Supplementary Loan Agreement was drafted by a solicitor engaged by the Plaintiff. The parties signed the Supplementary Loan Agreement on 8 March 2022 at a café-cum-bakery shop (the “Café Shop”) in Shanghai Street, Mongkok after the Defendant took time to read it, and the signing was witnessed by Hui, who, according to the Plaintiff, was their mutual friend and who signed on the Supplementary Loan Agreement as witness.

54.  It is noteworthy that Clause 2 of the Supplementary Loan Agreement stated the purpose of the Loan was for the Defendant’s personal investment. Despite the Plaintiff’s evidence that HK$2,000,000 of the Loan was advanced for the Defendant’s personal investment the return of which would be shared with the Plaintiff, there is no clause for sharing the profit in the Supplementary Loan Agreement, and not even any clause for interest on the Loan. Further, the Supplementary Loan Agreement mentioned nothing about the other part of the Loan, that is, HK$1,460,000 as the loss the Plaintiff had paid for the Defendant in the poker games. Despite the Defendant’s Statement to the Police, there is no explanation for any of these.

55.  On 8 March 2022, the Defendant sent to the Plaintiff the Captured Image of Instructions to CWY to show that he ceased the transaction because another debtor of his discovered that he was selling the Grand Central Property. To the Plaintiff’s understanding, the Defendant showed him the Capture Image in order to tell him that he had other debtors and he could not even sell his property to pay.

56.  On 31 May 2022, the Plaintiff, Hui and another friend visited the Defendant at the Defendant’s Shun Tak 1901 Office and discussed how to resolve the debt problem. They did not reach any agreement, however. I note that the Plaintiff has not identified who that “friend” was or why he took that “friend” there.

57.  The Plaintiff denies any duress or threat to the Defendant.

VI.  THE DEFENDANT’S EVIDENCE

58.  The Defendant’s evidence is the same as the Defendant’s Statement to the Police. In respect of the Loan Agreement, he added that:-

(1)  When he signed the Loan Agreement, only Cai was present.

(2)  When he signed the Loan Agreement, the information of the lender in the Loan Agreement was not left blank and no signature was put for the lender.

59.  In his Statement to the Police, the Defendant did not mention the Supplementary Loan Agreement. He also did not mention it in his supporting affirmation, namely, the Affirmation of Pang Ka Shing filed on 18 December 2024. It is in his 2^nd Affirmation filed on 1 April 2025 the Defendant did add that:-

(1)  He signed the Supplementary Loan Agreement after he discovered Cai was selling the Grand Central Property without his knowledge and consent.

(2)  After the discovery, he attempted to contact Cai but in vain. Therefore, in March 2022, he met up the Plaintiff and Hui at the Café Shop.

(3)  The Defendant expressed his disappointment about Cai’s attempt to sell the Grand Central Property behind his back. The Plaintiff told the Defendant that the Plaintiff also could not reach Cai, and insisted that the Defendant should repay the Loan. Hui said that because the Defendant lost the games, he should pay.

(4)  The Plaintiff then took out the Supplementary Loan Agreement and demanded the Defendant to sign. The Defendant signed it because he was worried that the Plaintiff would engage triad members to harass his pregnant wife or damage his reputation of his business and also because he noticed that the Supplementary Loan Agreement was not much different from the Loan Agreement.

60.  In respect of the saga on 31 May June 2022, he added:-

(1)  The Plaintiff and the Male claimed that they were triad members; and

(2)  After the Defendant reported the matter to the police on 9 June 2022, the police had surveillance operation near the Defendant’s Shun Tak 1901 Office Address.

61.  In respect of service of the documents on him at the Shun Tak 1901 Office Address, the Defendant explained:-

(1)  After 31 May 2022, in mid-June 2022, he did not work there anymore because his employer company was worried that he would bring trouble to the employer company.

(2)  His employer company moved away from the Shun Tak 1901 Office Address sometime prior to 28 December 2023.

(3)  In the November 2023 Agreement, he used the Shun Tak 1901 Office Address for his and his family safety. He also used the Shun Tak 1901 Office Address for a company of his set up in BVI.

62.  In respect of service of documents on JCDB, in December 2023, JCDB informed the Defendant that HCA 630/2022 had been ceased. The Defendant did not receive any notification from JCDB about any further documents after that.

63.  In respect of service of documents via personal message on the web, the Defendant did not open the file sent through WeChat from the Plaintiff and Cai, and after the threat, he had no longer any contact with them. He also did not open the file sent through WhatsApp because he did not know that solicitors would send documents via WhatsApp and so the Defendant thought that the messages were scams.

64.  The Defendant allegedly came to know the present proceedings in late September 2024 when a security firm (with which he held a securities account) on which the Interim Mareva Injunction was served.

VII.  MERITS OF THE DEFENCE

65.  Although the Defendant’s appeal is limited to the condition imposed in the Master’s Order on setting aside, and the Plaintiff has not failed any cross-appeal as such, as I held in §29 of Bank of Qingdao Co., Ltd. v OOO Securities (HK) Group Limited (formerly known as Orientiert XYZ Securities Limited) [2025] HKCFI 2223, in an appeal against Master’s decision, the Court considers the matter afresh not bound by the notice of appeal and/or the absence of cross-appeal. Ms Tina Mok, counsel for the Plaintiff, submits that I should set aside the Master’s Order and refuse the Defendant’s application to set aside, while Mr Joseph Tse SC (leading Mr Charlie Liu), counsel for the Defendant, submits that I should vary the Master’s Order only to the extent of removing the condition.

66.  The Defendant raises the following three defences:-

(1)  The defence of no genuine transaction or sham;

(2)  The defence of duress; and

(3)  The defence of illegality.

67.  In the present circumstances, the defence of no genuine transaction or sham goes hand in hand with the defence of duress. For this, I bear in mind that in the voice messages, the Defendant did not deny the existence of the Loan. The Defendant explained that he was under duress and therefore did not deny it. In the voice message, in fact, the Plaintiff also said something consistent with the Defendant’s allegation that he was under duress, namely, on 1 March 2022, the Plaintiff sent the following voice message to the Defendant (quoted in §13 above):-

“你睇吓你要幾日你出嚟同我見過面，如果唔係我就交俾黑社會去做㗎啦，你自己睇吓，我搵人去搵你…搵你傾…你自己衡量吓啦，因為我嗌咗人呢就收唔到手㗎啦，你要搞清楚。” (emphasis added)

68.  This message may be understood as that the Loan Agreement was not under duress but just that the Plaintiff threatened to use triad members to chase for the repayment of the Loan. If this were the case, then the Loan Agreement would still be valid, although the means to demand for the repayment would be illegal. However, I also consider the following matters:-

(1)  Near the time of the events, in June 2022, the Defendant made the Statement to the Police with particulars of the duress he had received. It is not what the Plaintiff apparently suggested that the Defendant did not raise such matters earlier.

(2)  The Defendant’s sending of the Captured Image of Instructions to CWY to the Plaintiff on 8 March 2022 cannot be logically explained by the Plaintiff’s version that the Defendant sent it to him to show that the Defendant was in a difficulty in selling the Grand Central Property. In my view, the sending is more consistent with the Defendant’s version of event that he was telling the Plaintiff that the transaction had been cancelled and the Grand Central Property was being sold without his knowledge and consent.

(3)  It is the Plaintiff’s own evidence that on 31 May 2022, he did bring Hui and “a friend” to the Shun Tak 1901 Office Address. However, he never explained who that “friend” was, for example, whether he was the Male mentioned in the Defendant’s Statement to the Police, or whether he was bald, like the Male described in the Defendant’s Statement to the Police. The fact that there was this identified “friend” on that occasion is consistent with the Defendant’s version of event that the Male was with the Plaintiff.

(4)  The Plaintiff’s evidence in respect of the Loan has to be examined with caution. As explained above, despite the Defendant’s Statement to the Police, in the present proceedings, there is, however, no record or any particulars of the sums which the Plaintiff paid for the Defendant in the poker games. There is also no record of the Defendant’s promise to share the profit on investment or any kind of request made by the Defendant for Loan from the Plaintiff for investment. There is no explanation as to why for such substantial sum of money as HK$2,000,000, Loan was advanced in cash. Also, despite the Plaintiff’s evidence that HK$2,000,000 of the Loan was advanced for the Defendant’s personal investment the return of which would be shared with the Plaintiff, there is no clause for sharing the profit in the Supplementary Loan Agreement, and not even any clause for interest on the Loan. Further, the Supplementary Loan Agreement mentioned nothing about the other part of the Loan, that is, HK$1,460,000 as the loss the Plaintiff had paid for the Defendant in the poker games. Despite the Defendant’s Statement to the Police, there is no explanation for any of these.

69.  Ms Tina Mok, counsel for the Plaintiff, submits that on the Defendant’s case, in particular, the Defendant’s Statement to the Police, it was Cai, but not the Plaintiff, who exerted any duress, and she goes so far as to submit that the Loan mentioned in the Defendant’s Statement to the Police may not be the same Loan in the present case. With respect, I cannot accept such submissions for the following reasons:-

(1)  Taking into account the time, the occasion and the amount, I have no hesitation at all in finding that the Loan mentioned in the Defendant’s Statement to the Police is the Loan.

(2)  In the present context, it does not matter whether it was Cai or the Plaintiff who made the threat for the Loan Agreement in October 2022 because the Plaintiff was present and his knowledge (constructive or actual) of Cai’s duress would be sufficient to vitiate the contract: see Chitty on Contracts (35^th ed) §11-076.

70.  Ms Mok also submits that the fact that the Defendant managed to cancel the sale and purchase in respect of the Grand Central Property in March 2022 and to withdraw the instructions to draw stocks in May or June 2024 shows that the Defendant was not under any duress as he alleges. However, I agree with Mr Tse that the fact that there was such cancellation and such withdrawal show that there was something unusual in the first place and beg the question – why would he enter into the transactions in the first place? The Defendant’s version of events may well provide an explanation.

71.  Having considered the above, I find that there is a real prospect of success in establishing the Defendant’s version of event (as set out in the Defendant’s evidence) on which the defence of no genuine transaction or sham and the defence of duress would be made out.

72.  As regards the defence of illegality, the Defendant relies upon section 14 of the Gambling Ordinance (Cap. 148), which provides that:-

“Any person who provides any money or other property to any other person knowing that it is to be used by any person in or for or in connexion with unlawful gambling or an unlawful lottery commits an offence.”

73.  Section 3(2) defines that:-

“Gaming is lawful if the game is played on a social occasion in private premises and is not promoted or conducted by way of trade of business or for the private gain of any person otherwise than to the extent of a person’s winnings as a player of or at the game.”

74.  The burden lies upon the Plaintiff to prove the elements of this provision. To determine whether the game is played on a social occasion, all the relevant circumstances should be considered, among which are the actual stakes of the game, the character of the gathering, whether the purpose was to win rather than recreational: see Au Chris v Yoon Soo Kim Steve [2022] 1 HKLRD 761 at §§41-43 per ST Poon J.

75.  On the evidence that one point would mean HK$1,000,000, there is a real prospect of success in establishing that the poker games in question were not for social occasion. The Loan, or at least, HK$1,460,000 of the Loan, was advanced for the Defendant to settle the loss in the games. There is a real prospect of success in establishing that the Loan was to be used “in connexion with” unlawful gambling, given that “in connexion with” is a phrase very often used to intend for a wide coverage of the matter. Therefore, there is a real prospect of success in establishing that the Loan, if any, was unlawful. Applying Monat, there is a real prospect of success that the Court would not enforce the Loan.

76.  Having considered all the above defences, I am satisfied that the Default Judgment should be set aside.

VIII.  WITH CONDITIONS?

77.  In respect of the legal principles in relation to setting aside on conditions:-

(1)  I agree with Mr Tse that conditions should usually not be imposed if the Court is satisfied that there is a real prospect of success in the defence.

(2)  However, “it might be appropriate to require a payment into court despite the existence of a good arguable defence… where there have been breaches of procedural rules by a defendant so that a payment into court is necessary to ensure the proper future conduct of the litigation… but not where the procedural infraction is minor”: see Hong Kong Civil Procedure 2025 Vol. 1 §13/9/15.

(3)  I also accept Mr Tse’s submissions that in general, where there is an interlocutory injunction in place to preserve assets for satisfying any future judgment debt, the Court would not impose condition: see for example, Leader Screws Manufacturing Co Ltd v Huang Shunkui [2025] 2 HKLRD 485 because such an interlocutory injunction would be sufficient to ensure proper future conduct, notably, any judgment would be satisfied at least partially.

(4)  In general, the power to impose conditions relates to costs: see §31 per Dah Chong Hong Kong (Engineering) Limited v Boldwin Construction Company Limited, HCA 1291/2002, 11 October 2022 at §31 per Ma J citing L&M Specialist Construction Limited v Wo Hing Construction Company Ltd [2000] 3 HKLRD 262 at 268I per Ribeiro JA.

(5)  The Court should not impose a condition with which it is impossible for the defendant to comply because this would be tantamount to giving judgement to the plaintiff: see Hong Kong Civil Procedure 2025 Vol. 1 §13/91/5.

78.  In the present case, first, I find that the Defendant knew of the existence of the present proceedings, or at least the Interim Mareva Injunction, in January 2024 because the Plaintiff’s solicitors served the Interim Mareva Injunction on the purchaser solicitors in the sale and purchase of the Grand Central Property and also the mortgagee which provided finance to the Defendant in respect of the Grand Central Property. It is highly likely that the purchaser solicitors and the mortgagee would inform the Defendant of existence of some kind of injunction. Further, JCDB, having received the papers in January 2024, would highly likely inform the Defendant of the same as well. In this regard, in his affirmation, the Defendant is careful to say that he is “not sure if there was any miscommunication”, and “to his recollection”, he did not know what there was another action after HCA 603/2022 was discontinued. Short of saying that he did not know the existence of the present proceedings back in January 2024 or that JCDB did not inform him of the existence of the proceedings, he only said in §50 of his 1^st affirmation that he did not instruct JCDB to represent him in the present proceedings and did not receive any documents from JCDB. Taking into account what happened to the solicitors’ attempt to serve documents at the Greenville Gardens Address and Golden Resources Tower in September 2024 (see §§40-41 above), which the Defendant has not denied, I find on balance that the Defendant came to know the existence of the present proceedings and the terms of the Interim Mareva Injunction. It is highly likely that a person would want to know what legal proceedings are about when he knows the existence of legal proceedings against him. It is particularly so when an injunction is served on some third parties who would affect him, like in the present case, the purchaser solicitors and the mortgagee. It would be his own fault if, knowing the existence of legal proceedings, he would still choose to ignore the papers, as he did on 20 September 2024 in Golden Resources Tower, running away via the fire exit.

79.  Second, it is, in my view, not a coincidence that the Defendant did not instruct any lawyers in September 2024 but only in November 2024. There is no good explanation why he did not do so in September 2024 when he, according to him, knew the present proceedings. The reason why he only instructed solicitors in November 2024, in my view, is no coincidence with the bankruptcy petition presented against him on 21 October 2024.

80.  Third, knowing the terms of the Interim Mareva Injunction, including the Disclosure Order, he chose to ignore it only until a few days prior to the present hearing before me – he finally filed his 4^th affirmation on 26 August 2025 in an attempt to comply with the Disclosure Order, more than 1.5 years after the Interim Mareva Injunction was granted and almost a year after the purported month he came to know the present proceedings, that is, September 2024. The explanation he offered in the affirmation is that after he came to know the present proceedings in September 2024, he had also to handle the bankruptcy petition, made applications to set aside the Default Judgment and stay the Master’s Order, and it took him quite some time to collate the evidence for complying with the Disclosure Order, while he was worried about his family. However, the fact is that he made no attempt to apply for time extension. It is fair for me to say that he just ignored the Disclosure Order.

81.  Fourth, even in his 4^th affirmation, he still fails to comply with the Disclosure Order. There may be room for argument over other instances of compliance or non-compliance – but there is one clear non-compliance, namely, there is no disclosure of assets as at the date of the Interim Mareva Injunction.

82.  Fifth, Mr Tse points out the Plaintiff’s failure to make full and frank disclosure or present a fair picture to the Court in his application for the Interim Mareva Injunction, in particular, the Plaintiff’s deliberate concealment or omission to mention his own voice message referring to use of triad members against the Defendant. I agree that on the face of it, the Plaintiff’s conduct is far from satisfactory, put mildly, and may even be sufficient to discharge the Interim Mareva Injunction (although this is not an issue before me). However, until the Interim Mareva Injunction is discharged, the Disclosure Order is still a Court Order with which the Defendant has to comply. If he thinks the Disclosure Order should be discharged, he should have applied for time extension at the very least and more properly, apply for a discharge. His attitude of just ignoring a court order is very unattractive to me.

83.  Sixth, in exercising the discretion, I should pay regard to the merits of the defence, and in this regard, the de-merits of the Plaintiff’s claim are part of the merits of the defence. Mr Tse points me to several pieces of evidence, the Plaintiff’s failure to present the picture fairly for the application for the Interim Mareva Injunction and the defence of illegality in respect of the HK$1,346,000 on the Plaintiff’s own evidence to say that the Plaintiff’s claim is bound to fail. In my view, the strength of the parties’ cases depends significantly on the credibility of the parties. I cannot say that the Plaintiff’s claim is bound to fail at trial, and cannot in any event say that the defence is so strong that despite the Defendant’s conduct in the present proceedings, no condition should be imposed.

84.  Seventh, insofar as Mr Tse would suggest that the Plaintiff’s failure to present a fair picture in the application for the Interim Mareva Injunction and so the Plaintiff, without clean hands, cannot come to ask the Court to exercise its discretion to impose condition, this may be a factor in appropriate circumstances, for example, the Plaintiff’s conduct is somehow the causation of the Defendant’s failure to comply with a Court Order. This, however, is not the case here.

85.  Eighth, while the Interim Mareva Injunction is still extant and existence of such an injunction could be a reason not to impose a condition (see §75(3) above), Mr Tse, understandably, cannot guarantee to me that the Defendant would not apply to discharge it at some stage in the future. In fact, his submissions on the Plaintiff’s failure to make full and frank disclosure may seem to suggest that the Defendant would seriously think about applying for a discharge.

86.  Having considered all the above, I think it appropriate to impose a condition relating to costs with appropriate terms to interact with any possible discharge of the Interim Mareva Injunction. I think an amount of costs of HK$1,000,000 is an appropriate estimate.

87.  Right now, according to the 4^th affirmation of the Defendant, approximately HK$340,000 sits in his security accounts, and approximately HK$340,000 cash is in his home. On the basis that he would comply with the Interim Mareva Injunction including his HK$340,000 cash in his home, the shortfall is HK$320,000. However, since the Interim Mareva Injunction is in place, he cannot make use of any part of these funds without the leave of the Court. Requiring him to make payment into Court to make up the shortfall is virtually impossible, unless there is evidence to suggest, and the Court would accept, that he actually has more assets than disclosed. If the Interim Mareva Injunction is somehow discharged, then unless the Defendant would file proper evidence to explain his financial situation, I would think that the same amount now disclosed and covered, that is, HK$640,000 under the Interim Mareva Injunction, with a discount for the Defendant’s living and legal expenses in a broad brush manner for the present purpose (say, HK$100,000), should be paid into Court to ensure proper conduct of the Defendant in the future.

88.  Taking the above into account, in my view, the condition (the “Condition”) I impose for setting aside with leave to defend is that:-

(1)  No payment shall be made into Court when the Interim Mareva Injunction remains extant;

(2)   (a) Payment into Court of HK$540,000 shall be made into Court within 28 days upon any discharge of the Interim Mareva Injunction; or

(b) payment into Court of the difference between HK$540,000 and the reduced amount under the Interim Mareva Injunction shall be made into Court within 28 days upon any variation of the Interim Mareva Injunction that results in the reduced amount;

(3)  The Defendant’s defence and counterclaim, if any, shall be struck out automatically, or shall be debarred from filing any defence and counterclaim, upon the Defendant’s failure to comply with §(2) above; and

(4)  There shall be liberty to apply.

IX.  CONCLUSION

89.  In conclusion, I allow the Appeal and set aside the Master’s Order and make the following order:-

(1)  The Default Judgment shall be set aside on the above Condition; and

(2)  The Defendant shall file and serve his Defence and Counterclaim, if any, within 28 days from today.

90.  As regards costs, while the Appeal is allowed, it is allowed to the extent of varying the condition. However, in the Defendant’s submissions, he only seeks to set aside the Default Judgment unconditionally, with no alternative offered. In respect of the Plaintiff’s submissions, the primary position is that the Default Judgment should not be set aside, and the Plaintiff does not suggest any variation of the condition as I did or at all. In the circumstances, the appropriate costs order should be no order as to costs.

91.  It remains for me to thank Mr Tse and Mr Liu, counsel for the Defendant, and Ms Mok, counsel for the Plaintiff, for their assistance.