LIU TSAN CHING v. PAK TIM YING TIFFANY

DCCJ 4691/2021

[2025] HKDC 393

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4691 OF 2021

--------------------

--------------------

--------------------

JUDGMENT

--------------------

Introduction

1.  At the trial of this action, the Defendant was absent. In fact, after she has filed her pleadings, and her witness statement in this case, she has not attended various case management hearings and the Pre-trial Review. Having been satisfied that she has been notified of the date of the trial, and that the relevant documents have been properly served on her, the court proceeded with the hearing in her absence.

2.  In this action, the Plaintiff claims that she has transferred a sum of HK$320,000 to the Defendant as a loan on 28 May 2019, which has only been partly repaid by the Defendant as at the commencement of this action.

The Plaintiff’s case

3.  The Plaintiff was the only witness who testified at the trial. According to the Plaintiff, she and the Defendant became acquainted in around April 2019, and gradually became very close friends. During gatherings in or around late April to May 2019, the Defendant had on multiple occasions told the Plaintiff that she was facing some financial difficulties. The Plaintiff then transferred a sum of HK$320,000 to the Defendant on 28 May 2019 as a loan (“the Loan”).

4.  On 16 October 2019, the Defendant made a partial repayment of HK$10,000 to the Plaintiff. On 15 January 2020, both of them signed a loan agreement whereby it was agreed that the Defendant would repay the outstanding sum of HK$310,000 in full on or before 28 May 2020. Alternatively, the Defendant was to repay the outstanding sum of HK$310,000 and a fixed interest at HK$50,000 by monthly installments of HK$10,000 until 28 May 2023 (“the Supplemental Agreement”).

5.  The Plaintiff says that on 28 May 2020, the Defendant was unable to repay the Loan in full, save for 2 subsequent installments in the sum of HK$10,000 each on 18 September and 28 September 2020 respectively, upon chasers. The Defendant has failed to repay any further sum thereafter.

The Defendant’s case

6.  According to her Defence and witness statement filed in the action, it is the Defendant’s case that she and the Plaintiff had at the material times been in an intimate relationship, and she claims that the sum of HK$320,000 transferred to her by the Plaintiff on 28 May 2019 was intended as a gift instead of a loan. She further claims that the amounts spent by her in their relationship should be sufficient to offset the Loan.

7.  She also claims that the Supplemental Agreement was signed under duress.

The issues

8.  In light of the above, I agree with the Plaintiff that the issues to be decided on are as follows:

(i)  Whether the bank transfer of HK$320,000 on 28 May 2019 was a loan, or was a gift from the Plaintiff to the Defendant as asserted by the Defendant;

(ii)  Whether the Defendant had signed the Supplemental Agreement under duress; and

(iii)  Whether the Defendant is entitled to rely on the alleged amounts spent by her during her intimate relationship with the Plaintiff to set off the Plaintiff’s claim as now alleged by her.

Was the amount transferred as a gift or a loan?

9.  It is trite that the onus is on the party claiming to be a donee of a gift to prove it – see Ng Kit, the legal representative and the sole beneficiary of The Estate of Ng Kwun Yuen (吳坤元) deceased v Wu Tsun Hua and Ors [2021] HKCFI 877, DHCJ Paul Lam SC, at paragraph 33(a).

10.  As the Plaintiff has pointed out, the key issue is whether, during the original transfer of the sum of HK$320,000, there was an intention to create legal relations. The court is to consider what had been communicated between the parties in all the circumstances and to decide whether, as understood by a reasonable person, the true inference is that they had intended to create a legal relation – see Jones v Padavatton [1969] 1 WLR 328 at 332G, and Ho Lai King v Kwok Fung Ying [2020] 4 HKLRD 253 (CA) at paragraph 43. In this regard, the following additional guidelines have been provided by the courts:

(i)  Evidence of subsequent conduct is admissible for the purpose of determining the parties’ intention at the material time: Blue v Ashley [2017] EWHC 1928 (Comm) at paragraph 64; Jones v Padavatton [1969] 1 WLR 328 at 336H; Ho Lai King v Kwok Fung Ying [2020] 4 HKLRD 253 (CA) at paragraph 43;

(ii)  The subjective understanding of the parties is also admissible in so far as it tends to show whether, objectively, the agreement was intended to be legally binding: Blue v Ashley at paragraph 64, and Ho Lai King v Kwok Fung Ying at paragraph 43;

(iii)  There is a presumption against an intention of creating any legal relationship in arrangements made in a close relationship, e.g. between a husband and a wife. This is not a presumption of law, but of fact. It derives from experience of life and human nature which shows that in such circumstances men and women intend to rely solely on family ties of mutual trust and affection. However, this presumption of fact can be rebutted – see Jones v Padavatton at 332G.

11.  In the present case, the Plaintiff says that the said presumption should not apply to the parties. Although they were in a close relationship, they did not have “family ties” of mutual trust and affection. Alternatively, the Plaintiff says that even if there was such a presumption of fact, the presumption can easily be rebutted by evidence surrounding the nature and circumstances of the Loan.

12.  The evidence shows that the Plaintiff had indeed transferred the sum of HK$320,000 to the Defendant on 28 May 2019. In her pleaded case, the Defendant does not dispute having received this amount.It is the Plaintiff’s evidence that she and the Defendant had initially orally agreed the said sum of HK$320,000 was treated as a loan, and the parties had originally intended that it was to be repaid after one year.

13.  In so far as the nature of their relationship is concerned, I must say I do have reservations about whether the Plaintiff and the Defendant did have an intimate or even sexual relationship. There seems to be no dispute by the Plaintiff that the Defendant is homosexual, but the Plaintiff says she only treated her as a close friend. In any event, it is pointed out by the Plaintiff that whatever the nature of their relationship (i.e. whether they were close friends or were in an intimate relationship as alleged by the Defendant), it had only lasted for less than 2 months. The parties were financially independent. They were not married and did not have family ties. I agree that it was unlikely for a substantial sum such as the Loan to be treated as a gift under such circumstances.

14.  Further, the Plaintiff says that the transfer was intended to be used for the Defendant’s own business, as opposed to shared daily expenses. According to the Plaintiff, the Defendant informed her that she needed the money to sustain her business. She even invited the Plaintiff to go to her business store in early May 2019, and showed the Plaintiff her business records. In this regard, it is noted that the Defendant did acknowledge in her witness statement (although she has not attended the trial to testify) that she had financial difficulty at the material time and was unable to cover the cost of her stock, although she did state that her mother had eventually provided assistance to her.

15.  More importantly, it can be seen in the “Whatsapp” text messages exchanged between them that on 28 June 2019, the Defendant had acknowledged she would repay the Loan, and the Plaintiff reminded her that it should be repaid after one year. The Plaintiff’s evidence is that subsequently, the Defendant did make a partial repayment of HK$10,000 in cash on or about 16 October 2019.

16.  Further “Whatsapp” messages on 13 December 2019 also show that the parties had indeed treated the HK$320,000 as a loan, and that they had dealt with it in a business-like manner. Subsequent “Whatsapp” exchanges also show the same. For example, on 7 January 2020, the Defendant had expressly acknowledged that she needed to repay the Loan to the Plaintiff, as can be seen from the following records:

(i)  The Plaintiff stated: “反轉豬肚就係屎，希望你仲記得你仲記得還$俾我，定係我哋都係寫張條款好啲”;

(ii)  Whereupon the Defendant replied in a voice message: “當然呢個係記得啦！一件事還一件事。我一定記得嘅！！！…”

17.  It can also be seen from the “Whatsapp” exchanges between them on 15 January 2020 that the two of them had negotiated the terms of the Supplemental Agreement. From the messages, it clearly appears that the parties treated and acknowledged the original transfer of HK$320,000 as a loan.

18.  In any event, it is important to note also that in the first paragraph of the Supplemental Agreement, the Defendant had indeed also acknowledged that the Plaintiff had lent HK$320,000 to her on 28 May 2019.

19.  As mentioned above, subsequently on 18 September 2020 and 28 September 2020, the Defendant repaid two further installments to the Plaintiff in the sum of HK$10,000 each. This further shows that the Defendant had acknowledged liability for the Loan.

20.  Having considered the evidence on the whole, I accept the evidence of the Plaintiff concerning the circumstances under which the Loan was extended to the Defendant. There is nothing in the contemporaneous records to suggest that the Plaintiff was not credible. In fact, such records do support her case. Taking into account the above analysis, I am of the view that a clear intention has been shown that the parties did recognise that the transfer of the sum of HK$320,000 from the Plaintiff to the Defendant was treated as a loan. This is supported by the ample contemporaneous records of communication between the parties as mentioned above, showing that, as any reasonable person would also have discerned, they had treated the sum transferred as a loan.

Whether the Defendant had signed the Supplemental Agreement under duress

21.  According to the Defendant’s pleaded case, she claims that the Supplementary Agreement was signed under duress. She alleges that at the time, the Plaintiff had indicated to her that unless she would sign the Supplemental Agreement, the Plaintiff would break up with her, and that the Plaintiff would tell the Defendant’s mother that she was homosexual.

22.  The applicable principles on duress were succinctly summarized by Linda Chan J in Pan Sutong v Bank of China [2022] HKCFI 1450 at paragraph 29:

“(1) There are 2 elements in the wrong of duress: (a) illegitimate pressure amounting to compulsion of the will of the victim; and (b) causal effect of such pressure on the victim.

(2) The legitimacy of the pressure depends on: (a) whether the pressure is lawful; and (b) the nature of the demand which the pressure is applied to support. The threat of any unlawful action will generally be regarded as illegitimate…The question of legitimacy may also be examined by reference to a range of factors, including: (a) whether the person exerting the pressure acted in good faith; and (b) whether the victim had any realistic alternative but to submit to the pressure.

(3) The concept of duress to the person has its own rules of causation. ‘But for’ causation is not required. It is sufficient that the threat was a reason for the victim entering the contract. The victim does not have to show that he would not have entered the contract without the threat, or that he has no realistic alternative but to enter into the contract. Once it is shown that the threats to the person were made for the purpose of inducing the contract, the burden is reversed such that it is for the party who made the threats to prove that the threats were not even ‘a reason’ causing the victim to enter into the contract…”

23.  The Plaintiff denies having made any threat to coerce the Defendant into signing the Supplementary Agreement. It is also pointed out that in the “Whatsapp” records on 7 January 2020, it was the Defendant who first suggested to borrow from money lenders and repay the Loan to the Plaintiff, to which the Plaintiff suggested to her that instead of paying high interest to money lenders, it would be better for the Defendant to pay interest to the Plaintiff and repay an amount of HK$10,000 per month. This shows that contrary to exerting any force or duress on the Defendant as alleged, the Plaintiff had been discussing an alternative method of solving the Defendant’s financial problem without her having to pay interest at a high rate.

24.  Further, it can be seen from the records that during the discussion of the terms of the Supplementary Agreement, both parties had contributed to the discussion. As the Plaintiff has pointed out, both of them could equally express what terms were acceptable. It cannot be seen from the records that there was any illegitimate pressure exerted by the Plaintiff on the Defendant. The records are also contrary to the Defendant’s allegation (stated in her witness statement[1]) that the Plaintiff had given the Supplementary Agreement to her “all of a sudden”, to which she did not agree but she had “no escape” and had to sign it.

25.  Also, the Plaintiff denies that she had threatened to break up with the Defendant as alleged, and denies that she would threaten to tell the Defendant’s mother that she was homosexual, when in fact the Defendant’s mother already knew of the Defendant’s sexuality. I also accept the Plaintiff’s evidence in this regard. In fact, the contemporaneous records of their communication mentioned above also show that the parties had discussed and considered the terms of the Supplementary Agreement on an equal basis without any indication of such threat or duress as alleged. In any event, the Defendant has not testified and there is no direct evidence from her as to what has been said to her by the Plaintiff.

26.  I also accept the Plaintiff’s evidence in this regard. I am of the view that the Defendant has failed to prove that the Plaintiff had exerted any illegitimate pressure on her, causing her to sign the Supplementary Agreement.

Whether the Defendant is entitled to rely on her alleged spending as a set-off

27.  In paragraph 19 of the Defendant’s witness statement, she alleged that according to her memory, she had paid or spent an amount of approximately HK$200,000 on the Plaintiff, presumably during the time when they were in the alleged intimate relationship. However, the Defendant has not testified to this, and there is nothing in the evidence before the court to prove the same. In any event, the Plaintiff’s evidence, which I accept, is that she has not received any such gifts given to or spent on her.

28.  There is thus no evidence in support of this part of the defence. In any event, as the Plaintiff has pointed out, the Defendant has on the records already acknowledged the Loan.

Judgment

29.  For the above reasons, I give Judgment for the Plaintiff for her claim. I find that the Defendant is liable to repay to the Plaintiff the outstanding amount of the Loan in the amount of HK$290,000, with agreed interest in the sum of HK$50,000.

30.  According to the Supplemental Agreement, the Defendant had until 28 May 2023 to repay the remainder of the Loan of HK$290,000 with the agreed interest. Therefore, I also make an order that the Defendant shall pay interest at the rate of 1% over the prime rate as the pre-judgment rate of interest from 29 May 2023 to the date of this Judgment, and thereafter at judgment rate until payment in full.

31.  Costs should follow the event. I make an order that the Defendant should pay the costs of the Plaintiff in this action, with Certificate for Counsel for the trial, to be taxed if not agreed.

32.  Lastly, I would like to thank Mr Poon for his assistance.