PONG CHUN CHUNG v. YAN KWOK HUNG

HCA 689/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 689 OF 2013

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JUDGMENT

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Introduction

1.  The plaintiff’s claim against the defendant is for the sum of $1,697,000 being the outstanding balance due and owing to him by the defendant in respect of monies lent by the plaintiff to the defendant.

2.  The plaintiff’s case is that between December 2006 and December 2008 he advanced four loans to the defendant amounting to the total sum of $2,080,000. The loans were made as follows:

(1)   on 23 December 2006, the sum of $100,000 (“the 1^st loan”);

(2)   on 9 February 2007, the sum of $280,000 (“the 2^nd loan”);

(3)   on 10 December 2008, the sum of $1,600,000 (“the 3^rd loan”); and

(4)   On 18 December 2008, the sum of $100,000 (“the 4^th loan”).

3.  Although in the amended defence (at para 5(c)) the defendant pleaded that he had never received the above sums whether on the said dates or at all, at trial there was no dispute that the 1^st  and 2^nd loans were indeed loans that had been made by the plaintiff to the defendant. 

4.  As regards the 3^rd loan, the defendant’s case is that this was not a loan but was a gift from the plaintiff to him.

5.  As regards the 4^th loan, it is unclear what the defendant’s pleaded case is.  In cross‑examination the defendant said that the plaintiff treated the sum of $100,000 (being the amount of the 4^th loan) as a gift to him.  However, the defendant said that he treated it as a loan from the plaintiff.

Background

6.  The plaintiff and the defendant have been friends with each other since the 1980s. They both subsequently became police officers and were colleagues in the police force in the 1990s. 

7.  The plaintiff left the police force in 1998.  In 2000 the plaintiff set up Yick Fung Industrial International Ltd (“Yick Fung Industrial”) a company incorporated in Hong Kong which carried on business as a manufacturer and wholesaler of airsoft guns and spare parts.

8.  The defendant remained in the police force after the plaintiff left in 1998.

9.  The defendant left the police force in February 2009 and was employed by Yick Fung Industrial. 

10.  The defendant entered into an employment contract with Yick Fung Industrial dated 23 February 2009 whereby with effect from 23 February 2009 the defendant agreed to be employed by Yick Fung Industrial as a manager of the marketing department on the terms contained therein.  The defendant’s starting basic salary was $25,000 per month.  He was also entitled to a discretionary year‑end bonus.

11.  Yick Fung Global Industrial Ltd (“Yick Fung Global”) was incorporated in Hong Kong on 13 August 2010. 

12.  Yick Fung Global took over the business of Yick Fung Industrial.  For that reason the defendant entered into an employment contract with Yick Fung Global on 20 June 2011 on the terms contained therein.  The defendant’s basic monthly salary at that time was $28,350.  He was also entitled to a discretionary year‑end bonus.

13.  By an agreement of leave without pay dated 8 August 2012 the defendant agreed to be placed on leave without pay from 1 September 2012 for a period of three months on the terms contained therein.  The defendant was required to resume his duty on 1 December 2012. 

14.  The defendant did not return to work at Yick Fung Global on 1 December 2012.  On or about 1 December 2012 Yick Fung Global terminated the employment of the defendant. 

15.  It is common ground that the defendant’s employment was terminated on 1 December 2012.  However, the defendant says that the termination of his employment was unlawful.

16.  The above facts are undisputed. 

17.  The defendant also counterclaimed the sum of $209,177 against the plaintiff.  However, it was abundantly clear that the counterclaim was in respect of amounts allegedly spent by the defendant on behalf of Yick Fung Global in respect of which he was seeking reimbursement. 

18.  The counterclaim failed to show a cause of action against the plaintiff.  At trial, Mr Chow, for the defendant, informed me that the defendant was abandoning the counterclaim against the plaintiff.  I, therefore, dismissed the counterclaim against the plaintiff on the first day of trial.  As requested by Mr Poon, for the plaintiff, I also made an order nisi that the costs of the counterclaim be paid by the defendant to the plaintiff, to be taxed on a party‑and‑party basis, if not agreed.

19.  The defendant also pleaded a limitation defence (at para 5(g) of the amended defence) in respect of the 1^st loan advanced on 23 December 2006 and the 2^nd loan advanced on 9 February 2007.  However, the limitative defence was no longer an issue at trial.  At trial, Mr Chow accepted that the effect of the repayments that had been made by the defendant was that the 1^st and 2^nd loans had been repaid.

The main issue

20.  As I have said, in cross‑examination the defendant said that he treated the amount of the 4^th loan as a loan from the plaintiff.  This was no longer an issue.

21.  It was common ground that the main issue is whether the 3^rd loan was a loan or a gift from the plaintiff to the defendant.  This is purely an issue of fact.

The witnesses

22.  I heard evidence from the plaintiff and from the defendant.  I found the plaintiff to be a credible and reliable witness.  He was not shaken in cross‑examination. I found the defendant to be an evasive, untruthful and unreliable witness. Where their evidence is at variance, I prefer the evidence of the plaintiff to the evidence of the defendant.

The evidence and findings

23.  The defendant gave evidence that he was invited by the plaintiff to join Yick Fung Industrial while he was still a serving police officer.  At that time he was enjoying fringe benefits in the police force including staff quarters, medical insurance and entitlement to pension benefits.  His evidence was that in late 2008 and early 2009 the plaintiff repeatedly tried to persuade him to leave the police force and to join his company Yick Fung Industrial with the promise of the gift of a flat for his residence.  The defendant said that he was eventually convinced to join the plaintiff’s company and to give up his job as a police officer as the plaintiff offered him a flat for his residence as a gift to join the plaintiff’s company.

24.  It is clear on the evidence, and I so find, that in late 2008 the plaintiff and the defendant did discuss the prospect of the defendant leaving the police force to join Yick Fung Industrial.  The plaintiff denied that he tried to entice the defendant from leaving the police force by offering him the gift of the amount of the 3^rd loan in the sum of $1,600,000.  The plaintiff gave evidence that out of his friendship with the defendant he was prepared to help the defendant out by granting him the 3^rd loan to enable him to purchase a flat for him to live in and also to pay for incidental renovation expenses.  The plaintiff said that the defendant was in financial difficulties and was unable to borrow money from a bank to finance his purchase of a flat.  I believe the plaintiff and accept his evidence.

25.  There is no dispute that the defendant and his wife purchased a flat being Unit F, 6^th floor, Block 1, Nerine Cove, No 23 Hang Yu Street, Tuen Mun, New Territories (“the property”).  According to the land search records, the formal sale and purchase agreement for the purchase of the property with the consideration of $1,560,000 was executed on 19 December 2008. The plaintiff said that before the formal sale and purchase agreement was entered into there was a provisional sale and purchase agreement entered into on 5 December 2008.  This is not disputed. 

26.  I would observe that the date of the 3^rd loan was 10 December 2008 and the date of the 4^th loan was 18 December 2008.  The amounts that were advanced to the defendant by way of the 3^rd and 4^th loans clearly were used towards payment of the purchase price of the property and renovation expenses.  That is not disputed.  The only issue is whether the 3^rd loan was a loan or a gift from the plaintiff.

27.  I would observe that in 2006 and 2007 the plaintiff had in fact assisted the defendant financially by lending him monies under the 1^st and 2^nd loans.  This is undisputed.  The plaintiff said, and I accept, that he agreed to help the defendant out financially by granting him those loans.

28.  The documents in the agreed Bundle D were agreed as to admissibility and authenticity.  On the undisputed documentary evidence of the pay‑in deposit slips, it is clear that the sums representing the 1^st, 2^nd and 4^th loans were paid into the defendant’s bank account with HSBC on 23 December 2006, 9 February 2007 and 18 December 2008, respectively.  I so find.

29.  As I have said, there is no dispute that the 1^st and 2^nd loans were in fact loans from the plaintiff to the defendant.  And the defendant has also accepted in cross‑examination that he treated the amount of the 4^th loan as being a loan from the plaintiff.

30.  As to the sum of $1,600,000 being the amount of the 3^rd loan, the defendant denied in evidence that he had received a cashier’s order issued by HSBC in his favour for the sum of $1,600,000 (“the cashier’s order”). 

31.  The defendant’s pleaded case (at para 5(d)(i) of the amended defence) was that he received as a gift from the plaintiff the sum of $1,554,000 for the purchase of the property and the sum of $46,000 as decoration fee to decorate the property.  His case was that the total amount of $1,600,000 was made up of the said two sums which were given to him as a gift.  His pleaded case was that the gift was given to him because of the plaintiff’s appreciation that the defendant had agreed to join his company as a marketing manager.  However, despite the fact that the defendant’s counsel, Mr Chow, informed me on the first day of trial that there was no dispute that the defendant had received the cashier’s order, the defendant was adamant in cross‑examination that he did not receive the cashier’s order.  The defendant said in evidence that there were four separate payments made by the plaintiff for him to purchase the property, being $50,000 and $100,000 respectively, in December 2008, $1,404,000 in January 2009 and $46,000 in March 2009 thereby making the total sum of $1,600,000 given to him.  The defendant was adamant that he received the four separate payments from the plaintiff totalling $1,600,000.  This was contrary to the defendant’s pleaded case.  It was also contrary to what he said in his witness statement.

32.  I would observe also that it was never suggested to the plaintiff in cross‑examination that there was never a cashier’s order given to the defendant or that the total amount of $1,600,000 was given by the plaintiff to the defendant over four separate payments.

33.  The cashier’s order was not produced in evidence but the cashier’s order purchase form (at p 3 of Bundle D) is contemporaneous documentary evidence which provides support that a cashier’s order was issued by HSBC in the name of the defendant as beneficiary for the sum of $1,600,000 on 10 December 2008. I believe the plaintiff and accept his evidence.  I do not believe the defendant and reject his evidence.

34.  The plaintiff’s case is that only the total sum of $380,000 was repaid by the defendant out of the total sum of $2,080,000 lent to the defendant leaving the balance of $1,697,000 due and owing to the plaintiff as claimed.

35.  The defendant’s pleaded case (at para 5(e) of the amended defence) is that he did borrow a total sum of $480,000 in about 2006 and 2008 but which he said had been settled by him.  In cross‑examination, however, the defendant admitted that he had repaid the plaintiff the total sum of $380,000 instead of the sum of $480,000 as pleaded.  That being so, there was no longer any dispute that repayments had been made by the defendant to the plaintiff in the total sum of $383,000.

36.  I would also observe that the plaintiff’s case that the amount of $1,600,000 advanced to the defendant was a loan and not a gift is supported by contemporaneous documentary evidence.  The defendant and his wife as borrowers and the plaintiff as lender executed a legal charge (“the legal charge”) on the property on 15 January 2009.  The recital expressly records that the defendant and his wife had requested to borrow from the plaintiff and the plaintiff had agreed to lend to them a sum of $1,404,000 on the covenants and obligations contained therein.

37.  By clause 2 of the legal charge the defendant and his wife acknowledged that the principal sum of $1,404,000 had been paid by the plaintiff.

38.  As to the execution of the legal charge, the defendant’s pleaded case (at para 5(d)(ii) of the amended defence) is that the plaintiff required him to sign the legal charge in order to ensure that the defendant would keep his promise to join Yick Fung Industrial.  It is further averred that the plaintiff promised him that the legal charge would be discharged when the defendant had worked in Yick Fung Industrial for more than one year.

39.  If, as the defendant said, the amount advanced to him was a gift, it is inconceivable, in my judgment, that he would have entered into the legal charge and acknowledged therein that the amount of $1,404,000 was a loan secured by the legal charge on the property.

40.  Out of the sum of $1,600,000 advanced to the defendant on 10 December 2008, the plaintiff said, and I accept, that the sum of $1,404,000 secured by the legal charge represented 90% of the purchase price of the property and the balance of $196,000 represented renovation fees.  The purchase price of the property was $1,560,000, as I have said, and 90% of that comes to $1,404,000. . 

41.  On the undisputed evidence the plaintiff also assisted the defendant in attending the estate agent with the defendant when the property was purchased.  The defendant was purchasing his first property at the time whereas the plaintiff had some experience in property purchases and he was there to assist the defendant.

42.  According to the land search records, the assignment was executed on 15 January 2009, the same day as when the legal charge was executed.  I am satisfied that the sum of $1,404,000 secured by the legal charge was used to pay the vendor the 90% balance of the purchase price payable on completion.   

43.  Although the defendant said that the legal charge was required to secure his promise to the plaintiff that he would join Yick Fung Industrial and that the plaintiff promised to discharge the legal charge after he worked for more than a year, on the evidence the defendant did not ask the plaintiff to discharge the legal charge after he worked there for more than a year. 

44.  There is no dispute that the legal charge was discharged on 13 December 2010 although there is a dispute of fact as to the reasons why it was discharged. 

45.  The legal charge was eventually discharged on 13 December 2010.  The plaintiff said that the reason he discharged the legal charge was to assist the defendant so that the defendant could re‑mortgage the property with a bank and use the monies to invest in stocks and shares.  At the time the market was rising and he wanted to assist the defendant in making some money in the market.  I believe the plaintiff and accept his evidence.

46.  The defendant, however, said that the reason for the discharge of the legal charge by the plaintiff was because of the plaintiff’s promise to him that it would be discharged if he worked for more than one year.  I do not believe him.  He was unable to satisfactorily explain in evidence why he did not press the plaintiff to discharge the legal charge right after he had worked there for more than one year from 23 February 2009.  The defendant admitted in evidence to re‑mortgaging the property to HSBC after discharge of the legal charge and using the monies to invest in the stock market in Hong Kong.

47.  At the time of the discharge of the legal charge and the re-mortgaging of the property to HSBC the plaintiff and the defendant were still good friends.  Their relationship only deteriorated in 2012 on the evidence.  I am satisfied and find that the plaintiff wanted to help the defendant earn some money from investments in the stock market which the plaintiff envisaged was rising at that time.  For that reason, the plaintiff discharged the legal charge on 13 December 2010 so that the defendant could re‑mortgage the property with HSBC and use the funds for the defendant’s stock investments.  I so find.  I accept that, as the plaintiff said, he was in no hurry at that time to chase the defendant for repayment of the amounts owing by the defendant to him.

48.  The defendant’s case is that the plaintiff gave him a substantial gift in the sum of $1,600,000 so that he could purchase a flat to entice him to join his company.  I would observe that on the evidence the plaintiff’s wife and his younger brother were also in the police force before joining Yick Fung Industrial.  No such gift was ever given to them on joining Yick Fung Industrial.  It was not suggested that they had received any such gift to entice them to join Yick Fung Industrial. 

49.  The plaintiff accepted in evidence that the defendant would have to give up his quarters, medical benefits, and his entitlement to a pension when leaving the police force.  He denied that he ever agreed to give the defendant the sum of $1,600,000 as a gift for leaving the police force and working for him in Yick Fung Industrial. 

50.  I would observe that the defendant did not have any special skills in marketing.  He had no prior experience in marketing.  He was a police officer in the police force prior to joining Yick Fung Industrial.  The defendant’s last postings before leaving the police force were in the Child Protection Unit and in the District Anti‑Triad Squad.  His basic salary on leaving the police force was $23,125. I accept that he would lose his fringe benefits on leaving the police force including his quarters, medical benefits and entitlement to pension benefits.  But, as he accepted in evidence, he would not have to deal with criminals when leaving the police force to join Yick Fung Industrial in the private sector.

51.  I would observe that after he signed the agreement for leave without pay in August 2012, the defendant said that he did try to look for another job but failed to do so.  This demonstrates, in my view, that the defendant did not possess any special skills for the plaintiff to entice him away from the police force with a substantial gift in the sum of $1,600,000.  It is inconceivable, in my view, that the plaintiff would have agreed to give the defendant such a large sum to entice him to join Yick Fung.  I believe the plaintiff and accept his evidence.  I do not believe the defendant and reject his evidence.

52.  Apart from the plaintiff’s wife and the plaintiff’s brother who had joined Yick Fung Industrial without any offer of the purchase of a flat to be given to them on joining the company, Marco Liu (“Marco”) also joined Yick Fung Industrial some time before the defendant joined.  Marco was a correctional services officer prior to joining Yick Fung Industrial.  The plaintiff also gave evidence that Marco was also not offered or given a substantial gift of a flat for him to join Yick Fung Industrial. 

53.  In cross‑examination, the defendant for the first time said that when Marco left his civil service position to join Yick Fung Industrial, the plaintiff also bought a flat for Marco in Tuen Mun Town Plaza.  I would observe that this evidence was never mentioned in the plaintiff’s witness statement.  It was also not put or suggested to the plaintiff when he was cross‑examined.  In my view, this evidence of the defendant in cross‑examination was fabricated by the defendant.  He had never mentioned this before his cross‑examination.  He has made this up to try and bolster his case that the plaintiff gave him a substantial gift to enable him to purchase the property on joining Yick Fung Industrial.  He tried to bolster his case by saying that Marco was similarly given a gift of a flat when joining Yick Fung Industrial.  I do not believe the defendant and reject his evidence.

54.  It is common ground that after the defendant joined Yick Fung Industrial his performance was satisfactory and he was promoted to vice president in 2011 with an increase in basic salary to $28,350.  He also had the opportunity to travel for business purposes.

55.  As I have said, the plaintiff and the defendant’s relationship deteriorated in 2012.  It appears that in 2012 the plaintiff became concerned about the defendant’s performance in Yick Fung Global.

56.  There is no dispute that between September 2011 to around August 2012 the plaintiff was in the Mainland and not present at the offices of Yick Fung Global.  On the undisputed evidence, the plaintiff was detained by the authorities in the Mainland and was only released from detention in about June 2012.  He was not allowed to leave the Mainland immediately thereafter but was only allowed to leave the Mainland about one year later.  During his absence from Yick Fung Global in Hong Kong, the plaintiff’s wife was in control of Yick Fung Global and the defendant assisted her in managing Yick Fung Global. 

57.  The plaintiff said that after his release from detention in June 2012 his wife did express to him her dissatisfaction with the performance of the defendant in the company.  He elaborated that his wife’s complaints about the defendant was in relation to the defendant spending the company’s money without proper authorization and that the defendant was indecisive in management matters.

58.  It was at this time that the plaintiff said that he should get something in writing from the defendant as to the amounts owing to him by the defendant.  He contacted the defendant over the telephone and asked him to let him know how much was owing by him to the plaintiff.  The defendant did so by the emails he sent to the plaintiff in July 2012 (at pp 80 and 81, Bundle D, translations at pp 82 and 83).

59.  By the first part of the email sent by the defendant to the plaintiff on 3 July 2012 (“the 3 July email”) the defendant said:

“Loan: 1,850,000

Repayment: 153,000

Debt: 1,697,000”

60.  The second part of the 3 July email went on to deal with the defendant’s claim for monies that he claimed that he had paid on behalf of the company. 

61.  By the email sent by the defendant to the plaintiff on 4 July 2012 (“the 4 July email”) the defendant said:

“Loan:

Wedding 150,000

Repayment to bank 100,000

Purchasing a property 1,554,000

Renovation  46,000”

62.  The plaintiff also gave evidence that on or about 8 August 2012 the defendant signed the agreement of leave without pay (at p 88, Bundle D, translation at p 89).  Although he said that it was signed on 8 August 2012, in my view, the plaintiff was mistaken about this.  It is dated 8 August 2012 but I am satisfied and find that it was signed only on 30 August 2012, as the defendant said.  This is supported by the handwritten date therein. 

63.  The plaintiff was not in Hong Kong when these events occurred as he was in the Mainland, as I have said.  He communicated with the defendant by telephone and by email.  He recalled that he had discussed the contents of the agreement of leave without pay over the telephone and the defendant agreed to sign the same which he did. The defendant said that he was the one who did the first draft of the agreement of leave without pay.  The agreement of leave without pay contains the defendant’s signature which he said he signed on 30 August as the handwritten date confirms.  But it was not signed by Yick Fung Global although Yick Fung Global has acted upon it.

64.  In any event, on 1 December 2012 the defendant did not return to work at Yick Fung Global and it is common ground that his employment was terminated although, as I have said, the defendant’s case is that it was an unlawful termination. 

65.  It matters not whether the termination of his employment was lawful or unlawful for the purposes of this action.  I understand that the defendant has lodged a claim at the Labour Tribunal against Yick Fung Global. 

66.  On the evidence, the following day after the defendant signed the agreement of leave without pay, he also signed an IOU (“the IOU”) stating that he owed:

“… the creditor [the plaintiff ] a total sum of $1,697,000 which is an interest-free debt.

Upon the creditor’s agreement, I, from 5 September 2012, will make repayments in the sum of $3,000 each month.

The creditor is entitled to give me a written notice of 90 days in advance, and I will have to pay off the entire debt in 90 days thereafter.”

The defendant signed the IOU with the date of 31 August 2012 handwritten on the document.

67.  The plaintiff has relied on the 3 July email and the IOU as containing admissions made by the defendant that the defendant is indeed indebted to the plaintiff in the total sum of $1,697,000.

68.  The defendant in evidence denied that he sent the 3 July email voluntarily to the plaintiff or that he signed the IOU voluntarily. 

69.  As regards the IOU it is pleaded at para 5(f) of the amended defence that:

“On about 31^st August 2012, the Defendant was forced by the Plaintiff to sign a I.O.U, saying that he owes the Plaintiff a sum of HK$1,697,000.00. When demanding the Defendant to sign the said I.O.U, the Plaintiff threatened that the Company would suspend the Defendant’s employment as the Defendant refused to sign the same. In fear of losing his income, the Defendant signed the I.O.U.”

70.  In his witness statement at para 17 the defendant said that on or about 31 August 2012 the plaintiff demanded that he sign the IOU saying that he owed him a sum of $1,697,000.  He said that he denied owing him that sum but that the plaintiff threatened him that the company would really suspend his employment if he refused to sign the IOU and for fear of losing his income and job he signed the IOU.  I do not believe the defendant.  As I have found, the agreement of leave without pay was signed by the defendant on 30 August 2012.  However, it was dated 8 August 2012 and on the defendant’s evidence, since 8 August 2012 he knew that the company had plans to suspend his employment.  And on 30 August 2012 the defendant had already agreed to leave his employment for a period of three months by signing the agreement of leave without pay.

71.  In his witness statement the defendant did not even mention the 3 July email. However, in cross‑examination he said that he sent the email according to the plaintiff’s instructions.  He said that he did not acknowledge owing the plaintiff the sum mentioned therein and that he was following the plaintiff’s instructions when he sent the email.  He said that the plaintiff telephoned him from the Mainland and asked him to send him an email with the details of the amount owing so that the plaintiff could show that to his wife.

72.  The defendant also said in cross‑examination that the 4 July email was also sent by him to the plaintiff as requested by the plaintiff and that the plaintiff mentioned the amounts there for wedding, repayment to bank, purchasing a property and renovation.  He said that he was forced to send the 3 July and the 4 July emails. 

73.  I would also refer to the second part of the 3 July email.  In the second part of that email the defendant made a claim for funds that he had expended on behalf of the company.  On his evidence, he was forced to send the first part of the 3 July email but not the second part.  I find it incredible that the defendant would be forced to send the first part of the 3 July email but not the second part of the same email where he makes a claim for the expenses he had made on behalf of the company.  The second part of the 3 July email stated:

“Funds paid for Hong Kong Company:

HK$83331.8 (Tools used in HK company plant, January rent of Thailand Company, hotel accommodation for overseas business trip(s), parking fees etc.)

RMB$14447.5 (CNC machinery instrument(s), fuel fees etc.)

Taiwan Company: 100,000 (Up to today, transferred 3 times in total for a sum of TWD$477,000 to HK Yick Fung Company, about HK$130,000)

(Please excuse me that I cannot give any financial support, it has already exhausted the savings of my wife and me and (I) have also thought about moving out and selling the property in order to help the company in these difficulties. In the middle of last year, my wife was infected with tuberculosis, she is still recuperating and is on long-term medication, she is not able to go out to work, therefore I am under huge pressure of making ends meet for both my family and my parents. I also feel deeply sorry for my wife and family).

Boss, you need to work hard.”

74.  I do not believe the defendant when he said that he was forced to send the 3 July and the 4 July emails. 

75.  The defendant also said that he had not mentioned the 3 July and the 4 July emails in his witness statement as he had forgotten about the emails.  He said that he only saw the emails after he had made his witness statement.  I do not believe him.  The 3 July email had already been pleaded in the plaintiff’s amended reply and defence to counterclaim (at para 3(ff)) which is dated 24 June 2014 well before the defendant’s witness statement dated 18 November 2014.

76.  For the first time in cross‑examination the defendant also said that the whole arrangement of getting him to send the July emails, to sign the agreement of leave without pay and the IOU was a scam practised on him.  This was neither pleaded in the amended defence nor did the defendant say anything of the sort in his witness statement.  This was also not put or suggested to the plaintiff when he was cross‑examined.  The defendant was evasive when giving evidence on these matters.  It seems to me that if the defendant felt that he had been the victim of a scam it is incredible that he did not mention it before his cross‑examination. In my view, this part of his evidence was also fabricated by him.  I do not believe the defendant and reject his evidence.

77.  The plaintiff said, and I accept, that he did not know the exact amounts owing and wanted the defendant to put it down in writing for him.  His wife had been in communication with Andy Lau, solicitor on this matter as evidenced by the email communication with Andy Lau.  Although the plaintiff said that the defendant took legal advice on the IOU from Andy Lau, this was denied by the defendant.  The plaintiff was in the Mainland at the material time and there is no direct evidence that the defendant did in fact obtain legal advice from Andy Lau.  I am not satisfied on the evidence that the defendant obtained legal advice on the IOU.  It matters not, in my view.

78.  I am satisfied and find that the plaintiff did ask the defendant to let him have written confirmation of the amounts owing by him and that as a result the defendant did send the 3 July and 4 July emails to the plaintiff.  The plaintiff also asked the defendant to let him have the IOU which the defendant agreed to.  I find that the defendant was not forced to send the 3 July and the 4 July emails to the plaintiff and that he was also not forced to sign the IOU.  He may have been reluctant to send those documents to the plaintiff but, in my judgment, he did so voluntarily to confirm in writing that he was indebted to the plaintiff in the sum of $1,697,000.  I also find that he was not forced to sign the agreement of leave without pay.

79.  I am satisfied that the plaintiff is entitled to repayment of the sum of $1,697,000 representing the balance outstanding in respect of the 3^rd and 4^th loans given by the plaintiff to the defendant.  Out of the total sum of $2,080,000 lent to the defendant, the defendant has repaid $383,000 leaving the balance of $1,697,000 outstanding.  I reject the defendant’s case that the amount of the 3^rd loan was a gift from the plaintiff to him.  In my judgment, it was a loan from the plaintiff.

80.  I am also satisfied and find that the 3^rd and 4^th loans were repayable on demand as the plaintiff said in evidence.  I am satisfied that oral demands were made by the plaintiff to the defendant to repay the balance of $1,697,000 and that despite demands the defendant has failed to repay the said sum to the plaintiff.

Conclusion

81.  I give judgment to the plaintiff against the defendant for the sum of $1,697,000 with interest from the date of judgment until payment at judgment rate.  I also make an order nisi that the defendant do pay the plaintiff his costs of the action, such costs to be taxed if not agreed.