ZHANG XINGLI v. ZHANG LI

DCCJ 1883/2020

[2024] HKDC 939

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1883 OF 2020

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BETWEEN

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JUDGMENT

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A. Introduction

1.  The dispute in this trial concerns the nature and purpose of a sum of HK$2 million (the “Sum”) transferred by the Plaintiff on 14 December 2015 to the bank account of Winning Star Global Limited (“WSGL”), a company of which the Defendant was at the material times the sole shareholder and director.

2.  The Plaintiff says the Sum was a loan advanced further to an oral agreement made in or about December 2015 between him and the Defendant (“Oral Loan Agreement”). The loan was said to be interest free and repayable upon demand.

3.  The Defendant, on the other hand, says the Sum was the start-up capital paid by the Plaintiff pursuant to an oral agreement reached in telephone conversations between the parties from mid November to early December 2015 to enter into a joint venture for investment management (“Oral JV Agreement”). WSGL was said to be initially the intended joint venture company, and the Sum to be for expenses for the joint venture in the first year.

4.  The Plaintiff and the Defendant both testified at trial.

B. Factual Background and Parties’ Cases

5.  I set out below the factual background and the parties’ respective cases on the key matters over which their factual accounts differ.

6.  The Plaintiff introduces himself as an entrepreneur (企業家) for over 20 years and running a company in Beijing. He was university educated in the Mainland.

7.  The Defendant also attended university in the Mainland and then pursued graduate studies in the United States. He has been in the investment banking industry and later the investment management business.

8.  The Plaintiff says he came to know the Defendant’s wife, a Madam Luo, through Mr Jack Ma of the Alibaba Group. Madam Luo was then working at Credit Suisse Private Bank. According to the Plaintiff, Madam Luo introduced the Defendant to him in April 2015. The Defendant was said to be planning to found a business at the time and looking for guidance and assistance from the Plaintiff in shares investment.

9.  The Defendant says he was introduced to the Plaintiff by his wife in May 2015. Around that time, the Defendant was founding his own business and setting up an investment management platform to source and execute investments for ultra high net worth clients. According to the Defendant, the Plaintiff approached him for good investment opportunities.

10.  In late October 2015, the Plaintiff decided to invest in Soufun Holdings Limited (“Soufun”) via the Defendant. On 9 November 2015, the Plaintiff remitted US$10 million to the bank account of WSGL. The Soufan transaction closed on 10 November 2015.

11.  There is an allegation by the Plaintiff that unbeknown to him at the time, the Defendant caused US$3 million out of the US$10 million to be invested in a note (“Soufun Note”) instead of the entire amount in Soufun shares. This is denied by the Defendant, who says he had explained the structure of the Soufun transaction, which involved investing in Soufun shares and the Soufun Note, to the Plaintiff from the beginning.

12.  According to the Plaintiff, the parties reached the Oral Loan Agreement in or about December 2015. The following are the accounts of events the Plaintiff has put forward at various stages of these proceedings:

(1) In the Indorsement of Claim, the Plaintiff stated that the Sum (defined as the “Investment Sum”) was for the purpose of investment in certain shares.

(2) In the Statement of Claim, the Plaintiff pleaded that the Sum was for the purpose of investment.

(3) In his Witness Statement, the Plaintiff stated that the Defendant had to borrow HK$8 million from him for founding a business (創業), but the Plaintiff considered the amount too big and was prepared to lend a sum of HK$2 million to help out the Defendant as a friend whom he trusted.

13.  The Defendant does not accept any of the above. On his account, the parties discussed and agreed on the following matters regarding setting up a joint venture investment management platform in a series of telephone conversations from mid November to early December 2015:

(1) The Defendant would source and manage investment deals for the joint venture, whereas the Plaintiff would invest his own money and find other sources of capital for such deals.

(2) The parties would share the profits from the investments on a 50/50 basis if the capital originated from the Plaintiff or investors he introduced, or a 15/85 basis if the capital originated from investors the Defendant introduced. If the capital were to come from other investors, the parties would share 20% of the carried interest. Any losses from the investments would be borne by the Plaintiff alone, or by the other investors he introduced.

(3) The investments would include but were not limited to the Soufun transaction and the Wanli and Uber transactions (referred to below) (collectively the “Transactions”).

(4) The joint venture vehicle was initially agreed to be WSGL. The joint venture would also be operated through companies already established by the Defendant, such as one called Winning Star LP, to save time and costs.

(5) The Plaintiff would pay for the upfront expenses incurred or to be incurred in connection with the setting up and operation of the joint venture. He also agreed to bear the fees and expenses incurred in connection with investment deals entered or to be entered into by the parties to the joint venture, including the Transactions.

(6) In particular, the Plaintiff agreed to make payment of HK$2 million as start-up capital to pay for the aforesaid expenses, and promised to inject more capital once the initial investment ran out until the joint venture turned cash-flow positive.

(7) The Defendant would not be paid any salary or dividends until the joint venture generated revenue.

14.  In connection with paragraph 13(5) above, the Defendant contends that the Plaintiff had approved a budget of expenses (titled “Winning Star Global Limited 預算”) which he prepared and went over with the Plaintiff in person when he was in Beijing from 10 to 13 November 2015. The estimated expenses for the first year was said to be HK$5,334,395.

15.  The above are what the Defendant claims to be the terms of the Oral JV Agreement. The Plaintiff denies having ever agreed to them, or to have seen (let alone approved) the aforesaid budget. He says the Defendant had repeatedly suggested setting up a joint venture with him, but he was uninterested and found the proposed profit sharing terms unacceptable.

16.  The foregoing are the parties’ competing accounts of why the Plaintiff came to transfer the Sum to WSGL’s account with HSBC on 14 December 2015.

17.  As regards the Transactions referred to above, it is not disputed that apart from the Soufun transaction, the Plaintiff further invested in Chongqing Wanli New Energy Co Ltd (“Wanli”) in January 2016 (which did not proceed for lack of regulatory approval)[1] and Uber Technologies Inc (“Uber”) in February 2016 (which involved the Plaintiff transferring around US$3 million to an account designated by WSGL). The parties’ disagreement lies in the Defendant saying that these Transactions were entered into pursuant to and in performance of the Oral JV Agreement, while the Plaintiff saying they were separate investments unrelated to the Oral Loan Agreement.

18.  Meanwhile, according to the Defendant, the parties were advised in January 2016 of the potential tax implications of using WSGL as the joint venture vehicle, and decided to set up a new joint venture company for the investments to be managed, and for the Soufun and Uber investments to be held until they were transferred to a private equity fund, Winning Star LP, to be managed by the joint venture. These are obviously denied by the Plaintiff.

19.  Further, there was email correspondence among the Defendant, Keera Capital Limited (“Keera”) and Ogier, advisors which the Defendant says he had engaged for setting up the investment management platform (as referred to in paragraph 9 above) and the joint venture. Notably:

(1) By email dated 12 January 2016, Keera asked Ogier if it was possible to have the first draft of the joint venture agreement ready in the coming days as the “Chinese investor” was in town and the Defendant would like to “confirm all details with the Chinese investor asap”.

(2) By email dated 14 January 2016, Ogier circulated the first draft of the joint venture agreement in English for the Defendant and Keera to review.

(3) By email dated 1 February 2016, the Defendant stated inter alia that “I’m meeting with the investor on Wednesday, so would really appreciate a quick turnaround as I have to review the Chinese translation”.

(4) By a further email dated 2 February 2016, the Defendant informed Ogier inter alia that he “would like to bring a finalized copy, but not an execution copy, as the investor may have comments”.

20.  According to the Defendant, he met with the Plaintiff in Beijing to discuss the joint venture on 3 February 2016. The Defendant says he brought along various agreements including the draft Shareholders’ Agreement for the Plaintiff to sign, but the Plaintiff reviewed the same and stated that he would like to wait for all the documents to be ready before signing them.

21.  By email dated 4 March 2016, the Defendant sent to a Mr Wang Haihong (“Mr Wang”) what were said to be the main documents relating to the setting up of the joint venture (“現將基金成立的主要相關文件發你處”) and a structural chart (“基金結構圖”). The Defendant asked Mr Wang to contact him any time if there were any questions. There is no dispute that Mr Wang is and was at all material times the Plaintiff’s assistant.

22.  By a WeChat message shortly thereafter on the same day, the Defendant referred Mr Wang to his email and the structural chart, and repeated that Mr Wang could let him know if there were any questions.

23.  Mr Wang then replied by WeChat as follows: “好的，我一會查收一下，回頭再跟張總碰一下，具體問題再找您溝通，謝謝”. “張總” is a reference to the Plaintiff.

24.  The Plaintiff stated in his Supplemental Witness Statement that he did not know the Defendant had sent Mr Wang the email and WeChat message in the two preceding paragraphs. He further said in his oral testimony that Mr Wang had authority to and could decide whether or not to report matters to him, depending on whether they were important and in his or his company’s interests.

25.  Then, on 11 March 2016, Mr Wang asked the Defendant on WeChat which entity, WSGL or Winning Star LP, was to execute agreement with Soufun and Uber. The Defendant replied on the next day that the entity was WSGL, as the joint venture was not yet established when the investments were made. The Defendant further explained that “基金公司已經成立了，兩個項目會轉到基金下面，也就是 Winning Star LP”.

26.  On the Defendant’s evidence (which the Plaintiff disputes), in a telephone call during the week of 28 March 2016, the Plaintiff informed the Defendant that he no longer wished to pursue the joint venture. When asked why, the Plaintiff said he had reviewed the joint venture structure and felt he did not have enough decision making power. The Plaintiff purportedly refused to provide any suggestions. The Defendant says he then immediately informed the Plaintiff that he would notify the lawyers to stop further work on the documentation, but certain expenses had already been incurred with regard to the joint venture and certain expenses would be incurred in the future even if the Plaintiff did not want to pursue the joint venture.

27.  The Court is given to understand that parties entered into the following written agreements on about 21 or 22 April 2016 regarding the Transactions:

(1) “股權代持協議” between the Plaintiff and the Defendant regarding the Soufun shares;

(2) “居間協議” between the Plaintiff and the Defendant regarding the Soufun shares;

(3) “股權代持協議” between the Plaintiff and WSGL regarding the Uber shares; and

(4) “居間協議” between the Plaintiff and the Defendant regarding the Uber shares.

28.  The Plaintiff says the agreements regarding Soufun shares were drafted by his legal advisor with costs borne by him.

29.  Then came June 2016, when (according to the Plaintiff) his liquidity became relatively tight and he wanted more liquidity for use where necessary. The Defendant, on the other hand, says he and his wife had lunch with the Plaintiff in Hong Kong on 20 June 2016, when the Plaintiff expressed he had recently experienced some liquidity problems and was considering selling the Soufun shares to cover his liquidity needs.

30.  What is not contested is that the Plaintiff sent the following WeChat message to the Defendant on 21 June 2016:

“依現在情形，我在銀行沒有一點現金，而且還要繼續收兩個 accumulator，全部股票抵押是波動的（一跌就讓我補現金和賣股票），有點惡性被動，能想到的就是希望把去年我匯給你到匯豐的200萬港幣盡快先匯回來，以便應付拋售之前的不時之需。謝謝！”

31.  The Defendant replied on 22 June 2016 as follows (using the voice message function on WeChat):

“張總啊，不好意思，因為昨天我那個搞的很晚呢，沒看到您這個條消息是這樣的就是這筆錢呢，這個嗯，大部分呢已經花在了，就是咱們之前做這兩個項目的一些相關費用啊，還有我們當時要設立基金一些費用上，那這我都有比較詳細的這個紀錄，那我想著到時候我跟您把這個紀錄過一下，咱們看看怎麼弄阿，問題是呢，今天我一早就去韓國，那明天要不等我回來從韓國回來，然後咱們找個時間，我把這個整個賬跟您過一下。”

32.  Then, on 23 June 2016, the Plaintiff stated on WeChat as follows:

“我和鑫然他們探討過了，決定拋售一千萬美元的搜房股票，討論過幾個方式，我知悉你們月底要去美國一月，決意高效可行的方案是全部轉到法巴來由他們操作。我等你們回港後立即辦理轉股手續，程序上也確認過，轉到法巴亦無任何障礙，我這週不會京，直至你們去離港去美！謝謝！”

33.  On the Defendant’s evidence, he met with the Plaintiff in Hong Kong on 27 June 2016 to discuss how to handle the disposal of the Soufun shares, and to go over with the Plaintiff a spreadsheet ledger showing expenses which had been incurred for the joint venture. According to the Defendant, the Plaintiff did not mention or make reference to any loan, nor contend that the Sum had been given by way of a loan. The Plaintiff, on the other hand, denies having ever seen any so-called ledger of expenses.

34.  There were ensuing WeChat exchanges between the parties on the Plaintiff’s demand for transfer of the Soufun shares to his BNP Paribas account. These included a message from the Plaintiff on around 29 June 2016 that he would commence legal proceedings against and no longer be friends with the Defendant (“我們將被迫啟動法律程序，其判決結果也將是毫無懸念的，你將下週起就會收到相關法律文件。至此，會有專人團隊和你打交道，我們也就不再是朋友”), and a further message on 30 June 2016 that he would see the Defendant in court (“如果立即轉股，別的可商量，否則也只有在法庭上見了！”), if the latter did not transfer the Soufun shares to him.

35.  There was also a WeChat message from the Plaintiff on 19 August 2016 in these terms:

“我在前天發給你一微信，你一如既往的不回覆，不理睬，硬是耗著、拖著，這樣好像不禮貌吧！霸佔著我的一千三百萬美元及二百萬港幣，一昧逃避總不是長久辦法吧！你現在在上海，對吧？”

36.  The Defendant did not reply to the above or later messages from the Plaintiff until 9 September 2016, when he said on WeChat that he would return to Beijing and suggested to meet with the Plaintiff.

37.  On the Plaintiff’s case, the Defendant ignored his repeated requests for transfer of the Soufun shares, resulting in him having to compromise in the end by authorising HSBC to dispose of the Soufun shares via WSGL’s account and suffering a loss of over US$2 million.

38.  The Defendant, on the other hand, says he explained to the Plaintiff on about 24 June 2016 HSBC’s decision not to allow WSGL to transfer the Soufun shares to the Plaintiff’s account at BNP Paribas unless it satisfied anti-money laundering checks, and offered alternatives to the Plaintiff, which the Plaintiff rejected. The Defendant claims it was only in late August 2016 that the Plaintiff withdrew his earlier accusations and became open to suggestions on how to sell the Soufun shares, and on about 14 September 2016 that the Plaintiff agreed for WSGL to execute a limited power of attorney in his favour to sell the shares.

39.  The Plaintiff’s evidence is that he had subsequently urged the Defendant for repayment of the Sum in a tactful way (“委婉催討”) over golf playing sessions and meals, because WSGL was still controlling his Soufun and Uber shares, and the Soufun Note (which he says was acquired without his permission) only matured in November 2019. These attempts were nevertheless stalled off (“推搪”) by the Defendant. The Defendant, on the other hand, says the Plaintiff did not bring up the issue about the Sum or allege that the Defendant owed him money, during their regular contacts or social gatherings. Meanwhile, the Defendant says certain expenses relating to the joint venture continued to accrue.

40.  On 13 May 2020, the Plaintiff commenced the present action.

41.  In June 2020, the Plaintiff further filed a lawsuit in Beijing against WSGL and the Defendant for inter alia losses incurred as a result of WSGL’s refusal to follow the Plaintiff’s instructions to sell the Soufun shares in July 2016. The Plaintiff’s claims in that lawsuit were dismissed and his appeal disallowed.

42.  Before leaving the evidence, I should return to the alleged budget of expenses and spreadsheet ledger referred to in paragraphs 14 and 33 above. The Plaintiff had devoted quite some time in cross-examination on various items in these documents, and the materials which the Defendant had produced to show the expenses purportedly incurred for the joint venture. They included, for example, invoices and receipts from professional advisors, or those relating to the Defendant’s travel and hotel expenses, rental for leasing an office operated by Regus at the International Commerce Centre, etc. I have considered all questions posed to and answers given by the Defendant, which I do not find necessary to recite one by one. I note the Plaintiff’s major lines of questioning were as follows:

(1) Why certain expenses purportedly incurred before the Oral JV Agreement, such as those for setting up various companies, were included, as to which the Defendant’s evidence is that the parties had agreed to continue using companies he had already formed to save time and costs, such that those expenses were also counted as being incurred for the joint venture;

(2) Why various expenses purportedly incurred after the Plaintiff allegedly asked to withdraw from the joint venture in the week of 28 March 2016 were also counted. The Defendant’s case (as already summarised above) is that he had then informed the Plaintiff certain expenses would be incurred in the future even if the Plaintiff did not want to pursue the joint venture, and had gone over with the Plaintiff a spreadsheet ledger showing expenses which had been incurred in June 2016;

(3) Why there remained HK$1.78 million (out of the HK$2 million) in WSGL’s bank account in March 2016, and around HK$1 million odd in June 2016. The suggestion was that the Defendant would have deducted or sought reimbursement from the HK$2 million earlier had there existed the Oral JV Agreement. In response, the Defendant drew a distinction between cash flow management and accounting. He explained that as long as he kept a clear record with documentary proof of the expenses he had incurred on behalf of the joint venture, it did not matter that he did not immediately seek reimbursement out of the HK$2 million in WSGL’s account.

43.  The above is as a summary of the material evidence placed before the Court. While the Court has not recited each and every matter in the witnesses’ statements and oral testimonies, it has duly taken them into account in coming to the findings under Section D below.

C. Applicable Legal Principles

44.  It is undisputed that the following principles should guide the Court’s approach to the factual evidence and assessment of witnesses’ credibility.

(1) Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility.

(2) In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events.

(3) Regard should be had to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.

(4) Caution should be had against too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’ character.

See Hui Cheung Fai v Daiwa Development Ltd (HCA 1734/2009, 8 April 2014) at paragraphs 77-81 (DHCJ Eugene Fung SC).

45.  The Defendant also relies on DHCJ Jin Pao SC’s decision in Leung Chin Sing, Rabo v Ko Chun Hay, Kelvin [2021] HKCFI 2242, which made reference to the aforesaid principles at paragraph 41. The learned Judge further observed at paragraphs 42 to 44 that:

“42. It is rare in modern commercial litigation to encounter a claim based on an agreement which is not only said to have been purely by word of mouth but of which there is no contemporaneous documentary record of any kind. The prevalence of e-mails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic imprint: Blue v Ashley [2017] EWHC 1928 (Comm) at [65] per Leggatt J (as he then was); Music Holdings Property HK Ltd v Ooi Lean Choo [2020] HKCFI 1312 at [58] per Ng J. Because the value of a written record is understood by anyone with business experience, its absence may, depending on the circumstances, tend to suggest that no contract was concluded: Blue v Ashley at [49]; Wing Hing (1956) Co Ltd v Nissin Foods Co Ltd [2021] HKCFI 638 at [56] per DHCJ Abraham Chan SC.

43. In Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [16-20], Leggatt J (as he then was) set out a detailed analysis on the unreliability of human memory and the impact on the civil litigation process on recalling past events. In view of these considerations, at [22], it was held that the best approach for a judge to adopt in the trial of a commercial case is to place little if any reliance on witnesses’ recollection of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. These observations were cited with approval by Kwan VP in Galleria (Hong Kong) Ltd v DBS Bank, Hong Kong Branch [2021] HKCA 611 at [175]. I have found these observations to be of assistance and particular relevance in approaching the witness evidence in this case, and I respectfully agree with them.

44. I also bear in mind that the burden of proof rests on the Plaintiffs to prove and establish the oral agreement, including the manner in which it was concluded and on the terms as pleaded, on a balance of probabilities. There is no burden on the Defendant to persuade the Court that his alternative version of events should be accepted: Music Holdings Property HK Ltd at [55] per Ng J.”

46.  These observations apply with equal force in the present case. While it must be right (and I believe the Plaintiff accepts) that the burden of proving the Oral Loan Agreement rests upon him, the Court does find itself in a position in this case to also assess the Defendant’s alternative version of events, which it shall do in Section D below.

47.  In opening submissions, in addition to running his case on the Oral Loan Agreement, the Plaintiff cited principles to the effect that he should be entitled to judgment based on restitution. As the Plaintiff’s pleadings contain no claim for restitution, I am not minded to consider the same. In any event, by virtue of my findings below, I do not think a restitutionary claim is open to the Plaintiff.

D. Assessment of Evidence and Findings

48.  To begin with the Plaintiff’s pleadings and witness statement, the Court has found it odd that his descriptions regarding the purpose of the alleged loan in these documents do not appear consistent (see paragraph 12 above). In cross-examination, the Plaintiff sought to explain that “investing in certain shares”, “investment” and “founding a business” were all one and the same thing, and that the “business” which Defendant was to “found” could be in the form of making investments. However, given the importance of the issue, ie why the Defendant purportedly requested a loan from the Plaintiff, and that the Plaintiff has all along been legally represented in these proceedings, one would expect the Plaintiff to be much more precise in formulating his case.

49.  But even leaving aside the above observation, the Court has found other aspects of the Plaintiff’s evidence to be inherently incredible and/or inconsonant with contemporaneous records.

50.  The first example concerns the exchanges between the Defendant and Mr Wang in paragraphs 21 to 23 above. These are important contemporaneous materials recording the Defendant’s submission of joint venture documents to the Plaintiff’s assistant, and the latter’s promise to communicate with the Plaintiff about them and revert to the Defendant. One naturally queries why the Plaintiff would disclaim knowledge about these exchanges, as he did in his Supplemental Witness Statement. The purported explanation, however, only came in his oral evidence, when he said his assistant could basically decide not to report matters to him (paragraph 24 above).

51.  But this belated explanation raises more questions than it answers.

(1) Why was it not given in the Plaintiff’s witness statements but proffered only for the first time in the witness box?

(2) Why did Mr Wang purportedly decide not to report the Defendant’s email and WeChat dated 4 March 2016 to the Plaintiff? The Defendant was no stranger to the Plaintiff. On the Plaintiff’s own case, by March 2016, he had invested substantial sums in the Transactions via the Defendant’s company WSGL.

(3) Even if Mr Wang did decide against reporting to the Plaintiff, he had promised on WeChat to revert to the Defendant. Why is there no record of Mr Wang declining the Defendant’s joint venture proposal?

(4) In any event, why was Mr Wang not called as a witness to explain and be cross-examined on these key matters?

52.  On the last subject, the Plaintiff said in cross-examination that he did not ask Mr Wang to testify because the latter was busy and had to handle his work whilst he came for this trial. The Court does not find this explanation convincing, given (1) it was never mentioned in the Plaintiff’s witness statements, (2) the lack of particulars provided by the Plaintiff even in the witness box (such as what work Mr Wang was supposed to handle during the trial period, what its purported importance, urgency or time-sensitivity was etc), and (3) the critical significance of Mr Wang’s evidence. In the premises, the Court is inclined to draw an adverse inference that Mr Wang has not been put forward as a witness because his evidence would not be favourable to the Plaintiff.

53.  Another notable instance relates to the WeChat exchanges between the Plaintiff and Defendant in paragraphs 30 to 32 above. The Plaintiff relies on his WeChat message on 21 June 2016 as his demand for repayment of the Sum. Yet the message only contained a request that he “hoped” the Defendant would “remit back” the HK$2 million as soon as possible.

54.  Even if one were to assume that the Plaintiff was being polite and tactful, the subsequent exchanges between the parties remain inexplicable. On the Plaintiff’s case, he was uninterested in and had declined the joint venture proposal. So, when the Defendant replied on 22 June 2016 that part of the Sum had been used on expenses for the joint venture and offered to go over his records with the Plaintiff, one would expect such reply to have at least raised the Plaintiff’s eyebrows. However, instead of demanding an explanation why the Sum (supposedly a loan that was repayable on demand) had been used on expenses to which the Plaintiff never consented, the Plaintiff’s message on the next day was completely silent on this, contained no reference to any loan, and focused simply on his wish for the Soufun shares to be transferred to his BNP Paribas account.

55.  The Plaintiff was again unable to give any credible explanation for this in the witness box. He claimed he had gathered from the Defendant’s reply that the latter had no intention of repaying the loan, and so he changed tack and asked for his Soufun shares to meet his liquidity needs. He also said he was worried that a repayment demand might cause the Defendant to act irrationally and jeopardise his investments in the Transactions. But none of these (even if true) explains why the Plaintiff would not even enquire with the Defendant how the Sum came to be used on expenses of a joint venture which the Plaintiff allegedly never agreed to set up.

56.  The Court also found it hard to reconcile the Plaintiff’s messages to the Defendant in June and August 2016 (see paragraphs 34 and 35 above) with his evidence that he had to urge the Defendant for repayment of the Sum in a tactful manner over golf and meals, and withhold legal proceedings until May 2020 because the Soufun Note only matured in November 2019 (see paragraphs 39 and 40 above). The messages in June and August 2016 do not strike the Court as being at all subtle or tactful, and shows the Plaintiff was capable of making firm demands, putting them on record, and threatening legal proceedings when he wanted to (in that instance over the transfer of the Soufun shares). It begs the question why the Plaintiff would not pursue repayment of the Sum much more directly and promptly. The Court notes that even in the Plaintiff’s WeChat message on 19 August 2016, which (on his case) was two months after he first demanded repayment of the Sum, he still did not describe it as a loan but referred to it as having been misappropriated (“霸佔”) by the Defendant along with US$13 million.

57.  For the above reasons, the Court finds that the Plaintiff has not discharged the burden of showing that the Sum was transferred to WSGL pursuant to the Oral Loan Agreement as alleged by the Plaintiff.

58.  On the other hand, the Court finds the Defendant’s case on the Oral JV Agreement more credible and consistent with contemporaneous evidence.

59.  Among such contemporaneous evidence is, first of all, the email correspondence among the Defendant, Keera and Ogier as set out in paragraph 19 above. They came shortly after the Oral JV Agreement was said to be reached some time in mid November to early December 2015 and the Plaintiff’s transfer of the Sum to WSGL on 14 December 2015. There is force in the Defendant’s submission that he would not have incurred time and costs on having professionals prepare the joint venture agreement had there been no commitment at all by the Plaintiff to setting up a joint venture.

60.  The Plaintiff questioned why the emails with Keera and Ogier referred to a “Chinese investor” rather than the Plaintiff by name. The Defendant explained in his Supplemental Witness Statement that the Plaintiff had specifically instructed that he wanted to remain anonymous until the documents were finalised for execution. The Court does not see this explanation as inherently incredible.

61.  The Plaintiff further challenged the Defendant’s case by querying why there was no signed written agreement for setting up the joint venture. The Court does not find this a compelling argument, when the Plaintiff was prepared to transfer much more substantial sums for investing in the Transactions before written agreements were drawn up and signed in April 2016 (see paragraph 27 above).

62.  The Defendant’s case is also supported by his email and WeChat message to Mr Wang in paragraphs 21 to 23 above and his WeChat message to the Plaintiff in paragraph 31 above, which, as observed above, the Plaintiff has not credibly addressed.

63.  As regards the Plaintiff’s challenge of the expenses budget, spreadsheet ledger and supporting materials referred to in paragraphs 14, 33 and 42 above, the Court considers the Defendant’s explanations as summarised in paragraphs 42(1) to 42(3) above generally reasonable and logical. In particular, regarding the point in paragraph 42(2) above, the Plaintiff has not run any alternative case to the effect that, even if there were the Oral JV Agreement, the Defendant would be obliged to return whatever remained of the Sum once the Plaintiff decides to withdraw from the joint venture. Nor does the Court find it incredible that certain expenses had to be incurred after the Plaintiff changed his mind in late March 2016.

64.  For completeness, the Court notes that the Defendant put forward an expenses summary for the purpose of these proceedings to show WSGL had incurred a total of HK$2,080,137.09 for the joint venture. The Plaintiff has queried why the Defendant/‌WSGL did not counterclaim for the HK$80,137.09 if his case were true. The Court finds the reason given by the Defendant, namely that the legal costs involved could well exceed the counterclaimed amount, convincing.

65.  For all the above reasons, the Court finds that the Plaintiff has more likely than not paid the Sum to WSGL as start-up capital pursuant to the Oral JV Agreement, and the Defendant is under no obligation to return the same or any part thereof to the Plaintiff.

E. Disposition and Costs

66.  I therefore order that:

(1) The Plaintiff’s claims against the Defendant in this action be dismissed.

(2) There be a costs order nisi that the Plaintiff pay the Defendant’s costs of this action, with certificate for counsel, to be taxed on a party to party basis if not agreed.

67.  I thank counsel for their assistance.