BARBARA PUI YUNG LYNN, the Administratrix of the estate of late Mr. Jack Lynn, deceased v. YEUNG KEUNG CHI AND OTHERS

CACV 21/2024, [2024] HKCA 742

On appeal from [2023] HKCFI 3351

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 21 OF 2024

(ON APPEAL FROM HCA NO. 177 OF 2021)

________________________

________________________

________________________

J U D G M E N T

________________________

Hon Chu VP giving the judgment of the Court:

Introduction

1.  This is the 4^th defendant’s appeal against the decision of Au Yeung J (“the Judge”)  given on 22 December 2023.  By the decision, the Judge granted summary judgment in favour of the 5^th defendant against the 4^th defendant in the third party proceedings for (1)  a declaration that the 4^th defendant holds the sums of HK$900,000 and HK$515,166.50 on trust for the 5^th defendant; and (2)  an order that the 4^th defendant makes restitution and refunds to the 5^th defendant of the two sums on the ground of unjust enrichment. 

2.  The appeal raises two issues.  First, it challenges the Judge’s rejection of the 4^th defendant’s defence that it has not received the sum of HK$900,000 as being incredible.  Second, it contends that there is a triable issue as to whether the claim of unjust enrichment has been made out in respect of part of the sum of HK$515,166.50, being the sum of HK$235,510 paid to the government to discharge outstanding property tax and rates. 

The facts

3.  The 5^th defendant’s claim against the 4^th defendant relates to a property situated at Park View Mansion, No 3 Lau Sin Street, Hong Kong (“the Property”).  Mr Jack Lynn (“the Deceased”), who died on 24 December 2001, was the sole registered and beneficial owner of the Property.

4.  Between June and October 2020, someone purporting to be Jack Lynn (“the Imposter”)  forged the Deceased’s signature and entered into a series of loan transactions with the 1^st to 4^th defendants.

5.  In the case of the 4^th defendant, which is a licensed moneylender, it lent a sum of HK$900,000 to the Imposter secured by a Second Legal Charge over the Property dated 16 October 2020 (“D4’s 2^nd Legal Charge”).  This was the last of the series of loan transactions procured by the Imposter.  By a Deed of Confirmation and Rectification dated 27 October 2020 (“Deed of Confirmation”), the Imposter confirmed that D4’s 2^nd legal Charge was for “all monies”.  The Imposter also executed a Deed of Surrender dated 16 October 2020 (“Deed of Surrender”), which provided that in the event he defaulted on his repayment obligation under D4’s 2^nd Legal Charge, he shall irrevocably and unconditionally deliver up vacant possession of the Property and the 4^th defendant may in its absolute discretion dispose of the Property.  All three documents were registered in the Land Registry.

6.  The Imposter defaulted on repayment under D4’s 2^nd Legal Charge.  The 4^th defendant proceeded to sell the Property through a firm of solicitors, Li & Associates (“LA”).

7.  By a sale and purchase agreement dated 10 December 2022 (“D5 SPA”), the 4^th defendant, purportedly in exercise of its right or power of sale as a mortgagee, sold the Property to the 5^th defendant for HK$9 million.  It is the 5^th defendant’s case that she paid a deposit of HK$900,000 (“Deposit”)  to the 4^th defendant by means of a cheque drawn on her parents’ account and in favour of LA.  The 4^th defendant did not dispute that the 5^th defendant had paid the Deposit but contended that it has not received the Deposit.

8.  There is also no dispute that on 8 January 2021, the 5^th defendant provided to her conveyancing solicitors, Tang, Wong & Cheung (“TWC”)  the balance of the purchase price, HK$8.1 million, also by means of a cheque drawn on her parents’ account.  It is further not disputed that on the completion date (i.e. 11 January 2021), pursuant to the 4^th defendant’s instructions contained in LA’s letter dated 11 January 2021, TWC issued the following cheques to the 2^nd to 4^th defendants:

(1)  A cheque in the sum of HJK$11,219.40 in favour of the 2^nd defendant, as repayment of the loan made by the 2^nd defendant to the Imposter.

(2)  A cheque in the sum of HK$7,573,504 in favour of the 3^rd defendant, as redemption money under a mortgage dated 14 August 2020 created over the Property and in favour of the 3^rd defendant.

(3)  A cheque in the sum of HK$515,166.60 in favour of the 4^th defendant, being the balance of the purchase price.

9.  An assignment (“D5 Assignment”)  was also executed by the 4^th and 5^th defendants upon completion. The 5^th defendant proceeded to take possession of the Property.

 HCA 177/2020

10.  On 25 January 2021, the 5^th defendant received a pre-action letter from the solicitors acting for the plaintiff, who is the administratrix of the Deceased’s estate. 

11.  On 1 February 2021, the plaintiff commenced the action below (HCA 177/2020)  against the 1^st to 5^th defendants, seeking declarations that the various loan agreements and legal charges made between the Imposter and the 1^st to 4^th defendants were void ab initio, an order for vacant possession and also damages. 

12.  By an order made on 26 September 2022, summary judgment was entered in favour of the plaintiff against the 4^th defendant, declaring that the D4’s 2^nd Legal Charge and Deed of Confirmation were void ab initio, and ordering that their registration in the Land Registry be vacated. 

13.  By another order made on 30 November 2022 by consent of the plaintiff and the 5^th defendant, it was declared that the D5 SPA and D5 Assignment were void ab initio and their registration in the Land Registry was ordered to be vacated.  The 5^th defendant was further ordered to deliver up vacant possession of the Property and to pay mesne profits to the plaintiff.

14.  In the meantime, on 9 August 2021, the 5^th defendant issued third party proceedings in the action below for contribution and indemnity against the 2^nd to 4^th defendants.  The 5^th defendant sought declarations that each of the 2^nd to 4^th defendants was holding the sums she paid to them on trust for her, restitution of those sums and/or damages and/or equitable compensation of HK$9 million, being money she had transferred to the 2^nd to 4^th defendants under a mistake, on the ground of unjust enrichment.

15.  The 5^th defendant’s claim was contested by the 2^nd to 4^th defendants.  In essence, they all claim to be unaware of the death of the Deceased and that they were victims of the fraud perpetrated by the Imposter.  Both the 3^rd and 4^th defendants also contended that they were bona fide mortgagees for value without notice and disputed the 5^th defendant’s entitlement to claim in unjust enrichment.

16.  The case of the 4^th defendant is that it had granted a loan of HK$500,000 to the Imposter.  At the Imposter’s request, HK$253,510 out of the loan was paid to the government to discharge the property tax and rates in arrears, and the balance of HK$246,490 was given to the Imposter in cash.  The 4^th defendant said that after the Imposter defaulted in making repayment, it entrusted the sale of the Property to LA, who was also responsible for arranging the discharge of the prior encumbrances against the Property.  The 4^th defendant denied having received the Deposit.  Its case is that it had only received from the 5^th defendant the sum of HK$515,166.60.

The Judge’s decision

17.  By a summons dated 6 February 2023, the 5^th defendant applied for summary judgment against the 2^nd to 4^th defendants. 

18.  By her decision given on 22 December 2023, the Judge entered judgment in favour of the 5^th defendant against the 2^nd to 4^th defendants. 

19.  In respect of the claim against the 4^th defendant, the Judge identified the following issues to have been raised by the 4^th defendant:

(1)  Whether the 4^th defendant had received the Deposit paid by the 5^th defendant;

(2)  Whether the 4^th defendant was a bona fide mortgagee for value without notice; and

(3)  Whether there had been a change of position on the 4^th defendant’s part such that the 5^th defendant’s claim in unjust enrichment should be refused.

20.  On issue (1), the Judge rejected the 4^th defendant’s defence that it had not received the Deposit as a bare assertion that was incredible.  In coming to this view, the Judge took into account that (i)  LA had applied a receipt chop on a copy of the cheque for the payment of the Deposit; (ii)  the 4^th defendant had acknowledged receipt of the Deposit in the D5 SPA; (iii)  despite an order for specific discovery having been made by Master Man on 29 April 2022, the 4^th defendant failed to disclose the completion statement; and (iv)  contrary to the 4^th defendant’s assertion that the solicitors’ clerk did not report to it about the transaction, the affidavit of Chan Kwok Keung filed by the 4^th defendant’s former solicitors, Tam Pun Yip (“TPY”), in support of its application to cease to act stated that the reason for the application was because TPY did not receive further instructions from the 4^th defendant. 

21.  On issue (2), the Judge held that the defence of bona fide mortgagee for value without notice was unarguable in that as the D4’s 2^nd Legal Charge was void ab initio, the 4^th defendant had not provided valuable consideration and had no right to receive payment from the 5^th defendant. 

22.  As to the 5^th defendant’s unjust enrichment claim, the Judge rejected the argument that the “netting off of gains and losses” principle applied to the sum of HK$515,166.60 received by the 4^th defendant from the 5^th defendant.  The Judge pointed out that the payment of the property tax and rates was part of the HK$500,000 loan lent to the Imposter, and that it was paid before the 5^th defendant purportedly became the owner, and the payment was for the benefit of the Deceased’s estate and not the 5^th defendant.  As to the balance of the loan, it was for the benefit of the Imposter and not the 5^th defendant. The Judge found that the 4^th defendant had provided no valuable consideration to net off against the 5^th defendant’s claim.  The Judge held that the 4^th defendant was enriched at the expense of the 5^th defendant and the enrichment was unjust. 

23.  As to issue (3), the Judge pointed out that to establish the defence of change of position, a defendant must show a causative link between the receipt of the benefit and the change of position, and that in the case of the 4^th defendant the causative link was premised on the void legal charge.  As the 4^th defendant had provided no valuable consideration, it was not inequitable to order restitution.

The appeal

24.  By a Notice of Appeal filed on 16 January 2024 and amended on 18 June 2024, the 4^th defendant appeals the Judge’s decision to this Court, contending that the Judge should have granted unconditional leave, or alternatively conditional leave, to defend the 5^th defendant’s claim.  The 4^th defendant put forward two grounds of appeal as follows:

(1)  Ground 1: The judge erred in rejecting the 4^th defendant’s case that it did not receive the Deposit.

(2)  Ground 2: The Judge erred in holding that the 4^th defendant is liable to repay to the 5^th defendant the amount of HK$235,510, being the amount of property tax and rates that the 4^th defendant had paid to the government (“Tax and Rates Payment”).

25.  The 5^th defendant has put in a Respondent’s Notice which seeks to affirm the Judge’s finding that the 4^th defendant’s assertion that it did not receive the Deposit was incredible on two bases.  First, it contends that in the D5 Assignment, the 4^th defendant had acknowledged receipt of the full purchase price of HK$ 9 million, which was inclusive of the Deposit.  Second, leaving aside the Judge’s reference to the supporting affidavit of Chan Kwok Keung (see [20] above), the other matters referred to by the Judge in the decision together with the above additional ground afford sufficient evidential basis for the Judge’s finding. 

Our reasons for decision

(1)  Ground 1

26.  Ground 1 challenges the Judge’s rejection of the 4^th defendant’s assertion that it did not receive the Deposit.  It is argued that: (i)  the Judge should not have placed weight on the 4^th defendant’s failure to produce receipt and documents in respect of the disposal of the Deposit; (ii)  the Judge was mistaken in relying on the affidavit in support of TPY’s application to cease to act; (iii)  the 4^th defendant was a victim of fraud perpetrated by the legal clerk of LA, which is a triable issue that could not be resolved by way of summary judgment; (iv)  the Judge should not have relied on the implausibility of LA not reporting on the transaction to the 4^th defendant; and (v)  the Judge failed to give weight to the circumstantial evidence put forward by the 4^th defendant.  

27.  We deal firstly with the argument that the 4^th defendant is a victim of fraud perpetrated by the clerk of LA.  This is a new point not pleaded, not mentioned in the affirmation filed by the 4^th defendant to oppose the Order 14 application, and not argued before the Judge.  Mr Chan, appearing with Mr Shum, for the 4^th defendant argues that Order 14 rule 4(1)  of the Rules of the High Court, Cap. 4A provides that a defendant may show cause by affidavit or otherwise, and the 4^th defendant is thus not bound by its pleaded defence in resisting the 5^th defendant’s Order 14 application.  In our view, this argument and the reliance on Tso Yuk Yin v Wan Wai Hung [2018] HKCFI 2798 at [54] are misplaced.  This Court is not hearing an Order 14 application.  We are dealing with an appeal.  It is trite that on an appeal a party cannot raise a point that has not been pursued in the court below, especially when the point is fact-sensitive: Flywin Co. Ltd. v Strong & Associates Ltd (2002)  5 HKCFAR 356. 

28.  Mr Chan suggests that, although the allegation was not explicitly mentioned in the affirmation filed by the 4^th defendant, there are sufficient materials before the court for the point to be raised.  We do not agree.  Not only is the point not apparent from the evidence, it is also contrary to the affirmation in opposition which painted a picture that the transactions involving the 4^th defendant were normal and proper. There is also no satisfactory explanation as to why the point was not pursued below.  In these circumstances, and bearing in mind this is a fact sensitive ground, it is not open to the 4^th defendant to raise this argument on appeal.  We would further point out that this ground does not serve to advance the 4^th defendant’s defence to the claim on the Deposit as LA was unarguably its agent in receiving the Deposit.

29.  Turning to the complaint about the Judge’s reference to the affidavit of Chan Kwok Keung filed by TPY in support of the application to cease to act for the 4^th defendant, this is directed at [51] of the Decision:

“With regard to the HK$900,000, D4’s own solicitor, Li & Associates, had applied a receipt chop on a copy of the parents’ cheque.  In the D5 Agreement, D4 acknowledged receipt of this sum.  As a mortgagee vendor, wouldn’t D4 be interested in knowing where the sale proceeds had gone?  No receipt for the deposit, no documents in respect of disposal of the HK$900,000 or completion statement for the Property were ever produced despite the order of Master Phoebe Man dated 29 April 2022.  D4 claimed that all that it cared about was to take back the HK$500,000 it lent.  D4 asserts that the solicitors’ clerk did not contact D4 to report on the transaction.  That was unbelievable because D4’s solicitors, Tam Pun Yip (“TPY”)  had filed a summons on 27 April 2022 applying to cease to act.  The supporting affidavit of Chan Kwok Keung said that the reason for ceasing to act was that TPY did not receive further instructions from D4, contrary to D4’s assertion.  TPY did cease acting.  D4’s bare assertion that it did not receive the HK$900,000 was totally incredible.” (Emphasis added)

30.  We accept it is not clear what was the relevance of the affidavit of Chan Kwok Keung and the reason for referring to it in discussing the 5^th defendant’s denial of having received the Deposit.  However, this is only one of the several matters that the Judge had considered in coming to the conclusion that the 5^th defendant’s assertion of not receiving the Deposit was incredible.  The Judge had referred to the receipt chop applied by LA on a copy of the cheque.  There is also handwriting on it stating that the cheque had been presented for payment (“PS 以上支票已過數為實”).  As noted above, LA was the 4^th defendant’s agent and it is not disputed that it had authority to receive the Deposit. 

31.  The Judge also referred to the D5 SPA signed by the director of the 4^th defendant, in which the 4^th defendant acknowledged that it had “received on or before the day and year first above written of and from the purchaser the deposit of HONG KONG DOLLARS NINE HUNDRED THOUSAND ONLY HK$900,000.00”.  In addition, as the 5^th defendant points out in the Respondent’s Notice, there is also the D5 Assignment signed by the 4^th defendant’s director acknowledging receipt of the full purchase price, which would include the Deposit.  It is noteworthy that the affirmation in opposition was not made by the director who signed the D5 SPA and D5 Assignment, and no explanation was offered by the 4^th defendant as to why its director would sign the two documents if it had not received the Deposit.  

32.  The Judge was further entitled to refer to the 4^th defendant’s failure to make discovery of the completion statement despite Master Man’s order for specific discovery.  The order directed the 4^th defendant to make discovery of completion statement for the sale of the Property prepared by LA, all vouchers, cheque stubs, photocopies of cheques and money transfer instructions in respect of the withdrawal, disposal, application of the Deposit and all receipts issued by the 4^th defendant to LA in respect of the Deposit.  The 4^th defendant did not comply with it.  Plainly, this is a matter relevant to assessing the veracity of the 4^th defendant’s assertion that it did not receive the Deposit from LA.  There is no merit in the argument that the Judge should not have taken into account the 4^th defendant’s failure to produce the completion statement and other documents despite having been ordered to do so.

33.  In short, the Judge’s finding that the 4^th defendant’s assertion that it did not receive the Deposit is incredible is well supported by the evidence filed in the summary judgment application. 

34.  Mr Chan has complained that the Judge failed to have regard to what he regards as “circumstantial evidence” in the case, namely the Imposter and LA were referred to the 4^th defendant by an intermediary agent, and the 4^th defendant had not dealt with such transaction before.  It is argued that the Judge should have looked at the case in the round when considering the inherent probability of the 4^th defendant’s assertion.  In our view, these matters have no or no material bearing on the Judge’s assessment of the veracity of the 4^th defendant’s assertion, given the abundance and strength of the evidence that have been referred to above.  

35.  For the above reasons, Ground 1 fails.

(2)  Ground 2

36.  Ground 2 evolves around the sum of HK$235,510 that the 4^th defendant paid to the government in October 2020 to settle the property tax and rates in arrears (“Tax and Rates Payment”).  Mr Chan argues that: (i)  the 4^th defendant was not enriched by this amount when, as recognized by the Judge, the payment was for the benefit of the Deceased’s estate, and also by reason of the principle of netting off of gains and losses; and (ii)  the 4^th defendant’s defence of change of position should have been upheld.

37.  In support of his netting off of gains and losses argument, Mr Chan relies on Goff & Jones on Unjust Enrichment (10^th ed, 2022)  at [4-59] to [4-66].  What may be distilled from these paragraphs are:

(1)  Some scholars have argued that a defendant is not enriched for the purpose of the law of unjust enrichment if his receipt of a benefit itself causes him a loss.  His gain and loss is said to be “netted off”.

(2)  In Test Claimants in the FII Group Litigation v HMRC [2021] UKSC 31; [2021] 1 WLR 4354 at [170], the UK Supreme Court accepted the submission that as a matter of principle, a defendant who is paid money may not be enriched if he incurs liabilities as a consequence of the receipt of the money.  This case thus provides support for the general proposition that a defendant is not enriched to the extent that his receipt of a benefit causes him to incur a liability.

(3)  This is a developing area of the law in that it remains to be seen whether a general netting off principle will become established within the law of unjust enrichment and, if so, what is the content and limits of this principle will be.  On the latter question, if netting off becomes a general rule of English law, then it is foreseeable that various issues will arise about its content and limits which will have to be resolved on a case-by-case basis.  For example, what counts as a loss for the purposes of the rule, and what kind of link is needed between a defendant’s gain and a defendant’s loss to trigger application of the rule?  

38.  The crux of Mr Chan’s argument is that the 4^th defendant by its receipt of the sum of HK$515,166.60 from the 5^th defendant, has lost its right to claim against the plaintiff for payment of the government tax and rates because such right against the plaintiff has been practically transferred to the 5^th defendant.  It is said that had the Property not been sold to the 5^th defendant, when the 4^th defendant sold it to another purchaser or if the Imposter redeemed the Property in due course, then the 4^th defendant would have been able to recover the amount of the Tax and Rates Payment from that other purchaser or the Imposter.

39.  These arguments are problematic.  First, the amount of the Tax and Rates Payment is part of the HK$500,000 loan lent by the 4^th defendant to the Imposter in October 2020.  It was at the Imposter’s request that HK$235,510 was paid to the government by a cheque dated 17 October 2020 to settle the outstanding property tax and rates.  It pre-dated the receipt by the 4^th defendant from the 5^th defendant of HK$515,166.60 on 11 January 2021.  Pausing here, it should be noted that, while the Judge and the parties have referred to this sum of HK$515,166.60 as “redemption money”, as between the 4^th and 5^th defendants, this sum is part of the purchase money under the D5 SPA and D5 Assignment.  It is in nature no different from the HK$900,000 deposit.  Since the D4’s 2^nd Legal Charge and the Deed of Confirmation were void ab initio, the 4^th defendant never had any title in the Property.  This, together with the D5 SPA and D5 Assignment being declared void ab initio, means that there is a failure of consideration for the purchase money paid by the 5^th defendant to the 4^th defendant.  The 4^th defendant is accordingly unjustly enriched by the two sums (i.e. HK$900,000 and HK$515,166.60)  at the expense of the 5^th defendant and liable to make restitution.

40.  Second, the netting off of gains and losses principle has no application to the facts of this case.  The Tax and rates Payment is part of the loan to the Imposter.  The loan was not caused by the 4^th defendant’s receipt of the purchase price from the 5^th defendant.  The receipt of the HK$515,166.60 (and the HK$900,000 deposit)  cannot be said to have caused the 4^th defendant to make the Tax and Rates Payment.  Nor can it be said that as a result of the 5^th defendant’s payment of HK$515,166.60 (and the HK$900,000 deposit), the 4^th defendant suffered a loss of the amount of the Tax and Rates Payment.  The argument that the 4^th defendant by the receipt of HK$515,166.60 from the 5^th defendant has lost a right to claim against the plaintiff for the payment of the government tax and rates is unsustainable. There is simply no causative link between the two.  There is also no basis for saying that the 4^th defendant’s right to claim against the plaintiff has been transferred to the 5^th defendant.  In any event, whether the 4^th defendant may recover from the plaintiff the property tax and rates that it had paid to the government is a matter between the 4^th defendant and the plaintiff. 

41.  Third, the contention that had the 4^th defendant not sold the Property to the 5^th defendant, it would have recovered the mount of the Tax and Rates Payment from another purchaser or the Imposter is also untenable.  The 4^th defendant has no interest in the Property and no right to sell it to anyone.  Any redemption money paid by the Imposter will be a repayment of the HK$500,000 loan together with interest.  The 4^th defendant has no entitlement to receive from the Imposter an additional sum of HK$235,510.

42.  Fourth, Mr Chan also argues that in considering whether a receipt of gain causes a loss, the court is not considering causation in the strict legal sense.  He refers to the judgment in FII Group case at [174] and [190] where the UK Supreme Court used the terms “inextricable link” and “consequence” when discussing whether HMRC had been enriched by the receipt of unlawful advanced corporation tax when the payment had triggered tax credits which HMRC had been bound to recognize.  In our view, this argument is of no consequence.  Our analysis above shows that the Tax and Rates Payment bears no relationship to the receipt of HK$515,166.60, being the balance of the purchase price.  There is no inextricable link between the payment and the receipt.  Nor can it be said that the payment is consequential upon or caused by the receipt from the 5^th defendant.  

43.  As to the defence of change of position, it is available to a defendant whose position has so changed in reliance on the plaintiff’s payment that it would be unequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full: Lipkin Gorman (A Firm)  v Karpnale Ltd [1991] 2 AC 548 at 580F. 

44.  The 4^th defendant argues that the defence applies to the amount of HK$235,510 out of the HK$515,266.60 received from the 5^th defendant in that it has changed its position by making the Tax and Rates Payment.  It is further argued that the change of position can take place before the receipt of payment from the 5^th defendant. This is because by procuring the execution of the Deed of Surrender, the 4^th defendant had anticipated that it would exercise the right of sale and there would be redemption of the Property.  Hence, the Tax and Rates Payment was arguably an anticipatory change of position on the 4^th defendant’s part, being made in anticipation that the 5^th defendant or other purchasers would redeem the legal charge.

45.  Mr Chan accepts that this argument based on anticipatory change of position was not argued before the Judge.  He however submits that this is not a new point as it only goes to the element of causation, which had been argued below.  We cannot agree.  The defence of change of position in good faith to a claim in restitution is fact sensitive.  The 4^th defendant is effectively seeking to run a new case that is not only unpleaded, but is contrary to the evidence adduced in opposition to the summary judgment application.  The 4^th defendant’s evidence was that it had changed its position “as a result of receiving the redemption money, as if not for the receipt of the redemption money, it would not have discharged its legal charge against the Property”.  It is not open to the 4^th defendant to belatedly raise a case of anticipatory change of position on appeal.

46.  In any event, the defence of anticipatory change of position cannot succeed both as a matter of evidence and law.  First, an essential element of the defence is that the defendant has incurred the expenditure in good faith relying on or on the faith of the payment to be received in future: Dextra Bank v Bank of Jamaica [2001] UKPC 50, [2002] 1 All ER 193 at [38].  In the present case, there is no evidence to support the contention that the Tax and Rates Payment made in October 2020 was incurred in anticipation of the receipt of the purchase money from the 5^th defendant in January 2021.  The 4^th defendant is a licensed money lender.  It made a loan to the Imposter.  Instead of giving the Imposter the full amount of the loan, it paid HK$235,510 to the government.  This was done at the Imposter’s request, and was not an expenditure incurred in anticipation of receiving purchase money or redemption money from the 5^th defendant in future.  

47.  Second, as Lord Goff pointed out in Lipkin Gorman at 580F-G, the mere fact that a defendant has spent the money does not of itself render it inequitable that he should be called upon to repay, because the expenditure might in any event have been incurred by him in the ordinary course of things: see also Goff & Jones at [27-10], [27-12] and [27-13] and Idemitsu Chemicals (Hong Kong)  Co., Limited v Yanqing Limited & Ors [2024] HKCFI 1075 at [39].  As the above analysis shows, the Tax and Rates Payment was part of the loan lent to the Imposter by the 4^th defendant in the ordinary course of its money lender business. 

48.  For the above reasons, Ground 2 also fails.

Disposition

49.  Accordingly, we dismiss the appeal.  Costs should follow the event.  We therefore order the 4^th defendant to pay the 5^th defendant the costs of the appeal to be taxed if not agreed.