CHAN KUNG KEE v. WEN XIAOLING

HCA 1635/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1635 OF 2010

____________

____________

(by Original Action)

AND BETWEEN

____________

(by Counterclaim)

_______________

J U D G M E N T

_______________

A. Introduction

1. The plaintiff seeks recovery of HK$3 million from the defendant. The plaintiff says it was a debt. The defendant says that it was for an investment that she had already made on behalf of the plaintiff.

2. The defendant counterclaims for a sum of RMB2,704,000 for the tuition fees of the plaintiff’s children.  The defendant says that it was a loan but the plaintiff says that it was a gift and he also disputes the amount.

B.  An overview of the credibility of witnesses

3. The documents are limited in the present case.  Much depends on the credibility of witnesses.  The plaintiff, his wife and daughter gave evidence on the plaintiff’s side.  The defendant and a Mainland lawyer, Ms Yuan Xiao Mei (“Ms Yuan”), gave evidence on the defendant’s side.

4. As regards the claim, the plaintiff is meticulous and his version is logical.  On the counterclaim, however, he is not fully credible.  Unless otherwise specified, I accept the evidence of the plaintiff.

5. Save that Mrs Chan is muddled insofar as time and figures are concerned, she is a credible witness.  Where there is conflict between her and the plaintiff’s evidence, I prefer the latter. 

6. I find Amy to be a credible and reliable witness.  She is firm and straightforward.  She is not shaken in cross-examination.

7. I do not find the defendant to be a credible witness.  Her version is not logical and is contradicted by documentary evidence.  As will be seen from the analyses below, she did not produce relevant documents (if they did exist).  She did not tell the truth about transfer of the HK$3m to the company.  Unless otherwise specified, where there is conflict, I prefer the evidence of the plaintiff and his wife to the defendant’s.

8. Ms Yuan responds to questions cautiously and with a clear mind.  I find her to be a credible and reliable witness.  I accept her evidence on Mainland law.

C.  THE UNDISPUTED FACTS

9. The plaintiff (“Mr Chan”) is the husband of the 2^nd defendant by counterclaim (“Mrs Chan”).  They have a son (“Hum”) and a daughter (“Amy”) (collectively “the children”).  The defendant (“Madam Wen”) is the sister of Mrs Chan.

10. Madam Wen was at all material times a shareholder and director of a Mainland company, Guangzhou Xin Yuan Heng Ye Power Transmission Device Limited (廣州鑫源恆業電力綫路器材有限公司) (“the company”). 

11. At all material times, Madam Wen and her son Zhu Yan were the only shareholders of the company.  Other people only became shareholders after commencement of these proceedings in November 2010. 

12. The Chan family and Madam Wen used to enjoy a very close relationship, to the extent that Mr Chan managed Madam Wen’s bank account in Hong Kong and Mrs Chan worked for her. Madam Wen took care of Amy until she was aged 3 and financially supported the children’s education in the UK.  In her own words, although the economy was bad in 2009, Madam Wen gave priority to the children’s tuition fees.

13. In or about February/March 2010, Mr and Mrs Chan intended to acquire the shares of the company to be listed (“the acquisition”).  They enlisted the assistance of Madam Wen.

14. By a resolution dated 2 March 2010 (“the March resolution”), the company approved, the contribution of RMB2.7m (equivalent to HK$3m) from Mr and Mrs Chan.

15. In the meantime, Madam Wen purchased a property at Yoho Midtown (“the property”), due for completion in May 2010.

16. On 3 May 2010, Mr Chan transferred HK$3m to Madam Wen, which was applied towards part payment of the purchase price of the property. 

D.  The disputed facts and findings

17. I accept Mr Chan’s evidence that he needed to raise money to purchase the shares.  He could not, therefore, say with certainty in March how much money he would invest.  It was in about May, after selling some listed shares, that the amount of investment became certain.

18. On 9 May 2010, Mr Chan and Madam Wen signed a document in duplicate called “borrowing terms” (借款條款) translated as:

“We hereby acknowledge receipt of [HK$3m] [Mr Chan] deposited into [Madam Wen’s] account … held with the Hong Kong and Shanghai Banking Corporation Ltd. As per HK$1 = RMB ￥0.886, this deposit is converted into RMB ￥2,658,000, which will be used to purchase the original issue shares of [the company] listed in China. The original issue shares will be jointly owned by [Mr and Mrs Chan].”

19. According to Mr Chan, Madam Wen did not take away a copy.  Later, Mrs Chan took it to the company where Madam Wen applied the company seal and gave it back to Mrs Chan.

20. Madam Wen disputed the authenticity of the borrowing terms.  She says she had signed an acknowledgement of receipt of HK$3m but was not given a copy.  The borrowing terms might have been made out of sheets that she signed in blank in Mr Chan’s possession.  This assertion was made in solicitors’ correspondence before action on 21 September 2010 even before Mr Chan mentioned the borrowing terms.  She also denies the validity of the company seal.

21. I see no reason why, given such a big sum and the good relationship between the parties, Mr and Mrs Chan would not openly require Madam Wen to sign the borrowing terms but needed to surreptitiously shuffle that document for her to sign before immigration clearance at Huanggang as Madam Wen alleged.

22. Similarly, I do not see why Mr and Mrs Chan needed to have the document sealed when the money was given to Madam Wen as recipient.  Madam Wen suggested that the company seal had been stolen but there was nothing to show that Mrs Chan had anything to do with the theft.  Mrs Chan’s evidence that she did not possess the seal was never challenged by Mr Tsui (counsel for Madam Wen).  Madam Wen’s evidence showed affirmatively that it was she herself and one Mr Tse, not Mrs Chan, who was in possession of the seal. 

23. I find the borrowing terms to have been executed by Madam Wen and that the company seal was applied in the way described by Mr and Mrs Chan. The borrowing terms was a genuine document.

24. According to Mr Chan, the HK$3m was a loan and it was expressly agreed that the loan would be repayable upon Madam Wen’s acquisition of the shares on behalf of Mr and Mrs Chan and would be repaid in the form of shares with equivalent value (“the express term”).

25. Mr Chan also says that it was an implied term that at any time prior to the acquisition, the loan would be repayable in monetary form on demand and/or indication from Mr Chan that Madam Wen’s assistance in the acquisition was not required (“the implied term”). 

26. Madam Wen says it was a reimbursement to her for the RMB2.7m she previously transferred to the company on 4 March 2010 (“the alleged transfer”).

27. In deciding on the nature of a document, the label given by the parties to it is considered but it is not decisive.  The court looks at the substance of what the document was intended by the parties to achieve. 

28. The borrowing terms only stated the word 借 (borrow or lend) in 3 places – in its title and twice describing Mr Chan as lender.  The contents of the document never mentioned anything about a loan. 

29. It was quite unlikely, in my view, that Madam Wen needed a loan. Disregarding her evidence that she had RMB30m in the company, Madam Wen clearly had enough cash to support the education of Amy, to repay the mortgage for a property she bought for Mrs Chan and to pay for the balance of the purchase price (HK$7.67m) for the property.

30. The agreement was for Mr and Mrs Chan to buy HK$3m worth of shares; Mr Chan would pay HK$3m intended for the acquisition in Hong Kong in the form of purchase price of the property; Madam Wen would pay the equivalent amount in the Mainland to the company for the shares.  The true reason for the agreement, I find, was to reduce the cost of transporting funds between Hong Kong and the Mainland.  The borrowing terms was to have Madam Wen acknowledge receipt of the money for the specified purpose.  I am not satisfied that the parties talked about “repayment” as such.  The “express term” was artificial.

31. In about May 2010, Madam Wen suspected Mrs Chan of embezzlement of company funds.

32. On or about 4 June 2010, Mr Chan told Madam Wen that he and Mrs Chan no longer wanted to acquire the shares (“the 1^st withdrawal”). This occurrence is disputed by Madam Wen. 

33. The 1^st withdrawal was neither part of the pleaded case nor mentioned in the plaintiff’s demand letter dated 19 August 2010 before action. The amended statement of claim only pleaded the withdrawal date to be 19 August 2010 (“the 2^nd withdrawal”). 

34. Mrs Chan was sacked from the company on about 4 June 2010 for suspected fraud on the company and embezzlement of company funds.  In any case, she must have left before 30 June 2010 because the company resolution of that date (“the June resolution”) mentioned about asking her to come back for investigation and to complete the procedure for the acquisition (“the procedures”). In such circumstances, one could reasonably expect her relationship with Madam Wen to have turned sour.  I accept Mr Chan’s version that the 1^st withdrawal did occur.

35. The company remains unlisted as of the trial dates.  No shares have been allotted to Mr or Mrs Chan.

36. Mr Chan claims for return of the loan, alternatively for breach of the implied term.  Madam Wen contends that she had transferred RMB2.7m (equivalent to HK$3m) to the company.  She also claims that Mr and Mrs Chan had failed to complete the procedures.

37. Madam Wen counterclaims for money lent to Mr and Mrs Chan, for helping their children to study in the UK, pursuant to an oral agreement (“the education loan agreement”) in 2004.  Between September 2004 and January 2010, Madam Wen had lent a total of about RMB2.7m to Mr and Mrs Chan. 

38. Mr and Mrs Chan do not dispute that Madam Wen did contribute towards the tuition fees of the children.  The dispute was whether those contributions were gifts or loans, duration of the contribution towards Amy’s tuition fees and the quantum.

E.  The core issues

39. In my view, stripped of all legal jargon, the core issues can be summarized as follows:

(1)  Had Madam Wen transferred to the company the RMB2.7m?

(2)  Did the plaintiff withdraw before the defendant performed her part of the obligation? 

(3)  Was there an education loan agreement?

(4)  If there was an education loan agreement, what was the amount owed under it?

F.  Had Madam Wen transferred to the company the RMB2.7m?

40. For the following reasons, I am not satisfied that Madam Wen had transferred the RMB2.7m to the company:

41. Firstly, she has not produced any documentary proof of the alleged transfer.  She gave various excuses for not producing documents in the witness box.  Her evidence that the company’s audit reports had only become available 3 days before commencement of the trial, ie almost 5 years since the alleged transfer, was incredible.  She claims to have told her legal representatives about these documents.

42. She even claims that it was too late to produce (i) the audit report; (ii) the original documents showing the alleged transfer; and (iii) the company’s financial accounts, which would have shown an item called “Other Payables – Provisions for the Selling of Share Ownership in the Companies accounts and list out the specific amounts subscribed by each officer” (see the 1 December 2009 and March resolutions.) 

43. If the judge is satisfied that certain contemporaneous documentation is likely to have existed were the oral evidence correct, and that the party adducing oral evidence is responsible for its non-production, then the documentation may be conspicuous by its absence and the judge may be able to draw inferences from its absence as indicating unfavourable tenor of evidence: Tullet & Tokyo International Securities Ltd v APC Securities Co Ltd [2001] 2 HKLRD 356, 365 D-J, CA; Wetton (as liquidators of Mumtaz Properties Ltd) v Ahmed [2012] 2 BCLC 109, Arden LJ (at §14, also see §§10-12, 16-17).

44. I draw the inference that the alleged transfer has never occurred.

45. Secondly, the actual contribution by an acquirer could (and in fact did) differ from the amount approved in the March resolution.  There was no hurry for Madam Wen to transfer RMB2.7m to what was her own company.  Mr and Mrs Chan were still relying on her for financial support of at least Amy’s tuition fees.  Although she said she did not care where Mr and Mrs Chan’s money would come from, I am not satisfied that Madam Wen would have committed herself in acquiring the shares for them without receiving the money from them.

46. Thirdly, the company has never acknowledged receipt of the RMB2.7m or that Mr and Mrs Chan were shareholders.  See the Application Form for the Registration of Limited Liability Company Modification dated 11 March 2011, Amendment to Articles of Association dated 18 February 2011 and the Capital Verification Report dated 8 March 2011.

47. I find that Madam Wen has not transferred the RMB2.7m to the company. Her case on reimbursement falls away.

G.  Did the plaintiff withdraw before the defendant performed her part of the obligation?

48. Since the alleged transfer never occurred, Mr and Mrs Chan had clearly withdrawn from the acquisition in good time, be it the 1^st or 2^nd withdrawal, before Madam Wen performed her only obligation.  The rest of the defence is unnecessary but I deal with it for completeness sake.

49. Madam Wen asserts that Mrs Chan had failed to attend shareholders’ meeting and sign documents in person to complete the procedures as required under the Mainland law.  This was based on the legal advice of Ms Yuan dated 28 May 2010 (“the 1^st opinion”) and 25 January 2013 (“the 2^nd opinion”) given to the company. 

50. Without disrespect to Ms Yuan, the 1^st opinion was irrelevant as it talked about the procedure for transfer of shares when the present case involved issue and allotment of shares to new shareholders.  To the extent the June resolution required Mr and Mrs Chan to attend the company in person to execute documents for completing the acquisition, it was unwarranted as being based on an inapplicable legal opinion.

51. The 2^nd opinion was obtained after this action was commenced, apparently to rationalize the June resolution.  It set out 4 steps (“the procedure”): (a) an expression of intent to acquire shares by a senior staff of the company (Mrs Chan); (b) a resolution passed by 2/3 of the shareholders approving the intended acquisition; (c) the subscriber and the company shall sign the acquisition agreement; and (d) in accordance with the agreement, the subscriber would provide the capital.  However, the 2^nd opinion does not help Madam Wen.

52. Firstly, the failure of Mr and Mrs Chan to complete the acquisition would at best give rise to a cause of action in favour of the company, but does not afford Madam Wen a defence to the present case.

53. Secondly, the Mainland law did not require Mr and Mrs Chan to attend the company’s shareholders meeting.  Ms Yuan even confirms that it was not necessary to execute documents for acquisition of shares in person in the Mainland. 

54. Thirdly, steps (a) and (b) have been met.  However, Madam Wen stated that the approval of Mr and Mrs Chan’s acquisition was put on hold until Mrs Chan’s suspected embezzlement was resolved and it was not resolved as yet.  Given this statement, Madam Wen was barred from maintaining that Mr and Mrs Chan were not entitled to terminate the acquisition for failure to complete the procedure.

55. Fourthly, Mr and Mrs Chan had never been informed of the legal requirements.  It was Madam Wen’s pleaded case that at about the end of June 2010, Man Lai (her sister), asked Mrs Chan to return to the company to complete the procedure but Mrs Chan refused.  In her witness statement, however, Madam Wen stated that she instructed Man Heng (Madam Wen’s son) who, in turn, told Man Lai that she should ask Mrs Chan to return to the company to complete the procedure.  Neither Man Lai nor Man Heng gave evidence and Madam Wen confirmed that she had no idea whether Man Lai had actually contacted Mrs Chan.  Madam Wen’s plea did not come up to proof.

56. Fifthly, Madam Wen had contradicted herself.  In her witness statement, she claimed to have personally asked Mrs Chan to return to the company to complete the procedure at about the end of June 2010.  This contradicted her evidence that she was not able to contact Mrs Chan personally despite various attempts during the same period.

57. Sixthly, if the documents were awaiting the execution of Mr and Mrs Chan, Mr Lam (counsel for the plaintiff) submits that the failure to produce them shows that the documents never existed.  As this was never put to Madam Wen in cross-examination, I disregard this point.

58. Seventhly, the time for putting up capital under point (d) has not yet come.  Accepting Madam Wen’s evidence that capital contribution came in gradually, either withdrawal was way before the date of capital verification (March 2011) or the closing date for raising capital (1 December 2010). Her evidence that Mr and Mrs Chan had to be the first to pay for the shares because their intended share was the largest among other subscribers contradicted the fact that at least 3 other persons mentioned in the March resolution were subscribing for more shares than Mr and Mrs Chan. 

59. In summary, I find that both withdrawals were in good time before Madam Wen transferred the money to the company.  Madam Wen is bound to return the HK$3m to the plaintiff as money had and received for failure to perform her obligation or failure of purpose.

60. The issue on implied term is irrelevant but I will deal with it briefly for completeness sake.

61. The law on implied term is not disputed.  A term to be implied must comply with the following conditions:

(i)   It must be reasonable and equitable;

(ii)  It must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

(iii)  It must be so obvious that ‘it goes without saying’;

(iv)  It must be capable of clear expression;

(v)  It must not contradict any express term of the contract.

Kensland Realty Ltd v Whale View Investment Ltd & anor [2001] HKCFAR 381, para 23, Ribeiro PJ.

62. In my view, it was obvious that Madam Wen did not forward the money to the company, or no shares were acquired, or if Mr and Mrs Chan withdrew before the transfer of the HK$3m to the company, the money must be returned to them so as to prevent a windfall to her.  All the requirements of Kensland Realty are met.  The implied term existed and was breached.

H.  Was there an education loan agreement?

63. I accept the evidence of Mr Chan that with his income of $48,000 per month and education allowance from the government, and Mrs Chan’s then income of RMB5,000 per month, the couple could only afford the cost of Hum’s education in the UK.  Without the support of Madam Wen, they would not have sent Amy to the UK.

64. The burden of proof is on Madam Wen to show that the education loan agreement existed but her evidence was unsatisfactory: 

65. Firstly, her case on when the education loan agreement was entered into was inconsistent.  Her pleaded case is that it was in 2004 but her witness statement (amended when she got into the witness box) says 2000.  If she had started paying since 2000, it would be illogical that the education loan agreement only emerged 4 years later. 

66. She then says that she did not pay for the year 2003/4; the education loan agreement resumed in 2004 when Mrs Chan came back to work for her.  In fact, Mrs Chan resumed working in the company in November 2005 [A255].  In any case, her answer dodged the question of why she did not claim for repayment of the loan from 2000-2003. 

67. Madam Wen then blames Mr Chan for not keeping any record for her.  The bank no longer kept records for 2000-2003 after 7 years.  This answer is unsatisfactory as the evidence, in particular that of Amy, shows that the money for tuition fees was often in cash.  How would the bank records help? Moreover, Man Heng had kept records for Madam Wen but they were not produced.

68. Secondly, as to whether she had told Mr and Mrs Chan that the tuition fees had to be repaid, Madam Wen was evasive.  She said she had not said so “at the start”.  She had only joked about repayment at times.  Such attitude would not have enabled Mr and Mrs Chan to know that they had to repay.

69. Thirdly, as to the time for repayment, Madam Wen gave various versions:

(i)   Upon graduation of Amy (as pleaded and in evidence);

(ii)  When there was money, but she did not say when to repay;

(iii)  She did not say when there was money they had to repay but had to start repaying; and

(iv)  When the children started making money.

70. Fourthly, Amy had graduated in the summer of 2010.  Madam Wen had not demanded for repayment until launching her counterclaim in 2011.  She said that she counterclaimed because Mr and Mrs Chan were wicked and unrighteous (太無賴、無良心). This remark of Madam Wen sums up her state of mind: “At that time I had wanted to help [Mr and Mrs Chan].  But now that they are financially sound, they ought to repay.  They wanted to deceive me.”  The counterclaim appears to be an afterthought, not based on any agreement.  Madam Wen was making up her case as she goes along.

71. On the other hand, Mr Chan’s evidence was equally unconvincing.  He has given Madam Wen a document  dated 5 August 2006 acknowledging receipt of the tuition fees for the children on 2 August 2006 and 5 August 2006 for a total of RMB90,000 (“the acknowledgement”).  Mr Chan further wrote that he “will submit the detailed list from 2005 to now, which will be listed out in computer record, at appropriate time.”

72. One wonders why Mr Chan had to keep records if he had not borrowed from Madam Wen.  He never produced the “detailed list”.  It is not disputed that he used to manage Madam Wen’s bank account in Hong Kong.  He claims that he had been asked to purchase spare parts and tools for the company, which Madam Wen disputes.  Such an explanation has never featured in Mr Chan’s witness statement.  Nor had he produced any proof to show how he had kept distinct records of such purchases and the tuition fees.  Amy had not heard of Mr Chan buying spare parts for Madam Wen/the company. 

73. Although Mr Chan had not kept/produced important documents, it might be due to various reasons (eg trust between the parties then) and that he had borrowed from Madam Wen was not the only inference.  The acknowledgement did not on its face refer to a loan arrangement.

74. I find some help from Mrs Chan’s evidence.  Mrs Chan made some financial sacrifice before she left the UK to return to the company.  In the UK, she was working as a chef between March and November 2005, earning about HK$30,000 per month after tax.  For that year, she had not received financial support from Madam Wen.  When she re-joined the company, she had to be responsible for all matters except finance. She left it up to Madam Wen to decide what to give her as salary.  She earned only about 1/3 of the past (at RMB10,000 per month on average) although Madam Wen also bought her a property in the Mainland without requiring her to repay the mortgage.  (Note that on Madam Wen’s case, Mrs Chan only earned RMB5,000 per month when she was sacked, which meant about 1/6 of her UK income.) I find that this reduced level of income was to reflect the gifts of Madam Wen in supporting the education of the children. 

75. I have also considered the evidence of Amy.  She was aged 10 when Madam Wen promised to support her.  She might not have known the details of the financial arrangement between them regarding her tuition fees.  However, I accept that she could remember that promise because it was she who suggested it to Madam Wen (who was very close to her) and she went to the UK in the following year. 

76. As to how long Madam Wen provided the tuition fees, there was inconsistency between the evidence of Mr and Mrs Chan on the one hand and Amy on the other. Both Mr and Mrs Chan testified that they had stopped receiving money from Madam Wen after 2006 because they could themselves afford the tuition fees as a result of the lucrative business of Mrs Chan.  However, Amy confirms in the witness box that she had been receiving money from Madam Wen and handing it over to Mr Chan as usual until 2010 when Amy completed her university education. She has not heard of her mother’s alcohol business.  I prefer the evidence of Amy, who had no motive to lie.

77. The inconsistency in the evidence of Mr and Mrs Chan and Amy in itself does not give rise to an irresistible inference that the monies from Madam Wen were loans.  The burden of proof remains on Madam Wen.  I am unable to accept her evidence, which is illogical and unbelievable.  I find that there was no education loan agreement.  The financial support of Madam Wen were gifts and not loans.

I.  If there was an education loan agreement, what was the amount owed under it?

78. I deal with this issue only for completeness sake.

79. I find that Madam Wen did provide for the tuition fees for Amy from 2000 up to 2010 except for 2005 when Mrs Chan was in the UK.  In addition, she only provided for the tuition fees of Hum for one year after Mrs Chan returned to the company on 5 November 2005 and this was reflected in Mr Chan’s note on the acknowledgement.

80. In paragraph 17 of the counterclaim, Madam Wen claims for 26 items of payment totalling about RMB2.7m.  Mr and Mrs Chan accepted that they had received the sums under items 17(a) to (l), covering September 2004 to December 2006.  If I had found that the education loan agreement existed, I would have awarded items 17(a) to (l) in full to Madam Wen.

81. The rest of the items were (apart from 3 items) not supported by a shred of documentary evidence.  They must be rejected outright.  Noting her evidence that each item was not paid in one go but that eg Mr Chan, his brother and sister would help to collect money from Madam Wen in cash for the tuition fees, there was no explanation as to why Madam Wen could remember the exact sum advanced under each item.  In the witness box, she even said she was not clear about what was in the counterclaim.  Her assertion that Mr and Mrs Chan had stolen the supporting records was not supported by evidence.

82. Items 17(w), (x) and (z) were purportedly supported by some company vouchers. 

(a)  Those documents did not state the purpose of the payments.  According to Madam Wen, the details were recorded by Man Heng, who was not called as a witness.

(b)  On those documents, Mrs Chan only signed as “handler”, as opposed to payee or borrower.  According to Mrs Chan, she had signed many similar documents during her time at the company and none of them had anything to do with tuition fees.

(c)  Madam Wen’s claim that those documents were personal receipts was contradicted by her own evidence that they were records of payment to Mr Chan through the company.

(d)  On one of those documents dated 25 December 2009, only RMB20,000 was involved and yet paragraph 17(w) of the counterclaim pleaded a sum of RMB420,000.  She could not explain why if money was withdrawn from various banks for item 17(w), the receipt of RMB20,000 must be signed first.

83. I am not satisfied that the company vouchers could prove that the sums under items 17(w), (x) and (z) had been lent to Mr and Mrs Chan or that the quantum was correct.

J.  Findings of Facts

84. The “borrowing terms” was a genuine document.  The HK$3m was not a loan as such to Madam Wen but was for the purpose of the acquisition.  The parties did not talk about “repayment” as such.  Madam Wen has not transferred the RMB2.7m to the company and the company has never acknowledged receipt of that sum.  Mr and Mrs Chan withdrew from the acquisition on about 4 June and 19 August 2010, before any transfer of money or allotment of shares to them took place.  There could be no justification for Madam Wen to retain the HK$3m for a purpose that had failed or her obligation that was not performed.

85. I also find that there was no education loan agreement as alleged by Madam Wen.  She supported the tuition fees of Amy from 2000 to 2010 (except 2005); and Hum for one year.  I am not satisfied that she had paid to Mr and Mrs Chan the sums pleaded in paragraph 17(m)–(z) of the counterclaim.

K.  Order

86. I order as follows:

(a)  There be judgment on the claim in the sum of HK$3m together with interest at judgment rate from the date of judgment to the date of payment; and

(b)  The counterclaim be dismissed.

87. In principle, the plaintiff shall have costs of the claim and counterclaim to be taxed if not agreed.  However, I shall reserve making a costs order until I see evidence, within 21 days by a joint letter of solicitors, that the parties had reasonably carried out mediation.

88. I thank Mr Lam, Mr Tsui, Mr Poon and the Mainland lawyer 袁曉梅律師for their assistance.