CHAN OI YING v. CHAN CHEUK WAI

HCA 854/2018

[2021] HKCFI 1271

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 854 OF 2018

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J U D G M E N T

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1.  In this action the plaintiff, Ms Chan Oi Ying (“P”), claims against the defendant, Mr Chan Cheuk Wai (“D”), for repayment of 3 loans in the amount of HK$500,000 (“1^st Loan”), RMB 350,000 (“2^nd Loan”) and RMB 200,000 (“3^rd Loan”) (collectively “1^st to 3^rd Loans”) together with interest accrued thereon.

2.  It is P’s case that the 1^st to 3^rd Loans were advanced pursuant to 3 agreements made partly in writing and partly orally between P and D on 6 September 2014, 19 September 2014 and 15 January 2015 (“1^st, 2^nd and 3^rd Agreements” respectively).  The written part of the 1^st to 3^rd Agreements are referred to as the “1^st to 3^rd Memoranda”.

3.  P has all along been represented until 16 April 2021 when she filed a notice to act in person.  P adopts her witness statement as her evidence and provides answers to the questions raised by this Court. 

4.  D continues to act in person and does not attend the trial.  There is therefore no evidence to contradict P’s evidence. 

A.      BACKGROUND

5.  P came to know D in 1990s when he was a student. In 1998, P was employed by Tung Po (HK) Technology Enterprises Limited (“Tung Po”) as finance manager.  Tung Po is a family company whose shareholders included D, his father and uncle.  Until May 2015 when it ceased operation, Tung Po had 5 subsidiaries in the Mainland, and P worked at its Shenzhen office.  During 2009-2010, D worked full time at the Shenzhen office.  Thereafter, D set up his own entertainment business but would attend the Shenzhen office from time to time.

6.  P trusted D and regarded him a good personal friend. 

7.  P’s case is simple:

(1)  On 6 September 2014, 19 September 2014  and 15 January 2015, she entered into the 1^st to 3^rd Agreements with D whereby she agreed to advance the 1^st to 3^rd Loans to D. 

(2)  The 1^st to 3^rd Agreements were contained in the 1^st to 3^rd Memoranda (in Chinese), each of which was prepared by a staff of Tung Po following P’s instructions and bears the title “借条”.

(3)  In addition, P and D orally agreed, on the same dates the 1^st to 3^rd Memoranda were executed, that D should pay interest  on the 1^st to 3^rd Loans at 2% per month (“Oral Term”).   

8.  The 1^st to 3^rd Memoranda and each of them contains the signatures and fingerprints of P and D.  The terms of the 1^st to 3^rd Agreements are materially the same.

9.  The 1^st Memorandum dated 6 September 2014 provides, inter alia, as follows:

(1)  D received HK$500,000 in cash from P on 6 September 2014 (cl.1(1)-(2));

(2)  Interest on the loan is 2%, to be paid monthly by an unspecified date.  The exact wordings in Chinese are “双方約定的借款利息為2%。借款人应于每月__日前支付利息。” (cl.2);

(3)  The loan is for 2 months, from 6 September 2014 to 5 November 2014.  Upon D’s default, P has the right to charge damages at 0.1% of the principal for each day of delay (“双方約定的借款期限為2個月，从2014年9月6日至2014年11月5日止。借款人逾期未还款的，每逾期一天，出借人有权每天按借款全額的0.1% 计收违約金。”) (cl.3); and

(4)  In the event that D fails to repay the loan and interest in accordance with the 1^st Memorandum, he shall be liable to pay all principal, interest, damages and all costs incurred by P in enforcing the 1^st Memorandum (cl.4).

10.  Under the 2^nd Memorandum dated 19 September 2014, P agreed to lend RMB 350,000 to D for 2 months, to be repaid by 18 November 2014.  Save that interest was stated to be payable on the 19^th day every month, all other terms are the same as the 1^st Memorandum.

11.  Owing to the daily transfer limit imposed by the bank, P was unable to transfer the 2^nd Loan from her bank account at China Merchants Bank Co, Ltd (“CMB”) to D.  She requested the assistance of her brother-in-law 夏勇(“Sha”) who, in turn, asked his staff (who is also P’s cousin) 祝進文(“Zhu”) to transfer RMB 350,000 to the bank account maintained by D at CMB.  The transfer was evidenced by a remittance slip issued by CMB.

12.  D did not repay the 1^st Loan or the 2^nd Loan by their due dates.  Nor did he pay any of the interest payable under the 1^st and 2^nd Memoranda.  Instead, D requested P to advance the 3^rd Loan to him.

13.  Under the 3^rd Memorandum dated 15 January 2015, P agreed to lend RMB 200,000 to D for 2 months, to be repaid by 14 March 2015.  All other terms are the same as the 1^st Memorandum.

14.  At P’s request, Zhu transferred RMB 200,000 to D on 15 January 2015.  The transfer was evidenced by a remittance slip issued by CMB. 

15.  D did not repay the 1^st to 3^rd Loans or the interest accrued thereon to P.

16.  It is P’s case that from 6 November 2014 (when the 1^st Loan was due) to 12 March 2015 (when the 1^st to 3^rd Loans were due), she had repeatedly asked D to repay the amount due to her but was told by D that he had been waiting for his father to transfer funds to him and he would repay the amount to her shortly. 

17.  By 15 March 2015, D became uncontactable.  At around the same time, Tung Po stopped paying salary to P.  This was followed by Tung Po terminating the Mainland operations and all the staff at the Shenzhen office including P. 

18.  On 18 April 2018, P commenced this action. 

B.      ISSUES

19.  D’s defence is one of bare denial.  He denies that:

(1)  he has entered into the 1^st to 3^rd Memoranda with P (“1^st Issue”);

(2)  he has borrowed the 1^st Loan from P (“2^nd Issue”);

(3)  he has received the 2^nd and 3^rd Loans (“3^rd Issue”);

(4)  the signatures and fingerprints on the 1^st to 3^rd Memoranda were his (“4^th Issue”); and

(5)  the Oral Term formed part of the 1^st to 3^rd Agreements (“5^th Issue”). 

B1.    1^st and 4^th Issues

20.  The 1^st and 4^th Issues may be dealt with together. 

21.  In view of D’s dispute on the authenticity of the 1^st to 3^rd Memoranda, P obtained leave of the Court[1] to adduce expert evidence on whether the fingerprints on the 1^st to 3^rd Memoranda were D’s fingerprints. 

22.  The Report of Ms Minesha Hong Ting Wong (“Expert”) was filed on 12 December 2019 (“Report”).  As D has not applied for leave to cross-examine the Expert, the Report is admitted as expert evidence pursuant to Order 38 rules 36 and 41 of Rules of the High Court. 

23.  I am satisfied that the Expert has the requisite experience and expertise in examining and analysing fingerprints, having undertaken such work in the United Kingdom and in Hong Kong for over 15 years.  In her Report, the Expert concludes that:

(1)  due to the excess red ink present in the fingerprint on the 1^st Memorandum, “there were insufficient feature details to compare with [D’s fingerprint]; and

(2)  the fingerprints on the 2^nd and 3^rd Memoranda are the same as D’s fingerprint.

24.  I accept the evidence of the Expert, which confirms that the fingerprints on the 2^nd and 3^rd Memoranda were D’s fingerprints. 

25.  Although the Expert is unable to come to a conclusion with respect to the fingerprint on the 1^st Memorandum, I take into account the following matters and find that on a balance of probability, the fingerprint on the 1^st Memorandum was that of D:

(1)  the form and terms of the 1^st Memorandum are almost identical to those of the 2^nd and 3^rd Memoranda;

(2)  there was no reason why P had to forge D’s fingerprint on the 1^st Memorandum when she was able to obtain D’s fingerprints on the 2^nd and 3^rd Memoranda;

(3)  although D denies that the signatures on the 1^st to 3^rd Memoranda were his, he has not adduced any expert evidence to substantiate his assertion; and

(4)  I accept P’s evidence on how she asked Tung Po’s staff to prepare the 1^st Memorandum, and how she asked D to sign and put his fingerprint on the 1^st Memorandum before she advanced the 1^st Loan to him.

26.  I accept P’s evidence on how she and D came to sign and put their fingerprints on the 1^st to 3^rd Memoranda on the dates stated so as to record the terms upon P agreed to advance the 1^st to 3^rd Loans to D.

27.  Having signed and put his fingerprints on the 1^st to 3^rd Memoranda, D must be taken to have agreed to the terms stated therein.  This accords with the well established principle that a person of full age and understanding is bound by the documents he signed unless he can establish a recognised legal basis to disown such documents (Ming Shiu Chung & ors v Ming Shiu Sum & ors (2006) 9 HKCFAR 334, §§84-87, per Ribeiro PJ).

B2.    2^nd and 3^rd Issues

28.  In my judgment, P has discharged the burden of showing that the 1^st to 3^rd Loans were advanced by her and received by D on the dates stated in the 1^st to 3^rd Memoranda, having regard to the following facts:

(1)  In the 1^st to 3^rd Memoranda signed by D, he expressly acknowledged and confirmed that he had received the 1^st to 3^rd Loans from P on the dates of the 1^st to 3^rd Memoranda;

(2)  The bank statement of P’s bank account at Hang Seng Bank shows that she withdrew HK$500,000 in cash on 6 September 2014;

(3)  P’s requests for Zhu to transfer the amounts representing the 2^nd and 3^rd Loans to D’s account at CMB are evidenced by 2 “付款委托書” (payment directions) signed by P and Zhu on the same dates the amounts were transferred from Zhu to D’s bank account; and

(4)  The amounts representing the 2^nd Loan and 3^rd Loans were transferred from Zhu’s account to D’s account at CMB on the same dates as the 2^nd and 3^rd Memoranda. 

B3.    5^th Issue

29.  P acknowledges that in the absence of the word “per month” in cl.2 of the 1^st to 3^rd Memoranda prima facie, the 2% interest should be payable per annum.  As stated above, P’s case is that the parties agreed on the Oral Term on the same dates the 1^st to 3^rd Memoranda were executed, such that the 2% should be payable per month.

30.  I do not think that P has discharged the burden of proving that the Oral Term formed part of the 1^st to 3^rd Agreements for the following reasons:

(1)  The assertion does not sit well with the fact that in all aspects relating to the 1^st to 3^rd Loans, P was careful in ensuring that all relevant terms and facts were properly stated and documented. 

(2)  The parties were aware of and did agree on the rate of interest and the period it would accrue in that under cl.3, the parties agreed that the “default” interest should accrue on a daily basis.  

(3)  Had the parties come to an agreement that interest on the 1^st to 3^rd Loans should be at 2% per month, they would have put that term into the 1^st to 3^rd Memoranda.  Indeed, immediately after the word “2%” in cl.2, there was an express reference to payment of interest per month.

(4)  P is unable to offer any credible evidence to explain why an important term such as interest being payable per month was left out from each and every one of the 1^st to 3^rd Memoranda, which were admittedly signed on different dates. 

(5)  I find that it is more probable that the parties did not agree on the Oral Term at the time they executed the 1^st to 3^rd Memoranda.

31.  It follows that the terms of the 1^st to 3^rd Agreements were the terms set out in the 1^st to 3^rd Memoranda and nothing more. 

C.      Disposition and relief

32.  For the reasons above, P is entitled to enter judgment against D for:

(1)  HK$500,000 and RMB 350,000 and RMB 200,000, being the outstanding principal under the 1^st to 3^rd Agreements;

(2)  interest on the 1^st, 2^nd and 3^rd Loans at 2% per annum from the dates they were advanced to D up to the date of this judgment and, thereafter, at judgment rate until payment; and

(3)  default interest at 0.1% per day on the 1^st, 2^nd and 3^rd Loans from their respective due dates up (i.e. from 6 November 2014, 19 November 2014 and 15 March 2015) up to the date of this judgment, and thereafter, at judgment rate until payment.

33.  I should add that D has not pleaded any defence to the rate of the “default” interest under cl.3 of the 1^st to 3^rd Memoranda.  It is therefore unnecessary to consider whether the “default” interest is commercially unreasonable or otherwise unenforceable. 

34.  I make a cost order nisi that D do pay to P all the costs of the action including all costs reserved, to be taxed if not agreed.