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CACV 70/2024, [2026] HKCA 247
On Appeal From [2024] HKCFI 349
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO. 70 OF 2024
(ON APPEAL FROM HCA NO. 2493 OF 2018)
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BETWEEN
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XUE BORAN |
1st Plaintiff |
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YANG LIXUAN |
2nd Plaintiff |
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and |
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HUI CHI SUM |
1st Defendant |
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YUEN SZE MAN |
2nd Defendant |
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| Before : |
Hon Kwan VP, Chu VP and Cheung JA in Court |
| Date of Hearing : |
3 February 2026 |
| Date of Judgment : |
23 February 2026 |
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JUDGMENT
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Hon Cheung JA (giving the Judgment of the Court) :
I. The appeal
1. This is an appeal by the 1st and 2nd defendants against the judgment of Deputy High Court Judge Winnie Tsui (as she then was) who gave judgment for the 1st and 2nd plaintiffs for $19,320,817, together with interest and costs.
II. The parties’ case
1) The plaintiffs’ case
2. The 1st and 2nd plaintiffs are husband and wife. They are originally from the Mainland. They obtained residence rights in Hong Kong in the early 2010s. The 1st and 2nd defendants are husband and wife. The 1st plaintiff and the 1st defendant are distant relatives and they are both of Chiu Chow descent.
3. The plaintiffs’ case is that they had lent $20,000,000 to the defendants between 2009 and 2011 pursuant to an Oral Loan Agreement. The money was lent to the defendants for them to expand their food business. The loan was interest free and repayable on demand.
4. The Oral Loan Agreement was varied and acknowledged in writing by a loan note in Chinese dated 10 May 2013 (‘the Loan Note’) signed by both defendants.
借條
本人許柏德，香港身份證號碼：XXX
妻子袁思敏，香港身份證號碼：XXX
於2010年向薛書榮、楊麗璇，夫婦借款（幣種大寫）港幣： 貳仟萬元正。，並約定於2013年6月份開始按月還款。最長還款期限不超5年，即2018年6月之前還清所借款項。
借款人：（指模）
（簽名）
（簽名）
2013年5月10日
(Translation)
Loan Note
I, Hui Pak Tak, Hong Kong Identity Card No.: XXX, my wife, Yuen Sze Man, Hong Kong Identity Card No.: XXX in 2010 borrowed TWENTY MILLION HONG KONG DOLLARS (currency block letters) in full from married couple Xue Shurong and Yang Lixuan, and agreed to begin monthly repayments from June 2013. The maximum repayment period shall not exceed five years; that is, the borrowed sum shall be repaid in full before June 2018.
Borrower: (fingerprint)
(Sd.)
(Sd.)
10 May 2013
5. The reason why the Loan Note was signed was because in mid-2012, the 1st plaintiff was diagnosed with cancer. This prompted him to consider the need to tie up loose ends both from family and business perspectives and the need to provide for his three young children, in case his treatment failed and he were to pass away.
6. The Oral Loan Agreement was further varied and acknowledged by a written loan agreement in Chinese dated 23 November 2014 (‘the Loan Agreement’) signed by both defendants.
借款合約
貸方 ： 薛博然，楊麗璇
地址 ：
借方 ： 許智深，袁思敏
地址 ：
於 2014 年 月 23 日：簽訂
本借款合約於 2014 年 月 日由下列雙方訂立：
(1) 薛博然(香港身份證號碼：XXX)，楊麗璇(香港身份證號碼：XXX)夫妻，居住地址為 ________________________ ________________________________(下稱：貸方)及；
(2) 許智深(香港身份證號碼：XXX)，袁思敏(香港身份證號碼：XXX)夫妻，居住地址為 __________________ ________________________________(下稱：借方)。
鍳於：
(1) 借方確認，借方於 2009 年至 2011 年分多次向貸方借款總額貳仟萬港元 (HK$20,000,000.00)正，並約定於2013 年6 月份開始還款，最長還款期限不超 5 年，即 2018 年 6 月之前還清所借款項，並於 2013 年 5 月 10 日以借款人身份簽署借條給貸方，作為憑證。
(2) 截止本合約簽署日，借方都沒有履行其還款義務。
(3) 經借貸雙方協商，特訂立本合約，重新規定還款事項，以便共同遵守。
[第一條 — 第四條]‒ ‒ ‒ ‒ ‒
第五條 還款期限和方式
1. 還款期限為 42 個月，自 2014 年 12 月1 日起至 2018 年 5 月31 日止。
2. 經雙方約定，借方應於還款期限內，分 42 次歸還貸方所貸款項。
3. 從 2014 年 12 月 1 日至 2015 年 3 月 31 日，借方僅需支付利息。
4. 從 2015 年 4 月 1 日開始，借方需支付本金及利息，但總額不得少於100,000 港元。
5. 借方必須於從 2018 年 5 月 31 日或以前付清本金和利息。
[第六條 — 第 十七 條]‒ ‒ ‒ ‒ ‒
本合約借貸雙方已詳讀及同意遵守本合約全部條款，以下簽章作實：
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(簽名) |
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(簽名) |
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貸方 |
薛博然 |
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借方 |
許智深 |
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(簽名) |
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(簽名) |
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貸方 |
楊麗璇 |
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借方 |
袁思敏 |
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(Translation)
Loan Agreement
Lender: XUE BORAN, YANG LIXUAN
Address:
Borrower: HUI CHI SUM, YUEN SZE MAN
Address:
Signed on 23rd November 2014
This Loan Agreement was signed by both Parties on Day Month 2014:
(1) XUE BORAN (Hong Kong ID card No.: XXX), YANG LIXUAN (Hong Kong ID card No.: XXX) husband and wife, residential address ____________________ (hereinafter referred to as Lender) and :
(2) HUI CHI SUM (Hong Kong ID card No.: XXX), YUEN SZE MAN (Hong Kong ID card No.: XXX) husband and wife, residential address ______________________ (hereinafter referred to as Borrower).
Whereas:
(1) The Borrower acknowledges that the Borrower has borrowed a total of HK $20 million (HK$20,000,000.00) from the Lender from 2009 to 2011, and agreed to begin repayment in June 2013. The maximum repayment period is not more than 5 years. That is to say, to pay off the loan before June 2018, and on 10th May 2013, the Borrower signed a Loan Note to the Lender as proof.
(2) As at the date of signing this Agreement, the Borrower has failed to fulfill its repayment obligations.
(3) After negotiation between the Borrower and the Lender, this Agreement is hereby signed again to specify the repayment terms for mutual compliance.
[Clauses 1 ‒ 4]‒ ‒ ‒ ‒ ‒
Clause 5 Time limit and method of repayment.
1. The repayment period is limited to 42 months from 1 December 2014 to 31 May 2018. (Sd.)
2. By mutual agreement, the Borrower shall repay the loan lent by the Lender in 42 (Sd.) installments within the repayment period.
3. From 1 December 2014 to 31 March 2015, the Borrower only have to pay the interest.
4. From 1 April 2015, the Borrower have to pay the principal and interest but the total amount shall not be less than HK$100,000.
5. The Borrower shall pay up the principal and interest on or before 31 May 2018.
[Clauses 6 ‒ 17 ]‒ ‒ ‒ ‒ ‒
The Borrower and Lender to this Agreement have read and shall abide by the terms of this Agreement. Both Parties sign below for confirmation:
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(Sd.) |
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(Sd.) |
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Lender |
HUE BORAN |
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Borrower |
HUI CHI SUM |
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(Sd.) |
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(Sd.) |
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Lender |
YANG LIXUAN |
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Borrower |
YUEN SZE MAN |
7. The reason why the Loan Agreement was made is as follows. Shortly after the signing of the Loan Note, at the request of the 2nd plaintiff, the defendants made two transfers to the plaintiffs through the 2nd plaintiff’s company account. The first transfer was in the sum of $300,000 and effected on 2 August 2013 and the second one was for $10,000 which was transferred on 5 November 2013. After that, however, the defendants made no further repayment. In August 2014, the 2nd plaintiff (the Judgment wrongly stated it was the 2nd defendant) was diagnosed with cancer. Therefore there was again a need for money. The plaintiffs instructed a law firm to draft a loan agreement and they invited the defendants to go to their flat to sign a written loan agreement. On 23 November 2014, the defendants went to the plaintiffs’ flat. Apart from the plaintiffs and the defendants, also present were the 1st plaintiff’s assistant and a lawyer and a paralegal from the law firm. The Loan Agreement was then signed by both defendants. The signing was witnessed by the lawyer who prepared the Loan Agreement.
2) The defendants’ case
8. The defendants denied that there was such a loan or that the Oral Loan Agreement existed. They admitted that the plaintiffs had since July 2009 given them $15,500,000, not $20,000,000, pursuant to an oral agreement reached between the 1st plaintiff and the 1st defendant on 3 June 2009 so that the 1st defendant would invest in Hong Kong stocks for the 1st plaintiff’s behalf. If profits were made on such investments, the 1st defendant would get 30% of the profits. However, if there were any losses, the 1st plaintiff would bear them all. Substantial losses were incurred on the investments and there remained only a balance of $1,899,358.42. They returned the balance in full by instalments to the plaintiffs over the period from December 2014 to March 2018.
9. The defendants said that the Loan Note was not enforceable against them as the 1st defendant had signed it under the undue influence of the 2nd plaintiff and the 2nd defendant had not signed it and had no knowledge of it at the time. The Judge summarised the defendants’ evidence on undue influence. The 1st plaintiff had previously told the 1st defendant that he was under investigation in the Mainland for market manipulation (‘the matter’) and was wanted nationally. In early May 2013, the 1st plaintiff told the 1st defendant that the matter was near conclusion and he only needed to explain to certain people the whereabouts of his previous funds. Then, on 10 May 2013, the 2nd plaintiff went to the 1st defendant’s food store in Tai Po with three or four people. She told the 1st defendant that the matter was drawing to a close and the only issue remaining was that the plaintiffs had to explain to certain people the whereabouts of the 1st plaintiff’s previous funds. She said that the plaintiffs had told these people that the plaintiffs had lent those funds to the 1st defendant and hence those people now came to Hong Kong to check if the 1st defendant did exist. She then took out the Loan Note and asked the 1st defendant to sign it. Taken aback, the 1st defendant said that what the 2nd plaintiff said contradicted the facts entirely and it was unacceptable. The 2nd plaintiff replied that the plaintiffs had passed the point of no return. She admitted that the plaintiffs had set the defendants up by bringing along those people to the defendants’ store and dragged them into the plaintiffs’ own problems. She further said that if the plaintiffs and the defendants mishandled the matter, those people would give the defendants a hard time in the future and the defendants would be in big trouble. The 2nd plaintiff asked the 1st defendant to help out and sign the Loan Note. She further said that if the matter was disposed of smoothly, the 1st plaintiff would be free and he would take care of the matter. Feeling entrapped by the plaintiffs’ conduct and the burden of the need to help the 1st plaintiff, the 1st defendant had no choice but to sign the Loan Note.
10. The defendants said the Loan Agreement was also not enforceable against them as they had signed it under duress. The 1st plaintiff threatened them that they should think about their three small children and consider whether they would want misfortune to happen to the defendants. The defendants were not allowed to leave the plaintiffs’ flat unless they signed the Loan Agreement. Eventually, they did.
III. The Judge’s Decision
11. The Judge summarised the plaintiffs’ case as follows :
‘ 5. The plaintiffs’ primary case is that they are entitled to recover the outstanding sums under the Loan Agreement. Their alternative position is that if that agreement is unenforceable, they are entitled to recover under the Loan Note. As a further alternative, if the Loan Note is unenforceable, they would claim under the Oral Loan Agreement. At the conclusion of the trial, the parties managed to agree on the quantum of the plaintiffs’ claims and the reliefs to be granted under the three scenarios.’
12. The Judge held that the case was primarily a factual dispute. She found that the plaintiffs and the defendants reached the Oral Loan Agreement in 2009. Sums amounting to $20,000,000 in total were given by the plaintiffs to the defendants between 2009 and 2011 pursuant to the Oral Loan Agreement and the loan was repayable on demand. The Judge found the 1st defendant signed the Loan Note without undue influence by the 2nd plaintiff. She, however, made no finding on whether the 2nd defendant had signed the Loan Note. The Judge found both the 1st and 2nd defendants signed the Loan Agreement without any duress on the part of the plaintiffs.
13. The Judge accepted the plaintiffs’ case was inherently plausible and coherent and also internally consistent :
‘ 128. Overall speaking, the plaintiffs have put forward a clear and coherent account of events which together make out their factual case, including the extension of the loan between 2009 and 2011, their chasing of the loan from 2012, the signing of the Loan Note in 2013 and the signing of the Loan Agreement in 2014. It would appear that every material event or development in their factual case bears an inherently credible and plausible explanation.
....
145. In their live testimonies, both the 1st and 2nd plaintiffs were able to speak about the various aspects of their case clearly, coherently and convincingly. Their oral evidence is consistent with their written evidence.’
14. The Judge held that the plaintiffs’ case was strongly supported by contemporaneous documents and objective facts :
‘ 150. The significant objective fact is that the defendants have made 24 payments to the plaintiffs starting from December 2014, which is the month immediately after the signing of the Loan Agreement.
151. According to its terms, the defendants should pay interest only for the first four instalments. The interest amount for each instalment would be $58,333 (ie $20,000,000 x 3.5% /12). And that is the precise amount which the defendants paid during each of those four months. The agreement further provided that from 1 April 2015 onwards, the defendants would need to pay principal and interest with an amount not less than $100,000. Again, the defendants paid exactly the sum of $100,000 for each of the months from April to August 2015. This payment pattern is therefore strong evidence showing that the defendants were in fact performing their obligations under the Loan Agreement.
152. From September 2015 onwards, however, their payments fell short of the sums stipulated in the Loan Agreement. And it was from about this time onwards that we see the WeChat messages sent to the 2nd defendant for repayments. The messages really speak for themselves. They show two things.
153. First, there is a pattern in which Junxuan [the 2nd plaintiff’s personal assistant] (in most cases) and the 2nd plaintiff (on a few occasions) would chase for the shortfall and in response to such chasers, the 2nd defendant would follow up with some payments, even though they still fell short of the minimum stipulated monthly amount of $100,000. In fact, on some occasions, the 2nd defendant apologised (or sounded apologetic) for the shortfall (eg “我昨天已入了七萬，我知道是不夠，我會盡力安排，請見諒，對不起”；“麻煩你跟璇姐說聲我明天或後天能入5 萬，暫時真的只能這樣，麻煩你了”)*. This shows that the defendants were in fact trying to comply with the payment obligations but were not able to do so.
154. Second, in the WeChat messages, Junxuan and the 2nd plaintiff at times explicitly referred to a signed contract and a loan agreement and a contractual repayment date of 31 May 2018. This strongly corroborates the plaintiffs’ case on the Loan Agreement. Importantly, at no time did the 2nd defendant refute the defendants’ liability under it in the WeChat exchange.’
*(Translation : ‘Yesterday I had paid $70,000, I know it is not enough, I will try my best to make arrangements, please understand, sorry’; ‘I will appreciate you to tell sister Xuan [the 2nd plaintiff] that I will pay $50,000 tomorrow or the day after, that is what can be done at the moment. I appreciate your help.’)
15. In respect of the defendants’ case, the Judge held the defendants’ case on the Investment Agreement was inherently implausible :
‘ 155. The credibility of the alleged Investment Agreement is to be tested against the objective backdrop that the plaintiffs are highly educated people who had had experiences working in the financial sector for some years by 2009 whereas the 1st defendant had had no training or credentials in stock investment at all.
156. On its face, there is no immediately apparent reason why the 1st plaintiff would ask the 1st defendant to make investments on his behalf.
157. The inherent plausibility of the parties having reached the Investment Agreement is, in my view, open to grave doubt.’
16. The Judge held the Investment Agreement was unsupported and was in fact contradicted by contemporaneous documents :
‘ 158. What is notable in this action is the undeniable fact that the defendants have produced no one single piece of document referring to or evidencing the existence of the Investment Agreement. This is notwithstanding the fact that we are talking about a substantial sum of money here and a long period of interaction between the parties, namely from 2009 to 2018.
159. There were no records kept by the defendants themselves to track the sums advanced to them and their trading activities. One must wonder how then they were supposed to calculate the profits and losses pursuant to the arrangement under the Investment Agreement.
160. Ms Fan [counsel for the plaintiffs] also highlights the fact that the alleged investments made on behalf of the plaintiffs were intermixed with the defendants’ own investments. In fact, it was the 1st defendant’s evidence that they did not open accounts specifically for the trading carried out under the Investment Agreement.
161. The absence of any specific records kept for the trading made on behalf of the plaintiffs and the intermixing of the plaintiffs’ and the defendants’ own investments would appear to point to the possibility that all these stock investments were in fact the defendants’ own investments.’
17. The Judge further held that the defendants had never mentioned in their exchange of text messages with the plaintiffs about the Investment Agreement or the investments purportedly made on the 1st plaintiff’s behalf.
IV. The defendants’ appeal
18. Initially, the 1st and 2nd defendants acted in person when they lodged their joint Amended Notice of Appeal. The 2nd defendant has since been represented by lawyers and she has filed a separate Re‑Amended Notice of Appeal of her own.
1) The 1st defendant’s appeal
19. The 1st defendant’s grounds of appeal can be summarised as followings :
(1) The Judge failed to admit the evidence that he sought to produce after the Judgment was given [Grounds 1 to 3];
(2) The Judge erroneously stated in [24] of the Judgment that the 2nd plaintiff gave the 2nd defendant cash on five separate occasions from 2009 to 2011 [Ground 4];
(3) The Judge failed to consider the possibility that the defendants were under duress to sign the Loan Agreement dated 23 November 2014 and the Judge’s finding that the defendants signed the Loan Agreement voluntarily without duress was wrong [Grounds 6 to 7];
(4) Ground 5 challenged the plaintiffs’ claim that the 2nd defendant had also borrowed the loan;
(5) Ground 8 challenged the Judge giving judgment against both the 1st and 2nd defendants in that the 2nd defendant was not present at, did not take part in and had no knowledge of the Oral Agreement, the alleged five deliveries and receipt of the cash and the signing of the Loan Note.
2) Our view
(1) Grounds 1 to 3
20. After the Judgment was delivered, the defendants lodged an application to stay the Judgment pending appeal (‘Stay Application’). At the hearing of their application, the defendants sought to adduce documents totalling some seventy pages, which included remittance and transaction records of banks, securities firms, and money exchange companies. The Judge refused to admit the new evidence ([2024] HKCFI 2921). The 1st and 2nd defendants have not applied to adduce any new evidence in this appeal. Grounds 1 to 3, which are found on the new documents that are not in evidence in the Court below and in this appeal, therefore cannot advance the 1st defendant’s appeal.
(2) Ground 4
21. This point was also raised in the defendant’s Stay Application. The Judge in her Decision on this application accepted it was an error in that it was the 1st defendant who accepted the money and not the 2nd defendant. In our view, this error does not affect the soundness of the Judgment as there was no dispute between the plaintiffs and the defendants at the trial that the sums received by the 1st defendant were deposited into the 1st and 2nd defendants’ bank accounts and repayments of the loan were made by both defendants.
(3) Grounds 6 to 7
22. The Judge found against the defendants that they were subject to duress when they signed the Loan Agreement. This was a finding of fact. The 1st defendant must show that the Judge was plainly wrong in her finding of facts before this Court would intervene and overturn the finding. Examples of such mistakes include : there was no evidence to support the finding, the judge had ignored relevant evidence or misunderstood the evidence and the finding was one that no reasonable judge could have made. This is a very high threshold to overcome. The 1st defendant has failed to show that the Judge’s finding on this issue was plainly wrong.
(4) Grounds 5 and 8
23. Grounds 5 and 8 were concerned with the 2nd defendant. The 2nd defendant in her Re‑Amended Notice of Appeal had chosen to rely on other grounds. In so far as the 1st defendant relied on these two grounds, our views are as follows. The context of this case is that the defendants were a married couple running a food business in Hong Kong. This was admitted by the 2nd defendant. While the negotiation for the loan was by the 1st defendant, it was for the purpose of expanding the defendants’ food business and the 1st plaintiff was so told. As found by the Judge, at the second meeting between the 1st plaintiff and the 1st defendant, the Oral Agreement was reached for the plaintiffs to lend the money to the defendants. The plaintiffs had stated their case that the loan was to both the defendants. Further and better particulars of the plaintiffs’ claim were provided. The pleaded defence is that they denied the plaintiffs’ case of the Oral Agreement and the plaintiffs were put to strict proof. Hence, the issue was well identified and although the Judge did not expressly say so, she was entitled to infer and did find on the basis of the context of the case and the role of the 2nd defendant after the Oral Loan Agreement was reached that she had knowledge of and was a party to that agreement. When it was belatedly argued by the defendants’ former counsel in his closing submission that according to the plaintiffs’ case there was nothing to suggest that the 2nd defendant had knowledge of the loan, the plaintiffs’ response was that this argument was only raised at the defendants’ closing submission and was never raised before. The allegation that the 2nd defendant had no knowledge about the conclusion of the Oral Loan Agreement was not even put to the plaintiffs’ witnesses. Again, the Judge was entitled to take these into consideration when she made the finding against the 2nd defendant. The 1st defendant has failed to show that the finding was plainly wrong.
3) The 2nd defendant’s appeal
24. The 2nd defendant relied on two grounds of appeal :
(1) The Judge erred in granting judgment to the plaintiffs when there was no valid consideration for the Loan Agreement moving from the plaintiffs to the 2nd defendant.
(2) The Judge erred in finding that the 2nd defendant was a party to the Oral Loan Agreement in 2009.
4) Ground 1
(1) The 2nd defendant’s arguments
25. Mr Lee (together with Mr Ku) for the 2nd defendant referred to [176] of the judgment in which the Judge held that the plaintiffs succeeded on their primary case i.e. they were entitled to recover the outstanding sums under the Loan Agreement. Mr Lee then referred to the plaintiffs’ plea in their Re‑Amended Statement of Claim about the consideration for the Loan Agreement.
‘ 3B. Further, it is averred that in consideration of the defendants agreeing to the terms of the Loan Agreement (including those provisions concerning repayment and interests), the plaintiff agreed to and did in fact: i) allow more time to the defendants to repay the loan; ii) grant more time to the defendants to repay the Loan and/or forbear to sue or commence legal action against the defendants or either of them.’
26. Mr Lee argued that the Judge erred in finding for the plaintiffs because the consideration pleaded by the plaintiffs for the Loan Agreement did not amount to a valid consideration moving from the plaintiffs to the 2nd defendant. Specifically, no additional time was allowed by the Loan Agreement (which provided for a repayment deadline on 31 May 2018) when compared with the previous Loan Note (which provided for the same repayment deadline albeit expressed differently as ‘before June 2018’). The plaintiffs lacked any basis to sue or commence legal action against either defendant, and therefore had nothing to forbear, because the 2nd defendant was never liable under the Loan Note, as the Judge found, the plaintiffs had failed to prove that the 2nd defendant had signed the Loan Note herself, or that she was even aware of the document in the first place and even in respect of the 1st defendant, the previous repayment deadline imposed by the Loan Note (before June 2018) had not expired on the date of the Loan Agreement (23 November 2014).
(2) Our view on Ground 1
27. We are of the view that the 2nd defendant is not able to succeed on Ground 1 for two reasons. The first is based on the Flywin principle. The second is that there was valid consideration for the Loan Agreement.
28. In respect of the first reason, the defendants had in their Amended Defence and Counterclaim pleaded that there was no consideration for the Loan Agreement or if there was any consideration, it was past consideration :
‘ 15(b) Further or in the alternative, it was in or about June or July 2009 when the 1st Plaintiff made and the Defendants agreed to the 1st Plaintiff’s Proposal. It was from about early July 2009 when the 1st Plaintiff transferred and/or gave the funds to the Defendants for the stock investment in Hong Kong. All these occurred before the Loan Agreement was signed on or about 23rd November 2014. Therefore, no consideration exists for the Loan Agreement or any consideration that allegedly exists, which is denied, is past.’
29. However, notwithstanding this plea, they, through their former counsel, had chosen to abandon this point as can be seen from his written opening submission :
‘ 5. Although, with respect to the Loan Note and the Loan Agreement, the alternative defence of “no consideration” and/or “past consideration” was pleaded, the same will not be pursued at trial.’ (emphasis added)
30. Ms Fan (and Mr Chan), the plaintiffs’ counsel at the trial, conducted the case on that basis. In their written closing submission, it was stated that :
‘ 99. With the defendants’ abandonment of the argument advanced the AD&CC [6(b) and 15(b) that the Loan Note and the Loan Agreement are unenforceable for want of consideration or past consideration (see the defendant’s Opening [5]), the enforceability of the Loan Note and the Loan Agreement now turns solely on the factual questions of whether they were vitiated by actual undue influence and duress respectively.’ (emphasis added)
31. Ms Fan who also appears in this appeal submitted that as a result of the defendants’ abandoning the lack of consideration defence, this issue was not discussed at the trial, nor mentioned in the cross‑examination or the judgment. She relied on Flywin Co Ltd v Strong & Associates Ltd [Flywin] (2002) 5 HKCFAR 356 where Bokhary PJ held :
‘ 38. ...... Where a point is taken at the trial, the facts pertaining to it are open to full investigation at the evidence-taking stage of the litigation. That is as it should be. Therefore where a party has omitted to take a point at the trial and then seeks to raise that point on appeal, the position is as follows. He will be barred from doing so unless there is no reasonable possibility that the state of the evidence relevant to the point would have been materially more favourable to the other side if the point had been taken at the trial.’
32. Mr Lee argued that the defendants’ plea of lack of consideration in their Amended Defence and Counterclaim was in a different context, namely, it was based on their reliance of the Investment Agreement and not in respect of the Loan Agreement itself. He further submitted that the plaintiffs’ case would remain the same if this issue had been raised below because the Court would still have to look at the same evidence, namely, the Loan Note and the Loan Agreement and also the evidence in regard to the finding that the 2nd defendant was not a party to the Loan Note. Hence, Flywin is not applicable.
33. We disagree with Mr Lee. The stark fact is that the issue of lack of consideration was never raised as an issue at all before the Judge because of the defendants’ abandonment of this defence irrespective whether it was based on the defendants’ reliance on the Investment Agreement or based on a discreet issue on the Loan Agreement itself. The 2nd defendant’s argument that the state of evidence would be the same is a surmise. We are not satisfied that there is no reasonable possibility that the state of evidence relevant to the issue of consideration would have been more favourable to the plaintiffs if the issue had been taken at the trial below.
34. In any event, we are of the view that the lack of consideration defence is not a valid one. Proceeding on the basis that the 2nd defendant was not a party to the Loan Note, the rule that ‘consideration must move from the promisee’ means that a person can enforce a promise only if they themselves provided consideration for it. However, while consideration must move from the promisee, it need not move to the promisor. It follows that the requirement of consideration may be satisfied where the promisee does something at the promisor’s request, but confers no corresponding benefit on the promisor : Chitty on Contracts (36th Ed) Vol 1 [6‑040] and [6‑041]. In Kao, Lee & Yip v Euro Treasure Ltd [1985] 1 HKC 46 at page 49, this Court held :
‘ Furthermore, the general rule is that, while consideration must move from the promisee, it need not move to the promisor. Therefore, the requirement of consideration is satisfied if the promisee, that is to say the plaintiff in this case, suffers detriment, at the promisor’s request, even though this confers no corresponding benefit on the promisor.’
35. For more recent authorities affirming this principle, see LA Micro Group (UK) Ltd and another v LA Micro Group Inc [2023] 3 WLR 767 at [96] and Musst Holdings Limited v Astra Asset Management UK Limited and Astra Asset Management LLP [2023] EWCA Civ 128 at [81].
36. In the present case, there was consideration moving from the plaintiffs (as promisee) by their forbearance to sue the 1st defendant on the Loan Note because the 1st defendant had failed to repay every month as from June 2013. As shown in Recitals (1) to (3) and Clause 5 of the Loan Agreement, the plaintiffs had forborne to sue the 1st defendant and the 2nd defendant had acknowledged and consented to the plaintiffs’ forbearance. Further, based on the Judge’s finding that the 1st and 2nd defendants were parties to the Oral Loan Agreement where the loan was repayable on demand and they had failed to repay the loan despite the demand, the terms of the Loan Agreement clearly show that consideration was provided for the Loan Agreement by the plaintiffs’ forbearance to sue on the loan.
5) Ground 2
(1) The 2nd defendant’s arguments
37. Mr Lee relied on two matters. First, even based on the plaintiffs’ evidence, which the Judge preferred, all the relevant communications leading to and concluding the Oral Agreement were exclusively between the 1st defendant and the plaintiffs, with no involvement from the 2nd defendant. Second, it was neither pleaded by the plaintiffs, nor was there any or any sufficient evidence to establish, that the 1st defendant had any authority to enter into a binding agreement (the Oral Agreement) as an agent of the 2nd defendant to borrow the loan on behalf of the 2nd defendant, in addition to any obligation that the 1st defendant had for himself. Mr Lee argued that if the basis of the defendants having to bear joint and several liability stems from an agreement, the plaintiffs must properly plead such details in their pleadings : Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663, [18] to [19]. He relied on the statement by Ma CJ at [21] and [22] about the rationale behind pleadings and that it is the pleaded issues that define the scope of the evidence not the other way round. He also relied on Au Kai To Karel v. End User Technology Ltd [2019] 1 HKLRD 943 at [39] on the need to plead the material facts which made the 2nd defendant a party to the Agreement. He referred to K & L Gates v Navin Kumar Aggarwal & Ors (Unreported, HCA 1061/2011 and HCA 349/2012, 20 May 2016) at [18] and Polima Toys Manufacturing Company Limited v Super Art Toys Company Limited (Unreported, HCA 948/2012, 6 February 2014) at [54] and submitted that if it was the plaintiffs’ intention to rely on an agency relationship as the basis of the action, they must clearly plead the case of whether the 1st defendant enjoyed actual authority or apparent or ostensible authority. If they relied on apparent or ostensible authority, they must plead how the 2nd defendant (as principal) had held out that the 1st defendant (as agent) had the right to enter into an agreement on her behalf.
(2) Our view
38. In our view, Ground 2 is academic and does not advance the 2nd defendant’s case because the 2nd defendant has already failed in her Ground 1, the arguments under Ground 2 are now irrelevant as the 2nd defendant’s liability was established by the Loan Agreement.
39. In any event, in our view, Ground 2 is also not sustainable. We have, when dealing with the 1st defendant’s ground of appeal, addressed his challenge that the 2nd defendant was not a party to the loan. This is sufficient to address the first matter relied upon by Mr Lee which is a repetition of the same arguments.
40. The second matter relied on by Mr Lee relate to the authority of the 1st defendant and the pleading requirements on authority. They are new points that had not been raised below. The arguments are again contrary to Flywin and the 2nd defendant is precluded from raising this point.
V. Conclusion
41. Accordingly, the appeals by the 1st and 2nd defendants are dismissed with costs to the plaintiffs.
(Susan Kwan)
Vice-President
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(Carlye Chu)
Vice-President
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(Peter Cheung)
Justice of Appeal
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The 1st Defendant, acting in person
Mr Kenneth K H Lee and Mr Stephen Ku, instructed by KCL & Partners, for the 2nd Defendant
Ms Jennifer Fan, instructed by Robinsons, Lawyers, for the 1st and 2nd Plaintiffs
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