CHAN MEI YI JESSICA v. TSOI KING KEUNG JOHNNY

DCCJ1643/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1643 OF 2014

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JUDGMENT

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The Issues

1.  The plaintiff, Miss Chan, and the defendant, Mr Tsoi, provide conflicting versions concerning the purpose of the transfer of HK$200,000 from Miss Chan to Mr Tsoi; the court is asked to decide, on the balance, which version is to be accepted. This case hinges on the strength of the evidence and the credibility of the parties.

2.  Miss Chan alleges that in or about March or April 2008, she orally agreed to lend a sum of HK$200,000 (the “Sum”) to Mr Tsoi at the interest rate of 2.25% per annum (the “Loan Agreement”); the Sum was advanced on 16 May 2008.  Despite repeated demands, Mr Tsoi still refuses to repay the same. 

3.  Mr Tsoi accepts that he did receive the Sum from Miss Chan by way of a cheque; however, he alleges it was trust money for him to invest for and on behalf of Miss Chan in the stock or warrant market; instead of a loan.

4.  Mr Tsoi also admits that he is prepared and ready to return HK$41,126.54 to Miss Chan as the remains of the Sum.

The Undisputed Facts

5.  Both parties agree that:

a. They knew each other since 1999 through online chatting, soon they met the other and became friends;

b. At the material times, both of them made investment in the stock or warrant market in Hong Kong;

c. On 16 May 2008, the Sum was deposited into Mr Tsoi’s bank account by way of a cheque [B2/169][1];

d. They chatted a lot online by using a computer social media program known as MSN;

e. Miss Chan’s solicitors wrote a demand letter to Mr Tsoi by August 2009 about the Sum and their relationship had come to an end by 2010.

Analysis of Evidence

6.  Both parties rely heavily on the MSN conversation transpired between them.

7.  The main thrust of Miss Chan’s case is their conversation on 29 April 2008.  In her witness statement, her case is that:

“In around March-April of 2008, the Defendant told me that he successfully obtained a loan from the bank for investment purpose by using a company which did not have actual business running to ‘cook up the figures’ … yet, because the bank asked for the repayment of the loan (‘call loan’) from the company and the company lacked sufficient funds, the Defendant thus borrowed $200,000 from me. … The Defendant initially asked me for $150,000 but after numerous conversations, I agreed to lend him $200,000 with interest at the prime rate minus three percent pre annum. On 29^th April 2008, the Defendant indicated to me through social media software MSN that he was going to borrow the loan from me on that day. He also confirmed to borrow money from me at P-3% interest rate when he said, ‘P-3% … deal! Don’t break your promise!’ According to this agreement, I issued a $200,000 cheque to the Defendant on 16^th May 2008” [B1/37 – 38, §6].

8.  The relevant MSN messages dated 29 April 2008 are as follows [B2/212 – 218]:

Time	From	To	Content
01:43:22	P	D	I got a few hundred-thousands ... don't know what good (it'll) do just being left here
01:43:53	P	D	(What if) the little RMB fall after the Olympic Games …
01:45:32	D	P	You better go make a call and ask, better than asking me … so much money, (if you) give (it) to me to spend, (you) don’t need to bother
01:46:17	P	D	Give the money to you (?) … should charge you p-3% … if (it has) such a fat profit, I charge him/her interest of 59%
01:48:32	P	D	So what (now?) …
01:48:53	D	P	P-3% … deal!  Don’t you take (it) back!
01:49:22	D	P	(I’ll) print a copy first
01:50:05	P	D	Do you have any property as a pledge?  This is mortgage interest rate …
01:50:39	D	P	I (shall) keep the title deeds
01:52:53	D	P	(I) won’t bloody listen to you … (you) didn’t say it just now … (you) made a hole for yourself to fall into.
01:53:32	P	D	(That’s because) I hadn’t finished
01:55:15	D	P	You ask me what (I) said to that, of course I said (we had) a deal … weren’t you silly
01:57:29	P	D	The little RMB only has an annual interest of 0.8% … (so) profit only on the rise in value, right?
01:58:36	D	P	Don't switch to talk something else ... when will (you) transfer the sum to me(?)
01:59:01	P	D	How much do you want?
01:59:11	P	D	$20,000, enough?
02:01:34	D	P	You said (yourself) a few hundred thousands ... won't (qualify) to be a few if less than 3 ... certainly at least 150,000
02:04:58	D	P	Haha ... (and) you try to be a money lender like the others ... now (you 're) feeling afraid(?)
02:05:50	P	D	p-3% a month … (you) just got a deal …
02:09:29	D	P	But how much can (you) lend to me?
02:14:16	D	P	Do you know how much P stands at? I fear you will get the worse (of the deal)
02:18:19	P	D	Five point something, (isn’t it?) …
02:18:46	P	D	Monthly interest (!) …
02:21:00	D	P	How can P be monthly interest? You can even blow a (straight) Chinese flute bent
02:23:54	D	P	150000 x 2.25%/12 = 281.25
02:24:39	D	P	More than (that for) passbook savings
02:26:39	D	P	Not divided by 12 months, (then) you (indecipherable) have 3375 a month
02:27:50	P	D	So … I lend $150,000 to you, and you will give me back 3375 a month?
02:29:25	D	P	Do you know what kind of figure 3375 is
02:29:51	P	D	One year …
02:29:58	P	D	So little …
02:30:23	P	D	15 thousand … you give me 3375 as interest a month, you can more than afford it …
02:32:29	D	P	At last, you understand
02:32:48	P	D	Of course I understand
02:33:02	P	D	15 thousand, and you pay me 3375 per month
02:35:49	D	P	Then, do you know if (you) can amass 5% in return with 15 thousand in a month?
02:39:29	D	P	It is not a problem that I give you 3375 a month, but is there a term by which time I need to repay everything to you … is there a 3,5,7 year?
02:40:33	D	P	Or you only want to chew on the interest?
02:43:26	D	P	If you have nothing to say … (I) will take this to mean you only want to chew on the interest … deal!
02:43:50	P	D	Only chew on the interest … How do you mean?
02:46:15	D	P	Same as some insurance policies, (I) keep the money for 20 years before giving (it) back to you
02:47:09	D	P	Afraid now?
02:50:20	D	P	You won’t spend (it) all, and (you’ll) have money to pocket every month.  You will have at least 15 thousand left after 20 years, (it’s) such a steal
02:54:15	D	P	You transfer the money to me tomorrow, the 29th (of the lunar calendar), then you can start getting interest on the 29th (of the lunar month) next month, quick …
02:55:07	P	D	20 years? (I’ll) have 3375 every month …
02:55:11	D	P	How came no response?  Passed out from being afraid?
02:55:40	D	P	Yes … 20 years
02:55:47	D	P	Hahahaha
02:56:04	P	D	Will it follow the P and go up?  We’ll work (it) out the same way (even if) P is 10-plus%?
02:57:41	D	P	Flip … already said it is P specifically … won’t be like you, all the while this’s and that’s
02:59:31	D	P	One more thing … you even have to (pay) me handling charges if you want me to repay you early
03:01:45	P	D	So, only repayment of interest, not the principal …  and I’ll be repaid 15 thousand all the same in 20 year’s time?
03:02:04	P	D	3 thousand something per month, (that’s) forty thousand something per year … hoho …
03:06:10	P	D	Then, in 3 years, it’s break even …
03:07:55	D	P	Of course 15 thousand will be paid back to you after 20 years … otherwise how can this kind of interest be paid to you … the sum is 40,500 a year … but you may only have 3,375 when the 12th month comes … why? It is because you would have already spent all the money in each of the other 11 months … still talking of breaking even in 3 years (?) … hahahaha
03:08:35	P	D	I will find another bank account to save up the money and not touch/ move (it)
03:09:27	D	P	I don’t flipping believe you won’t spend (it) … hahahaha …
03:09:43	P	D	I will save (it) up …
03:10:26	P	D	Breaking even in 3 years … and then I lend you another 15 thousand …  heehee … better than planting gold
03:10:48	P	D	How about you … hand over 10 LVs as security …
03:11:10	P	D	Not much difference from the pawn shop …
03:14:23	P	D	What warrant/s to buy tomorrow?
03:14:33	P	D	Quick, I have to sleep
03:14:59	D	P	You can save (that) up?  I don’t believe (it)!  I am afraid you would ask me to repay before 2 years is up … (indecipherable) … hahahaha …
03:15:55	D	P	Tomorrow we watch … may jump ship anytime
03:18:02	D	P	Then you make the transfer to me tomorrow morning, eh … pay earlier and (start) to collect interest earlier … hahaha …
03:19:13	P	D	Let me write out an IOU … write down the terms expressly …
03:19:35	P	D	What happens if I die?  And what happens if you die?
03:21:48	D	P	Waiting for you … here (we go) again!!!  So flipping trouble … you die I pocket (the money) … I die hard luck for you
03:22:39	P	D	Then don’t die these 3 years … (and) I don’t need to lose so much money …
03:23:42	D	P	Then you need to come over to protect me these 3 years
03:26:05	P	D	What warrants to buy tomorrow?
03:26:08	D	P	So now, can you and I have a flip/deal (?)
03:26:23	P	D	Will give you the IOU for you to sign tomorrow …
03:28:20	D	P	(I’ve) said (we) keep watch … so you write up the cheque also … and interest starts to run once bank transfer is done
03:28:42	P	D	What about collaterals?
03:29:38	D	P	Wah … like it is real … I said a loaf of thing … hahahaha …
03:29:51	P	D	Cut (it) off?
03:30:06	P	D	Hell … go to sleep … about to die (sic) …
03:31:09	D	P	No need to cut (it) off … (will) give (it) to you to put and hold in the month
03:32:09	P	D	Go to sleep …
03:32:58	D	P	Deal …
03:33:24	P	D	Deal/ Flip your arse

(with emphasis added)

9.  Miss Chan argues that the Loan Agreement was confirmed as Mr Tsoi accepted the terms including the interest rate by mentioning “Deal”.

10.  Mr Tsoi explains he was just joking with Miss Chan and was trying to teach her how to calculate interest; he never intended to borrow money from Miss Chan.

11.  I accept Mr Tsoi’s explanation after a careful analysis of the above conversation.

12.  If one reads the conversation carefully, one will find throughout the conversation the actual loan amount had never been mentioned.  Miss Chan started off by saying “I got a few hundred-thousands … don’t know what good (it’ll) do just being left here” [01:43:22]; then she mentioned “$20,000, enough?” [01:59:11]; Mr Tsoi then mentioned “You said (yourself) a few hundred thousands …won’t (qualify) to be a few if less than 3 … certainly at least 150,000” [02:01:34].

13.  Mr Tsoi mentioned the sum should be at least $150,000; however, both parties had never confirmed the exact figure to be lent in the whole conversation.  If both parties intended to create the Loan Agreement, the actual loan amount must be the first thing that would come to their mind, as it would be the most important element of the Loan Agreement.

14.  They discussed about the interest rate; however, in a rather light-hearted manner.  Miss Chan once mentioned “I charge him/her interest of 59%” [01:46:17] and Mr Tsoi said “Haha … (and) you try to be a money lender like the others …” [02:04:58].

15.  They mentioned about the pledge of the loan; but again, in a joking manner.  Miss Chan said, “Do you have any property as a pledge?  This is mortgage interest rate …” [01:50:05] and Mr Tsoi replied “I (shall) keep the title deeds, (I) won’t bloody listen to you … (you) didn’t say it just now … (you) made a hole for yourself to fall into” [01:50:39 – 01:52:53].  It never looks like it is a serious dialog between a real lender and borrower.

16.  Then their discussion went on and Mr Tsoi taught Miss Chan how interest should be calculated.   Miss Chan then said “I will save (it) up … Breaking even in 3 years … and then I lend you another 15 thousand … heehee … better than planting gold” [03:09:43 – 03:10:26]; obviously Miss Chan was in a joking manner.

17.  I conclude that both parties did not have the real intention to enter into any legally binding loan agreement.

18.  The above also sets an example on the communication pattern between Miss Chan and Mr Tsoi; that Mr Tsoi always tried to tease Miss Chan by giving some sexual innuendos; sometimes, they just flirted with each other; and from time to time, Mr Tsoi could be very manipulative.

19.  Miss Chan’s witness statement does not tally with the MSN record.  According to paragraph 6 of her witness statement, she knew that Mr Tsoi used a company without any actual business to obtain a loan from the bank for investment purpose by “cooking up the figures”, then the bank asked Mr Tsoi to repay the loan; which triggered Mr Tosi to borrow money from her.  Mr Tsoi asked for $150,000 initially but after numerous conversations, she agreed to lend him $200,000; then on 29 April 2008, Mr Tsoi confirmed the Loan Agreement by saying “P-3% … deal!  Don’t break your promise!”

20.  As Miss Chan knew Mr Tsoi used a non-operating company to borrow money from the bank and the bank called loan, she should be very anxious about Mr Tsoi’s repayment ability; in particular, that $200,000 represented around 50% of the sale proceeds of her flat [B2/37, §5][2].

21.  However, thousands of MSN messages are disclosed in the hearing bundle, and Miss Chan had never mentioned in any message that the Sum was a loan, nor made any demand for repayment.

22.  Further, Miss Chan mentions that Mr Tsoi initially asked to borrow $150,000 from her and after numerous conversation; she agreed to lend him $200,000.

23.  The MSN messages state the otherwise.  According to the messages, Miss Chan started off by saying “I got a few hundred-thousands … don’t know what good (it’ll) do just being left here.  (What if) the little RMB fall after the Olympic Games …” and Mr Tsoi replied “You better go make a call and ask, better than asking me … so much money, (if you) give (it) to me to spend, (you) don’t need to bother”.  Then Miss Chan said “Give the money to you (?) … should charge you p-3% … if (it has) such a fat profit, I charge him/her interest of 59%.” [01:43:22 – 01:45:32]

24.  Accordingly, Miss Chan first mentioned that she had a few hundred-thousands dollars on hand and had no idea how she should utilize it, then the parties ventured into the discussion concerning the usage of that sum of money.  Then Miss Chan asked, “How much do you want?  $20,000, enough?” and Mr Tsoi replied “You said (yourself) a few hundred thousands … won’t (qualify) to be a few if less than 3 … certainly at least 150,000.” [01:59:01 – 02:01:34]  The whole idea of $150,000 came from Miss Chan mentioned she had few hundred thousands and Mr Tsoi said “won’t qualify to be a few if less than 3”.  They had never mentioned anything about the bank, Mr Tsoi’s cooked-up company, the bank’s loan or Mr Tsoi was demanded to repay the loan.

25.  Hence I reject Miss Chan’s version.

26.  Mr Tsoi’s version is the Sum is trust money that Miss Chan asked him to invest on her behalf.

27.  He relies on the following messages:

Time	From	To	Content
11 May 2008 [B2/229]
23:58:10	P	D	Hey, hay, $200,000 … what service (will you) provide?  How many courses?
23:58:35	D	P	What services?
23:59:46	D	P	The aim is to lose all for you … hahaha …
7 June 2008 [B2/238]
02:32:15	D	P	If market opens on Monday, there’s every chance that you would only have 30% or less left from your 200,000, scary right (?)
02:35:52	D	P	Passed out? Hahaha …
02:36:07	P	D	Oh … You can weather any storm
27 June 2008 [B2/243]
02:26:03	D	P	Don’t you remember that you only have $23,233.42 left? There isn’t 50,000 … I have bullets to tackle (it) only because (I) got new OD today.
02:26:37			Johnny sends file Jessica_200K.xls
02:27:05	P	D	So you already put more into my 200,000? OK
02:28:48	D	P	(That’s) not such a good idea because need to pay interest on the OD, even worse if things got mixed up.
02:30:25			You have already successfully received from Johnny C:\user\J260\Document\myreceived files\Jessica_200K(2).xls
02:30:48	P	D	20 thousand plus going back up, so there’s 50 thousand plus?
02:33:01	D	P	50K means 50,000 bear (warrant) contracts
02:33:49	P	D	Ar … you think of a way then …
02:34:12	P	D	Lost 90% … shxt …
2 July 2008 [B2/250]
03:40:50	P	D	Only 20,000 plus left … can’t be moved … if I give another 100,000, if something happens, I really have nothing left.
03:41:59	P	D	You figure (something) for me
03:42:50	P	D	Ar … I wouldn’t be the one to make profit even if (it) rebounds
03:43:50	D	P	I am not asking you to give to me, I am talking about the underlying stock portfolio, you may buy (them) yourself

28.  According to the above messages, when the parties discussed about that $200,000, both of them treated it as Miss Chan’s money.  Miss Chan mentioned “Hey, hey $200,000 … What service will you provide?” and Mr Tsoi answered “The aim is to lose all for you … hahaha”; and Mr Tsoi said “If market opens on Monday, there’s every chance that you would only have 30% or less left from your $200,000, scary right?” and Miss Chan showed her confidence on Mr Tsoi by saying “Oh … You can weather any storm”; and Mr Tsoi said “Don’t you remember that you only have $23,233.42 left?”

29.  Further, on 11 May 2008, Miss Chan mentioned “Hay, hay, $200,000 … what service (will you) provide?”, then on 16 May 2008 the Sum was transferred.  It matches with Mr Tsoi’s version that the Sum is trust money.

30.  Mr Tsoi mentioned that he had kept Miss Chan fully informed about the investment he made on her behalf; and he produced the monthly summaries in respect of the months of May and June 2008 which set out all the transactions during that period [B1/51, § 19 & 56 – 60].

31.  It is also confirmed by the above messages that Mr Tsoi sent files to Miss Chan from time to time.

32.  There is no rebuttal evidence from Miss Chan that Annexure 1 and 2 were not the files that were sent by Mr Tsoi to her.

33.  At first sight, the tables on B1/56 & 57 are very confusing and difficult to understand. However, if one replaces the headings 收入 (income) and 支出 (expenses) with “cash in hand” and “warrants in hand”, the tables will make sense.  According to the table on B2/56, at the beginning, on 19 May 2008, Mr Tsoi had cash $200,000 in hand that he recorded as income, then he bought in several warrants on 22 and 23 May 2008 (warrants in hand) that he recorded as expenses; he also sold out a warrant on 23 May 2008, which increased his cash in hand as recorded in income. 

34.  I accept the tables were contemptuous monthly summaries that Mr Tsoi sent to Miss Chan concerning the transactions carried out by him on her behalf.

35.  The above tables also tally with Mr Tsoi’s version and the MSN messages that Miss Chan had suffered a substantial loss within two months.

36.  On 27 June 2008, after Mr Tsoi told Miss Chan that “Don’t you remember that you only have $23,233.42 left?” Miss Chan’s response was “Lost 90% … shxt …” Such intense response indicated that Miss Chan treated the loss very personal and it supports the case that the Sum is trust money.  If the Sum is a loan, Miss Chan should be very anxious if Mr Tsoi could repay it; however, there is no MSN message to show Miss Chan demanded Mr Tsoi for repayment.

37.  On the balance, I accept Mr Tsoi’s version[3].

Conclusion

38.  For the reasons above, I dismiss Miss Chan’s claim.

39.  I make costs order nisi that costs be to Mr Tsoi, to be taxed if not agreed; if parties do not apply to vary the same within 14 days, the costs order nisi will become absolute.

40.  I grant counsel’s certificate and thank for both counsel’s assistance.