Case Details

Citation

MAJESTIC PLAN INTERNATIONAL LTD AND OTHERS v. JI CHANGQUN, HCA 1494/2019

Case Number

HCA 1494/2019

Court

Court of First Instance

(CFI)

Decision Date

22 December 2025

Parties

Applicant(s):

MAJESTIC PLAN INTERNATIONAL LIMITED, PROFIT REACH VENTURES LIMITED, DIGITAL KING INVESTMENTS LIMITED

Respondent(s):

JI CHANGQUN (季昌群)

For Respondent(s):

Ms Kinsey Kang and Mr Enoch Fong, instructed by M/s Kwan & Chow

Judges

Alan Kwong

MAJESTIC PLAN INTERNATIONAL LTD AND OTHERS v. JI CHANGQUN

[2025] HKCFI 5875

Court of First Instance22 December 2025

Judges:Alan Kwong

HCA1494/2019 MAJESTIC PLAN INTERNATIONAL LTD AND OTHERS v. JI CHANGQUN

HCA 1494/2019

[2025] HKCFI 5875

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1494 OF 2019

________________________

BETWEEN

	MAJESTIC PLAN INTERNATIONAL LIMITED	1^st Plaintiff
	PROFIT REACH VENTURES LIMITED	2^nd Plaintiff
	DIGITAL KING INVESTMENTS LIMITED	3^rd Plaintiff
	and
	JI CHANGQUN (季昌群)	Defendant

________________________

Before:

Deputy High Court Judge Alan Kwong in Court

Dates of Hearing:	17-19, 26 November 2025
Dates of Further Submissions:	3 and 10 December 2025
Date of Judgment:	22 December 2025

________________________

J U D G M E N T

________________________

A. Overview

1. In this action, the Plaintiffs sue the Defendant on a memorandum of understanding (備忘錄) dated 13 March 2019 (the “MOU”).

2. The Plaintiffs assert that the MOU is a legally binding agreement.

3. The Defendant admitted that he signed the MOU. As will be elaborated below, it is not in dispute that the terms of the MOU were not performed.

4. However, it is the Defendant’s case that:-

(1)  The MOU is liable to be vitiated by reason of the oral misrepresentation made by the Plaintiffs’ Mr Zhang Ziyu (“Mr Eric Zhang”).

(2)  He had no intention to create a legal relationship with the Plaintiffs.

(3)  The MOU is, anyhow, invalid and unenforceable for want of consideration.

5. Without prejudice to the aforesaid contentions, the Defendant also, as a matter of contractual construction, disputes the quantum of the Plaintiffs’ claims pursuant to the MOU.

6. When the present proceedings were commenced, Messrs Sidley Austin acted for the 1^st, 2^nd, and 3^rd Plaintiffs, and a statement of claim was filed and served on behalf of each of them. However, as the proceedings developed, Messrs YTL LLP (which had replaced Messrs Sidley Austin as the Plaintiffs’ solicitors) was unable to obtain instructions from the 3^rd Plaintiff. Thus, at the pre-trial review that took place on 16 September 2025, I ordered that Messrs YTL LLP should cease to represent the 3^rd Plaintiff. Since then, the 3^rd Plaintiff’s claims against the Defendant have not been prosecuted.

7. In the premises, the present trial only involved the 1^st and 2^nd Plaintiffs and the Defendant.

B. The 1^st and 2^nd Plaintiffs’ Case

8. The 1^st and 2^nd Plaintiffs are subsidiaries of China Tian Yuen Finance Group (Holdings) Ltd (“Tian Yuan Holdings”).

9. The 3^rd Plaintiff was a subsidiary of Renco Holdings Group Ltd (“Renco Holdings”)[1].

10. The Defendant is a highly successful and sophisticated businessman. As a matter of public records, the Defendant is the chairman and chief executive officer of a company named Fullshare Holdings Ltd (“Fullshare”), whose shares are listed on Hong Kong Stock Exchange Ltd (stock code: 607). According to Forbes’ World’s Billionaires List in 2019, the Defendant had an estimated wealth of USD2.4 billion.

11. The Plaintiffs say that the Defendant owns, controls and/or is affiliated with the following companies: (i) Eastern Result International Ltd (“Eastern Result”); (ii) Glorious Fame Holdings Ltd (“Glorious Fame”); and (iii) Yong Jian Enterprises Ltd (“Yong Jian”).

12. There were 2 other occasions where the Defendant and/or its connected entities obtained loans from Tian Yuan Holdings:-

(1) By a loan agreement dated 2 September 2016, a company connected with the Defendant and Fullshare named 南京赛特置业有限公司 obtained a short-term loan in the total sum of RMB 600 million from a company connected with Tian Yuan Holdings, namely上海澜熠贸易有限公司. The Defendant provided personal and corporate guarantee in respect thereof.

(2) By a loan agreement dated 28 April 2017, another company connected with the Defendant and Fullshare named 江苏苏丰投资有限公司 obtained a short-term loan in the total sum of RMB 500 million from another company connected with Tian Yuan Holdings, namely 天元（深圳）投资咨询有限公司.

13. In around mid-2016, the Defendant sought financing from Tian Yuan Holdings, and Tian Yuan Holdings brought in Renco Holdings, ie the parent company of the 3^rd Plaintiff.

14. Following some discussions that took place in 2016 and 2017, it was agreed that Tian Yuan Holdings and Renco Holdings would provide financing to the Defendant through their investments in the following investment funds arrangements:-

(1) Huarong International Fortune Innovation Ltd Partnership (the “Fortune Fund”), to which the 1^st and 3^rd Plaintiffs are parties; and

(2) OBOR Global Innovation Fund SPC (the “OBOR Fund”), to which the 2^nd Plaintiff is a party.

15. Insofar as the Fortune Fund is concerned:-

(1)  The limited partners of the Fortune Fund were: (i)  LP1: Glorious Fame; (ii)  LP2: the 1^st Plaintiff; (iii)  LP3: Renco (and later the 3^rd Plaintiff); and (iv)  LP4: Eastern Result.

(2)  The 1^st Plaintiff contributed a capital of HK$680 million, and the 3^rd Plaintiff derived its interest from a contribution of HK$340 million by another subsidiary of Renco.  The primary purpose of the Fortune Fund was to, inter alios, acquire the shares in Fullshare.

(3)  The term of the Fortune Fund commenced on 23 December 2016 and expired on 23 December 2018.

(4)  The 1^st Plaintiff was entitled to various fees calculated at a rate of 13.89% per annum of its capital contribution and a fixed return, which was labelled as a “coupon” of 8% per annum payable semi-annually.

(5)  Pursuant to a deed of payment undertaking between the 1^st Plaintiff and Eastern Result (the “Eastern Result Deed of Undertaking”)  dated 23 December 2016, Eastern Result undertook to repay the 1^st Plaintiff its capital contribution and other sums due and owing from the Fortune Fund to the 1^st Plaintiff.

(6)  Pursuant to an agreement between the 3^rd Plaintiff and Eastern Result, the 3^rd Plaintiff was entitled to, inter alios, payments which were fixed returns based on an annualized percentage of 19% of the capital contribution made (the “Digital King Premium”). Eastern Result later negotiated several time extensions, and effected a fixed sum of around HK$16.15 million for each extension of 3 months.

(7)  Five individuals[2] were procured by the Defendant to execute charges over the shares in Zall Smart Commerce Group Ltd (stock code: 2098)  (the “Zall Share Charges”)  dated 22 March 2017 to secure Fortune Fund’s payment obligations owed to the 1^st Plaintiff.

(8)  It transpired that by the end of the term of the Fortune Fund on 23 December 2018, the 1^st Plaintiff only received part of its “coupon” for the first half of 2018. The 1^st Plaintiff did not receive the “8% coupon” for the second half of 2018, and neither the 1^st Plaintiff nor the 3^rd Plaintiff received full repayment of their capital contributions. More fundamentally, Eastern Result further failed to fulfil its obligation under the Eastern Result Deed of Undertaking to repay sums due and owing from the Fortune Fund to the 1^st Plaintiff.

(9)  Against the aforesaid background, the 1^st Plaintiff entered into a sale and purchase agreement (the “Yongjian SPA”)  with Yong Jian. The Defendant provided a personal guarantee dated 9 November 2018 in favour of the 1^st Plaintiff to guarantee the sums required to be paid by Yong Jian to the 1^st Plaintiff (the “Yongjian Personal Guarantee”).

16. Insofar as the OBOR Fund is concerned:-

(1)  The term of the OBOR Fund commenced on 28 May 2017 and expired on 7 June 2019.

(2)  The 2^nd Plaintiff was entitled to a fixed return of 9% per annum (payable semi-annually on its capital contribution of HK$520 million.

(3)  Pursuant to the terms of Supplemental I to the Private Placement Memorandum for the OBOR Fund, Glorious Fame had to make mandatory subscriptions, the proceeds of which would be used to pay the fixed return owed to the 2^nd Plaintiff.

(4)  Pursuant to two deeds (the “Security Deeds”)  dated 30 June 2017, Yong Jian and Glorious Fame charged their shares in the OBOR Fund in favour of the 2^nd Plaintiff.

(5)  It transpired that Glorious Fame failed to make mandatory subscription in December 2018. As a result, the 2^nd Plaintiff only received its fixed return up to the end of June 2018, and the OBOR Fund did not have sufficient financial resources to pay the fixed return to the 2^nd Plaintiff (including the return in the second half of 2018)  and Yong Jian by the end of December 2018.

17. In their opening submissions, Mr Jenkin Suen SC, leading Ms Ebony Ling and Mr Adrian Lee, (for the 1^st and 2^nd Plaintiffs) emphasized that whilst the arrangements under the Fortune Fund and the OBOR Fund were dressed up as investments, they were in substance orchestrated for the purpose of advancing financing to the Defendant and/or its related entities (明股實債).

18. Since the Plaintiffs did not receive the capital contribution and investment returns in respect of the Fortune Fund and the OBOR Fund, the representatives of Tian Yuan Holdings, Renco Holdings and the Defendant entered into discussions in early 2019.

19. As evidenced by an email dated 26 February 2019, the Plaintiffs’ representatives (namely (i) Mr Zhang Yiming, (ii) Ms Cheng Li, (iii) Mr Liu Qin, and (iv) Mr Eric Zhang) had a meeting with the Defendant[3], during which the parties discussed the arrangements and timeframe for repaying the monies due and owed to the Plaintiffs under the Fortune Fund and the OBOR Fund. In the said email (which was drafted by Mr Eric Zhang), it was stated that the parties would enter into a written “guarantee” (担保协议).

20. As evidenced by the contemporaneous records on WeChat, in early March 2019, the representatives from the Plaintiffs’ side and the representatives from the Defendant’s side (including Ms Xu Miaoyan (“Ms Xu”), who was a finance manager in the Fullshare Group) liaised with each other in regard to the contents of the document to be executed (ie the MOU).

21. Eventually, on 13 March 2019, the representatives of the 1^st, 2^nd, and 3^rd Plaintiffs and the Defendant executed the MOU. The relevant parts of the MOU read as follows:-

“本备忘录自以下各方于2019年3月13日签署：

(1)  季昌群，身份证号码[4]：，护照号码：，其住址为南京市建邺区双阐街149号1队(“甲方”)：

(2)  香港京元万隆投资管理有限公司，一家根据香港法律设立的公司，其注册办事处位于ROOM 2805, 28/F， China Resources Building， NO. 26 Harbour Road, Wanchai, Hong Kong. (“乙方”)：

(3)  伟图国际有限公司（MAJESTIC PLAN INTERNATIONAL LIMITED），一家根据英属维尔京群岛法律设立的公司，其注册办事处位于P. 0. Box 957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands. (“丙方”)：

(4)  利达创投有限公司（Profit Reach Ventures Limited），一家根据英属维尔京群岛法律设立的公司，其注册办事处位于P. 0. Box 957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands. (“丁方”)。

一、前言 ("Section I")

1. 丙方[the 1^st Plaintiff] 与Digital King Investment Limited [the 3^rd Plaintiff](下称"LP3")分别为Huarong International Fortune Innovation Limited Partnership（下称 “财富基金'')  的LP2及LP3, 认购额分别为港币680,000,000元及港币340,000,000元（下称 “财富基金认购本金”)。

根据基金认购协议，丙方享有年化8％的固定回报，一年付息两次。基金期限为2年，到期日为2018年12方23日。另根据补充协议丙方享有约年化 13.89％的额外回报，故丙方于财富基金项下综合收益率年化 21.89%。目前，财富基金已到期但仍未进行清算，丙方未收到其相应的基金固定回报及认购本金。

2. 丁方[the 2^nd Plaintiff]于2017年6方13日出資认购OBOR Global Innovation Fund SPC（下称 “足球基金”)  夹层级基金份额，认购额为港币520, 000, 000元（下称 “足球基金认购本金”，与财富基金认购本金合称“基金认购本金”)。

根据基金认购协议，丁方作为夹层投资人享有年化9 ％之固定回报，一年付息两次。目前，丁方仍未收到2018年下半年的基金收益。

二、付款安排 (“Section II”)

1. 基金固定回报支付

1.1 财富基金尚未支付丙方的固定回报为27,200,000 元，同时由于财富基金到期而尚未返还认购本金而产生的占用费（由2018 年12 月24日至2019 年3 月31 日）为港币39,965,742.47 元（下称“占用费”)。

1.2 财富基金尚未支付LP3 的资金占用费为港币16,150,000 元。

1.3 足球基金尚未支付丁方的固定回报为港币23,592,328. 77 元。

1.4 以上尚未支付的基金固定回报及占用费用总额为港币106,908,071.24 元（下称“基金固定回报”)。基金固定回报支付时间表为：

a. 2019 年3 月8 日前支付港币1, 000 万－ 2,000 万元，

b. 2019 年3 月15 日前支付港币1,000 万－ 2,000 万元，

c. 2019 年3 月22 日前支村港币1,000 万－ 2,000 万元，

d. 2019 年3 月29 日前支付全部基金固定回报剩余款项(即106,908,071.24元减去按1.4a, 1.4b 及1.4 c 已支付的款顼）

e. 2019 年5 月31 日付清财富项目2019 年4 月1 日至2019 年5 月31 日期间未偿还部分本金占用费，该期间内占用费按年化21.89％收取。

2. 基金认购本金返还

2.1 丙方的财富基金认购本金共港币6. 8 亿元的支付时间表为：

a. 2019 年4 月1 日开始部分本金返还，

b. 2019 年5 月31 日或之前完成丙方本金返还

2.2 LP3 的财富基金认购本金港币3.4 亿元的支付时间办：

c. 2019 年5 月31 日或之前完成LP3 本金返还

三、甲方承诺 (“Section III”)

1. 甲方在此无条件及不可撤回的承诺，甲方将会尽最大努力及采取一切措施包括担不限于促使财富基金管理人及时清算财富基金并进行分配，促使第三方向丙方、丁方及LP3 购买相应的基金份额等措施来保证第二条所称的基金固定回报和基金认购本金能够按约定的时间表进行支付。

2.  甲方在此进一步无条件及不可撤回的承诺，如果第二条所称的基金固定回报和基金认购本金未能满足约定时间表中任一时点的支付要求，则所有的基金固定回报及基金认购本金（包括根据时间表尚未到期的）即视为立即到期,甲方需立即无条件的向乙方、丙方及／或丁方以购买基金份额的方式支付所有尚未支付的基金固定回报及基金认购本金。 ”

22. For completeness, I shall set out the English translation of the relevant parts of the MOU (which was prepared by the Plaintiffs’ former solicitors):-

“This memorandum of understanding is made on the 13th day of March, 2019 by:

(A)  季昌群, ID number[5]: , passport number: , address: Team 1, No.149, Shuangzha Street, Jianye District, Nanjing City (“Party A”);

(B)  香港京元万隆投资管理有限公司, a company incorporated under the laws of Hong Kong with its registered office at: ROOM 2805, 28/F, China Resources Building, NO. 26 Harbour Road, Wanchai, Hong Kong (“Party B”);

(C)  伟图国际有限公司 (MAJESTIC PLAN INTERNATIONAL LIMITED), a company incorporated under the laws of the British Virgin Islands with its registered office at: P. O. Box 957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands. (“Party C”);

(D)  利达创投有限公司 (Profit Reach Ventures Limited), a company incorporated under the laws of the British Virgin Islands with its registered office at: P.O. Box 957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands. (“Party D”).

I. WHEREAS:

1. Party C and Digital King Investment Limited (hereinafter “LP3”) are respectively the LP2 and LP3 of the Huarong International Fortune Innovation Limited Partnership (hereinafter “Fortune Fund”) and their subscription amounts are HK$ 680,000,000, and HK$ 340,000,000 (hereinafter “Fortune Fund Principal Amounts”) respectively.

2. In accordance with the fund subscription agreement, Party C shall receive a fixed return of 8% per annum, payable semi-annually. The term of the fund is two years and the maturity date for the fund is 23 December 2018. Additionally, in accordance with a supplemental agreement, Patty C shall receive an additional fixed return at the rate of approximately 13.89% per annum. Accordingly, Party C shall receive a total return at the rate of 21.89% per annum under the Fortune Fund. As of this date, the term of Fortune Fund has expired, yet the Fortune Fund has not been wound up. Party C has not received its entitled fixed returns or been repaid its capital contribution.

3. On 13 June 2017, Party D subscribed for the mezzanine fund interest in the OBOR Global Innovation Fund SPC (hereinafter “OBOR Fund”)at a subscription amount of HK$ 520,000,000 (hereinafter “OBOR Fund Principal Amount”, together with the Fortune Fund Principal Amounts, the “Fund Principal Amounts”).

4. In accordance with the fund subscription agreement, Party D, as the mezzanine investor, shall receive a fixed return of 9% per annum, payable semi-annually. As of this date, Party D has not yet received its return payment for the second half of 2018.

II. PAYMENT ARRANGEMENT

The payment arrangement and corresponding payment schedule agreed upon between Parties A, C, and D is as follows:

1. Payment of fixed returns of the funds:

1.1 The amount of outstanding fixed returns under the Fortune Fund payable to Party C is HK$27,200,000. Additionally, owing to the fact that the term of the Fortune Fund has expired yet the principal amounts have not been returned, an occupancy fee (calculated from 24 December 2018 until 31 March 2019)  of HK$39,965,742.47 (hereinafter “Occupancy Fee”)has been generated.

1.2 The outstanding occupancy fee payable under the Fortune Fund to LP3 is HK$16,150,000.

1.3 The outstanding fixed return payable to Party D under the OBOR Fund is HK$23,592,328.77.

1.4 The total unpaid fixed return and occupancy fees referred to above is HK$106,908,071.24 (hereinafter “Fund Fixed Return”). The payment schedule for the Fund Fixed Return is as follows:

a. Payment of HK$10,000,000-20,000,000 before 8 March 2019.

b. Payment of HK$10,000,000-20,000,000 before 15 March 2019.

c. Payment of HK$10,000,000 - 20,000,000 before 22 March 2019.

d. Payment of the remainder of the Fund Fixed Return by 29 March 2019 (HK$106,908,071.24 less the sums actually paid under 1.4a, 1.4b, and 1.4c).

e. Complete repayment by 31 May 2019 of occupancy fees for the period from 1 April 2019 to 31 May 2019 arising from any unpaid principal amounts. The occupancy fees during this period shall be charged at a rate of 21. 89% per annum.

2. Return of Fund Principal Amounts

2.1 Repayment timetable of Party C's Fortune Fund Principal Amount of HK$ 680,000,000:

a. Part of the Fortune Fund Principal Amount shall be repaid from 1 April 2019 onwards,

b. Repayment of Party C’s principal amount shall complete on or before 31 May 2019

2.2 Repayment timetable ofLP3's Fortune Fund Principal Amount of HK$ 340,000,000:

c. Repayment of LP3’s principal amount shall complete on or before 31 May 2019

III. UNDERTAKINGS BY PARTY A

1. Party A hereby unconditionally and irrevocably undertakes that Party A shall use his best efforts to take all actions and to do all things necessary, including but not limited to causing the manager of the Fortune Fund to timely wind up the Fortune Fund and distribute the assets of the Fortune Fund, or causing third parties to purchase corresponding fund interest from Party C, Party D, and LP3, or doing other actions as necessary, to ensure that the Fund Fixed Return and the Fund Principal Amounts referred to in Section II would be repaid in accordance with the payment schedule as specified.

2.  Party A further unconditionally and irrevocably undertakes that if at any point in time the Fund Fixed Return and the Fund Principal Amounts referred to in Section II are not repaid in accordance with the agreed payment schedule, the entire Fund Fixed Return and the Fund Principal Amount (including those which were otherwise not due under the payment schedule)  would become immediately due and payable. Party A shall immediately and unconditionally repay all unpaid Fund Fixed Return and Fund Principal Amounts by purchasing fund interest from Party B, Party C, and/or Party D.”

23. Mr Suen submitted that:-

(1)  Under Clause 1 in Section III, the Defendant agreed to use his best endeavours to take all actions and do all things necessary to ensure repayment of the outstanding sums under the payment schedule set out under Clauses 1 and 2 in Section II (the “Payment Schedule”).

(2)  If the outstanding sums were not repaid in accordance with the Payment Schedule, amounts comprising of the fixed returns and the principal amounts under the Fortune Fund and OBOR Fund contributed (the “Agreed Sums”)  would become immediately due and payable to the Plaintiffs. The Defendant has the obligation to cause repayment of such Agreed Sums by purchasing the Plaintiffs’ interests in the Fortune Fund and the OBOR Fund: see Clauses 1 and 2 in Section II.

(3)  There is an implied term that the Agreement also covers the fixed return up to the end of June 2019 due to the 2^nd Plaintiff by the OBOR Fund (“OBOR First Half 2019 Return”), which would also become immediately due and payable to the 2^nd Plaintiff in the event that the Outstanding Sums were not repaid in accordance with the Payment Schedule. The Defendant would also have an obligation to cause repayment of the same by purchasing the 2^nd Plaintiff’s interest in the OBOR Fund (the “Implied Term”).

24. After the MOU was signed, the Defendant caused HK$198,596,373 to be paid to the Plaintiffs during the period from 15 March 2019 to 27 June 2019. Apart from this, the Plaintiffs did not receive any further payment.

25. In the premises, it is the 1^st and 2^nd Plaintiffs’ case that:-

(1) Since the outstanding sums were not repaid in accordance with the Payment Schedule, pursuant to Clause 2 in Section III of the MOU, the Defendant was liable to repay the Agreed Sums (which had become immediately repayable), but, wrongfully and in breach of the obligations, he did not do so.

(2) Further, wrongfully and in breach of his duties under Clause 1 in Section III of the MOU, the Defendant had also breached its duty to exercise his best endeavours to procure the Fortune Fund and the OBOR Fund to make repayments.

26. Accordingly, the 1^st and 2^nd Plaintiffs claim against the Defendant for:-

“Fortune Fund Principal Amounts (财富基金认购本金)”[6] HK$680,000,000

OBOR Fund Principal Amounts (足球基金认购本金)[7] HK$520,000,000

The fixed return owed to the 1^st Plaintiff in relation to the Fortune Fund for the 2^nd half of 2018 [8] HK$27,200,000

Occupancy Fee owed to the 1^st Plaintiff in relation to its capital contribution into the Fortune Fund for the period from 24 December 2018 to 31 March 2019.[9] HK$39,965,742.47

OBOR Second Half 2018 Return[10] HK$23,592,328.77

OBOR First Half 2019 Return[11] HK$22,053,698.63

“Capital occupancy fees” owed to the 1^st Plaintiff in relation to its capital contribution into the Fortune Fund for the period between 1 April 2019 and 31 May 2019[12] HK$ 24,876,635.62

Total: HK$1,337,688,405

27. Meanwhile, the 1^st and 2^nd Plaintiffs give credit to the following sums:-

Repaid Amount from 13 November 2018 to 31 May 2019 HK$203,396,374

Amount received by the 1^st Plaintiff through enforcing the Zall Share Charges from 15 May 2019 to 13 September 2019 HK$139,179,331

Amount received by the 2^nd Plaintiff through enforcing the Security Deeds from 21 October 2019 to 23 February 2023 HK$74,687,862

Total: HK$417,263,567

28. Thus, the 1^st and 2^nd Plaintiffs claim against the Defendant for a total amount of HK$920,424,838(ie HK$1,337,688,405 less HK$417,263,567).

C. The Defendant’s Case

29. The Defendant admitted that he has been the chairman and chief executive officer as well as an executive director of Fullshare, which is a listed company[13].

30. In his defence and counterclaim[14], the Defendant made no admission as to whether he owned, controlled, and/or was affiliated with Eastern Result, Glorious Fame, and Yong Jian.

31. The Defendant averred that he had never obtained financing from Tian Yuan Holdings and Renco Holdings, and there were no discussions in respect thereof at all[15].

32. The Defendant also averred that the ultimate beneficial owner(s) of the Fortune Fund and the OBOR Fund were independent of him, and he did not participate in the establishment and operation thereof[16]. In this connection, there is a suggestion that Eastern Result, Glorious Fame, and Yong Jian had their own shareholders/directors, who were not controlled by the Defendant. The sole shareholders/directors of these companies were as follows:-

Eastern Result Tao Xubin (“Mr Tao”)

Glorious Fame Yang Rujun (“Mr Yang”)

Yong Jian Zhu Chengsheng (“Mr Zhu”)

33. The Defendant further averred that:-

(1)  He did not receive any financial gain as a result of the Plaintiffs’ investments in the Fortune Fund and the OBOR Fund[17].

(2)  The Fortune Fund was formed because Huarong International Capital Ltd wanted to dispose of part of its shareholding in Fullshare. Thus, it sought the Defendant’s assistance in finding or introducing potential purchasers. It was in these circumstances that Huarong International Capital Ltd brought in Tian Yuan Holdings as the financier[18].

(3)  The OBOR Fund was formed because Zall Group Limited intended to raise capital by issuing new shares. Thus, it sought the Defendant’s assistance in finding or introducing potential investors. It was in these circumstances that the Defendant introduced Glorious Fame and Yong Jian as potential investors and contacted Tian Yuan Holdings as the potential financier[19].

(4)  Glorious Fame, Eastern Result, and Yong Jian were at all material times represented by a financial advisor named “新弘盛資產管理有限公司” (hereinafter “新弘盛”). Ms Xu and Mr Song Xu (“Mr Song”), who liaised with the representatives of Tian Yuan Holdings, were the employees of 新弘盛.

34. As to the reason why he signed the MOU, the Defendant’s case[20] is as follows:-

(1)  There were discussions between Ms Xu and Mr Song of 新弘盛, on the one hand, and, on the other hand, Mr Eric Zhang of Tian Yuan Holdings in regard to the terms of the MOU.

(2)  Mr Eric Zhang requested that the Defendant should sign an undertaking to guarantee the payments by Eastern Result, Glorious Fame, and Yong Jian. The Defendant refused.

(3)  The Defendant was of the view that the relevant parties should sign a memorandum for the purpose of setting out their mutual understanding, and such a memorandum should be non-binding.

(4)  However, Mr Eric Zhang was adamant that the Defendant should sign something in order for him to report to his superiors.

(5)  During the Defendant’s visit to Hong Kong, on 13 March 2019, Mr Eric Zhang approached the Defendant at the lobby of the Four Seasons Hotel. Mr Eric Zhang orally represented to the Defendant that the MOU was merely for the purpose of enabling him to have something in writing in order to report to his supervisors, and that the same would not have any legally-binding effect (the “Alleged Oral Representation”).

(6)  Relying on the Alleged Oral Representation by Mr Eric Zhang, the Defendant signed the MOU. However, it transpired that the Alleged Oral Representation was false, in that the MOU purported to be a legally binding agreement, whereby the Defendant undertook substantial legal obligations that were tantamount to a guarantee of the liabilities of Eastern Result, Glorious Fame, and Yong Jian. In this connection, the Defendant further averred that he had no commercial reason to accept these liabilities.

35. In the premises, the Defendant contended that the MOU is liable to be vitiated by reason of misrepresentation. He further contended that he did not have any intention to create or enter into a legal relationship at all.

36. Without prejudice to the aforesaid contentions, the Defendant also contended that the MOU is void and/or unenforceable for want of consideration, in that the 1^st and 2^nd Plaintiffs are unable to show that there is valid consideration provided to the Defendant under the MOU.

37. As to the quantum of the 1^st and 2^nd Plaintiffs’ claims under the MOU, the Defendant pointed out that the Payment Schedule under the MOU is completely silent on:-

(1) The OBOR Principal Amount of HK$520,000,000 (ie the capital contribution owed to the 2^nd Plaintiff under the OBOR Fund); and

(2) The OBOR First Half 2019 Return in the amount of HK$22,053,698.63.

38. In their opening submissions, Ms Kinsey Kang, together with Mr Enoch Fong, (for the Defendant) pointed out that in the 1^st and 2^nd Plaintiffs’ pre-action demand letters dated 6 June 2019 and 24 July 2019[21], the 2^nd Plaintiff did not demand the Defendant to pay the aforesaid sums of HK$520,000,000 and HK$22,053,698.63. As such, even if the MOU were binding on the Defendant (which is denied), the 2 sums in question could not be part of the parties’ contractual bargain.

D. The Legal Principles on Assessment of Credibility

39. In Lee Fu Wing v Yan Paul Po Ting [2009] 5 HKLRD 513 at 534, DHCJ Au (as Au JA then was) set out the well-established approach to assessing credibility. In the course of assessing the credibility of a party’s case, the court shall consider the following matters:

(1)  whether the party’s case is inherently plausible or implausible;

(2)  whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise)  which is undisputed or indisputable;

(3)  where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests, this is relevant to the assessment of his overall credibility; and

(4)  the demeanour of the witnesses.

40. In the context of adjudicating a dispute in relation to an alleged oral agreement or understanding, in Joint and Several Trustees of the property of Yeung Wing Sing v Yeung Wing Sing & Anor [2021] HKCFI 2018 at para 26, Recorder Yvonne Cheng SC (as Cheng J then was) pointed out that:

(1)  contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2)  in deciding whether to accept a witness’s account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3)  care should be taken in regard to the consistency of the witness’s evidence with undisputed or indisputable evidence, and the internal consistency of the witness's evidence;

(4)  care should be taken in drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’s character; and

(5)  witnesses’ credibility should be tested by reference to the objective facts proved independently of their testimony, and to the court should consider their motives and the overall probabilities.

E. The 1^st and 2^nd Plaintiffs’ Claims against the Defendant

E1. Alleged Misrepresentation

41. Having considered the inherent probabilities, the objective circumstances, the documentary evidence, the witnesses’ evidence, and counsel’s submissions:-

(1)  I have no hesitation in rejecting the Defendant’s allegations in relation to the alleged misrepresentation by Mr Eric Zhang.

(2)  I find that the Defendant signed the MOU knowing what its contents were about, and the reason why he put his signature on the MOU was that he accepted the obligations set out therein. In fact, the Defendant’s subordinates, including Ms Xu, had reviewed and provided comments on the draft MOU.

(3)  I am of the view that the Defendant has interests in and/or is associated with Glorious Fame, Eastern Result, and Yong Jian. He also has interests in the collateral held by the 1^st and 2^nd Plaintiffs. It is explicable as to why the Defendant would sign the MOU.

42. First of all:-

(1)  It is trite that he who alleges must prove the allegation with evidence: see eg Unison Faith Ltd v Wu Tak Leung [2022] HKCFI 2904 at para 49 (per DHCJ Leung, as Leung J then was); Insurance Company of the State of Pennsylvania v Grand Union Insurance Company & Anor (CACV 8/1989, 16 June 1989) at para 34 (per Hunter JA).

(2)  For reasons best known to himself, the Defendant, who made a witness statement, chose not to give evidence in the present trial. Whilst I would take into account the assertions made by the Defendant, I am unable to place much weight on the contents of the Defendant’s witness statement, which had not been affirmed on oath.

(3)  Meanwhile, there is not a shred of contemporaneous evidence that shows the exchange between Mr Eric Zhang and the Defendant during the occasion of 13 March 2019.

(4)  In the circumstances, I fail to see how the Defendant can prove that Mr Eric Zhang made the Alleged Oral Representation to him as alleged. The Defendant has plainly failed to discharge the onus required of him. For this reason alone, the Defendant’s defence based on misrepresentation should be rejected.

43. Second, I am of the view that the Defendant’s case on the Alleged Oral Representation is inherently improbable. I do not believe that Mr Eric Zhang would make the Alleged Oral Representation. Even if the Alleged Oral Representation were made (which was not the case), I do not believe that the Defendant would rely on the same to execute the MOU:-

(1)  The Defendant is a sophisticated and savvy businessman, who was at the material times:-

(a)  a substantial shareholder and an executive director as well as the chairman and chief executive officer of a listed company (ie Fullshare);

(b)  involved in highly sophisticated commercial transactions; and

(c)  named and identified in Forbes’ World’s Billionaires List.

(2)  In the circumstances, it is difficult to believe that Mr Eric Zhang (who is a seasoned business executive)  would suggest that the MOU was created for the mere purpose of enabling him to make a report to his superiors and that the MOU carries no legal effect. If the MOU carries no effect at all, what is the point of making a report to Mr Eric Zhang’s superiors and why would the parties bother to execute the document (see Re Hong Kong Automobile Ltd [2020] HKCFI 1134 at para 41 (per DHCJ Le Pichon)? Mr Eric Zhang must know that his counterparty is a sophisticated person. I do not believe that he would make the Alleged Oral Representation, which makes no sense at all.

(3)  What is even more difficult to believe is that the Defendant, who is a sophisticated and savvy businessman, would simply believe that Alleged Oral Representations and put his signature on the MOU without taking steps to find out what the document was about. This is inherently improbable.

(4)  In this connection, it is noteworthy that the MOU is a succinct document (with 3 pages of substantive contents). Like any other legally binding document, the MOU contains (i)  a preamble that sets out the background leading to the transaction in question; (ii)  a jurisdictional clause and a clause on the applicable law; and (iii)  the usual signature clauses indicating that the signing process was witnessed.

(5)  In light of the features of the MOU, it appears to me that the Defendant must know that the MOU is a serious document that aims at creating a binding legal relationship. There is no room for the Defendant to allege that he signed the MOU out of kindness in order to enable Mr Eric Zhang to report to his superiors. Being a sophisticated businessman, the Defendant must know that by signing the MOU, he unequivocally indicated his acceptance of the obligations thereunder.

44. Third, there is ample contemporaneous evidence showing that (i) the Defendant was willing to take up personal obligations; (ii) Ms Xu regarded the Defendant as her boss; (iii) Ms Xu was involved in the negotiation that led to the execution of the MOU; (iv) Ms Xu commented on the contents of the draft MOU; (v) Before the MOU was executed, the Defendant knew and accepted that the MOU would be executed; (vi) the Defendant ensured that a sum of HK$10 million be paid to the Plaintiffs; (vii) Ms Xu accepted that the MOU was validly executed by the Defendant; and (viii) Mr Song put forward a repayment proposal after the Defendant failed to perform the obligations under the MOU.

45. In this connection, the following contemporaneous evidence supports the Plaintiffs’ case, and contradicts the Defendant’s case:-

(1)  On 21 February 2019, Mr Eric Zhang sent a message to the Defendant via WeChat[22]. In this message, Mr Eric Zhang stated that (i)  the repayment proposal that Ms Xu reported to him on the previous day was advantageous; (ii)  whilst Ms Xu indicated that the Defendant did not wish to sell the shares for the purpose of paying the outstanding interest, the reality was that if the shares were not sold, the situation would exacerbate; and (iii)  the Defendant was urged to pay the outstanding interest, provide a repayment schedule, and agree that part of the collateral be sold. Mr Eric Zhang further requested to meet the Defendant in person, so that they could discuss the matter. The Defendant agreed and asked about the whereabouts of Mr Eric Zhang. On the same day (ie 21 February 2019), in order to keep Ms Xu updated about the progress of his discussion with the Defendant, Mr Eric Zhang forwarded the aforesaid WeChat message to Ms Xu[23]. In my view, the aforesaid discussions on WeChat show that:-

(a)  The Fortune Fund and the OBOR Fund were, in reality, set up for the purposes of making financing available to the entities associated with the Defendant, and the Defendant did have an interest in the matter. Otherwise, Mr Eric Zhang would not have approached the Defendant for repayment when the Plaintiffs did not receive payments pursuant to the terms of the Fortune Fund and the OBOR Fund, and the Defendant would not have been willing to discuss the matter with Mr Eric Zhang.

(b)  The Defendant did have an interest in the collateral provided to the Plaintiffs in relation to their rights and entitlements under the Fortune Fund and the OBOR Fund. Otherwise, the Defendant would not have been reluctant to agree that the collateral be sold, and he would not have agreed to liaise with Mr Eric Zhang.

(c)  Ms Xu represented and was accountable to the Defendant regarding the matters relating to the Fortune Fund and the OBOR Fund. Otherwise, she would not have reported the repayment proposal to the Defendant, and Mr Eric Zhang would not have forwarded his exchange with the Defendant to Ms Xu.

(2)  As mentioned, there is a contemporaneous email from Mr Eric Zhang dated 26 February 2019[24], wherein he put on record that in the morning on the same day (ie 26 February 2019), he, together with Tian Yuan Holdings’s Mr Zhang Yiming, Ms Cheng Li, and Mr Liu Qin, had a meeting with the Defendant regarding repayments, and the repayment arrangement would be implemented via a document in the form of a guarantee agreement (which transpired to be the MOU). There is simply no evidential basis to suggest that Mr Eric Zhang manufactured this contemporaneous email for the purpose of supporting the Plaintiffs’ false claims to be brought in the future. I do not believe that this was what happened. I am of the view that as evidenced by the said contemporaneous email, the truth is that:-

(a)  The meeting on 26 February 2019 did take place.

(b)  There, the Defendant indicated his willingness to take up personal obligations, and he, in principle, agreed to execute a document (which turned out to be the MOU), the effect of which would be tantamount to a guarantee agreement.

(3)  Following the meeting on 26 February 2019, on 28 February 2019, Mr Eric Zhang sent a WeChat message to the Defendant chasing payment of an agreed sum of HK$10,000,000[25]. In response, the Defendant indicated that the payment had already been arranged. This exchange contradicts the Defendant’s case that he had no interests in the matters relating to the Fortune Fund and the OBOR Fund, and thus he had no reason to sign the MOU as alleged. It appears clear that the Defendant, at the material times, was willing to ensure that the Plaintiffs would receive a sum that they were promised. He was not an outsider or a mere “introducer” as alleged.

(4)  There are WeChat messages[26] showing that from 27 February 2019 to 1 March 2019, Mr Eric Zhang and Ms Xu liaised with each other regarding the repayments:-

(a)  On 27 February 2019, when Ms Xu indicated that she needed to liaise with Mr Song, Mr Eric Zhang promptly pointed out that the Defendant had already given a confirmation. Had Ms Xu and Mr Song reported to 新弘盛 (as opposed to the Defendant), Mr Eric Zhang would not have said this. Despite what Mr Eric Zhang said, Ms Xu did not suggest that the Defendant was an outsider who had nothing to do with the transaction and nothing to do with 新弘盛. In my view, it is obvious that Ms Xu reported to the Defendant (who was her boss), and at the material times, Ms Xu liaised with the 1^st and 2^nd Plaintiffs’ representatives on behalf of the Defendant regarding the repayment.

(b)  Subsequently, on 1 March 2019, Ms Xu, on her own volition, proposed the payment schedule that eventually became part of the MOU. In my view, Ms Xu would not have proposed the payment schedule to Mr Eric Zhang without seeking the consent and confirmation of the Defendant (who was her “boss”)  in advance. The Defendant must have known and accepted the Payment Schedule under the MOU.

(5)  On 4 March 2019, in a WeChat group that involved Mr Eric Zhang, Ms Xu provided comments on various clauses in the draft MOU, and it was indicated that legal advice from the legal department was sought[27]. Ms Xu further indicated that the Defendant was not around, but she would approach him when he returned. Ms Xu’s message shows that:-

(a)  The contents of the MOU were reviewed by the Defendant’s subordinates (including Ms Xu herself). As such, the Defendant’s decision to sign the MOU was an informed one. It was not a decision that was made hastily on the spot on the occasion of 13 March 2019.

(b)  As of 4 March 2019, Ms Xu knew that the Defendant was expected to sign the MOU, and she would liaise with the Defendant in respect thereof.

(6)  On 11 March 2019 (ie 2 days before the MOU was executed), Eric Zhang set up a WeChat group that involved himself, the Defendant, and Mr Song[28]. As soon as the said WeChat group was set up, Mr Eric Zhang issued a message to the Defendant stating that the purpose of setting up the group was to push forward the work to be done and to report the progress to him. In the said message, Mr Eric Zhang expressly mentioned that one of the work to be done was to execute the MOU. Instead of (i)  asserting that he had no interests in the Fortune Fund and/or the OBOR Fund; and/or (ii)  raising an enquiry as to why he should execute the MOU, the Defendant responded: “good (好)”. Meanwhile, Mr Song responded: “received (收到)”. In this connection, there is neither truth nor substance in Mr Song’s explanation that the Defendant did not mean what he said, and that his response was merely a matter of courtesy. In my view, the truth is that the Defendant knew and accepted that he would sign the MOU, and as such, he did not raise any enquiry at all. This is consistent with Mr Eric Zhang’s earlier email dated 26 February 2019, which put on record that the Defendant, in principle, agreed that the arrangement for making repayment would be implemented via a document in the form of a guarantee agreement. This transpired to be the MOU.

(7)  On 26 March 2019, Mr Eric Zhang sent a WeChat message in a group that involved the Defendant and Mr Song. In this message, Eric Zhang indicated that the value of the shares charged in favour of the Plaintiffs regarding the Fortune Fund had dropped, and as such, further collateral was requested. Instead of suggesting that the Defendant had nothing to do with the matter, Mr Song indicated that there could be a face-to-face meeting the next day to discuss the matter. The said exchange shows that the Defendant had an interest in the matter. Otherwise, Mr Eric Zhang would not have approached the Defendant at all, and Mr Song would not have agreed that a face-to-face meeting be held. In this connection, I do not accept Mr Song’s suggestion that he had told Mr Eric Zhang not to approach the Defendant at all. This suggestion is not evidenced by a shred of contemporaneous record, and is inconsistent with the contemporaneous exchange amongst the parties.

(8)  As evidenced by the WeChat messages exchanged between Mr Song and Ms Xu on 28 April 2019[29], the Plaintiffs requested that a supplemental memorandum (which touched upon a further sum of HK$8 million)  be executed. In her messages, Ms Xu indicated her frustration, and she stressed that “her boss” had already executed a memorandum (ie the MOU)  in Hong Kong. It was abundantly clear that Ms Xu’s “boss” referred to the Defendant. After all, it is not in dispute that the Defendant was the one who signed the MOU in Hong Kong on 13 March 2019. The fact that Ms Xu’s boss referred to the Defendant is further evidenced by the contents of the draft supplemental memorandum attached to the message. This document expressly names the Defendant as well as other parties to the MOU. The aforesaid WeChat messages flatly contradict the suggestions that (i)  Ms Xu did not work for the Defendant, but 新弘盛;(ii)  Ms Xu did not represent the Defendant in regard to the dealings with the 1^st and 2^nd Plaintiffs; and (iii)  the Defendant had not agreed to the terms and conditions of the MOU.

(9)  As evidenced by Mr Eric Zhang’s WeChat message to Ms Cheng Li on 8 June 2019[30] (which was issued 2 days after the 1^st and 2^nd Plaintiffs issued a demand letter to the Defendant in respect of his failure to perform the obligations under the MOU[31]), Mr Song visited Hong Kong and made a repayment proposal. Such a repayment proposal is evidenced by Mr Song’s message to Mr Zhang Yiming and Mr Eric Zhang[32]. This shows that Mr Song was not merely a representative of 新弘盛. Instead, he was a representative of the Defendant. This was the reason why he put forward a repayment proposal when the Defendant was unable to perform the obligations under the MOU.

46. Fourth, apart from the abovementioned WeChat messages, there is other contemporaneous evidence showing that Ms Xu represented and was accountable to the Defendant:-

(1)  As mentioned, under the Yongjian Personal Guarantee, the Defendant agreed to take up the liabilities of Yong Jian under the Yongjian SPA.

(2)  Clause 3.1 of the Yongjian Personal Guarantee[33] provides that the 1^st Plaintiff may serve documents on the Defendant by sending emails to the following email account: “191939951@qq.com” (the “QQ Email Account”).

(3)  The QQ Email Account belonged to Ms Xu. As evidenced by the contemporaneous records[34], there were numerous occasions where Ms Xu used the QQ Email Account to communicate with the representatives of the Plaintiffs.

(4)  Whilst the Defendant and Ms Xu, for no explicable reasons, refused to testify at all, Mr Song, who gave evidence in court, was unable to offer any explanation.

(5)  On the evidence, it is clear that Ms Xu was authorized by the Defendant to handle the matters relating to the Fortune Fund. This was the reason why the Defendant nominated her to be the recipient of the notices that the 1^st Plaintiff might issue pursuant to the terms of the Yongjian Personal Guarantee. It is obvious that Ms Xu was not merely a representative of 新弘盛.

(6)  Moreover, whilst there is a name card showing that Ms Xu was the finance manager of the Fullshare group[35], there are contemporaneous records[36] showing that Ms Xu maintained an email account that ends with “fullsharetech.com” (the “Fullshare Email Account”). As of 7 December 2016, Ms Xu was still using the Fullshare Email Account to communicate with Mr Eric Zhang. The bottom of Ms Xu’s email dated 7 December 2016 contains an indication that she is an employee or representative working for the Fullshare group, and the address of a company that was associated with the Defendant and/or the Fullshare group, namely 南京豐盛產業控股集團有限公司, was expressly stated[37]. At the material times[38], the Defendant, in his own capacity and via a corporate vehicle[39], owned 79.78% of the shareholding in 南京豐盛產業控股集團有限公司[40].

(7)  In the circumstances, it is hardly controvertible that Ms Xu had a position in the Fullshare group, which has been controlled by and/or associated with the Defendant. There is every reason to believe that Ms Xu was associated with and accountable to the Defendant. I cannot see how the Defendant may disassociate himself from Ms Xu.

47. Fifth, I reject the suggestion that there were genuine employment relationships between 新弘盛 and Ms Xu and Mr Song.

(1)  In this connection, the Defendant relied on 2 sets of purported employment agreements entered into between, on the one hand,新弘盛 and, on the other hand, Ms Xu and Mr Song[41].

(2)  However, these purported employment agreements raise more questions than answers. For instance, they are completely silent on the monthly salaries to which Ms Xu and Mr Song were entitled, and no figure was inserted into the relevant clauses that purportedly deals with salaries.

(3)  When Mr Song testified, he explained that there was only a profit-sharing arrangement. However, since the owner of 新弘盛 was his good friend, the arrangement was not recorded in writing.

(4)  Mr Song’s explanation was a bare assertion. It was unconvincing. It was neither corroborated by a shred of evidence nor elaborated meaningfully. I cannot see any commercial reason why the alleged profit-sharing arrangement was not encapsulated in the purported employment agreement nor recorded in writing elsewhere.

(5)  Further, having observed the way in which Mr Song responded to the questions asked of him, I am of the view that Mr Song was an uncooperative witness, who was untruthful to the court. Whenever he appreciated that the questions might cause damage to the Defendant’s case, he did whatever he could to evade the questions.

(6)  It is worth mentioning that Mr Song was one of the five individuals who executed the Zall Share Charges dated 22 March 2017 for the purpose of securing Fortune Fund’s payment obligations owed to the 1^st Plaintiff. As pointed out in a report prepared by Glaucus Research Group[42], Zall Smart Commerce Group Ltd and Fullshare held each other’s shareholding. It appears to me that Mr Song was plainly associated with the Defendant and/or Fullshare, and this was the reason why he was willing to put forward his shares in Zall Smart Commerce Group Ltd as security. Had Mr Song been a mere employee of 新弘盛 that merely played an advisory role in the transaction, he would not have put forward his personal assets. In my view, there is simply no substance in Mr Song’s explanation that he wished to be accountable to the clients of 新弘盛.

48. Sixth, I accept the evidence of Mr Zhang Yiming regarding the meeting with the Defendant on the occasion of 26 February 2019. Mr Zhang Yiming personally attended the meeting on 26 February 2019. He confirmed that at the said meeting, the Defendant indicated that (i) Glorious Fame, Eastern Result, and Yong Jian had failed to perform their contractual obligations; and (ii) he was willing to take up personal obligations for ensuring that the Plaintiffs would be able to recover their entitlements under the Fortune Fund and the OBOR Fund. Mr Zhang Yiming’s evidence is consistent with and corroborated by Mr Eric Zhang’s contemporaneous email dated 26 February 2019. In my view, Mr Zhang Yiming was unshaken during cross-examination. I do not see any good reason to doubt his evidence.

49. Seventh, I am of the view that it would be appropriate to draw an adverse inference from the fact that the Defendant refused to testify in the present trial:-

(1)  Bearing in mind that the forefront of the Defendant’s pleaded case is that he executed the MOU under the Alleged Oral Representation by Mr Eric Zhang and that the Alleged Oral Representation is not evidenced by any contemporaneous documents or records, the Defendant’s absence from the present trial is most conspicuous.

(2)  For reasons best known to the Defendant, his legal representatives were unable to proffer any explanation as to why the Defendant elected not to give evidence, despite he made a witness statement that was filed in these proceedings. In her oral opening submissions, Ms Kang even candidly but bluntly informed the court that she had no submissions to make in regard to the Defendant’s absence.

(3)  In the premises, applying the legal principles discussed in Tullet & Tokyo International Securities Ltd. v. APC Securities Co. Ltd [2001] 2 HKLRD 356, at 365B-J (per Le Pichon JA); South China Securities Ltd v Lam Kwen Yuen [2012] 5 HKLRD 524 at para 7 (per DHCJ Lisa Wong SC, as Lisa Wong J then was); and Triunion (HK)  Cereal & Oil Co Ltd v APAC Investment Holdings Ltd & Ors [2022] HKCFI 3326 at para 60 (per Recorder Victor Dawes SC, the appropriate inference to draw is that had the Defendant testified at trial, the following unfavourable facts would have been exposed:-

(a)  Mr Eric Zhang did not make the Alleged Oral Representation at all.

(b)  The Defendant appreciated that the MOU is a legally-binding document, and he accepted the obligations thereunder.

(c)  Ms Xu was at all material times his representative, and she regarded him as her “boss”. As such, Ms Xu, on the Defendant’s behalf, liaised with the Plaintiffs’ representatives (including Mr Eric Zhang)  regarding the arrangements under the MOU (including Payment Schedule). In particular, Ms Xu commented on the contents of the MOU, and these comments were known to and approved by the Defendant.

(d)  The Defendant had an interest in and exercised control over Eastern Result, Glorious Fame, and Yong Jian. As such, there was a reason why he would execute the MOU.

(4)  In my view, these are the most probable explanations as to why the Defendant refused to testify in the present trial.

50. Eighth, I am also of the view that it would be appropriate to draw an adverse inference from the fact that Ms Xu refused to testify in the present trial:-

(1)  As mentioned, there are contemporaneous WeChat messages showing that (i)  Ms Xu regarded the Defendant as her “boss”; (ii)  Ms Xu accepted that the Defendant had already executed the MOU, and as such it would not be necessary to execute a supplemental memorandum; (iii)  Ms Xu commented on the terms of the draft MOU; and (iv)  Ms Xu was the one who put forward the payment schedule that eventually became part of the MOU.

(2)  It is obvious that Ms Xu would be an important witness in these proceedings, and this was the reason why she made a witness statement.

(3)  However, for reasons best known to herself and/or the Defendant, Ms Xu did not testify in the present trial, and the Defendant’s legal representatives were unable to proffer any explanation.

(4)  Applying the legal principles set out in Tullet & Tokyo International Securities Ltd (supra)  at 365B-J, South China (supra)  at para 7, and Triunion (HK)  Cereal & Oil Co Ltd (supra)  at para 60, I draw an adverse inference that had the Ms Xu testified at trial, the following unfavourable facts would have been exposed:-

(a)  The Defendant was Ms Xu’s boss.

(b)  Ms Xu, on behalf of the Defendant, liaised with the Plaintiffs’ representatives (including Mr Eric Zhang)  in regard to the arrangement under the MOU, and the Defendant knew and agreed that Ms Xu could liaise with the Plaintiffs’ representatives on his behalf. In particular, Ms Xu commented on the contents of the MOU, and these comments were known to and approved by the Defendant.

(c)  Before the MOU was executed, the Defendant had already known and accepted that he would execute the same.

(d)  Ms Xu knew that the Defendant had knowingly accepted the terms and conditions of the MOU.

(e)  Ms Xu knew that the Defendant had an interest in and exercised control over Eastern Result, Glorious Fame, and Yong Jian. This was the reason why the Defendant agreed to execute the MOU.

(5)  In my view, these are the most probable explanations as to why Ms Xu did not testify in the present trial.

51. Ninth, insofar as the question of whether the Defendant had an interest in and exercised control over Eastern Result, Glorious Fame, and Yong Jian is concerned:-

(1)  It is important to note that there is not a shred of evidence showing that Eastern Result, Glorious Fame, and Yong Jian’s sole shareholder/director on records, namely Mr Tao, Mr Yang, and Mr Zhu, were involved in the meeting that took place on 26 February 2019.

(2)  Likewise, there is not a shred of contemporaneous records showing that:-

(a)  Mr Tao, Mr Yang, and Mr Zhu had any discussion with the 1^st and 2^nd Plaintiffs’ representatives (such as Mr Eric Zhang)  regarding the repayment obligations relating to the Fortune Fund and the OBOR Fund.

(b)  Mr Tao, Mr Yang, and Mr Zhu had any discussion with Ms Xu and Mr Song regarding the repayment obligations relating to the Fortune Fund and the OBOR Fund.

(3)  Meanwhile, as pointed out in paragraphs 44 to 45 above, the contemporaneous records show that there were extensive discussions between the 1^st and 2^nd Plaintiffs’ Mr Eric Zhang, on the one hand, and, on the other hand, the Defendant, Ms Xu, and Mr Song. These discussions eventually culminated in the execution of the MOU.

(4)  Had Mr Tao, Mr Yang, and Mr Zhu been the real or beneficial owners of the interests in Eastern Result, Glorious Fame, and Yong Jian as alleged, they would have been involved in the discussions relating to the repayment obligations under the Fortune Fund and the OBOR Fund. Their complete absence from the picture is simply inexplicable.

(5)  In my view, the most probable explanation is that (i)  Mr Tao, Mr Yang, and Mr Zhu were not the real or beneficial owners of the interests in Eastern Result, Glorious Fame, and Yong Jian and (ii)  that real or beneficial owner was the Defendant. This was the reason why the discussions only involved the Defendant as well as Ms Xu and Mr Song (who reported to and were accountable to the Defendant: see paragraphs 44 to 47 above).

(6)  Indeed, the fact that Defendant had an interest in and/or was affiliated with Yong Jian is evidenced by the fact he provided the Yongjian Personal Guarantee to secure the performance of Yong Jian’s obligations under the Yongjian SPA. In this regard, I agree with Mr Suen’s observation that unless the Defendant had an interest, there was no reason why he would have taken upon personal obligations under a personal guarantee.

(7)  For completeness, it should be pointed out that at the trial, it was the Defendant’s case that he was the one who introduced Mr Tao, Mr Yang, and Mr Zhu. In light of this assertion, it appears that the Defendant would be in a position to approach and contact Mr Tao, Mr Yang, and Mr Zhu, and there is no suggestion that these gentlemen were no longer contactable or approachable. However, the Defendant chose not to adduce any evidence from Mr Tao, Mr Yang, and Mr Zhu to prove the assertion that they were the true owners of Eastern Result, Glorious Fame, and Yong Jian. In this connection, the Defendant’s legal representatives were unable to put forward any explanation as to why the Defendant did not adduce evidence from these gentlemen.

(8)  Applying the legal principles set out in Tullet & Tokyo International Securities Ltd (supra)  at 365B-J, South China (supra)  at para 7, and Triunion (HK)  Cereal & Oil Co Ltd (supra)  at para 60, I draw an adverse inference that had Mr Tao, Mr Yang, and Mr Zhu testified at trial, the following unfavourable facts would have been exposed:-

(a)  they were not the real or beneficial owners of the shareholding and interests in Eastern Result, Glorious Fame, and Yong Jian; and

(b)  they were merely the Defendant’s nominees, and the Defendant was the real or beneficial owner of the shareholding and interests in Eastern Result, Glorious Fame, and Yong Jian.

E2. No Intention to Create Legal Relationship?

52. In her oral opening submissions, Ms Kang fairly accepted that the Defendant’s assertion of misrepresentation rises and falls together with the suggestion that the Defendant had no intention to create any legal relationship.

53. This concession was sensible:-

(1) It is the Defendant’s pleaded case that the MOU is, on its face, a legally binding document[43]; however, the Defendant was told by Mr Eric Zhang that the MOU would not be legally binding, and the Alleged Oral Representation was false.

(2) For the reasons elaborated in Section E1 above, I reject the Defendant’s case on misrepresentation. It follows that the Defendant did sign a legal document (ie the MOU), which is valid and binding on him.

54. Indeed, it is trite that a person of full age and understanding is bound by his signature on a document, unless he can show that he is entitled to rely on one of the vitiating factors at common law: see Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334 at paras 84 and 87 (per Ribeiro PJ).

55. Having said that the Defendant’s case on misrepresentation is completely hollow and liable to be rejected, there is simply no basis to contend that the Defendant did not intend to enter into a legal relationship when he signed the MOU.

E3. The MOU is not Supported by Consideration?

56. Ms Kang contended that the MOU is not supported by any consideration moving from the 1^st and 2^nd Plaintiffs.

57. I am not in a position to accept Ms Kang’s contentions.

General Legal Principles

58. It is trite that consideration needs to move from the promisee, but it does not need to move to the promisor: see Chitty on Contracts (35^th Ed) at paras 6-040 and 6-041.

59. It has been suggested where the parties acted on the basis that a valid contract existed, it would take very compelling reasons for the court to hold that the contract in question is invalid in law for want of consideration, and the court will adopt a pragmatic approach. In Chong Cheng Lin Courtney v Cathay Pacific Airways Ltd (CACV 7/2010, 16 November 2010) at paras 50 to 51, A Cheung J (as Cheung CJ then was) stated:-

“50. However, the rigour of the general rule as to consideration has been ameliorated, but not without critics… In City Polytechnic of Hong Kong v Blue Cross (Asia-Pacific) Insurance Ltd [1995] 2 HKLR 103, 109, cited by the trial judge in para 33 of his judgment, Rhind J pointed out ‘a trend towards a pragmatic appraisal of consideration in commercial relationships’. Rhind J attributed the observation of this trend to Lord Wilberforce in New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd [1975] AC 154, 167C-E…

51. The law must not depart from the reality of everyday life for no good reason. Having concluded that the relevant provisions in the 1991 Handbook were indeed intended by the parties to have contractual force, and having observed that throughout both Cathay and its cabin attendants had honoured those provisions on that footing (save where genuine disagreement appeared regarding its scope of application, like what happened in the present case), it would take very compelling reasons for the Court to hold that what were regarded as contractual by the parties actually had no contractual force in law for want of consideration.”

(emphasis added)

Promise to sell the interests in the Fortune Fund and the OBOR Fund

60. At this juncture, it would be helpful to set out clause 2 in Section III of the MOU in its entirety:-

“甲方在此进一步无条件及不可撤回的承诺，如果第二条所称的基金固定回报和基金认购本金未能满足约定时间表中任一时点的支付要求，则所有的基金固定回报及基金认购本金（包括根据时间表尚未到期的）即视为立即到期,甲方需立即无条件的向乙方、丙方及／或丁方以购买基金份额的方式支付所有尚未支付的基金固定回报及基金认购本金。”

“Party A further unconditionally and irrevocably undertakes that if at any point in time the Fund Fixed Return and the Fund Principal Amounts referred to in Section II are not repaid in accordance with the agreed payment schedule, the entire Fund Fixed Return and the Fund Principal Amount (including those which were otherwise not due under the payment schedule) would become immediately due and payable. Party A shall immediately and unconditionally repay all unpaid Fund Fixed Return and Fund Principal Amounts by purchasing fund interest from Party B, Party C, and/or Party D.”[44]

(emphasis added)

61. As defined in the preamble of the MOU:-

(1)  Party A (甲方)  is the Defendant;

(2)  Party B (乙方)  is 香港京元万隆投资管理有限公司, a representative or agent of the 3^rd Plaintiff;

(3)  Party C (丙方)  is the 1^st Plaintiff; and

(4)  Party D (丁方)  is the 2^nd Plaintiff.

62. As regards the phrase “Fund Fixed Return (基金固定回报)” and the phrase “Fund Principal Amount (基金认购本金)”, it is pertinent to refer to clauses 1 and 2 in Section I and clause 1 in Section II of the MOU:-

(1)  Under clauses 1 and 2 in Section I:-

(a)  The subscription amounts of HK$680,000,000 and HK$340,000,000 paid by the 1^st Plaintiff and the 3^rd Plaintiff in relation to the Fortune Fund are defined as the “Fortune Fund Principal Amounts (财富基金认购本金)”.

(b)  The subscription amount of HK$520,000,000 paid by the 2^nd Plaintiff in relation to the OBOR Fund is defined as the “OBOR Fund Principal Amount (足球基金认购本金)”.

(c)  The Fortune Fund Principal Amounts (财富基金认购本金)  and the OBOR Fund Principal Amount (足球基金认购本金)  are collectively defined as the “Fund Principal Amounts (基金认购本金)”.

(2)  Under clause 1.4 in Section II, the aggregate sum of HK$106,908,071.24 (which comprises of the unpaid fixed return and occupancy fees referred to in clauses 1.1 to 1.4)  is defined as “Fund Fixed Return (基金固定回报)”. Clause 1.4 then goes on to set out the Payment Schedule in respect thereof.

63. In paragraph 31 of her opening submissions, Ms Kang stated that the effect of clause 2 in Section III of the MOU is as follows:-

“…[The Defendant] undertakes that if the [Fund Fixed Returns] and [Fund Principal Amount] referred to in Section II cannot satisfy the demand required at any point of time in the agreed payment schedule, then all the [Fund Fixed Return] and [Fund Principal Amount] (including those not due according to the schedule) will be deemed to be due immediately; [the Defendant] has to immediately without condition pay the [Fund Fixed Return] and [Fund Principal Amount] which have not been paid by way of purchasing the shares in the Funds.” (emphasis added)

64. I have no quarrel with Ms Kang’s views.

65. The effect of clause 2 in Section III of the MOU is such that if the Payment Schedule under Section II is not adhered to, the Defendant will immediately be liable to pay the entirety of the outstanding part of the Fund Fixed Return and the Fund Principal Amount by way of purchasing the Plaintiffs’ interests in the Fortune Fund and the OBOR Fund.

66. This means that whilst the Defendant will have to pay the amounts in respect of the outstanding part of the Fund Fixed Return and the Fund Principal Amount to the Plaintiffs, meanwhile, the Plaintiffs will have to transfer their corresponding interests in the Fortune Fund and the OBOR Fund in favour of the Defendant, and the corresponding interests to be transferred in favour of the Defendant should be in proportionate to the outstanding amount that the Defendant pays pursuant to clause 2 in Section III.

67. It is important to stress that it would be impossible for the Defendant to purchase the Plaintiffs’ interests in the Fortune Fund and the OBOR Fund if the Plaintiffs were not under a parallel obligation to sell or transfer the same in favour of the Defendant.

68. The Plaintiffs’ parallel obligations to sell or transfer are implicit, but vital to the operation of clause 2 in Section III.

69. In the premises, it cannot be said that the MOU is not supported by consideration moving from the Plaintiffs. It is clear that under clause 2 in Section III, the Plaintiffs are under a legally enforceable obligation to sell or transfer interests in the Fortune Fund and the OBOR Fund that are proportionate to the outstanding amount in respect of the Fund Fixed Return and the Fund Principal Amount.

70. For completeness, I do not accept the pleadings point raised by Ms Kang:-

(1)  Ms Kang complained that in the statement of claim, the Plaintiffs did not expressly plead that they relied on the consideration in respect of the obligation to sell or transfer interests in the Fortune Fund and the OBOR Fund.

(2)  In my view, there is no substance in this complaint.

(3)  In paragraph 12(3)  of the statement of claim, the Plaintiffs pleaded the Defendant’s obligations to cause repayment by “purchasing the Plaintiffs’ interests in the Fortune Fund and the OBOR Fund as required”.

(4)  More importantly, in paragraph 11 of the statement of claim, the Plaintiffs expressly pleaded the material contents of the MOU in their entirety. In this connection, the Chinese words in clause 2 in Section III (the effect of which is to require the Plaintiffs to transfer their corresponding interests in the Fortune Fund and the OBOR Fund in favour of the Defendant)  are set out verbatim.

(5)  It is trite that a party is only required plead the material facts, and he is at liberty to present in argument any legal consequence of which the facts permit: see Hong Kong Hua Qiao Co Ltd v Cham Ka Tai [2015] 4 HKC 167 at para 20 (per Kwan JA, as Kwan JA then was); and In re Vandervell’s Trust (No 2) [1974] 1 Ch 269 at 321H -322A.

(6)  Having said that the relevant contractual provisions (ie clause 2 in section III of the MOU)  have been pleaded in its entirety, there is plainly no reason why the 1^st and 2^nd Plaintiffs may not address the court in regard to the legal effect thereof. This is simply a matter of contractual construction. The Defendant was not even caught by surprise at all.

Forbearance to Sue

71. Mr Suen further submitted that the 1^st and 2^nd Plaintiffs had provided consideration by agreeing to forbear from suing.

72. It is trite that a creditor’s promise not to enforce a valid claim is normally good consideration for a promise given in return: see Chitty on Contracts (35^th Ed) at para 6-049.

73. Forbearance from suing can be implied. In this connection, the learned authors of Chitty on Contracts (35^th Ed) at paras 6-056 and 6-059 stated:-

“6-056 Actual forbearance may be consideration A creditor who, without making any express promise, simply forbears from enforcing a debt or other claim may be held to have impliedly promised to forbear. For example, the acceptance of a cheque in payment of a debt may be evidence of a promise not to sue the debtor so long as the cheque is not dishonoured, or at least for a reasonable time. Where the claim is of such a kind that a promise to forbear (or the performance of it) would constitute consideration for a counter-promise, an actual forbearance may also constitute consideration even though the creditor has not made any express or implied promise to forbear. In Alliance Bank v Broom[45] the defendant owed GBP 22,000 to his bank, who pressed him to give security. He promised to do so but the bank made no counter-promise. It was held that there was consideration for the defendant’s promise as the bank had given, and the defendant had received, “some degree of forbearance”[46]”.

“6-059 Express or implied request of debt necessary The crucial question, therefore, is whether the creditor has forborne “on the strength of” the debtor’s promise. They will clearly have done so where the debtor has expressly requested the forbearance. But such an express request is not necessary. In Alliance Bank v Broom[47] the bank’s forbearance was held to constitute consideration even though the bank had not expressly requested it. Lord Macnaghten later explained the case on the ground that the debtor had impliedly requested forbearance[48]…”

(emphasis added)

74. In the premises, if a debtor impliedly requested forbearance, the creditor’s actual forbearance from enforcing the debt or claims can constitute valid consideration.

75. As pointed out by Mr Suen in his closing submissions, as of the time when the MOU was executed, the 1^st and 2^nd Plaintiffs enjoyed a series of enforceable contractual rights against the Fortune Fund, the OBOR Fund, Eastern Result, Glorious Fame, Yong Jian, the 5 individuals (including Mr Song) who executed the Zall Share Charges, and the Defendant. The 1^st and 2^nd Plaintiffs were plainly in a position to take actions against these entities and individuals. The enforceable rights enjoyed by the 1^st and 2^nd Plaintiffs are set out in the following table:-

Instruments The rights/claims of the 1^st and 2^nd Plaintiffs

Clause 17.4(a)  of the Amended and Restated Limited Partnership Agreement relating to the Fortune Fund dated 23 December 2016 When the term of the Fortune Fund expired on 23 December 2018, the general partner must wind-up the affairs of the partnership and liquidate the assets.

Clause 2.1 of the Eastern Result Deed of Undertaking dated 23 December 2016 Eastern Result undertook to pay the “shortfall amount” under the Fortune Fund in favour of the 1^st Plaintiff.

Clause 2.1 of the Zall Share Charges executed by 5 individuals[49] on 22 March 2017 The 5 individuals (including Mr Song)  charged their shares in Zall Smart Commerce Group Ltd to secure the performance of all obligations and liabilities due, owing, incurred, or payable by way of distribution from the Fortune Fund to the 1^st Plaintiff.

Clause 1.1 of the Yongjian Personal Guarantee dated 9 November 2018 The Defendant guaranteed the immediate payment of any amount due and owing from Yong Jian under the Yongjian SPA entered into between the 1^st Plaintiff and Yong Jian[50], whereby Yong Jian agreed to acquire the 1^st Plaintiff’s interest in the Fortune Fund for a total consideration of around HK$700 million.

Supplement I of the OBOR Fund Private Placement Memorandum dated 28 May 2017
Written Resolution of the Sole Director of OBOR Fund dated 5 July 2017 Glorious Fame, being class C shareholder, was required to make mandatory subscription in the sum of 50% of the fixed returns payable to Yong Jian (being class A shareholder)  and the 2^nd Plaintiff (being class B shareholder).
The amount of mandatory subscription for the first fiscal year was amended to the sum of 100% of the fixed returns payable to Yong Jian and the 2^nd Plaintiff.

Clause 2.1 of the Security Deed (by Glorious Fame)  dated 30 June 2017 Glorious Fame charged its class C shares in the OBOR Fund in favour of the 2^nd Plaintiff to secure the due and punctual payment of the fixed returns and full redemption amount.

Clause 2.1 of the Security Deed (by Yong Jian)  dated 30 June 2017 Yong Jian charged its class A shares in the OBOR Fund in favour of the 2^nd Plaintiff to secure the due and punctual payment of the fixed returns and full redemption amount.

76. Before the MOU was executed, the 1^st and 2^nd Plaintiffs (and/or their representatives) had issued a series of demand letters and/or notices to some of the abovementioned entities and individuals. For instance:-

(1)  By letter dated 27 December 2018[51], the 1^st Plaintiff demanded Huarong International Capital Ltd (ie the general partner)  to wind-up the Fortune Fund and liquidate the assets thereof

(2)  By letter dated 24 December 2018[52], the 1^st Plaintiff demanded Eastern Result to pay and discharge the secured liabilities under the Eastern Result Deed of Undertaking.

(3)  On 20 February 2019, the 1^st Plaintiff issued a series of demand letters[53] to the 5 individuals who executed the Zall Share Charges.

(4)  On 21 February 2019, Mr Eric Zhang (who was obviously nominated by the 1^st and 2^nd Plaintiffs to act as a director of the OBOR Fund)  issued a letter on behalf of the OBOR Fund[54], demanding Glorious Fame to make mandatory subscription and to pay an outstanding amount of HK$43,353,424.66.

77. In the circumstances, there is no question that the 1^st and 2^nd Plaintiffs were aware of their enforceable rights against the abovementioned entities and individuals, and it appears that before the MOU was executed, the 1^st and 2^nd Plaintiffs envisaged that they would take steps to enforce some of these enforceable contractual rights.

78. However, as of the time when the MOU was executed, the 1^st and 2^nd Plaintiffs did not take any step or action to enforce their contractual rights.

79. Why was this the case?

80. In my view, there is no substance in Ms Kang’s suggestion that the 1^st and 2^nd Plaintiffs simply did not wish to ruin their relationship with Huarong International Fortune Innovation Ltd Partnership and/or its related entities. I accept that if possible, the 1^st and 2^nd Plaintiffs’ management would wish to maintain a harmonious relationship with their commercial counterparts. However, in light of the stakes involved, I do not believe that the 1^st and 2^nd Plaintiffs’ management would forego the 1^st and 2^nd Plaintiffs’ financial interests just for the sake of maintaining a good relationship with their commercial counterparts. This suggestion does not make commercial sense at all.

81. As evidenced by the contemporaneous WeChat records and emails, what happened was as follows:-

(1)  The starting point is the WeChat messages exchanged amongst Mr Eric Zhang, the Defendant, and Ms Xu on 21 February 2019[55] (which is canvassed in paragraph 45(1)  above). As pointed out by Mr Eric Zhang in his WeChat message, the Defendant was reluctant to accept the repayment proposal coming from the Plaintiffs’ side (which was conveyed to him via Ms Xu). This was because the Defendant did not want to sell the collateral that was provided to the Plaintiffs. In the circumstances, there was a meeting between Mr Eric Zhang and the Defendant[56].

(2)  Subsequently, another meeting that involved the Defendant and Tian Yuan Holdings’s Mr Zhang Yiming, Ms Cheng Li, Mr Liu Qin, and Mr Eric Zhang took place on 26 February 2019. The consensus that was reached at this meeting was elaborated in Mr Zhang Yiming’s testimony (see paragraph 48 above)  and evidenced by Mr Eric Zhang’s email dated 26 February 2019[57] (see paragraph 45(2)  above). For the reasons elaborated above, I found that:-

(a)  The meeting on 26 February 2019 did take place.

(b)  There, the Defendant indicated his willingness to take up personal obligations, and he, in principle, agreed to execute a document, the effect of which would be tantamount to a guarantee agreement.

(3)  It is also noteworthy that as evidenced by Ms Xu’s WeChat message to Mr Eric Zhang on 1 March 2019, the Defendant did not want the shares held by the OBOR Fund be sold[58], and the Defendant’s side was willing to sell their own shares in order to repay the outstanding interest.

(4)  Against this background, Mr Eric Zhang and Ms Xu liaised with each other in regard to the terms of the MOU. As pointed out in paragraph 45(5)  above, the contents of the draft MOU had been reviewed by the Defendant’s side, and on 4 March 2019, Ms Xu did provide comments on various clauses in the draft MOU.

(5)  Eventually, on 13 March 2019, the Defendant executed the MOU in Hong Kong.

82. On the evidence:-

(1) It is clear to me that the reason why the Defendant was willing to take up the personal obligations under the MOU was that he did not want the Plaintiffs to take enforcement action as the same would have an impact on the collateral in question. Bearing in mind that the Defendant was a substantial shareholder of Fullshare, which had significant cross-shareholding with Zall Smart Commerce Group Ltd[59] and that the Plaintiffs’ intended action might give rise to undesirable consequences on the prices of the shares, the Defendant’s concern was understandable.

(2) It also appears to me that the reason why the Plaintiffs did not take immediate steps to exercise their contractual rights was that the Defendant was willing to take up personal obligations for securing repayments in their favour pursuant to the terms of the MOU. This was the most likely reason why the Plaintiffs were willing to accept a deferred timetable for repayment (ie the Repayment Schedule under Section II of the MOU).

83. In light of the commercial reality, I am of the view that (i) there must have been an implied request from the Defendant that the Plaintiffs should forbear from taking enforcement actions in accordance with its strict contractual rights; and (ii) pursuant to the Defendant’s implied request, the Plaintiffs agreed to forbear from taking immediate enforcement action based on the contractual rights under the contractual instruments set out in paragraph 75 above.

84. This is the only conclusion that makes commercial sense. Had the Plaintiffs insisted that they be entitled to take immediate enforcement actions, the Defendant would not have agreed to take up personal obligations under the MOU. By the same token, had the Defendant refused to take up personal obligations under the MOU, it was more likely than not that the Plaintiffs would have taken steps to enforce their contractual rights earlier in order to protect their commercial and/or financial interests.

85. For completeness, it should be pointed out that whilst Ms Kang disputed the validity of the Plaintiffs’ intended claims, it is trite that the question of whether there is good consideration does not depend on the existence of a proven valid legal claim. As DHCJ Kent Yee pointed out in Yao Guoliang v Liu Yang (HCA 2269/2015, 3 October 2017) at paras 51 to 55 (citing Swiss Singapore Overseas Enterprises Pte Ltd v China CITIC Bank Corp Ltd [2014] 6 HKC 55 at para 96 (per Kwan JA, as Kwan VP then was)), it suffices if it can be shown that there has been in existence a bona fide dispute or claim, which the litigant agreed to forbear from enforcing or did actually forbear from enforcing.

86. On the strength of the terms and provisions in the contractual instruments set out in paragraph 75 above, I am satisfied that the Plaintiffs’ intended claims against the general partner of the Fortune Fund, Eastern Result, the Defendant, the 5 individuals who executed the Zall Share Charges, Glorious Fame, and Yong Jian were bona fide. As a matter of fact, there was no contemporaneous indication from these entities and individuals that the Plaintiffs’ intended claims pursuant to the aforesaid contractual instruments were disputed. On the evidence, I am of the view that the Plaintiffs genuinely and bona fide took the view that their intended claims were “iron cast”, and the aforesaid entities and individuals must have accepted that this was the case. Otherwise, they would have indicated their grounds for disputing the Plaintiffs’ claims. This did not happen.

87. In the premises, I accept Mr Suen’s submissions. I am of the view that:-

(1) There was an implied but clear request for forbearance from the Defendant.

(2) In light of the implied but clear request from the Defendant, there was actual forbearance on the part of the Plaintiffs.

88. Last but not least, I do not accept Ms Kang’s submissions that the Plaintiffs’ pleas on forbearance from suing are inadequate. In paragraph 10(2) of the statement of claim, the Plaintiffs did expressly plead that they provided consideration by agreeing to “forbear and/or actually forbearing from suing or otherwise taking any legal action or step to recover the said outstanding sums prior to the revised [Payment Schedule] as stipulated in the [MOU]”. As the contractual remedies available to the Plaintiffs are clearly set out in the contractual instruments referred to in paragraph 75 above and canvassed in the pleadings of the parties, I do not believe that the Defendant was caught by surprise. In my view, he must know the case that he was required to meet.

89. For all the above reasons, I reject the Defendant’s contention that the MOU is unenforceable for want of consideration.

E4. Quantum (1): The 2^nd Plaintiff’s capital contribution of HK$520,000,000 in respect of the OBOR Fund

90. Ms Kang submitted that as a matter of contractual interpretation, the 2^nd Plaintiff is not entitled to claim its capital contribution of HK$520,000,000 in respect of the OBOR Fund against the Defendant pursuant to clause 2 in Section III of the MOU. She pointed out that the Repayment Schedule under clause 2 in Section II of the MOU does not cover the said sum of HK$520,000,000 at all. As such, the Defendant could not be liable for this sum under clause 2 in Section III when the Payment Schedule under Section II is not adhered to[60].

91. I disagree with Ms Kang’s submissions.

92. The fact that the repayment of the 2^nd Plaintiff’s capital contribution of HK$520,000,000 in respect of the OBOR Fund is not covered by the Payment Schedule under clause 2 in Section II does not avail the Defendant at all.

93. As Mr Suen pertinently pointed out, the terms of the OBOR Fund only expired on 7 June 2019. Thus, as of the time when the MOU was executed on 13 March 2019, the terms of the OBOR Fund had not yet expired, and the 2^nd Plaintiff was not yet entitled to repayment. This was the reason why the Payment Schedule under clause 2 in Section II (which only covers the period until 31 May 2019) does not cover repayment of the said sum of HK$520,000,000[61]. In my view, the parties simply had no intention to “move forward” the date for making the payment in respect of the sum of HK$520,000,000. It does not follow that the Defendant does not agree to take up personal obligations in respect thereof in the event that the Payment Schedule under clause 2 in Section II is not adhered to.

94. In order to ascertain whether the Defendant is liable for the said sum of HK$520,000,000, the focus is on the meaning and definitions of the relevant phrases under clause 2 in Section III of the MOU.

95. As pointed out above in paragraphs 60 and 63 to 65 above, it is not in dispute that the effect of clause 2 in Section III is as follows:

(1) if the Payment Schedule under Section II is not adhered to, all the “Fund Fixed Return(基金固定回报)” and all the “Fund Principal Amounts (基金认购本金)” (including those that are not yet due under the Payment Schedule) would be immediately payable; and

(2) the Defendant should immediately and unconditionally pay all unpaid “Fund Fixed Return (基金固定回报)” and all unpaid “Fund Principal Amounts(基金认购本金)” by purchasing the Plaintiffs’ interests in the Fortune Fund and OBOR Fund.

96. The crux of the parties’ dispute is the meaning of the phrase “Fund Principal Amounts (基金认购本金)”.

97. The answer is clear.

98. The definition of the phrase “Fund Principal Amounts (基金认购本金)” expressly subsumes the sum of HK$520,000,000 in question. As pointed out in paragraph 62 above, under clause 1 and 2 in Section I, (i) the 2^nd Plaintiff’s contribution of HK$520,000,000 in relation to the OBOR Fund[62] and (ii) the 1^st and 3^rd Plaintiffs’ respective contributions of HK$680,000,000 and HK$340,000,000 in relation to the Fortune Fund[63] are collectively defined as “ Fund Principal Amounts (基金认购本金)”.

99. In the premises, there is no room for the Defendant to suggest that the phrase “Fund Principal Amounts (基金认购本金)” under clause 2 in Section III excludes the 2^nd Plaintiff’s contribution of HK$520,000,000. This suggestion flies in the face of definition set out in clauses 1 and 2 in Section I.

100. For completeness, it should be pointed out that none of the provisions in the MOU remotely suggests that the phrase “Fund Principal Amounts (基金认购本金)” is defined with reference to the Payment Schedule. On the contrary, clause 2 in Section III expressly provides that so long as the Payment Schedule is not adhered to, all the “Fund Principal Amounts (基金认购本金)” will become immediately due, irrespective of whether the sums in question are due under Payment Schedule. In my view, this is an indication that the Defendant’s obligation to pay the entirety of the “Fund Principal Amounts (基金认购本金)” should not be construed with reference to the payment amounts set out in the Payment Schedule.

101. For all the above reasons, I conclude that the phrase “Fund Principal Amounts (基金认购本金)” under clause 2 in Section III of the MOU subsumes and covers the 2^nd Plaintiff’s capital contribution of HK$520,000,000 in respect of the OBOR Fund. Accordingly, the Defendant (who signed the MOU and accepted the obligations thereunder) is liable to the 2^nd Plaintiff for this amount.

E5. Quantum (2): The 2^nd Plaintiff’s Entitlement to OBOR First Half 2019 Return of HK$22,053,698.63

102. It is not in dispute that the MOU is silent on the OBOR First Half 2019 Return of HK$22,053,698.63.

103. Whilst this sum could have been included within the definition of the phrase “Fund Fixed Return (基金认购本金)” under clause 1.4 in Section II of the MOU, it has been omitted.

104. In the circumstances, the 2^nd Plaintiff suggests that the MOU contains the alleged Implied Term to the effect that the Defendant is liable for the said sum of HK$22,053,698.63. In this connection, Mr Suen, in his submissions, contended that the omission must be an oversight, and it makes no commercial sense for the Defendant to take up liability in respect of a majority part of the sums owed to the Plaintiffs, but not the rest.

105. In Nazir Ali v Petroleum Company of Trinidad and Tobago [2017] UKPC 2 at para 7 (which was cited with approval by the Court of Appeal in Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd [2019] HKCA 261 at para 32), Lord Hughes stated:-

“It is enough to reiterate that the process of implying a term into the contract must not become the re-writing of the contract in a way which the court believes to be reasonable, or which the court prefers to the agreement which the parties have negotiated. A term is to be implied only if it is necessary to make the contract work, and this it may be if (i) it is so obvious that it goes without saying (and the parties, although they did not, ex hypothesi, apply their minds to the point, would have rounded on the notional officious bystander to say, and with one voice, “Oh, of course”) and/or (ii) it is necessary to give the contract business efficacy. Usually the outcome of either approach will be the same. The concept of necessity must not be watered down. Necessity is not established by showing that the contract would be improved by the addition. The fairness or equity of a suggested implied term is an essential but not a sufficient pre-condition for inclusion. And if there is an express term in the contract which is inconsistent with the proposed implied term, the latter cannot, by definition, meet these tests, since the parties have demonstrated that it is not their agreement.” (emphasis added)

106. In Chitty on Contracts (35^th Ed) at para 17-02, the learned authors stated:-

“Given the strict nature of the test established by the Supreme Court it is now no easy task to persuade a court to imply a term into a contract, particularly a written contract of some length which has been negotiated with the benefit of legal advice, and a number of cases can now be found in which the courts have applied the approach of the Supreme Court in Marks & Spencer and, on the that basis, have declined to imply a term into the contract between the parties. If the contract does not expressly provide for what is to happen when a particular event occurs or in a particular situation, the most usual inference to draw is that nothing is to happen and no term is to be implied.” (emphasis added)

107. It has been suggested that where a contract expressly mentions some things, it is often to be inferred that other things of the same category that are not expressly mentioned were deliberately omitted, and similar principles apply to the express inclusion of obligations dealing with a particular area of application: see Lewison on The Interpretation of Contracts (8^th Ed) at para 7.53 (at p.468).

108. It is not in dispute that the 1^st and 2^nd Plaintiffs’ representatives (including Mr Eric Zhang, who had the benefit of being advised by Tian Yuan Holdings’s in-house legal advisors[64]) and the Defendant’s representatives (including Ms Xu, who had the benefit of receiving legal advice)[65] extensively liaised with each other before the contents of the MOU were finalized. It is obvious that the parties did not conduct their contractual dealing in a casual manner.

109. In the circumstances, I find it difficult to accept the 1^st and 2^nd Plaintiffs’ suggestion that the OBOR First Half 2019 Return of HK$22,053,698.63 was omitted due to an inadvertent oversight.

110. Had the omission been an inadvertent oversight, there would have been some indication in the parties’ contemporaneous exchange showing that this was the case, and one would expect the 1^st and 2^nd Plaintiffs to point out the omission astutely and promptly. This did not happen.

111. As pointed out by Kang, the Plaintiffs’ pre-action demand letters to the Defendant dated 6 June 2019 and 24 July 2019[66] repeatedly omitted the OBOR First Half 2019 Return of HK$22,053,698.63.

112. In this connection, Mr Suen pointed out that the demands under the first letter dated 6 June 2019 were qualified by the standard phrase “including but not limited to (包括但不限於)”.

113. However, the second demand letter dated 24 July 2019 (which was issued by the 1^st and 2^nd Plaintiffs’ former solicitors) did not contain a similar standard phrase. In this letter[67], the Plaintiffs’ former solicitors stated that they were “instructed to demand the outstanding amounts [the Defendant] undertook in the MOU to be paid…”, but the “outstanding amounts” in question did not include the OBOR First Half 2019 Return of HK$22,053,698.63 at all.

114. The reality was that as of 24 July 2019, neither the 1^st and 2^nd Plaintiffs’ management nor the 1^st and 2^nd Plaintiffs’ former legal representatives took the view that the OBOR First Half 2019 Return was part of the contractual bargain between the parties under the MOU. This was the reason why the same was omitted from the Plaintiffs’ second demand letter dated 24 July 2019.

115. It is not obvious to me that the MOU intends that the OBOR First Half 2019 Return be covered. This was not even obvious to the 1^st and 2^nd Plaintiffs’ management and former solicitors. Had it been obvious that the MOU should cover the OBOR First Half 2019 Return, the same would have been mentioned in the aforesaid demand letters.

116. There is no room for the court to rewrite the parties’ contractual bargain. I cannot insert the Implied Term asserted by the Plaintiffs simply because it may improve the transaction under the MOU: see Nazir Ali (supra) at para 7.

117. It should also be pointed out the MOU is workable without the alleged Implied Term. The commercial reality was such that whilst the Plaintiffs obtained the rights to take enforcement action against the Defendant personally in the event that the Payment Schedule under Section II of the MOU is not adhered to, the Defendant obtained a promise from the Plaintiffs to forbear from taking steps to enforce their contractual rights before the deadlines under the Payment Schedule expire. I cannot see how it can be said that the contractual bargain between the parties is only workable if the alleged Implied Term asserted by the Plaintiffs is inserted.

118. For all the above reasons, I conclude that the Implied Term asserted by the 1^st and 2^nd Plaintiffs does not exist, and the Defendant is not liable for the sum of HK$22,053,698.63 (ie the OBOR First Half 2019 Return).

E6. Conclusion

119. To sum up, I conclude that:-

(1)  The Defendant knowingly signed the MOU and knowingly accepted the personal obligations thereunder.

(2)  The MOU is supported by valid considerations moving from the Plaintiffs. It is a valid and legally enforceable agreement that is binding on the Defendant.

(3)  The Defendant’s obligations under the MOU cover the 2^nd Plaintiff’s capital contribution of HK$520,000,000 in respect of the OBOR Fund. However, the OBOR First Half 2019 Return of HK$22,053,698.63 is not covered.

120. It is not in dispute that the 1^st and 2^nd Plaintiffs only received an aggregate sum of HK$203,396,374 from 13 November 2018 to 27 June 2019[68].

121. It is, thus, hardly controvertible that:-

(1) The Payment Schedule under clauses 1 and 2 in Section II of the MOU was not adhered to.

(2) The Defendant failed to perform his obligations under clause 2 in Section III of the MOU. He did not pay the unpaid “Fund Fixed Return (基金认购本金)” and the unpaid “Fund Principal Amounts (基金固定回报)” for purchasing the Plaintiffs’ interests in the Fortune Fund and OBOR Fund.

122. In the premises, it is clear that there was breach of contract on the part of the Defendant[69].

123. Pursuant to clause 2 in Section III of the MOU, the Defendant is liable to the 1^st Plaintiff for the following sums:-

“Fortune Fund Principal Amounts (财富基金认购本金)”[70] HK$680,000,000

The fixed return owed to the 1^st Plaintiff in relation to the Fortune Fund for the 2^nd half of 2018 [71] HK$27,200,000

Occupancy Fee owed to the 1^st Plaintiff in relation to its capital contribution into the Fortune Fund for the period from 24 December 2018 to 31 March 2019.[72] HK$ 39,965,742.47

“Capital occupancy fees” owed to the 1^st Plaintiff in relation to its capital contribution into the Fortune Fund for the period from 1 April 2019 to 31 May 2019[73] HK$ 24,876,635.62

Total: HK$772,042,378

124. The Defendant is also liable to the 2^nd Plaintiff for the following sums:-

OBOR Fund Principal Amounts (足球基金认购本金)[74] HK$520,000,000

OBOR Second Half 2018 Return[75] HK$23,592,328.77

Total: HK$543,592,329

125. However, the 1^st and 2^nd Plaintiffs should give credit in regard to:-

(1)  the aggregate sum of HK$203,396,374 that was received from 13 November 2018 to 27 June 2019, of which (i)  HK$174,004,045 was paid to the 1^st Plaintiff; and (ii)  HK$29,392,329 was paid to the 2^nd Plaintiff[76];

(2)  the sum of HK$139,179,331 that was received as a result of the 1^st Plaintiff taking actions to enforce the Zall Shares Charges against the 5 individuals[77]; and

(3)  the sum of HK$74,687,862 that the 2^nd Plaintiff received from the OBOR Fund as a result of its action of selling the shares that it held in Zall Smart Commerce Group Ltd[78].

126. In the premises:-

(1) The Defendant is liable to the 1^st Plaintiff for an aggregate sum of HK$458,859,002 (ie HK$772,042,378 less HK$174,004,045 less HK$139,179,331).

(2) The Defendant is liable to the 2^nd Plaintiff for an aggregate sum of HK$439,512,138 (ie HK$543,592,329 less HK$74,687,862 less HK$29,392,329).

F. The 3^rd Plaintiff’s Claims against the Defendant

127. The 3^rd Plaintiff has not prosecuted its claims against the Defendant in these proceedings, and it was absent from the present trial.

128. In Hong Kong Civil Procedure (2025) at para 35/1/1, the learned authors, citing Chan Yuet Ying v Wong Choi Hung (HCA 3800/2003 and HCA 2893/2004, 12 January 2016) at paras 102 to 103 (per DHCJ Marlene Ng, as she then was), pointed out that “if the plaintiff does not appear at the trial, his claim shall be dismissed”.

129. I do not see any reason why the 3^rd Plaintiff did not prosecute its claims in these proceedings. I accept Ms Kang’s submissions that the appropriate course to take is to dismiss the 3^rd Plaintiff’s claims against the Defendant.

G. Disposition

G1. The 1^st and 2^nd Plaintiffs’ Claims against the Defendant

130. I order the Defendant to pay (i) the 1^st Plaintiff the sum of HK$458,859,002; and (ii) the 2^nd Plaintiff the sum of HK$439,512,138.

131. As regards interest, I accept Mr Suen’s submissions that whilst interest should accrue from the day when the cause of action arose (see Kyocera Corporation v W Haking Enterprises Ltd & Anor [2021] 2 HKC 1 at paras 57.1 (per Yuen JA), it would be appropriate, convenient, and fair to order that interest should accrue from the date of the Plaintiffs’ first demand letter, ie 6 June 2019[79]. As of the date of this demand letter, the Defendant should have known that the Plaintiff would seek to hold him liable for the sums under the MOU. In my view, in light of the issues raised by the Defendant, the dispute between the parties was not straightforward at all, and the Plaintiffs were not guilty of inordinate delay in prosecuting these proceedings. I am not of the view that there is any sound reason why interest should accrue on a later date.

132. In the premises, the 1^st and 2^nd Plaintiffs are, in principle, entitled to interest at 1% above the prime rate from 6 June 2019 (ie the date of the Plaintiffs’ first demand letter) to the date of this judgment, and thereafter interest at judgment rate until payment in full.

133. However, there are complications in regard to the calculation of the pre-judgment interest to which the Plaintiffs are entitled. As demonstrated in annexure 3 of Mr Suen’s main closing submissions and annexure 4 of Mr Suen’s supplemental submissions on quantum (which replaced annexure 3 of his main closing submissions), the shares in Zall Smart Commerce Group Ltd were sold in tranches on various dates from 15 May 2019 to 23 February 2023. As such, it would be erroneous to calculate pre-judgment interest based on the sums of HK$458,859,002 and HK$439,512,138. These figures were the indebtedness owed by the Defendant after the last tranche of the shares in Zall Smart Commerce Group Ltd were sold on 23 February 2023, and they do not represent the principal indebtedness owed by the Defendant prior to this date. Having said that the shares in Zall Smart Commerce Group Ltd were sold in tranches, the principal indebtedness varied on different dates.

134. Another complication is that the parties have a dispute as to whether the proceeds arising from the sale of the shares in Zall Smart Commerce Group Ltd and the payments that were received by the 1^st and 2^nd Plaintiffs should be treated as repayment of the underlying indebtedness (which is Defendant’s contention) or payment of the outstanding interest (which is the 1^st and 2^nd Plaintiffs’ contention). On this point, Mr Suen referred to Re Centre Rise Rise Trading Ltd (HCCW 142/2007, 22 July 2008) at para 26. There, Kwan J (as Kwan VP then was) pointed out that:-

“As the Company did not exercise its right to appropriate when the repayment was made, the right to appropriate had devolved upon the Bank as the creditor. The Bank may exercise such right up to the very last moment or until something happened which made it inequitable for the Bank to exercise the right. Where there is no appropriation by either the debtor or creditor in the case of a debt bearing interest, the law will, unless a contrary intention appears, apply the payment of to discharge any interest due before applying it to the earliest items of principal (Chitty on Contracts, 29^th Ed, vol 1, paras 21-059 to 21-061, and 21-067”

135. In my view, Mr Suen’s contention is premised on an incorrect assumption that the Defendant had a contractual obligation to pay interest. This was not the case. The MOU does not provide that the Defendant should pay interest on the outstanding indebtedness owed to the Plaintiffs. As such, it could not be the parties’ intention that the payments received by the 1^st and 2^nd Plaintiffs should be treated as payments of interest. As of the time when the payments were made (or received), the court had not yet handed down the present judgment, and no interest had been awarded in favour of the 1^st and 2^nd Plaintiffs. In other words, at the material times, there was simply no outstanding interest to pay. In the premises, it could only be the parties’ intention that the payments in question were utilized to pay the outstanding principal indebtedness under the MOU.

136. In light of my findings set out hereinabove, I direct the parties to seek to agree the quantum of the pre-judgment interest to which the 1^st and 2^nd Plaintiffs are entitled. If the parties are able to reach an agreement, they should report to the court by letter within 14 days. If the parties are unable to reach an agreement, they should lodge and serve written submissions within 28 days, and I will dispose of the outstanding dispute on paper.

G2. The Defendant’s Counterclaims against the Plaintiffs

137. I dismiss the Defendant’s counterclaim for a declaration that the MOU is liable to be rescinded.

G3. The 3^rd Plaintiff’s Claims against the Defendant

138. I dismiss the 3^rd Plaintiff’s claims against the Defendant in this action.

G4. Costs

139. There is no reason why costs should not follow the event.

140. The 1^st and 2^nd Plaintiffs are the successful parties in this action. However, in my view, the costs order should reflect the fact that the Defendant successfully resisted the 2^nd Plaintiff’s claim in respect of the OBOR First Half 2019 Return of HK$22,053,698.63.

141. In his closing submissions, Mr Suen indicated that in light of the Defendant’s irresponsible litigation conduct, it would be appropriate to order indemnity costs against him. In my view, the court should not make a decision hastily without hearing the full submissions of the parties.

142. In the premises, I make a costs order nisi that:-

(1)  the Defendant should pay the 1^st Plaintiff’s costs in this action, including all costs reserved, to be taxed if not agreed on a party-to-party basis (with certificate for 2 counsel);

(2)  the Defendant should pay 95% of the 2^nd Plaintiff’s costs in this action, including all costs reserved, to be taxed if not agreed on a party-to-party basis (with certificate for 2 counsel); and

(3)  the 3^rd Plaintiff should pay the Defendant’s costs in respect of its claims in this action, including all costs reserved, to be taxed if not agreed on a party-to-party basis (with certificate for 2 counsel).

143. Any application to vary the aforesaid costs order nisi should be taken out within 14 days.

G5. Other Matters

144. Lastly, I express my gratitude to Mr Jenkin Suen SC, Ms Ebony Ling, Mr Adrian Lee, Ms Kinsey Kang, and Mr Enoch Fong for their very helpful assistance.

	(Alan Kwong)
	Deputy High Court Judge

Mr Jenkin Suen SC, Ms Ebony Ling and Mr Adrian Lee, instructed by M/s YTL LLP, for the 1^st and 2^nd Plaintiffs

The 3^rd Plaintiff, Digital King Investments Limited, in person, absent

Ms Kinsey Kang and Mr Enoch Fong, instructed by M/s Kwan & Chow, for the Defendant

[1] It was formerly named Hong Kong Bridge Investments Ltd

[2] They were Mr Song (defined below), Ma Xueli, Hong Chuanfang, Ma Yue, and Sun Yingzhou

[3] According to the Plaintiffs’ case, a Mr Song Xu, who was on the Defendant’s side, also attended the meeting.

[4] The ID card number was spelled out in the original document, but removed on purpose in this judgment due to concern of privacy.

[5] The ID card number was spelled out in the translation, but removed on purpose in this judgment.

[6] Under clauses 1 and 2 in Section I of the MOU, this, together with the “OBOR Fund Principal Amounts (足球基金认购本金)”, are defined as the “Fund Principal Amounts (基金认购本金)”

[7] Under clauses 1 and 2 in Section I of the MOU, this, together with the “Fortune Fund Principal Amounts (财富基金认购本金)”, are defined as the “Fund Principal Amounts (基金认购本金)”

[8] See clause 1.1 of the MOU. This sum is part of the “Fund Fixed Return” defined under clause 1.4 of the MOU.

[9] See clause 1.1 of the MOU. This sum is defined as the “Occupancy Fee”. This sum is part of the “Fund Fixed Return” defined under clause 1.4 of the MOU.

[10] This is pursuant to clause 1.3 of the MOU. This sum is part of the “Fund Fixed Return” defined under clause 1.4 of the MOU.

[11] This is pursuant to the alleged Implied Term asserted by the 1^st and 2^nd Plaintiffs.

[12] This pursuant to clause 1.4e of the MOU. This sum is part of the “Fund Fixed Return” defined under clause 1.4 of the MOU.

[13] Defence & Counterclaim, para 3

[14] Defence & Counterclaim, para 4

[15] Defence & Counterclaim, para 6

[16] Rejoinder, paras 4(4) and (8)

[17] Rejoinder, para 5(2)

[18] Rejoinder, paras 4(1)-(4)

[19] Rejoinder, paras 4(6)(a)-(d)

[20] Defence & Counterclaim, para 5

[21] Core Bundle C, Tabs 47 to 48, pages 625 to 629

[22] Bundle C14, Tab 117, page 3786 to 3787

[23] Bundle C14, Tab 118, page 3789

[24] Core Bundle C, page 567

[25] Bundle C14, Tab 117, page 3788

[26] Core Bundle C, page 570

[27] Core Bundle C, Tab 31, page 574

[28] Core Bundle C, page 587

[29] Bundle C15, Tabs 143 and 144, pages 3859 to 3860

[30] Bundle C19, Tab 188, page 4954

[31] Core Bundle C, Tab 47, pages 625 to 626

[32] Bundle C19, Tab 188, page 4959

[33] Core Bundle C, page 550

[34] See for example the email dated 21 December 2016 produced at Bundle C3, Tab 19, page 654.

[35] Bundle C20, Tab 209, page 5246

[36] Bundle C1, Tab 17, page 425

[37] Cross reference: Bundle C1, Tab 10, page 275

[38] Ie as of 31 March 2016

[39] 南京新盟資產管理有限公司. The Defendant owned 99.90% of the shareholding in this corporate vehicle.

[40] See the corporate chart in the report of 南京豐盛產業控股集團有限公司 prepared for the purpose of issuing bonds to the publc, which was produced at Bundle C1, Tab 10, page 297.

[41] Bundle C1, Tabs 3 to 4, pages 216 to 219

[42] Bundle C10, Tab 55, pages 2653 to 2654

[43] See Defence & Counterclaim, para 5(8)

[44] This is the translation prepared by the former solicitors representing the Plaintiffs: see Core Bundle C, Tab 41, page 607

[45] (1864) 2 Drew & Sm. 289; R v Att-Gen for England and Wales [2003] UKPC 22, [2003] EMLR 24 at [31]

[46] (1864) 2 Drew & Sm. 289 at 292

[47] (1864) 2 Drew & Sm. 289

[48] Fullerton v Provincial Bank of Ireland [1903] AC 309, 313

[49] They were Mr Song, Ma Xueli, Hong Chuanfang, Ma Yue, and Sun Yingzhou

[50] Core Bundle C, Tab 21, page 533

[51] Core Bundle C, Tab 24, pages 559 to 560

[52] Core Bundle C, Tab 23A, pages 558-1 to 558-2

[53] Whilst the demand letters dated 20 February 2019 were not produced to the court, their existence is evidenced by the subsequent letters/notices issued by the 1^st Plaintiff on 29 April 2019: see Bundle C15, Tabs 145 to 149, pages 3861 to 3870

[54] Core Bundle C, Tab 25, page 562

[55] Bundle C14, Tabs 117 to 118, page 3786 to 3789

[56] This is evidenced by the WeChat messages produced at Bundle C14, Tab 117, page 3786 to 3787

[57] Core Bundle C, page 567

[58] Core Bundle C, page 570

[59] See the report prepared by Glaucus Research Group (Bundle C10, Tab 55, pages 2653 to 2654)

[60] Ms Kang also pointed out that in the demand letters dated 6 June 2019 and 24 July 2019 (Core Bundle C, Tabs 47 to 48, pages 625 to 641), the Plaintiffs did not expressly demand the sum of HK$520,000,000. For the reasons elaborated below, I am of the view that the focus is on the construction of the phrases in the relevant terms of the MOU. Whilst the subsequent correspondence of the parties may (or may not) shed light on the parties’ understanding, they are incapable of altering the objective contractual intention of the parties as contained in the contractual document itself.

[61] It should be noted that clause 1.4(e) in Section II of the MOU envisaged that part of Fund Fixed Return would have to be paid by 31 May 2019. It appears to me that when the parties drafted the MOU, they only planned the Repayment Schedule up till 31 May 2019, and they envisaged that the payment schedule relating to the capital contributions of HK$520,000,000 relating to the OBOR Fund be dealt with in accordance with the original contractual document.

[62] This is individually defined as “OBOR Fund Principal Amounts (足球基金认购本金)”

[63] These are individually defined as “Fortune Fund Principal Amounts (财富基金认购本金)”

[64] See eg Mr Eric Zhang’s email to Ms Stella Wang (who was an in-house legal advisor) dated 26 February 2019 at Core Bundle C, Tab 27, page 567

[65] See the WeChat message in Core Bundle C, Tab 31, page 574. It appears that the legal department that provided legal advice was Fullshare’s legal department.

[66] Core Bundle C, Tabs 47 to 48, pages 625 to 629

[67] See paragraph 6 at Core Bundle C, Tab 48, page 628

[68] The Plaintiff’s closing submissions, annexure 3. The sum of HK$203,396,374 consisted of (i) the payment of HK$5,000,000 on 13 November 2018; (ii) the payment of HK$2,000,000 on 15 January 2019; (iii) the payment of HK$167,004,044.87 on 31 May 2019; (iv) the payment of HK$8,000,000 on 15 March 2019; (v) the payment of HK$10,000,000 on 8 April 2019; (vi) the payment of HK$5,592,329 on 12 April 2019; and (vii) the payment of HK$5,800,000 on 6 May 2019

[69] For completeness, it should be noted that the 1^st and 2^nd Plaintiffs’ case also has a 2^nd limb, ie the Defendant had failed to exercise his best endeavor to ensure that the sums under the Payment Schedule were repaid. This is pursuant to clause 1 in Section III of the MOU. In this connection, I accept there is no evidence showing that the Defendant had exercised his beat endeavor at all. I also accept Mr Suen’s submissions that whilst the Defendant was ranked in the Forbes List of Billionaires in 2019, the Defendant has adduced no direct evidence on the financial resources available to him at all material times, and it would be appropriate to draw an adverse inference against him. In the premises, I am inclined to accept the 2^nd limb of the 1^st and 2^nd Plaintiffs’ case as it does appear to me that the Defendant had failed to exercise his best endeavor and that there are good reasons to believe that had the Defendant exercised his best endeavor, the sums in question could have been paid. Be that as it may, it is unnecessary for me to form a definitive view on the 2^nd limb of the 1^st and 2^nd Plaintiffs’ case. For the reasons elaborated above, I accept the 1^st and 2^nd Plaintiffs’ case on the 1^st limb, ie the Defendant failed to perform his obligations under clause 2 in Section III of the MOU, in that he did not pay the unpaid “Fund Fixed Return (基金认购本金)” and unpaid “Fund Principal Amounts (基金固定回报)” for purchasing the Plaintiffs’ interests in the Fortune Fund and OBOR Fund when the Payment Schedule under Section II of the MOU was not adhered to.

[70] Under clauses 1 and 2 in Section I of the MOU, this, together with the “OBOR Fund Principal Amounts (足球基金认购本金)”, are defined as the “Fund Principal Amounts (基金认购本金)”

[71] See clause 1.1 of the MOU. This sum is part of the “Fund Fixed Return” defined under clause 1.4 of the MOU.

[72] See clause 1.1 of the MOU. This sum is defined as the “Occupancy Fee”. This sum is part of the “Fund Fixed Return” defined under clause 1.4 of the MOU.

[73] This pursuant to clause 1.4e of the MOU. This sum is part of the “Fund Fixed Return” defined under clause 1.4 of the MOU.

[74] Under clauses 1 and 2 in Section I of the MOU, this, together with the “Fortune Fund Principal Amounts (财富基金认购本金)”, are defined as the “Fund Principal Amounts (基金认购本金)”

[75] This is pursuant to clause 1.3 of the MOU. This sum is part of the “Fund Fixed Return” defined under clause 1.4 of the MOU.

[76] The Plaintiffs’ closing, annexure 3. The sum of HK$203,396,374 consisted of (i) the payment of HK$5,000,000 on 13 November 2018; (ii) the payment of HK$2,000,000 on 15 January 2019; (iii) the payment of HK$167,004,044.87 on 31 May 2019; (iv) the payment of HK$8,000,000 on 15 March 2019; (v) the payment of HK$10,000,000 on 8 April 2019; (vi) the payment of HK$5,592,329 on 12 April 2019; and (vii) the payment of HK$5,800,000 on 6 May 2019

[77] The Plaintiffs’ closing, annexure 3

[78] The Plaintiffs’ closing, annexure 3

[79] See the Plaintiff’s submissions on quantum, paras 7 to 9.

MAJESTIC PLAN INTERNATIONAL LTD AND OTHERS v. JI CHANGQUN

Court

Procedural posture

Issues

Holdings

Legal principles

Disposition