CHINA ENERGY DEVELOPMENT HOLDINGS LTD v. YEUNG KA SING, CARSON

HCA 784/2021

[2026] HKCFI 1693

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 784 OF 2021

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J U D G M E N T

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A. INTRODUCTION

1.  In these proceedings, the Plaintiff seeks to recover amounts said to be due under two guarantees, one dated 19^th April 2010 (“the Alleged 2010 Guarantee”), and the other dated 10^th January 2021 (“the Alleged 2011 Guarantee”; together with the Alleged 2010 Guarantee “the Alleged Guarantees”).

B.  THE FACTS

2.  Unless otherwise indicated, the following are undisputed or indisputable, and I find them as facts.

B1.  The Plaintiff

3.  The Plaintiff is listed on the Main Board of the Stock Exchange of Hong Kong.

4.  Around 2008 to 2011, Mr Chan Wai Keung, Mr Chang Kin Man, Mr Ip Allan Wing Lun and Mr Fu Wing Kwok Ewing all at some stage occupied directorship in the Plaintiff and were part of the Plaintiff’s senior management.

B2.  The Defendant

5.  At the material times, the Defendant had interests or positions in the following companies.

5.1  He was (and is)  the sole owner and a director of Billion Wealth Group Ltd (“Billion Wealth”), a BVI company.

5.2  He was at all material times, through Billion Wealth, a substantial shareholder of SMI/Sing Pao (defined below).

5.3  He was a substantial shareholder, the chairman and/or executive director of Birmingham Sports (defined below)  in the period from around 2007 to 2014.

B3.  SMI/Sing Pao

6.  Sing Pao Media Enterprises Limited was, prior to 11th May 2012, known as named SMI Publishing Group Limited (“SMI/Sing Pao”).  One of its subsidiaries was in the business of newspaper publication.  It was previously listed on the GEM Board of the Stock Exchange of Hong Kong.  Its shares were suspended from trading on 28^th April 2005.  SMI/Sing Pao was the named borrower under the seven Loan Agreements (defined below).

7.  On 23^rd April 2008, the Defendant, through Billion Wealth, became a substantial shareholder of SMI Group.

8.  Around 2009 to 2011, Mr Ip Allan Wing Lun was a non-executive director of SMI/Sing Pao.

B4.  Birmingham Sports

9.  At the material time, Birmingham Sports Holdings Limited (“Birmingham Sports”)  was listed on the Main Board of the Stock Exchange of Hong Kong.  It was previously known as Grandtop International Holdings Ltd (before December 2009)  and Birmingham International Holdings (between December 2009 and April 2017).

10.  The Defendant was its substantial shareholder, chairman and/or executive director in the period from around 2007 to 2014.

11.  Mr Chan Wai Keung, Mr Chang Kin Man, Mr Ip Allan Wing Lun and Mr Fu Wing Kwok Ewing all at some stage held senior management roles (of director or company secretary)  in Birmingham Sports between 2007 and 2014.

B5.  The Loan Agreements

12.  The Plaintiff as lender and SMI/Sing Pao as borrower entered into seven loan agreements which are relevant to these proceedings (“the Loan Agreements”).  The total of the principal sums advanced thereunder was $37.1m.

13.  Each of the Loan Agreements (and as extended)  provided for payment of interest at the rate of 1% per month (cl.3(a)), payment of default interest in the event of failure to repay amounts when due at the rate of 3% per month (cl.3(e)), and repayment of outstanding balances of the loan together with accrued interest (cl.4).  They further contained a clause reserving the right, on the part of the Lender, to require the Borrower at any time to provide security or additional security for the due repayment of the loan, as a condition for continuing the loan.

14.  The parties subsequently entered into further agreements to extend the term of the agreements (“the Extension Agreements”).

15.  The first loan agreement was entered into on 29^th October 2008 (“the 1^st Loan Agreement”), pursuant to which the Plaintiff lent to SMI/Sing Pao a principal sum of $7,000,000.

15.1  The original date for repayment was 29^th January 2009.

15.2  The agreement was extended three times, on 29^th January 2009, 29^th January 2010, and 29^th January 2011, so that the date for repayment (of principal and interest)  was extended to 29^th January 2012 (“the 1^st Loan Repayment Deadline”).

16.  The second loan agreement was entered into on 11th November 2008 (“the 2^nd Loan Agreement”), pursuant to which the Plaintiff lent to SMI/Sing Pao a principal sum of $6,000,000.

16.1  The original date for repayment was 11th February 2009.

16.2  The agreement was extended three times, on 11th February 2009, 11th February 2010, and 11th February 2011, so that the date for repayment (of principal and interest)  was extended to 11th February 2012 (“the 2^nd Loan Repayment Deadline”).

17.  The third loan agreement was entered into on 25^th November 2008 (“the 3^rd Loan Agreement”), pursuant to which the Plaintiff lent to SMI/Sing Pao a principal sum of $2,000,000.

17.1  The original date for repayment was 25^th February 2009.

17.2  The agreement was extended three times, on 25^th February 2009, 25^th February 2010, and 25^th February 2011, so that the date for repayment (of principal and interest)  was extended to 25^th February 2012 (“the 3^rd Loan Repayment Deadline”).

18.  The fourth loan agreement was entered into on 3^rd December 2008 (“the 4^th Loan Agreement”), pursuant to which the Plaintiff lent to SMI/Sing Pao a principal sum of $8,000,000.

18.1  The original date for repayment was 3^rd March 2009.

18.2  The agreement was extended three times, on 3^rd March 2009, 3^rd March 2010, and 3^rd March 2011, so that the date for repayment (of principal and interest)  was extended to 3^rd March 2012 (“the 4^th Loan Repayment Deadline”).

19.  The fifth loan agreement was entered into on 13th January 2009 (“the 5^th Loan Agreement”), pursuant to which the Plaintiff lent to SMI/Sing Pao a principal sum of $6,000,000.

19.1  The original date for repayment was 13th April 2009.

19.2  The agreement was extended twice, on 13th April 2009 and 13th April 2010, so that the date for repayment (of principal and interest)  was extended to 13th April 2011 (“the 1^st Loan Repayment Deadline”).

20.  The sixth loan agreement was entered into on 5^th May 2009 (“the 6^th Loan Agreement”), pursuant to which the Plaintiff lent to SMI/Sing Pao a principal sum of $4,100,000.

20.1  The original date of repayment was 5^th May 2010.

20.2  The agreement was extended once on 5^th May 2010, so that the date of repayment (of principal and interest)  was extended to 5^th May 2011 (“the 6^th Loan Repayment Deadline”).

21.  The seventh loan agreement was entered into on 7^th June 2010 (“the 7^th Loan Agreement”), pursuant to which the Plaintiff lent to SMI/Sing Pao a principal sum of $4,000,000.  The date for repayment (of principal and interest)  was 7^th June 2011.

22.  The seven deadlines for repayment are referred to below as “the Repayment Deadlines”.

23.  The 1^st and 6^th Loan Agreements provided for the part of the loan to be drawn down in cash and part to be paid by cheque to one Fidelity Capital Resources Limited (“Fidelity”).  The 2^nd, 4^th, 5^th and 7^th Loan Agreements provided for the loan proceeds to be paid to Fidelity.  The 3^rd Loan Agreement provided for the loan proceeds to be paid to one 兴图有限公司 (“Sennal”).  Fidelity was wholly owned by SMI/Sing Pao from at least 16^th May 2008 to 8^th April 2014.  The Defendant was not a director or shareholder of either Fidelity or Sennal during the period from 2008 to 2016.

B6.  The Alleged Guarantees

24.  It is the Plaintiff’s case that on 19^th April 2010, the Defendant executed a guarantee (that is, the Alleged 2010 Guarantee)  in favour of the Plaintiff, as security for the 1^st to 6^th Loan Agreements.  (The 7^th Loan Agreement had not yet been executed at the time.)

25.  It is the Plaintiff’s case that on 10^th January 2011, the Defendant executed a guarantee (that is, the Alleged 2011 Guarantee)  in favour of the Plaintiff, as security for the 1^st to 7^th Loan Agreements.

26.  The recital to the Alleged 2010 Guarantee referred to the Plaintiff having made available a loan facility of $33.1m to SMI/Sing Pao pursuant to the 1^st to 6^th Loan Agreements.[1]  It recited that the Defendant had agreed to execute the guarantee “as security for performance of the Borrower’s obligations to repay the Lender the Loan and all other amounts for the time being owing under the [1^st to 6^th] Loan Agreements”.

27.  The recital to the Alleged 2011 Guarantee referred to the Plaintiff having made available a loan facility of $37.1m to SMI/Sing Pao pursuant to (unspecified)  loan agreements.  It recited that the Defendant had agreed to execute the guarantee “as security for performance of the Borrower’s obligations to repay the Lender the Loan and all other amounts for the time being owing under the [unspecified] Loan Agreements”.

28.  Clause 2.1 of each of the Alleged Guarantees provided that:

“ In consideration of the Lender, at the request of the Guarantor, agreeing to make the Facility available to the Borrower upon the terms and conditions of the Loan Agreements, the Guarantor hereby unconditionally and irrevocably guarantees to the Lender, as principal obligor and not merely as surety for payment or collection or otherwise, as a continuing obligation:

  (a)  The due, full and punctual payment of the Secured Indebtedness…”

29.  Clause 6.1 of each of the Alleged Guarantees provided that:

“ The Guarantor hereby covenants, undertakes and agrees with the Lender throughout the continuance of this Guarantee and so long as the Secured Indebtedness or any part thereof remains owing that he will, unless the Lender otherwise agrees in writing:

…

  (i)  punctually pay all sums due from the Borrower or the Guarantor and otherwise comply with their respective obligations under this Guarantee.”

30.  At the end of page 13 of each of the Alleged Guarantees, the following appeared:

“ IN WITNESS whereof this GUARANTEE has been executed by the Guarantor and is intended to be and is hereby delivered on the day and year first above written.”

31.  Each of the Alleged Guarantees was signed with a manuscript signature on the next page, to the right of a signature block which appeared as follows:

“ THE GUARANTOR )

SIGNED SEALED AND DELIVERED BY )

YEUNG KA SING, CARSON )

was hereunto afixed )

  in the presence of:  )  ”

32.  There was no signature from any attesting witness on either of the Alleged Guarantees.

33.  No backsheet was attached to either of the Alleged Guarantees.

34.  Both of the Alleged Guarantees stated:

34.1  the Defendant’s identity card number in identifying him as the Guarantor,

34.2  the address of Birmingham Sports as the Defendant’s address, and

34.3  the fax number of Birmingham Sports as the fax number for receiving written notifications under the guarantee.

B7.  The Plaintiff’s annual reports; the December 2010 Circular

35.  The Plaintiff’s annual reports for 2008, 2009, 2010 and 2011 recorded the existence of loan receivables from SMI/Sing Pao.  In the annual reports for 2009, 2010 and 2011, it was further stated that the loan receivables from SMI/Sing Pao were secured by the personal guarantee of a third party.

35.1  Note 26 to the Plaintiff’s audited financial statements for the year ending 31^st December 2008, forming part of the Plaintiff’s 2008 Annual Report, recorded loan receivables of $47,000,000 from unrelated parties, and stated that:

“ (ii)  The balances represent loan receivables from independent third parties, which was unsecured, interest-bearing at 1% per month and repayable within 1 year. Of this amount, HK$23 million was loan receivable from [SMI/Sing Pao], a company listed on SEHK, but trading of this company’[s] shares was suspended from 28 April 2005 and up to the date of this report.”

35.2  Note 26 to the Plaintiff’s audited financial statements for the year ending 31^st December 2009, forming part of the Plaintiff’s 2009 Annual Report, recorded loan receivables of $57,100,000 from unrelated parties, and stated that:

“ (ii)  The balances represent loan receivables from independent third parties, which was unsecured, interest-bearing at 1% per month and repayable within 1 year. Of this amount, HK$33.1 million (2008: HK$33 million)  was loan receivable from [SMI/Sing Pao], a company listed on Stock Exchange, but trading of this company’[s] shares was suspended from 28 April 2005 and up to the date of this report. The loan receivable from [SMI/Sing Pao] is secured by a personal guarantee of a third party.”[2]

35.3  Note 24 to the Plaintiff’s audited financial statements for the year ending 31^st December 2010, forming part of the Plaintiff’s 2010 Annual Report, recorded loan receivables of $60,441,000 from unrelated parties, and stated that:

“ The balances represent loan receivables from independent third parties, which was unsecured, interest-bearing at 0.5% to 1% per month and repayable within 1 year. Of this amount, HK$37.1 million (2009: HK$33.1 million)  was loan receivable from SMI Publishing Group Limited, a company listed on SEHK, but trading of this company’[s] shares was suspended from 28 April 2005 and up to the date of this report. The loan receivable from SMI Publishing Group Limited is secured by a personal guarantee of a third party.

  Another HK$23.3 million (2009: Nil)  was loan receivable from Birmingham International Holdings Limited, a company listed on SEHK.  The loan receivable from Birmingham International Holdings Limited is unsecured.”

35.4  Note 25 to the Plaintiff’s audited financial statements for the year ending 31^st December 2011, forming part of the Plaintiff’s 2011 Annual Report, referred back to the loan receivables from unrelated parties as at 31^st December 2020, and stated that:

“ The balances at 31 December 2010 represented loan receivables from independent third parties, which were unsecured, interest bearing at 0.5% to 1% per month and repayable within 1 year. Of this amount, HK$37.1 million was loan receivable from SMI Publishing Group Limited (“SMI”), a company listed on SEHK, but trading of this company’[s] shares was suspended from 28 April 2005 and up to the date of this report. The loan receivable from SMI Publishing Group Limited is secured by a personal guarantee of a third party. Another HK$14.8 million (2010: HK$14.8 million)  was loan receivable from Birmingham International Holding Limited (“Birmingham”), a company listed on SEHK. The loan receivable from Birmingham International Holding Limited is unsecured. During the year ended 31 December 2011, all of the loan receivables from these companies were impaired as they were unable to repay the principle [sic] and interest when the amounts fall due.

  Up to the date of this report, the Group has not been able to obtain viable repayment proposal from SMI and Birmingham.  The Group is now actively considering to take appropriate legal action to secure the Group’s position.”

36.  On 3^rd December 2010, the Plaintiff published a circular (“the December 2010 Circular”)  regarding its intended acquisition of a company with interests in a site with natural gas reserves (pursuant to an agreement of January 2009, for a consideration of between $2 billion to $10 billion), which constituted a very substantial acquisition under the Listing Rules (“the Acquisition”).  The December 2010 Circular set out financial information relating to the Plaintiff and its subsidiaries, including note 26(ii)  relating to loan receivables and the personal guarantee as taken from the 2009 Annual Report referred to above.

B8.  Birmingham Sport’s annual reports

37.  Note 30 to Birmingham’s audited financial statements for the year ending 30th June 2010, forming part of Birmingham’s 2010 Annual Report, stated as follows.

“ The directors of the Company considered [SMI/Sing Pao] and its subsidiary, Sing Pao Newspaper Company Limited (“Sing Pao”)  (together referred as the “SMI Group”)  are the related companies of the Group and the Company as one of the substantial shareholders of the Company is also the key shareholders of the SMI Group. Amounts due from related companies of the Group and the Company disclosed pursuant to Section 161 B of the Companies Ordinance are as follows:”

38.  Birmingham Sports’ annual reports recorded the existence of loan receivables from SMI/Sing Pao: $3,312,000 as at 30th June 2010, $3,672,000 as at 30th June 2011, $4,593,000 as at 30 June 2012, and $5,682,000 as at 30th June 2013.

39.  The notes to the audited financial statements in Birmingham Sports’ 2010 Annual Report contained the following note.

“ Mr. Yeung Ka Sing, Carson (“Mr. Yeung”), the director and the major shareholder of the Company, is in the process of applying a credit facility line of no less than HK$150,000,000 with a bank in 3 tranches with his private property located in Hong Kong as the asset pledge and in the opinion of directors, this credit facility will be forthcoming.  Mr. Yeung has agreed in writing that he will use this credit facility to finance the Company and the Group in order to provide sufficient financial resources to the Group so as to enable the Group to meet its liabilities as they fall due and carry out on the business without a significant curtailment of operation.

  Accordingly, based on the above measures, the consolidated financial statements have been prepared by the directors of the Company on a going concern basis.”

B9.  SMI/Sing Pao’s annual reports

40.  SMI/Sing Pao’s annual reports recorded the provision of loan facilities from Billion Wealth: $60m on 23^rd April 2008, $50m on 20th May 2009, and $50m on 9^th November 2010, with the first two facilities fully utilised and $26.8m of the third facility utilised as at 31^st March 2011.

41.  SMI/Sing Pao’s annual reports for 2009, 2010 and 2011 stated that no assets of SMI/Sing Pao were pledged for loan facilities granted to SMI/Sing Pao and its subsidiaries.

42.  SMI/Sing Pao’s annual report for 2011 also referred to interest expenses being incurred for a loan from Birmingham Sports.

B10.  Default by SMI/Sing Pao; winding up of SMI/Sing Pao

43.  SMI/Sing Pao defaulted on repayment of the loans under the Loan Agreements, which fell due between 13th April 2011 and 3^rd March 2012.  It owes the $37.1m principal lent, and interest.

44.  On 12th August 2015, SMI/Sing Pao was wound up by the court and delisted from the GEM Board of the Stock Exchange of Hong Kong 14^th August 2015.  On 23^rd November 2015, representatives of KPMG were appointed as liquidators of SMI/Sing Pao (“the Liquidators”).

45.  On 7^th January 2016, the Plaintiff sent a proof of debt to the Liquidators, indicating that the total outstanding principal and interest due to the Plaintiff was in the sum of $99,773,632.88.

46.  On 2^nd November 2017, the Liquidators confirmed in writing to the Plaintiff that SMI/Sing Pao had insufficient funds to repay any loan principal and/or interest.

47.  On 16^th April 2021, the Plaintiff (through solicitors)  issued a written demand describing sums owed up to that date.  The Defendant subsequently received a copy of the demand.

C.  THE ISSUES

48.  The parties agreed that the issues which arise on the pleadings are as follows.

49.  Issue 1: did the Defendant sign the Alleged Guarantees?

50.  Issue 2: did the Alleged Guarantees fail to satisfy the formalities required of a deed?

51.  Issue 3: is the Plaintiff time-barred from claiming that the Defendant is in breach of the terms of the Alleged Guarantees?

52.  Issue 4: if consideration is necessary for the Alleged Guarantees, was any such consideration provided?

53.  Issue 5: if the Alleged Guarantees are enforceable against the Defendant, what terms thereof has the Defendant breached?

54.  Issue 6: if the Alleged Guarantees are enforceable against the Defendant and the Defendant is found to be in breach of them, what is the quantum of loss and/or damages that the Plaintiff can claim?

D.  ISSUE 1: DID THE DEFENDANT SIGN THE ALLEGED GUARANTEES?

55.  This is the real issue between the parties, taking up most of the time at trial.  The Defendant’s case is that he did not sign the Alleged Guarantees.

D1.  The approach to assessing the evidence

56.  It is common ground that the Plaintiff bears the burden of proving that the Defendant did in fact sign the Alleged Guarantees; it is not for the Defendant to prove that his signature was forged.

57.  The parties agreed that the approach to take is as set out in Club Deluxe Ltd v Club Metropolitan Ltd & others [1995] 2 HKLR 69 at 80, line 45, namely, to look at the inherent probabilities and weigh the respective cases for the parties with that in mind.  Litton JA cited Devine v Wilson (1855)  10 Moo PC 502, where the Privy Council at 531 said:

“ …In a civil case the onus of proving the genuineness of a deed is cast upon the party who produces it, and asserts its validity. If there be conflicting evidence as to the genuineness, either by reason of alleged forgery, or otherwise, the party asserting the deed must satisfy the jury that it is genuine. The jury must weigh the conflicting evidence, consider all the probabilities of the case, not excluding the ordinary presumption of innocence, and must determine the question according to the balance of those probabilities…”

58.  In assessing the witnesses’ evidence, I have had regard to the principles summarised in Hui Cheung Fai v Daiwa Development Ltd, unreported, HCA1734/2009, 8 April 2014 at [77] to [83] (DHCJ Eugene Fung SC).  In particular:

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

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

58.3  regard should be had to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence;

58.4  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’ character;

58.5  witnesses’ credibility should be tested by reference to the objective facts proved independently of their testimony, and regard should be had to their motives and to the overall probabilities.

59.  I have also had regard to the summary of relevant principles made by HH Judge Simon Barker QC in Northampton Borough Council v Cardoza and others[2019] BCC 582:

“ 36. As to the considerations applicable to evaluating evidence, a useful starting point is Goff J’s (as he then was)observation as to resolving conflicts of evidence in Armagas Ltd v Mundogas SA(The Ocean Frost)[1985] 1 LL Rep 1 at p.57:

‘ … Where there is a conflict of evidence … reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth’.

37. Factors relevant to the evaluation of a witness’s evidence were identified by Lewison J (as he then was)in Painter v Hutchinson[2007] EWHC 758 (Ch)at [3] when addressing the unsatisfactory nature of the defendant’s approach to giving evidence. These included: evasive and argumentative answers, tangential speeches avoiding the question, blaming legal advisers for pleading, disclosure and evidence shortcomings, self-contradiction, internal inconsistency, shifting case, new evidence, and selective disclosure. This was not intended to be an exhaustive list, but it is important and very helpful.

38. A useful recent reminder or guidance on the approach to the evidence of factual witnesses, and expanding on the guidance given by Goff J in The Ocean Frost, was given by Leggatt J (as he then was) in Gestmin SGPS SA v Credit Suisse (UK)Limited[2013] EWHC 3560 (Comm). After noting that human memory is fallible and that the process of litigation and preparing for trial tends to interfere further with the reliability of human memory, particularly where a lawyer has had a hand in drafting a witness’s evidence and the witness’s memory has been refreshed by reading documents, Leggatt J concluded that the best approach for a judge to adopt at the trial of a commercial case is to base factual findings on documentary evidence and known or probable facts and the inferences to be drawn therefrom. Witness evidence, written and oral, is not without purpose; but, its principal uses are to subject the documentary record to scrutiny and to evaluate the witness’s motivations, personality and working practices.[3]

39. In similar vein, in the recent case of Freemont (Denbigh)Ltd v Knight Frank LLP[2014] EWHC 3347 (Ch)reference was made to an article written by Bingham J (as he then was) entitled “The Judge as Juror: The Judicial Determination of Factual Issues” published in [1985] 38 Current Legal Problems 1-27. Bingham J considered the approach to deciding upon the reliability of a witness’s evidence and regarded the following to be helpful indicators of where the truth lies: the consistency of the witness’s evidence with what is agreed, or clearly shown by other evidence, to have occurred; the internal consistency of a witness’s evidence; and, the consistency of a witness’s evidence with what (s)he has said or deposed on other occasions. Bingham J considered that the credit of a witness in matters not germane to the litigation was of less assistance, and that the demeanour of a witness was on the whole not a reliable pointer to a witness’s honesty.”

60.  I have further borne in mind the reminder of K Yeung J in Siao Miu Hua v Wu Ching Kuen [2024] HKCFI 232 at [84] that:

“ It is essential to have regard to the entirety of a witness’ evidence. A witness can make mistakes, but the mistakes do not necessarily affect other parts of his evidence. Likewise, a witness may lie. However, lies themselves do not mean necessarily that the entirety of that witness’ evidence is to be rejected. A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie”.

61.  With these principles in mind, I have considered various aspects of the evidence, to which I now turn, in determining whether or not the Plaintiff establishes on the balance of probabilities that the Defendant executed the Alleged Guarantees.

D2.  Absence of contemporaneous records regarding the giving of the Alleged Guarantees

62.  Counsel for the Plaintiff, Mr Jacky Lam, frankly acknowledged that whilst the burden is on the Plaintiff to explain the factual circumstances in which the Alleged Guarantees were made, the Plaintiff does not have contemporaneous records of how they came to be prepared or executed.

62.1  The Loan Agreements and the Alleged Guarantees were signed before the Plaintiff’s present senior management and board of directions joined the Plaintiff, with the exception of Mr Zhao Guoqiang (“Mr Zhao”), who was the Plaintiff’s factual witness at trial.

62.2  Mr Zhao joined the Plaintiff as its Chief Executive Officer and Executive Director in December 2009 (after the 1^st to 6^th Loan Agreements were executed)  and was in those posts when the terms of the 1^st to 6^th Loan Agreements were extended in 2010 and 2011, when the 7^th Loan Agreement was signed in June 2010, and when the Alleged Guarantees were (allegedly)  signed in 2010 and 2011. However, Mr Zhao had no personal involvement with these transactions, and had no recollection, knowledge or understanding of how the Loan Agreements and Alleged Guarantees came into existence.  He surmised that the loans had been made to SMI/Sing Pao at a time when some members of the board were friendly with the Defendant, and that when there was a change of management in late 2009 and early 2010, the new management required the Alleged Guarantees to be given in order for the Loan Agreements to be extended and for the loan under the 7^th Loan Agreement to be made.

62.3  The then directors of the Plaintiff who signed the Loan Agreements on behalf of the Plaintiff, Mr Chui Kwong Kau and Mr Chan Shi Yung, are no longer with the Plaintiff.[4]  Mr Zhao gave evidence that he had contacted Mr Chui Kwong Kau after the commencement of these proceedings, in about 2022 or 2023, and had asked him how the agreements came to be signed.  Mr Zhao said that Mr Chui Kwong Kau said that the Alleged Guarantees were genuine and that the Defendant did not admit to signing them because he did not want to be liable on them.  It seems, however, that Mr Chui might himself not have had first-hand knowledge of the exact circumstances in which the Alleged Guarantees came to be signed, as Mr Zhao’s evidence is that Mr Chui said that he asked Mr Chan Shi Yung to ask the Defendant to sign the Alleged Guarantees.  Mr Zhao readily acknowledged that he had no record of Mr Chui Kwong Kau telling him these matters; nor had he made any supplemental witness statement to give details of this supposed conversation.  He had asked Mr Chui Kwong Kau to give evidence for the Plaintiff, but he says that Mr Chui said that he did not want to do so.  As for Mr Chan Shi Yung, Mr Zhao said that Mr Chui Kwong Kau had told him that Mr Chan had died.

62.4  Mr Zhao said that he did not know the other persons who had been the Plaintiff’s directors at the time of the signing of the Loan Agreements and the alleged signing of the Alleged Guarantees (there were over ten executive directors, and several independent non-executive directors, during the relevant period).  The Plaintiff has not produced any evidence from them.

62.5  Mr Zhao’s evidence was that the Plaintiff had no records of how the agreements came into existence, such as drafts of the agreements, or emails referring to the agreements.  Mr Zhao did not know why the Plaintiff did not have such records, although he thought that documents explaining how an agreement came into being, as opposed to the agreement itself, might not necessarily have been kept.

63.  Counsel for the Defendant, Ms Valerie Tang, submitted that it was significant that Mr Zhao said that he had access to the Plaintiff’s company records, including records showing how the Alleged Guarantees came about, but that the Plaintiff did not produce these at trial.[5]  I have reviewed again the relevant part of Mr Zhao’s evidence.  Whilst he did at points seem to suggest that there might be such records, on the whole I did not when listening to his testimony at trial (and do not now upon reviewing the evidence)  consider that he was saying that there were concrete documents explaining the provenance of the Alleged Guarantees.  His evidence was that (1)  he had already disclosed all the relevant documents available relating to the loans and Alleged Guarantees; (2)  he had not come across any drafts of the Loan Agreements or the Alleged Guarantees; (3)  he himself was not involved in the obtaining of the Alleged Guarantees, but this did not mean that there were no records; (4)  his secretary had access to the records; (5)  (in answer to a direct question of whether he was saying that there were records to show how the Alleged Guarantees came about)  there were persons who reported to him during board meetings that the Alleged Guarantees existed; (6)  the Plaintiff’s directors in charge of finance had reported to him that the Alleged Guarantees existed, but he could not recall when these meetings were; (7)  as regards the records showing how the Alleged Guarantees came about, the person who handled the matter, namely Mr Chui Kwong Kau, had said something; the records in question were the Alleged Guarantees themselves; (8)  (when pressed as to the nature of the records showing how the Alleged Guarantees came into being)  there were in fact no records of how the Alleged Guarantees came to exist; (9)  (when he was reminded of his earlier answer that he had access to company records but he had not produced any)  he was not saying that there were any records of how the Alleged Guarantees came into being, but rather, that he came across the original Alleged Guarantees; (10)  whilst there were board minutes approving the Loan Agreements, he was not sure that there were any board minutes approving the procuring of the Alleged Guarantees.

64.  Mr Zhao also said that his witness statement had not dealt with the fact that subsequently, he learned from the news that the Defendant had sued Mr Wang, the vendor in the Acquisition, and based on his understanding of the litigation from the news reports, the events in question to his mind explained why the Defendant had given the Alleged Guarantees.  I do not place any weight on this vague and unparticularised evidence.

65.  Whilst I agree that it is important to bear in mind that the Plaintiff has not adduced any contemporaneous records of how the Defendant came to execute the Alleged Guarantees, I do not agree that it is a case where the Plaintiff has failed to produce documents of which it was aware in relation to such execution.  It is true that Mr Zhao did not include in his statement his account of having contacted Mr Chui Kwong Kau and the double hearsay that Mr Chan Shi Yung was the one who asked the Defendant to sign the Alleged Guarantees, and that the Plaintiff did not subpoena Mr Chui Kwong Kau, but then again, the value of such hearsay evidence is questionable.  Mr Zhao’s omission simply means that I will not place any weight on what Mr Chui Kwong Kau and Mr Chan Shi Yung supposedly said.  This is a point against the Plaintiff, but not a point that casts suspicion on the way in which the Plaintiff conducted the litigation.

66.  Mr Zhao was a straightforward witness, doing his best to give evidence about matters of which he candidly accepted he had limited knowledge.  What Mr Zhao could say, and I accept as truthful, is as follows.  He joined the Plaintiff in December 2009 to deal with the gas and oil fields aspects of the Acquisition; the finance aspects were assigned to other directors.  As a member of the board of directors, he received reports at board meetings that the Alleged Guarantees were in place. He could not recall the exact time frame, but this would have been at the stage when the auditors were reviewing the Plaintiff’s financial position, which had to be satisfactory in order for the Acquisition to proceed.  His understanding was that the Alleged Guarantees were crucial requirements for in order for the Acquisition to proceed.  He considered that they would ensure that the loans made to SMI/Sing Pao could be repaid.  He had thought to himself (at the time)  that it was a good thing for the Plaintiff to have the Alleged Guarantees in place as they would protect the Plaintiff against the risk of default by the borrower.  When SMI/Sing Pao sought to borrow $4m in 2010, the finance team noted that no repayments of the earlier loans had been made.  Had a guarantee not been provided, his understanding was that the Plaintiff would not have made the loan under the 7^th Loan Agreement in 2010.

D3.  The Alleged Guarantees were stored in the Plaintiff’s secure database

67.  Mr Zhao’s unchallenged evidence was that the Plaintiff’s finance and accounting team had a physical centralised documentary database in which important documents were kept, and the Loan Agreements and Alleged Guarantees, being considered to be such documents, were kept there.  The database was maintained by the Plaintiff’s company secretary and finance director, and kept under lock and key.

68.  This gives credence to the Plaintiff’s claim that the documents were genuine and contemporaneously executed.  Of course, it does not exclude the possibility that the Alleged Guarantees bore forged signatures.

D4.  The face of the Alleged Guarantees

69.  The Alleged Guarantees stated the Defendant’s ID card number and the address and fax number of Birmingham Sports.  In cross-examination, the Defendant agreed that this information would not have been widely known at the time when the Alleged Guarantees were supposed to have been executed.  He also agreed that at the time, the address for Birmingham Sports was his principal place of business, even though he had other companies with other addresses.

70.  Mr Lam submitted that it was therefore likely that the information was provided by the Defendant or with his knowledge. At the same time, it is perhaps not inconceivable that a diligent forger could have obtained this information.

71.  Ms Tang pointed out that there were a number of irregularities on the face of the Alleged Guarantees: whilst the drafting had envisaged that the Alleged Guarantees would be attested to by a witness, no witness had signed the documents; neither SMI/Sing Pao (as borrower)  nor the Plaintiff (as lender)  had signed either; none of the pages had been signed or initialed, so that there was a “disconnection” between the signature page and the other pages; there was no backsheet as commonly found in formal documents; the recital to the Alleged 2010 Guarantee wrongly referred to a loan agreement dated 14^th March 2010; there was nothing indicating that lawyers had been involved in the preparation or execution of the Alleged Guarantees.

72.  It seems to me that these are not particularly significant matters.  The Alleged Guarantees were drafted to be executed by the Defendant and not SMI/Sing Pao or the Plaintiff.  Formal documents sometimes are, but sometimes are not, signed or initialed on every page; it is not the case that the Defendant says that he recalled signing a document other than a guarantee, and in any event the signature block clearly indicates that the person signing is signing as “guarantor”. It is true that the signature block envisaged that there would be a witness, but then again the absence of a witness would not render the Alleged Guarantees invalid, so that it may not necessarily have been untoward to have omitted obtaining a witness’ signature.  One cannot tell from the face of the Alleged Guarantees whether or not lawyers were involved in their preparation or execution.

D5.  Reference to the Alleged Guarantees in Plaintiff’s contemporaneous public documents

73.  The notes to the audited financial statements in the Plaintiff’s annual reports for 2008, 2009, 2010 and 2011 refer to loan receivables from SMI/Sing Pao.  There is no suggestion that these could be anything other than the loans under the Loan Agreements. The same notes in the Plaintiff’s annual reports for 2009, 2010 and 2011 refer to these loans as being “secured by a personal guarantee of a third party”. The December 2010 Circular also referred to the loans and guarantee.

74.  These documents do not identify the guarantor. Ms Tang submitted that at best, they showed that somebody had guaranteed the loans under the Loan Agreements. They did not show that the Defendant was the guarantor and had signed the Alleged Guarantees.

75.  It is true that the documents do not identify the Defendant as the guarantor of the loans under the Loan Agreements.  However, the Plaintiff has only the Alleged Guarantees in its records as the guarantees for these loans.  It was not suggested to Mr Zhao that there were any other guarantees for the loans but that (for example)  the Plaintiff had failed to produce them or had lost them.  The documents refer to the guarantee of a third party (not multiple third parties)  – there is no suggestion that there was more than one guarantor.  It is inherently unlikely that there was a guarantee from some other person, which either (1)  the Plaintiff knew about but chose not to pursue, or (2)  the Plaintiff did not know about and which has disappeared, with the Alleged Guarantees somehow surfacing in the Plaintiff’s secure database in its place.

76.  Of course, this does not exclude the possibility that the Alleged Guarantees bore forged signatures.

D6.  The Defendant’s claims that he did not sign the Guarantees

77.  In cross-examination, the Defendant said in no uncertain terms that he would know if he had signed a document or not.  He was adamant that whilst he might have signed a lot of documents during the course of 2009 to 2012, he would know whether a document had been signed by him or not. In particular, by April 2021 (when the Plaintiff’s solicitors sent a demand letter)  he was certain that he had not signed the Alleged Guarantees.  He said that his position was that he definitely did not sign the Alleged Guarantees, and not just that he did not remember whether had signed them or not.

78.  That being the case, paragraph 2 of his Defence (filed on 7^th September 2021 and accompanied by a Statement of Truth of the same date)  is strange.  The second sentence reads “At this moment, the Defendant avers that he does not recall signing the alleged 2010 Guarantee and/or the 2011 Guarantee…”.  When asked about this, he said that he did tell lawyers that he did not sign the Alleged Guarantees.  He could not explain why this was not reflected in the pleading, particularly since he says that the point was discussed with lawyers before the pleading was filed.

79.  As Mr Lam submitted, the whole of paragraph 2 of the Defence is couched in the language of uncertainty.  It contains an averment that the Defendant had an interest in a number of companies and affiliates, and that the Defendant reserved the right to seek further and better particulars, issue interrogatories and/or seek specific discovery.  It therefore appears to convey that the Defendant was unsure whether he signed the Alleged Guarantees.

80.  I do note that in paragraph 11 of the Defence, there is an express denial that the signatures on the Alleged Guarantees were those of the Defendant. It is pleaded that the handwriting in the two documents “appear markedly different” (which the Defendant clarified in evidence to mean that they were different from his signatures). However, if the Defendant was sure that he did not sign the Alleged Guarantees, it is difficult to see how, on such instructions, paragraph 2 of the Defence could have come about.

81.  Leaving aside the inconsistency between the two paragraphs, and the inconsistency of the claim of difference with the Defendant’s expert’s opinion that the similarity of the signatures on the Alleged Guarantees the Defendant’s suggests forgery, the conduct of the Defendant after being faced with the Plaintiff’s claim in 2021 is surprising.  Although (he claims that)  he was sure that he did not sign the Alleged Guarantees, he did not go to the police to report the forgery, nor did he engage a handwriting expert to defend the civil proceedings.[6]

82.  The Defendant gave several explanations for not going to the police: (1)  that he was too busy to do so (which suggests that he thought about it), (2)  that it had not occurred to him (which suggests that he had not thought about it)  and (3)  that he decided to await the outcome of the civil proceedings before deciding what to do (which suggests that he thought about it). In re-examination, he said that he was busy with defending money-laundering proceedings, and that he owed the Government some $238m and needed to earn money to pay this debt.  However, the Plaintiff’s claim is for repayment of a principal of $37.1m, contractual interest of some $12m, and default interest (totaling some $127.8m as at the date of the Statement of Claim and continuing to accrue at the rate of 3% per month).  Had the Defendant truly thought that his signature had been forged on the Alleged Guarantees, it seems surprising that he did not report the matter to the police, who might have found information to support the Defendant’s position.

83.  As regards the engagement of a handwriting expert, the Defendant says that he was advised by solicitors.  It is true that one would not necessarily need to engage handwriting experts at the pleading stage.  However, the Defendant’s Timetabling Questionnaire of 24^th February 2022 had indicated that the Defendant did not intend to adduce expert evidence at all.  It was only later, in August 2022, that the Defendant signified an intention to do so.  Again, this seems surprising if the Defendant’s position all along was that the signatures were not his.

D7.  Reasons for giving the Alleged Guarantees

84.  A major point of contention between the parties was whether there was any reason for the Defendant to have given the Alleged Guarantees.  The Plaintiff says that there was, as provision of the Alleged Guarantees would have enabled SMI/Sing Pao’s continued access to funds borrowed from the Plaintiff.  The Defendant says that there was no commercial reason why he would provided the Alleged Guarantees: although he was a substantial shareholder of SMI/Sing Pao and it would have been beneficial to him if the company had performed well, he was a businessman driven by commercial gain and profits.[7]

85.  The evidence shows that the Defendant would indeed have had good reason to have provided the Alleged Guarantees.

86.  In SMI/Sing Pao’s 2009 Annual Report, the Defendant was described as holding 125.2% of the shares in SMI/Sing Pao, through Billion Wealth.[8]

86.1  Of this percentage, 73.64% was attributable to a convertible note issued by SMI/Sing Pao to Strategic Media International Limited (“Strategic Media”), a company wholly owned by Qin Hui (a substantial shareholder of SMI/Sing Pao), which note was subsequently assigned to Billion Wealth in April 2008.  I should note that the Defendant sought to emphasise that he did not actually obtain the shares and had to sue Qin Hui for them.[9]  This does not detract from the fact that (as he himself said)  it would have been beneficial to the Defendant for SMI/Sing Pao to perform well.

86.2  The other 26.37% was attributable to Qin Hui having pledged all of his shares to Billion Wealth as security for the latter’s grant of a loan facility of $60m to SMI/Sing Pao and its subsidiaries in April 2008.

87.  In his oral testimony, the Defendant repeatedly sought to distance himself from SMI/Sing Pao, and to disclaim having provided financial support or management input.  In fact, his support for, and involvement with, SMI/Sing Pao was much greater than he was willing to admit, and these facts had to be elicited in cross-examination, with the Defendant being evasive and uncooperative, giving answers that were vague and short on detail, and that sought to deflect or confuse rather than to clarify.

88.  The Defendant had in fact provided substantial financial support to SMI/Sing Pao.

88.1  Billion Wealth (wholly owned by the Defendant)  provided a loan facility of $60m to SMI/Sing Pao pursuant to an agreement of 23^rd April 2008, as recorded in SMI/Sing Pao’s 2009 Annual Report.  As at 31^st March 2009, SMI/Sing Pao had already used some $45.2m of the loan facility.  The loan was interest-free and repayable after 24 months or as otherwise agreed.

88.2  Billion Wealth provided a further loan facility of $50m to SMI/Sing Pao on 20th May 2009, as recorded in SMI/Sing Pao’s 2010 Annual Report.  As at 31^st March 2010, SMI/Sing Pao had already used some $41.6m of the loan facility.  The loan was interest-free and repayable upon resumption of trading of SMI/Sing Pao’s shares.

88.3  Billion Wealth provided a third loan facility of $50m to SMI/Sing Pao on 9^th November 2010, as recorded in SMI/Sing Pao’s 2011 Annual Report.  As at 31^st March 2011, SMI/Sing Pao and its subsidiaries had already used some $26.8m.  The loan was interest-free and repayable after 24 months or as otherwise agreed.

89.  When asked about Billion Wealth, the Defendant initially sought to avoid providing any details about this company, being apparently unable to answer how many directors it had, whether it conducted any business or was a holding company, or how it earned its income.  When it was put to him that he had lent (the initial)  $60m to SMI/Sing Pao, the Defendant’s response was to say that he purchased convertible bonds, rather than to admit or deny the correctness of the statement.  When he was further asked whether he meant that the statement “…Billion Wealth’s loan facility of HK$60,000,000 to granted to [SMI/Sing Pao and its subsidiaries]” as appearing in SMI/Sing Pao’s 2009 Annual Report was wrong, he said that it was possible that the statement was wrong.[10]  When he was pressed as to whether he meant that Billion Wealth did not lend money to SMI/Sing Pao, the Defendant again said that he acquired convertible bonds and did not know where the money went.  He then agreed with the proposition that he was not aware that SMI had borrowed a lot of money in 2008 and 2009, but then when the statement in the 2009 Annual Report that “… Billion Wealth … an independent third party, entered into a loan agreement to provide to [SMI/Sing Pao] … a loan facility of not exceeding HK$60,000,000”, he answered (contradictorily)  that he did not say that he was not aware of the loan.  After he finally acknowledged that he was aware that Billion Wealth lent money to SMI/Sing Pao, and said that the loans had not been repaid, he then said that he had no impression that the loan facilities had been granted. When asked how he could be aware that the loans had not been repaid if he was not aware that they had been made, he said that he meant that $60m had not been repaid.  When Mr Lam clarified that his question related to all three loan facilities and not just the one for $60m, the Defendant reverted to saying that he had no impression of the loan facilities.  He also claimed not to know why Billion Wealth lent such substantial sums of money to SMI/Sing Pao, despite being the sole shareholder of Billion Wealth.  When he was asked whether he was concerned at being shown the statements in SMI/Sing Pao’s annual reports that Billion Wealth had made such substantial loans, again he did not answer the question directly.  In the course of questioning about the loans from Billion Wealth, at one point he gave the confusing answer that the $60m lent to SMI/Sing Pao was spent on buying convertible bonds (issued by SMI/Sing Pao).

90.  I have no hesitation in rejecting the Defendant’s claims of ignorance as being untruthful.  Billion Wealth was his wholly-owned company; it is inconceivable that he did not know, or could not remember, that such substantial loans had been made to SMI/Sing Pao, and why they had been made. I also note that in his witness statement, the Defendant had said that he was aware of SMI/Sing Pao’s annual reports (the context being his claim that he knew little about the company and his knowledge of its financial status was confined to that contained in the annual reports and other publicly available documents).  If somehow the loans had been made without his knowledge, he would nevertheless have learnt of them from reading these annual reports.

91.  The Defendant was also involved in the management and operations of SMI/Sing Pao.  Initially he sought to say that he was not involved in SMI/Sing Pao’s business.  He then said that he merely acquired convertible bonds in the company.  On further questioning he said that he helped the management.  Then he said that he strengthened its production capability and received orders for it.  On further questioning, he said that he got orders for SMI/Sing Pao through another company.  When he was asked why he had originally said that he was not involved with business transactions of SMI/Sing Pao, he claimed that the reason was that “transactions” indicated control, and he did not control the company.

92.  The Defendant agreed that when he acquired an interest in SMI/Sing Pao in April 2008, he knew that its shares had been suspended from trading since 2005, and that it was not earning much.  In fact, he knew, as SMI/Sing Pao’s 2009 Annual Report indicated, that SMI/Sing Pao and its subsidiaries were facing litigation for various debts, and the loss attributable to shareholders had increased from the previous year.  However, he went ahead with his acquisition anyway, because “buying a newspaper was my ideal”. He said that he paid tens of millions of dollars in 2008 to acquire his interest in SMI/Sing Pao, and his motivation for doing so was that “to have a newspaper was my dream”.  There were also considerations of “politics” and “nostalgia” in his decision, as he had been a reader of the Sing Pao newspaper when he was younger.  He had also been introduced to Qin Hui, who wanted the Defendant’s help with the management of SMI.  He knew that SMI/Sing Pao and Qin Hui had problems.  The evidence shows that the Defendant’s interest in helping SMI/Sing Pao was not purely financial; he had agreed to help the company out of its problems and had taken active steps in doing so; and he was also emotionally invested in the success of the company.

93.  According to Birmingham Sports’ 2010 Annual Report, the Defendant had applied for a credit facility line of no less than $150m with his private property used as an asset pledge, to finance Birmingham Sports and its subsidiaries to enable them to meet their liabilities as they fell due.  To some extent, this shows that the Defendant was willing to risk his personal assets to support companies in which he had an interest. Of course, one cannot necessarily assume that the Defendant would have extended the same support to SMI/Sing Pao, a different company. This particular piece of evidence probably does not go further than to say that (as the Defendant himself said)  depending on the circumstances, he might provide such assistance.

94.  In the light of all the evidence, I agree that there was good reason for the Defendant to have provided the Alleged Guarantees, so as to ensure that SMI/Sing Pao could have continued access to the funds borrowed from the Plaintiff, and indeed to enable it to borrow further funds under the 7^th Loan Agreement.  Keeping SMI/Sing Pao afloat was important to the Defendant: the Defendant (through Billion Wealth)  was a significant creditor; it was the Defendant’s dream to own a newspaper; he had taken up the task of helping Qin Fai and SMI/Sing Pao out of their problems and improving the company’s management. I reject the Defendant’s claim that there was no good reason for him to have provided the Alleged Guarantees.

D8.  Reasons for the loans

95.  Mr Zhao’s evidence was that the Plaintiff had never held itself out as primarily or mainly carrying out a money-lending business in Hong Kong; it was its subsidiary which was a registered money lender. It is therefore not clear why the Plaintiff agreed to lend money to the SMI/Sing Pao.  In his witness statement, Mr Zhao surmised that the loans were “possibly” or “likely” granted because there were some “existing relationships” between (1)  the Plaintiff’s then senior management and the SMI Group (Mr Ip Allan Wing Lun was part of the Plaintiff’s senior management, a non-executive director of SMI/Sing Pao, and held a “senior role” in Birmingham Sports, and (2)  the Plaintiff’s then senior management and Birmingham Sports (Mr Chan Wai Keung, Mr Chan Kin Man, Mr Ip Allan Wing Lun and Mr Fu Wing Kwok Ewing were part of the Plaintiff’s senior management and also held “senior roles” in Birmingham Sports). In his oral evidence, Mr Zhao said that he had seen board minutes of the Plaintiff approving the making of the Loan Agreements, and they had been signed by Mr Chui Kwong Kau and Mr Chan Shi Yung.  However, these minutes were not produced in evidence.

96.  Ms Tang submitted that on the Plaintiff’s case, the provenance of the Loan Agreements and the Alleged Guarantees was very closely linked – both allegedly given because of “close relationships”, so that the inability to explain the reason why the Plaintiff entered into the Loan Agreements adversely affected the Plaintiff’s case that the Alleged Guarantees were signed by the Defendant.

97.  It seems to me that the Plaintiff’s case is not that the Loan Agreements and the Alleged Guarantees were given for the same reason, but that the Loan Agreements were entered into by the former management of the Plaintiff by virtue of its close links to the Defendant, whereas the new management of the Plaintiff, shorn of the Defendant’s friends, and needing to complete the Acquisition, considered that the Alleged Guarantees were needed as security.[11]  Either way, I do not agree that doubts as to why the Plaintiff entered into the Loan Agreements necessarily affect the question of whether the Defendant executed the Alleged Guarantees.[12]  It may be that had the Plaintiff been able to better explain why it entered into the Loan Agreements, this would have helped to shed more light on the making of the Alleged Guarantees, assisting the Plaintiff in discharging its burden of proof.  However, the Plaintiff’s failure to do so does not enable some sort of adverse inference to be drawn against it.

98.  I digress here to address a related point made by the Defendant.  Much was made of the Plaintiff’s failure to adduce certain evidence, such as the minutes relating to the making of the Loan Agreements, a supplemental witness statement from Mr Zhao about what Mr Chui Kwong Kau had told him, and evidence from the other former directors of the Plaintiff regarding the making of the Loan Agreements.[13]  The absence of such evidence does mean that there is little to support the Plaintiff’s theory that the Loan Agreements were made by reason of the Defendant’s relationship with former members of the Plaintiff’s management. It also means that the Plaintiff might have missed the chance of obtaining evidence in its favour to help show that the Alleged Guarantees were signed by the Defendant.  But at the end of the day, the fact that the Plaintiff could have better prepared its case and produced more evidence does not answer the question of whether, on the existing evidence, the Plaintiff has proved its case on the balance of probabilities.  Insofar as there are gaps in the evidence, I accept that this was not due to any deliberate attempt to hide any facts.

D9.  Overall points regarding factual evidence for Issue 1

99.  Although the Plaintiff was unable to provide any records of how the Defendant came to execute the Alleged Guarantees, when one takes all the circumstantial evidence together, it points to the Defendant as being their signatory.  The only evidence supporting the Defendant’s claim that he did not sign the Alleged Guarantees is the Defendant’s bare denial.  However, I do not believe this denial.  I have set out above why I do not believe his claim that there was no reason for him to sign the Alleged Guarantees; on the contrary, there was in fact good reason for him to do so.  I have given some examples above of why I found his evidence to be lacking in credibility and indeed untruthful.  There were many others.

100.  I have considered whether it could be the case that (for example)  untruthful answers as regards whether he knew that Billion Wealth had lent money to SMI/Sing Pao could nevertheless be consistent with a truthful denial of having signed the Alleged Guarantees, but have concluded that it could not.  The main thrust of the Defendant’s case in denying that he signed the Alleged Guarantees was based on the claim that he had no reason to have supported SMI/Sing Pao, so that whether or not he had provided other support was highly relevant.  As I have set out above, when challenged about various aspects of this claim, the Defendant was evasive and uncooperative, and sought to deflect and confuse.

101.  Ms Tang rightly points out that in the present case, the relevant events took place some time ago: the Alleged Guarantees date from April 2010 and January 2011.  She cited Incorporated Owners of Fuk Wing Building v Ma Hing Ching, DCCJ 2356/2015, unreported, 17^th July 2017 at [70] to [73] (HH Judge Winnie Tsui, as she then was)  to make the point that with the long passage of time, a witness may not be able to recall exact dates or events with precision in the absence of something to help jog his memory, such as a contemporaneous document or particular event; this also means that (1)  any inaccuracy in his recollection is not necessarily an indication that he is lying; (2)  conversely, a recollection in minute detail may call for caution; (3)  contemporaneous documents may assume greater importance.

102.  However, this was not a case of the Defendant forgetting events and having no precise evidence to offer. It was a case of the Defendant saying, positively, that he remembered that he did not sign the Alleged Guarantees and he had no reason to do so; and a case of the Defendant, when asked about key matters bearing on this, giving answers which sought to deflect and confuse.

103.  Furthermore, it is relevant to bear in mind that the Defendant had an interest in denying that he had signed the Alleged Guarantees.

104.  I should record that the Defendant denied knowing, or knowing much about, the two entities to which part of the loan proceeds were transferred (Fidelity and Sennal). It does not seem to me that this is particularly probative either way of whether he signed the Alleged Guarantees.

D10.  The expert evidence

D10.1  The approach

105.  Both parties referred to Nina Kung v Wang Din Shin (2005)  8 HKCFAR 387 for the applicable principles relating to expert evidence regarding handwriting. I note in particular the guidance at [17] to [19] (Chan PJ)  and [394] (Ribeiro PJ).  A handwriting expert has the advantages of (1)  having scientific techniques or means to find out facts which a judge or jury may not be equipped to do, and (2)  the necessary experience and expertise, helping him to look for relevant facts and arriving at a reasoned conclusion.  However, at the end of the day, it is for the judge or jury to form their own independent judgment with the assistance of the expert; given the nature of the expert evidence, it has to be approached with caution: handwriting analysis is not an exact science and the opinion of a handwriting expert is inherently less precise than a conclusion based on the results of a scientific analysis.  The acceptability of an expert’s opinion depends very much on how sound and convincing the reasons for his opinion are.

106.  The key principles of examination and comparison of signatures, as gathered from the expert literature, were also set out by Chan PJ at [22] to [27].

107.  In the present case, the two questioned signatures appearing on the Alleged Guarantees (“the Questioned Signatures”)  were compared with fifty-seven genuine “control” signatures of the Defendant.  The experts – Mr Grant Sperry for the Plaintiff, and Mr Leung Sze Chung for the Defendant – were in agreement as to the applicable procedures for examining the signatures.

107.1  The first step was to examine and evaluate the Questioned Signatures.  The purpose was to assess the value of the signatures for identification purposes.

107.2  Then, there was an examination, evaluation and inter-comparison of the control signatures, to assess whether sufficient similar letter features and combinations existed to allow for comparisons with the Questioned Signatures; the significance and identification value of such features; and the variation in the various features of the controls.

107.3  Next, there was a comparison between the features of the Questioned Signatures and the control signatures.

107.4  A conclusion was then drawn.

D10.2  The experts’ overall views

108.  Both experts opined that the Defendant’s signature was structurally very simple and therefore not difficult to simulate.  At the same time, both experts opined that there were no diagnostic features of forgery in the Questioned Signatures, such as hesitation, wavering strokes, suspicious pen lifts, or retouching.

109.  Both experts were also in agreement that there was a great deal of variation between the control signatures themselves.

110.  The experts differed in their assessment of the adequacy of the control signatures, and also in their assessment of the comparison between the Questioned Signatures and the control signatures.

111.  Mr Sperry’s conclusion was that the Defendant could neither be identified nor eliminated as having written the Questioned Signatures.  Mr Leung’s conclusion was that the Questioned Signatures were probably not written by the Defendant.

D10.3  My assessment of the expert evidence

112.  Having heard the experts give evidence, I agree with Mr Sperry’s view that Mr Leung attached too much significance to various trivial differences between the control signatures and Questioned Signatures; whilst there were differences, they were not fundamental.  Furthermore, Mr Sperry opined, one should not lose sight of the fact that the Questioned Signatures were freely and naturally executed, and would have been relatively difficult to simulate without displaying some of the features of simulation (which were not found in the signatures).

113.  Both counsel sought to make much out of the expert evidence.  In my view, it suffices to address a few key points arising in the expert evidence to illustrate why I prefer Mr Sperry’s view, and why I doubted the reasoning behind Mr Leung’s view.

D10.3.1  Tracing

114.  The signature on the Alleged 2010 Guarantee was referred to as “Q1”.  It contained an “a”-like feature.  The Defendant placed emphasis on the fact that only one of the control signatures (referred to as “D19”)  also featured an “a”-like feature. Mr Leung opined that this coincidence “arose suspicion that D19 might have been used as a model”.

115.  The signature on the Alleged 2011 Guarantee was referred to as “Q2”.  Mr Leung opined that it was “morphologically similar” to D18.

116.  Mr Leung further opined that if Q1 was overlaid on D19, the signatures could “by-and large be overlapped”; and the same for Q2 and D18.

117.  Mr Leung’s opinion was that “Alarming morphological similarities are found in the superimposed images of Q1 & D19, and Q2 & D18, suggesting the possibility of tracing.”

118.  I asked Mr Sperry about Mr Leung’s view, based on his overlapping exercise, that “The findings are consistent with the control signatures in D18 & D19 being used as templates for the questioned signatures in respectively Q2 & Q1”.  Mr Sperry said that he “totally disagreed”.  He did not agree that the signatures could be overlapped.  He pointed out that this was particularly clear for Q2 and D18.  The image of the two overlaid signatures[14] showed that whilst the outer left and right edges of the signatures could be somewhat aligned, the internal features of each were significantly different: (1)  Q2 had two troughs whereas D18 had three troughs, (2)  the introductory stroke of Q2 was a downwards stroke whereas the introductory stroke of D18 was an upwards stroke that was not found in Q2, (3)  the ends of the two signatures were different.  When placed side-by-side, the differences were even more apparent.  For Q1 and D19, Mr Sperry acknowledged that they did in some respects overlap, but there were also differences between the two, in that (1)  the first trough in Q1 was deeper than that in D19, and (2)  the connecting stroke between the first trough and the “a”-like feature was different in the two signatures, so that the “a”-like feature was formed differently – in Q1 the “a” was formed by the pen going underneath it, whereas in D19 the “a” was formed by the pen going across.

119.  These points made by Mr Sperry were quite apparent from the images of the signatures shown in evidence.

120.  Mr Leung heard Mr Sperry expressing this view in the course of his testimony.  When it came to Mr Leung’s turn to give evidence, he sought to explain away these points by saying that the tracing was not done carefully,[15] and that it was not a typical tracing where a forger followed a signature point by point. It seems to me then that there is little basis to infer that there was tracing at all.  Mr Leung’s evidence would suggest that any signature that roughly followed the left and right edges of a control signature could be a forgery by tracing no matter whether the important features within the body of the signature overlapped or not. If they overlapped, it would be a case of careful and typical tracing; if they did not overlap, it would be a case of not-careful and not-typical tracing.  In other words, the overlapping exercise could not reveal much about whether the signature was forged by tracing (in contrast to Mr Leung’s original starting point that his overlapping exercise was significant in that it revealed tracing).

D10.3.2  The “a”-like feature in Q1

121.  Mr Leung considered that since only one control signature (D19)  contained the “a”-like feature, this coincidence, coupled with his overlapping exercise, indicated that the very signature of D19 was used as a template for the tracing of Q1[16] (the implication being that the Defendant would not have truly signed with an “a”-like feature, whilst a forger, tracing D19, would have done so).

122.  Mr Sperry opined that it was not actually possible to tell, based on the available material, to what extent the “a”-like feature was or was not a feature of the Defendant’s signatures.  True it was that some fifty-seven controls had been put forward, and that only one of them had the “a”-like feature.  However, it did not necessarily follow that the coincidence of the “a”-like feature appearing in both Q1 and D19 indicated forgery.  Another explanation could be that the “a”-like feature was simply under-represented in the control samples used.  He posed a hypothetical question: what if D19, the control signature, was put forward as a questioned signature – then, the “a”-like feature in its middle would not match any of the other fifty-six controls.  However, it would obviously be wrong to then conclude that D19 was a forgery.

123.  I agree with Mr Sperry that under-representation of the “a”-like feature in the control signatures could be an explanation, and that one cannot simply conclude that the coincidence of its appearance in both Q1 and D19 is an indication of forgery.  Part of the experts’ agreed procedure was that they would assess the value of the control signatures.  It seems to me that Mr Sperry’s view adequately took this evaluation into account, whereas Mr Leung’s view did not. In any event, leaving aside the agreed procedure, it seems to me that Mr Sperry’s view accords with common sense.

124.  I also note that whilst on the one hand, Mr Leung considered Q1 was traced from D19 because of the coincidence of the “a”-like feature in Q1 and D19, paradoxically, on the other hand, he considered Q2 was traced from D18 despite the differences in the internal features of Q2 and D18.

D10.3.3  The level of the inaugurating trough in Q1

125.  Mr Leung made much of the fact that in Q1, the bottom of the inaugurating trough was lower than the bottom of the “ay” that followed it.  In his report, he showed that for a number of the control signatures (including D19 and D18), the bottom of the inaugurating trough was on the same level as the bottom of the “ay” or “y” that followed it.

126.  In cross-examination, Mr Leung acknowledged that it was also the case in a number of other control signatures that the bottom of the inaugurating trough was at a different level than the bottom of the subsequent troughs in the rest of the signature.  Mr Leung said, however, that those other controls fell within a different category of signatures – in his report, he had divided the control signatures into three groups and the third group consisted of just one control signature, namely D19, and his point (in cross-examination)  was that (1)  in D19, the bottom of the inaugurating trough was on the same level as the bottom of the “ay” that followed it, (2)  in Q1, the bottom of the inaugurating trough was on a different level as the bottom of the “ay” that followed it, which was a significant difference from Q19, (3)  it was irrelevant that in other controls, the bottom of the inaugurating trough was also on a different level as the bottom of the subsequent parts of the signature, because one could only compare Q1 with D19 and not the other controls as only D19 had the “a”-like feature.  However:

126.1  as Mr Sperry pointed out, if there were more control samples with the “a”-like feature available, it might turn out that the bottom of the inaugurating trough in some of those samples was also lower than the bottom of the “ay” following it;

126.2  Mr Leung’s own report (in figure 1 and at paragraph 5.4.3)  had sought to make the point that the inaugurating trough in two other control signatures was at the same level as the bottom of the troughs in the rest of the signature.  Yet those two other control signatures (P3-1 and D18)  were in a different category of control signatures to D19.  In other words, he relied on control signatures from other categories to support his theory where they were consistent with his theory, but discounted control signatures from other categories where they were inconsistent with his theory.

D10.3.4  The finishing upstroke in Q2

127.  Mr Leung relied on the fact that in Q2, the finishing upstroke bent to the left, whereas in a number of the control signatures, it bent to the right.[17]  However, as he acknowledged in cross-examination, there was a great deal of variation in the direction of the finishing upstroke in some of the other control signatures.  Mr Leung himself said that there were “large variations among the ending of the ‘y’”, and when he was asked whether he had any opinion as to why the “y” at the end went in different directions, he said that there was “no particular explanation” for this, “it depends on the writer and his habit” and it also depended on the circumstances when the signature was signed.

D10.4  Conclusion regarding the expert evidence

128.  I therefore do not accept Mr Leung’s view that the Questioned Signatures were probably not written by the Defendant.  Given that Mr Sperry’s view is that the Defendant could neither be identified nor eliminated as having written Questioned Signatures, the expert evidence does not provide any assistance as to Issue 1.

D11.  Conclusion regarding Issue 1

129.  Whilst there is not a lot of evidence on the issue, I find that it all points to the Defendant as having signed the Alleged Guarantees, with the exception of the Defendant’s bare denial. I do not accept this denial.  I have explained above the reasons why I do not find the Defendant’s testimony to be reliable.  I therefore find as a fact that the Defendant signed the Alleged Guarantees.

E.  ISSUE 2: DID THE ALLEGED GUARANTEES FAIL TO SATISFY THE FORMALITIES REQUIRED OF A DEED?

130.  The Defence pleaded that the Alleged Guarantees failed to satisfy the formalities required of a deed, or s.19 of the Conveyancing and Property Ordinance (Cap.219)  (“the CPO”), because they were not signed by the Defendant.[18]  Expressed in this way, the complaint about lack of formalities stands or falls with Issue 1.[19]

131.  Ms Tang’s closing submissions sought to rely on s.19 CPO, which deals with the execution of a deed by an individual.  Under s.19(2)  CPO, a document is presumed to have been sealed by an individual if the document signed by him satisfies a number of requirements, one of which is that the document “states that it has been sealed”.  Ms Tang acknowledged that since the execution clauses of the Alleged Guarantees stated “SIGNED SEALED AND DELIVERED”, there was a rebuttable presumption that the documents were sealed.[20]  She simply sought to argue that the fact that the clauses stated “in the presence of” appeared to suggest that attestation was an important formality envisioned by the parties.  However, as she accepts, attestation is not a requirement in order for the Alleged Guarantees to have the status of deeds.  There is therefore nothing in the point – even if it were open to the Defendant, on his pleaded case, to take the point.

F.  ISSUE 3: IS THE PLAINTIFF TIME-BARRED FROM CLAIMING THAT THE DEFENDANT IS IN BREACH OF THE TERMS OF THE ALLEGED GUARANTEES?

132.  Ms Tang frankly acknowledged that no limitation issue arises if the Alleged Guarantees are deeds (rather than simple contracts).[21]

G.  ISSUE 4: IF CONSIDERATION IS NECESSARY FOR THE ALLEGED GUARANTEES, WAS ANY SUCH CONSIDERATION PROVIDED?

133.  Ms Tang also acknowledged that no issue as to consideration arises if the Alleged Guarantees are deeds (rather than simple contracts).[22]

H.  ISSUE 5: IF THE ALLEGED GUARANTEES ARE ENFORCEABLE AGAINST THE DEFENDANT, WHAT TERMS THEREOF HAS THE DEFENDANT BREACHED?

134.  The Plaintiff confined itself to the Defendant’s breaches of cl.2.1(a)  and cl.6.1(i)  of the Alleged Guarantees, that is, the Defendant’s guarantee of the due, full and punctual payment of the Secured Indebtedness under the Loan Agreements, and the Defendant’s covenant and undertaking to punctually pay all sums due from the Borrower or Guarantor and to comply with their respective obligations under the Guarantees.[23]

135.  Any issue arising fell away at trial.[24]

I.  ISSUE 6: IF THE ALLEGED GUARANTEES ARE ENFORCEABLE AGAINST THE DEFENDANT AND THE DEFENDANT IS FOUND TO BE IN BREACH OF THEM, WHAT IS THE QUANTUM OF LOSS AND/OR DAMAGES THAT THE PLAINTIFF CAN CLAIM?

136.  Ms Tang confirmed in her oral closing submissions that there was no issue as to the Plaintiff’s calculation of quantum as set out in Annex 1 of the Plaintiff’s written closing submissions.

J.  DISPOSITION

137.  I give judgment for the Plaintiff for the outstanding loan principal of $37,100,000, contractual loan interest of $12,054,575.35, and default interest (amounting to $185,307,287.69 as at 23^rd September 2025 and continuing to accrue at the rate of 3% per month until the date of this judgment).

138.  There will be interest on the aggregate judgment sum (including pre-judgment interest)[25] at judgment rate, from the date of judgment until payment, pursuant to s.49 of the High Court Ordinance (Cap.4).

139.  I further make an order nisi that the Defendant is to pay the Plaintiff the costs of and occasioned by the action, to be taxed if not agreed.