KEEN LLOYD HOLDINGS LTD v. CHAN KA MAN

HCA 2067/2020

[2025] HKCFI 5929

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2067 OF 2020

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BETWEEN

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JUDGMENT

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1.  In this action, the Plaintiff Keen Lloyd Holdings Limited (“P”) sues the Defendant Chan Ka Man (“Chan”) to enforce a settlement agreement said to have been reached orally between P’s director Mr Chin Kam Chiu (“Chin”) and Chan in a meeting held around early September 2019 (“the Settlement Agreement”), which was reached to settle P’s claims in HCA 641/2014 (“HCA 641”) against Chan and her daughter Churk Sin Ki (“Ki”).

2.  The principal issues are whether the Settlement Agreement in fact had been reached, and whether the Settlement Agreement was supported by consideration (“the Consideration Issue”) in view of, among others, the fact that P’s claims against Chan and Ki in HCA 641 were struck out on 18 January 2017 on the ground that P has failed to pay into court HK$350,000 as security for the costs of Chan and Ki pursuant to an Order made on 7 November 2016. Ms Wong, counsel for Chan, raised 3 more issues that were not specifically pleaded. I will allude to them after setting out the factual background.

BACKGROUND FACTUAL MATTERS

3.  The factual background matters are rather protracted, some are disputed and some not, or not seriously disputed. I will specify in the narrative below which of them are disputed, and which are not. I will also narrate the factual matters relating to HCA 641 in more detail as Chan raised the question, in relation to the Consideration Issue, as to whether P had a “reasonable claim” against Chan and Ki in HCA 641 and she also contested that it would clearly be an abuse of process if P attempted to revive HCA 641 or commence new proceedings on the same subject matters after the claims were struck out.

4.  Of some relevance by way of backdrop as context to evaluate the witnesses’ communications and their conducts and explanations to some of their conducts is the rather misty relationship dynamics between Chin, Chan and Chan’s husband Churk Yat Ming (“Churk”), which would take the narrative back to 1979.

5.  In 1979, Chin was introduced to Chan by a friend who tried to pair them up romantically. However, later Chin introduced Chan to his friend Churk. Chan later married Churk, and they have 2 daughters and a son - Ki is their eldest daughter, and I will call the other daughter “the 2^nd Daughter” and their son “the Son”.

6.  It is common ground that Chin and Chan in all these years up to the present disputes had remained good friends and in a cordial relationship. As for Chin and Churk, Chan said they were like “brothers”, which Chin did not accept. Chin said he trusted Chan and not Churk, and also said in evidence that he telephoned Chan more than he telephoned Churk, which was not disputed by Chan. In oral evidence, both Chin and Chan, and more on the part of Chan, portraited Churk as not a good or responsible husband to Chan. Chin in his witness statement said Churk had an affair with one Madam Tai in Mainland (“Tai”) and they had given birth to a daughter, but this apparently was not accepted by Chan. Chin’s evidence, and not seriously disputed by Chan, was that in around 2005 Chan with tears blamed Chin for having paired her up with an unworthy man as Churk, which according to Chin, made him felt guilty and wanted to make it up to Chan. Chan said in oral evidence that Chin had a secret crush on her, which Chin denied. On the other hand, Chin said that he never dated Chan, but rather, Chan said to him in around 2005 that she in fact initially had a liking towards Chin.

7.  The upshot was, according to Chin, that Chin was willing to, and did, provide substantial financial assistance to Churk and the daughters when such were requested by Chan, and not when requested by Churk. Such instances of assistance were said by Chin to include the following :

a. in 2007, Churk asked for a loan of HK$500,000 from Chin which Chin refused, but shortly after when Chan asked Chin for a loan of RMB 500,000 to help with Churk’s business, Chin lent the money to Chan, which was never repaid;

b. in 2007, Chan asked Chin to introduce transportation work in Guangzhou to Churk;

c. in 2008, Chan arranged to meet with Chin and there said to him that Churk was unable to finance Ki’s studies overseas (in either the U.K. or Australia) and Chan again blamed Chin for pairing her up with Churk and asked Chin to finance Ki’s education overseas, which Chin agreed and did so finance Ki; and

d. in 2010, Chan arranged to have tea with Chin and there said the same things concerning the 2^nd Daughter’s intention to study overseas and asked Chin to also finance her education overseas, Chin agreed and did so finance the 2^nd Daughter.

8.  At trial, Chan initially disputed the provision of assistance by Chin mentioned in the preceding paragraph, but later did not dispute them seriously and instead said in cross-examination that she did not request such assistance from Chin, and that it was because Chin and Churk “有協商，有另外交易” (but without giving any details) that Chin agreed to provide such assistance.

9.  Since the beginning of January 2012, the banks had refused to comply with the banking instructions given by P, its subsidiaries and Chin in respect of their respective bank accounts due to on-going investigations by the Custom and Excise Department over suspected illegal smuggling and money laundering activities.

10.  The following is a broad summary of the factual allegations made by P as the plaintiff in HCA 641[1] against Churk (as 1^st defendant), Zhenwei Limited (“Zhenwei”)(as the 2^nd defendant), Chan (as the 3^rd defendant), and Ki (as the 4^th defendant):

a. Around the end of January 2012, it was orally agreed between Chin on behalf of P and Churk on behalf of Zhenwei at P’s office that starting from 1 February 2012, Zhenwei would hold on trust for P funds for payments of goods due to P but deposited by third parties into Zhenwei’s bank account with the Bank of China (Hong Kong) Limited no. 012-390-0-001017-1 (“the Zhenwei BOC Account”), and that regarding such funds deposited Zhenwei had to only act in accordance with, and could not act without, P’s instructions or directions and Zhenwei was to provide to P a copy of the monthly statement of the Zhenwei BOC Account every month for P to verify the transactions and remaining balance (“the Trust Agreement”).

b. Zhenwei was a Hong Kong company. Churk and Tai were the only 2 directors and shareholders of Zhenwei each holding 50% shares; and Churk was the sole authorized signatory of the Zhenwei BOC Account.

c. Very shortly after and also around the end of January 2012 and in a Chinese Restaurant in Causeway Centre, Wanchai, Chin met with Churk and Chan (“the January 2012 Meeting”), and Churk and Chan gave an oral guarantee to Chin on behalf of P (“the Oral Guarantee”) guaranteeing that Zhenwei would not mis-use, misappropriate or breach its duties regarding any of P’s funds so deposited into the Zhenwei BOC Account. The Oral Guarantee was made by Churk and Chan on the consideration that Chin would pay for Ki’s and the 2^nd Daughter’s tertiary education overseas until their completion.

d. Pursuant to the Trust Agreement and the Oral Guarantee, 6 deposits of P’s funds totalling HK$13,679,770.40 were paid into the Zhenwei BOC Account between 6 February 2012 and 31 July 2012.

e. Between 6 February 2012 and 1 February 2014, P authorized Zhenwei to, and Zhenwei did, withdraw a total of HK$5,673,384.74 from the Zhenwei BOC Account. Thus, Zhenwei still held on trust for P deposited in the Zhenwei BOC Account the balance of HK$8,006,385.66 (“the Balance”).

f. Zhenwei has been providing to P altogether 21 monthly bank statements of the Zhenweil BOC Account for the period from February 2012 to December 2013, but, despite demands, failed to provide to P the bank statements for the period from January to March 2014.

g. In fact, since February 2012 until March 2014, Churk and Chan caused unauthorized withdrawals from the Zhenwei BOC Account.

h. On 30 March 2014, P instructed Zhenwei to transfer the Balance to P which it agreed to do the next day on 31 March 2014. However, Zhenwei failed to do so on 31 March 2014.

i. In the late afternoon of 31 March 2014, Churk met with Chin and Fu Chiu Wah (“Fu”), a staff of P (“the March 2014 Meeting”). There, Churk orally admitted that (i) he and Chan had withdrawn the Balance without P’s consent, (ii) used the money to improve the living standard of the family and purchased stocks, (iii) the 21 monthly bank statements provided to P[2] (“the Forged Bank Statements”) were forged by the Son and then Ki under his instructions. Churk also there signed an Acknowledgment of Debt in Chinese[3] acknowledging, among others, that the Balance was owed and Churk had to return the Balance to P in full on or before 7 April 2014 (“the Chinese AOD”).

j. However, Churk was unable to be contacted since 1 April 2014. P reported the matter to the police that day.

k. The Balance was never repaid back to P by Zhenwei, Churk, Chan or Ki.

11.  On 9 April 2014, P commenced HCA 641 initially against Churk and Zhenwei. On 11 April 2014, P obtained a Mareva injunction against Churk (“the 641 Mareva Injunction”).

12.  I also note at this juncture that since very early on Churk had made a number of express admissions, including (a) the Chinese AOD, (b) his apologies to Chin and admissions that he has taken the money to speculate on stocks hoping to improve the livelihood of his family given in the whatsapp messages he exchanged with Chin between 1 April 2014 and late April 2014[4], and (c) in his Defence filed in HCA 641 on 3 November 2014.

13.  Pursuant to the Order of G. Lam J (as he then was) given on 16 May 2014 and by their solicitors’ letter of 26 May 2014, Bank of China confirmed that the Forged Bank Statements were forgeries[5] and produced to P a complete set of 23 bank statements of the Zhenwei BOC Account covering the period from February 2012 to December 2013[6].

14.  By re-amendment made on 15 August 2014, P joined Chan and Ki as 3^rd and 4^th defendants in HCA 641 and sued them for :

a. Chan (together with Churk) for liability under the Oral Guarantee; (together with Churk and Ki), for conspiracy to injure P by unlawful means of misappropriating trust money and fraudulent concealment by forging and using the Forged Bank Statements, and for dishonest assistance in the breach of trust by Zhenwei; and for receipts of money knowing that the same was obtained in breach of trust; and

b. Ki (together with Churk and Chan), for conspiracy to injure P by unlawful means of misappropriating trust money and fraudulent concealment by forging and using the Forged Bank Statements, and for dishonest assistance in the breach of trust by Zhenwei.

15.  None of what P alleged in HCA 641 is accepted by Chan for the present purpose. Chan’s stance in this action in gist is that (a) she particularly denies she was present in the January 2012 Meeting at all, and therefore denies she had given the Oral Guarantee, (b) she does not seriously dispute the Trust Agreement or that Zhenwei had received and held P’s money in the Zhenwei BOC Account or that there had been unauthorized withdrawals of P’s money therefrom, but strenuously denies any involvement therewith or any contemporaneous knowledge of the same, and (c) she initially disputed, but later in the course of trial did not dispute that since the end of January 2012, Chin continued to fund Ki’s and the 2^nd Daughter’s educations overseas despite Chin, P and P’s subsidiaries could not operate their bank accounts, but the tenor of her evidence was that she was not even involved with such funding by Chin to the 2 daughters, and had no knowledge as to how much, how or when the 2 daughters were paid such funds from Chin.

16.  The fact that the Forged Bank Statements sent to P were forgeries are indisputable as Bank of China had confirmed that they were.

17.  On any view, this is evidently a serious case of forgery and uttering forged documents, as shown by :

a. A comparison of the set of genuine bank statements and the Forged Bank Statements readily reveals that (i) every one of the Forged Bank Statements, covering 21 months, was forged, (ii) in the first of the 21 Forged Bank Statements, 2 withdrawals and one transfer out on respectively 9 and 21 February 2012 totalling HK$150,000 do not appear thereon, (iii) thereafter, periodic and numerous withdrawals (presumably unauthorized) do not appear on the Forged Bank Statements, for instance, 4 withdrawals in March 2012 totalling HK$2,300,000 do not appear on the forged copy, (iv) by 9 June 2012, around HK$10 million of P’s funds had been deposited but all save HK$15,400.34 were withdrawn, and the majority of those withdrawals were unauthorized (v) since then, there continued to be concealed withdrawals after the last 2 deposits of P’s funds were made (on 4 and 31 July 2012 totalling about HK$3.5 million), there were also numerous deposits in various amounts which do not appear on the Forged Bank Statements (presumably, they were deposits secretly made to meet those payments out from the Zhenwei BOC Account directed by P).

b. Thus, numerous entries were forged consistently throughout each of the Forged Bank Statements to periodically present to P during those 23-month period the false picture that only authorized withdrawals were made and the monthly balances in the Zhenwei BOC Account were correct, thereby purposefully concealing the illegal activities.

c. Very note-worthily, the forgeries were very sophisticated forgeries in all respects – regarding the fonts, the spacing, the codes denoting the nature of the transactions and such – that the Forged Bank Statements are such look-alikes to the genuine ones that the forgery was virtually undetectable.

18.  It is undisputed, as shown by the names of recipients disclosed by Bank of China[7] and the fact that the genuine bank statement[8] shows the transaction but the corresponding Forged Bank Statement[9] does not, that on 21 February 2012 HK$100,000 was transferred into Chan’s bank account without P’s authority.

19.  It is also undisputed that four of the Forged Bank Statements covering September to December 2013 were sent on 27 January 2014 to P electronically as attachments to an email sent from the email address of the email account belonging to Ki[10].

20.  Regarding the forgery and Ki’s possible involvement, Chan essentially said that she was not involved nor had or has knowledge of what happened but at this trial she attempted to offer many explanations to exculpate Ki. While Chin’s[11] and Fu’s[12] evidence given in their witness statements, not accepted by Chan, is that when Chin questioned Churk during the March 2014 Meeting, Churk told him that the Son and Ki altered the genuine bank statements and that since Ki worked in a bank, she was familiar with bank statements, Chin further said that he telephoned and talked to Ki on 31 March 2014 and on the next day and Ki said that Churk and Chan asked her to alter the bank statements and Churk asked her to send them to P by email.

21.  Another related factual dispute is that Chin said in his witness statement[13] that by mid July 2013 Churk had not met with Ms 林雅茵 (a manager of P)(“Lam”) for several months to verify the transactions and monthly balances in the Zhenwei BOC Account (as he should have), Chin then telephoned Chan to chase up and he together with Fu met Chan in 名爵酒樓in Wanchai North several days later, at which meeting Chan handed to Chin 3 of the Forged Bank Statements covering the months of February to May 2013[14]. Chan completely denies that the incident ever occurred and also denies generally her involvement or knowledge of the arrangement that P’s fund had been deposited into the Zhenwei BOC Account.

22.  As have been mentioned as one of the allegations in HCA 641, on 1 April 2014 when Zhenwei failed to repay the Balance and Chin was unable to contact Churk, Chin reported the matter, including the forgery, to the police. Chin gave 3 police statements, one on 1 April 2014[15], another on 30 July 2014[16] and the last one on 5 August 2014[17]. Fu gave his police statement on 9 October 2014[18].

23.  Going back to HCA 641,

a. The parties exchanged their witness statements in December 2015.

b. On 27 April 2016, Chan and Ki issued a summons seeking security for costs from P.

c. On 25 July 2016, P successfully obtained summary judgment on part of its claim against Churk in the sum of HK$5,901,605.66 (“the Summary Judgment Sum”) on Churk’s own admission, leaving P’s claim against Churk for the remainder of the Balance, namely about HK$2.1 million, to be tried.

d. On 7 November 2016, P was ordered to provide security for costs in the sum of HK$350,000 within 28 days.

e. Despite a further Unless Order having been made, P defaulted in providing the said security. On 18 January 2017, P’s claims against Chan and Ki were struck out and dismissed upon the default.

f. Since then, P has not taken any steps in HCA 641.

24.  According to Chin, and not disputed by Chan, since 2012 P was embroiled in various litigations with the Commissioner of Customs and Excise; while Chin (together with others) was investigated and then prosecuted in 2015 under case no DCCC 919/2015 for a number of offences, principally dealing with property known or believed to represent proceeds of indictable offence, and from 1 September 2015 to mid December 2016 he was denied bail and was remanded in custody. He was then heavily preoccupied in preparing for the defence of the criminal proceedings and then attending the 97-day criminal trial.

25.  On 26 June 2019, the verdict in DCCC 919/2015 was delivered whereby Chin was acquitted of all charges.

26.  According to Chan, since July 2019, some “third parties” (actual words used by Chan: “第三方人士”[19], which Chan did not name) contacted Churk and her many times to demand payment of the Balance to P, they suggested to them to sell the property held by Churk and Chan as joint tenants and known as Flat J, 2^nd Floor, Block 10, Fullview Garden, No 18 Siu Sai Wan Road (“the Property”) and to use the proceeds for repayment. They harassed them by, among others, pouring red paint on the premises of the cleaning company owned and operated by Chan and making harassing phone calls to Churk, herself and Ki. Chin denies any knowledge or involvement with such alleged activities of these “third parties”.

27.  It is common ground that around noon time one day in early September 2019, Chin and his 2 friends met with Chan, Churk and their 2 companions in the Chinese restaurant China Hall (御苑) in Kwai Fong (“the September 2019 Meeting”), where and when, according to P, the Settlement Agreement was orally reached, but according to Chan, such was not even talked about. The parties’ respective factual versions on what in fact happened in the September 2019 Meeting were diagonally conflicting. That would be the principal factual issue to be resolved.

28.  There were some disputes over certain actions following up with that meeting, which I will in due course also deal with. It is common ground that in respect of HCA 641 certain negotiations took place leading to the exchange, or negotiations took place by the exchange, of a number of without prejudice solicitors’ letters between Messrs Ho Tse Wai & Partners (“HTW”) and Messrs Ivan Tang & Co (“IT&Co”) from December 2019 to May 2020 (“the 641 WP Letters”). The parties dispute hotly over the purport and probative value of these letters concerning the disputed issues at hand.

29.  According to Chan, in November 2019 and late April 2020, the “third parties” continued to harass her, Churk and Ki.

30.  I would mention at this juncture that in oral evidence, Chan repeated said that the “third parties” who harassed her as mentioned in §26 above, who attended the September 2019 Meeting (as will allude to below), and who were mentioned in the preceding paragraph were members of triad societies (黑社會) and that they were acting at the behest of Chin.

31.  On 15 July 2020, Churk took out a summons in HCA 641 to discharge or vary the 641 Mareva Injunction on the ground of delay in prosecuting the HCA 641. It was heard on 14 August 2020 before Q Au-Yeung J. By her Ladyship’s decision dated 26 August 2020, the learned judge varied the 641 Mareva Injunction by giving leave to Churk to sell his 50% interest in the Property and to sell certain stocks held in his name and ordered the proceeds of the sales (net certain expenses) be paid to P in satisfaction of the Summary Judgment Sum.

32.  The net proceeds of the sale of the stocks (after deducting certain expenses and costs) in the sum of HK$3,077,290.19 were paid to P in November 2020. However, Churk has not taken any step to sell the Property pursuant to the said Order of Q Au-Yeung J.

33.  On 11 December 2020, P commenced the present action against Chan to enforce the Settlement Agreement.

OTHER ISSUES RAISED BY CHAN AT TRIAL; CHAN’S PLEADED CASE REGARDING THE SETTLEMENT AGREEMENT

34.  In her opening submission, Ms Wong raised, apart from the principal issues I set out in paragraph 2 above, the issue of “whether the [Settlement Agreement] was intended to be legally binding”. In her closing submissions, she further raised two additional issues of “whether the [Settlement Agreement] was of sufficient certainty” to make it enforceable and whether there was “a meeting of the minds between the parties”.

35.  Chan’s pleaded case regarding the Settlement Agreement is as follows.

36.  In §3 of her Amended Defence pleading to §2 of the Amended Statement of Claim in which the Settlement Agreement was first mentioned, Chan denied the Settlement Agreement and put P to proof, and further specifically averred:

a. that Chan had no authority to enter into the Settlement Agreement to sell the Property which was jointly owned by Churk and her;

b. “there is no reason, basis and/or ground for her to enter into the [Settlement Agreement]” as (i) the HCA 641 action against her and Ki was struck out, and (ii) it will be “a double recovery” for P if the entire proceeds of sale of the Property were to be paid to P; and

c. For a period of 15 months from the time the Settlement Agreement was allegedly reached to the commencement of this action, P has never raised with Chan the Settlement Agreement and this action was commenced only after Q Au-Yeung J did not accede to P’s application to also freeze Chan’s interest in the Property on 26 August 2020.

37.  Then, in §9 of her Amended Defence, Chan specifically pleaded to §9 of the Amended Statement of Claim in which the September 2019 Meeting and the formation of the Settlement Agreement were pleaded. Chan there barely denied that any agreement (including the Settlement Agreement) was reached between Chin and Chan and put P to proof. She then repeated §3 of her Amended Defence, and averred that Churk and her were further harassed “due to the Plaintiff’s failed attempt to reach an agreement with Chin (sic, should be Churk) and/or the Defendant”. I note that Chan did not deny the occurrence of the September 2019 Meeting there, or pleaded any averment regarding what happened in that meeting.

38.  Thus, the 3 newly raised issues were not specifically pleaded in Chan’s Amended Defence. I would therefore only consider them in the context of Chan putting P to proof generally and would be particularly wary of any specific contentions or of any reliance on any specific matters to argue these 3 “issues” which were only raised in submissions.

HAS THE SETTLEMENT AGREEMENT IN FACT BEEN REACHED?

Approach in assessing credibility and reliability of evidence and fact finding

39.  The basic principles and approach are trite and not disputed. They have been helpfully summarized by DHCJ Eugene Fung SC (as he then was) in Hui Cheung Fai & Another v Daiwa Development Ltd & Others (HCA 1734/2009, unrep, 8 April 2014):

“76. In making my findings of fact in this case, I am guided by a number of general principles which judges apply as to fact finding and the assessment of credibility.

77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce). ...

78. 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: eg Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).

79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.

80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36-37 (Bokhary PJ)), or from the assessment of the witnesses’ character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)).”

40.  Moreover, it is also well established that if a witness has told lies on a central issue, that may have a significant adverse impact on the credibility of his or her evidence as a whole (Progetto Jewellery Co Ltd v Lau Chiu Ying [2020] HKCFI 209 at §§28-31; PC Enterprises (HK) Ltd and Another v Chan Wai Ching [2021] HKDC 966 at §41).

Parties’ respective factual versions regarding the September 2019 Meeting; the terms of the Settlement Agreement according to P

41.  P’s pleaded case on the Settlement Agreement is that during the September 2019 Meeting, Chin on behalf of P and Chan

“made an oral agreement whereby in consideration of [P] agreeing to forgo its claim against [Chan and Ki] or (sic) the Misappropriated Sum and/or any part thereof, and/or to withhold commencement of proceedings to enforce such claim against [Chan and Ki], and/or to forbear from further prosecuting the HCA 641 Action as against [Chan], [Chan] agrees to sell the property which she and [Churk] hold as joint tenants … as soon as possible and pay the entire proceeds to [P] in full and final settlement of its claim as against [Chan and Ki] for the Misappropriated Sum and/or in satisfaction of P’s claim in HCA 641 Action as against [Chan and Ki]”[20].

42.  Chin said the same in his witness statement. In oral evidence, Chin further said that (a) in early September 2019, he had called Chan asking when she would repay the Balance and he had said that if Chan did not repay, he would revive HCA 641 or raise a new claim (“the Revivial Threat”); and then later, Chan called him, said that she had discussed the matter with Churk and arranged for the September 2019 Meeting, (b) 2 friends of his visited from Mainland and as no other convenient time could be arranged for the September 2019 Meeting, the 2 friends came along but they sat at another table and did not join any discussion between him and Chan, and (c) in the September 2019 Meeting when he saw Churk, he asked Churk to sit elsewhere as the police had told him that he should not have any communications with Churk pending the criminal investigation; but before Churk left the table, Churk said that he promised to pay the balance outstanding (ie., whatever amount that would still be owed to P after the sale of the Property and payment of the proceeds), interest and costs.

43.  I would also add that in P’s Statement of Claim and Reply[21], it was pleaded that one Mr Chan of IT&Co (now solicitors acting for Chan)(“Mr Chan”) was named by Chan to Chin in the September 2019 Meeting as the person to contact for follow up and that shortly after the September 2019 Meeting, Chin met with Mr Chan who confirmed that Chan was willing to sell the Property.

44.  Regarding Chan’s case, I have already in §§36 and 37 above alluded to what Chan’s pleaded case is in disputing the Settlement Agreement. Chan’s version on what happened in the restaurant during the September 2019 Meeting is somewhat unusual. I will quote what she said in her witness statement:

“13. 約2019年九月初，第三方向卓先生表示秦先生要求與本人及卓先生會面。

14. 由於原告人及或第三方多次向本人、卓先生及女兒作出不合法的催賬行為，於無可奈何下之下，本人及卓先生答應第三方的要求。

15. 約2019年9月初，本人及卓先生於兩名親友陪同下，到酒樓與秦先生會面。

16. 於會面當日，當本人及卓先生到達酒樓時，秦先生已在場。秦先生見到本人及卓先生時，面露驚訝神色。本人當時覺得甚為詫意，但仍禮貌地向秦先生打招呼，並詢問秦先生是否「搵」本人。然而，秦先生表示並沒有「搵」本人。本人曾再次向秦先生確認他是否有透過第三方約本人見面，然而，秦先生堅稱他未有約本人見面。

17. 有見及此，本人便結束與秦先生的對話並與卓先生及兩位親友到鄰桌飲茶。

18. 其後不久，秦先生便離開酒樓。

19. 雖然本人，卓先生及秦先生曾於酒樓見面，惟除上文第16段所述之事宜外，本人、卓先生及秦先生並未有任何對話及/或溝通，更遑論提及物業，或出售物業之事宜，亦未有達成任何協議或和解協議，包括聲稱協議。

20. 秦先生離開酒樓後，第三方曾與本人及卓先生對話及溝通:

(1) 第三方多次要求本人及/或卓先生向第三方支付一些金錢作「見面禮」，但本人及卓先生堅拒第三方的要求；及

(2) 另外，第三方亦曾向本人及卓先生展示一張打印的文件，內容大約指卓先生承認拖欠原告人總申索款項，並要求卓先生簽署，但卓先生亦拒絕簽署。

21. 最後，由於本人與卓先生堅拒向第三方支付任何金錢作「見面禮」，而卓先生亦堅拒按第三方要求簽署文件，第三方最後只能不了了之讓本人及卓先生離開酒樓。

22. 本人、卓先生及第三方的整個對話，基本上環繞上文第20段所述之事宜。本人、卓先生及第三方從未提及出售物業之事宜，更別遑論達成任何協議或和解協議，包括聲稱協議。”

45.  In short, Chan’s version in her witness statement is that there was no actual meeting with Chin at all on that occasion. Chan said in oral evidence, not disputed by Chin, that one of the 2 “relative and friend” that attended the September 2019 Meeting with Chan and Churk was Mr 黎輝 (“Lai”), the son-in-law of Chan’s sister, who was acquainted with Chin, and the other person attended was a friend of Lai.

46.  While nothing was said there by Chan responding to P’s allegation that shortly after the September 2019 Meeting, Chin met with Mr Chan who confirmed that Chan was willing to sell the Property, it follows logically from her account that there should not have been any such meeting between Chin and Mr Chan discussing the sale of the Property.

The witnesses and their general credibility

47.  P called Lam, Fu and Chin as its witnesses. Chan was the only witness for her case.

48.  Lam worked for P as its office manager from 1996 to June 2015 and since left the employment of P. Her evidence covered matters relating to HCA 641. The more significant aspects of her evidence for present purposes were that she reported to Chin in early June 2013 that Churk has been avoiding the monthly verification of the Zhenwei BOC Account and that later Chin handed 3 monthly bank statements of the Zhenwei BOC Account covering the months of February to May 2013[22] to her saying that he received them from Chan, and Lam noted it down at the bottom margin of the 3 statements with the words “由卓太交秦生”. These 3 bank statements were some of the Forged Bank Statements. These, if accepted, would corroborate Chin’s version and shatter Chan’s version that she had no knowledge and was completely uninvolved with matters relating to the payment of P’s funds into the Zhenwei BOC Account. Lam was only briefly challenged on these in cross-examination and Lam maintained her such evidence. Having seen and heard carefully Lam giving evidence, I am positively impressed by her as a witness and find her generally a credible and reliable witness.

49.  Ms Wong in closing submissions submitted that the claim in HCA 641 was a “non-issue” and criticized P for “turning this trial to a trial within a trial on the HCA 641 claim”. I however recalled that in opening submissions she challenged broadly including on the merits that P had no “reasonable claim” at the time of the Settlement Agreement. In any event, it seemed to me very clear at trial and to all parties that the fact that Lam’s such particular evidence, if accepted, could and would have significant bearing on the Court’s assessment of credibility of Chan’s evidence and stance.

50.  Since 2009, Fu has been an employee of P and he at all material times worked as Chin’s personal assistant. He left P’s employment in 2015 or 2016. Again, his evidence related to the HCA 641 matters. Three matters he said in his short witness statement bear some significance. First, he stated very positively that Chan was present in the January 2012 Meeting and there made the Oral Guarantee in clear terms, thus, directly contradicting Chan’s evidence and stance. Second, in the March 2014 Meeting (in which he was present) he also heard Churk said that Ki and the Son helped him altered the bank statements and that Ki was working in a bank and “對呢啲嘢好熟”. Third, he overheard the telephone conversation between Chin and Ki later that day on 31 March 2014 that Chin told Ki that Churk said to him that the bank statements were “made” by Ki and the Son. Fu was cross-examined on these matters in some details and remained unshaken. I also note that Fu stated the first and second matters (but not the third) equally clearly in the police statement he gave on 9 October 2014. When giving evidence, Fu was calm, composed and direct. I am favourably impressed by him as a witness and find him generally a credible and reliable witness.

51.  Chin is relatively uneducated but nevertheless a self-made successful merchant. He evidently was very familiar with court proceedings having acted in person and sat as a witness in a number of proceedings, both civil and criminal. My impression is that he is smart and thoughtful, if not evidently intuitive, rather direct and even blunt.

52.  Contrary to what Ms Wong contended, I do not find Chin an evasive witness as he almost invariably answered factual questions instantaneously and directly. I accept that Chin has a tendency to be argumentative, and that was shown when he answered a number of Ms Wong’s questions over the 641 WP Letters. I would comment on this in due course in their proper setting when I discuss the 641 WP Letters. Apart from the answers on the 641 WP Letters, Chin was argumentative in cross-examination in a number of other instances, but I noted that he was so not when he was first asked a factual question, rather, he sometimes retorted and argued when his earlier answer was sharply challenged by Ms Wong based on her reasoning or deductions.

53.  Ms Wong acknowledged that Chin’s witness statement was lengthy and contained many details, including those on dates (as far as he can remember), places, persons attending and referred to many contemporaneous documents which were annexed to his witness statement (including many whatsapp contemporaneous messages); but Ms Wong criticized that many events and matters spoken of were irrelevant. There was no complaint from Chan that Chin gave these accounts otherwise than consistently in his said 3 police statements, in the pleadings and witness statement in HCA 641. Chin was cross-examined extensively and remained unshaken.

54.  Amidst these details given by Chin and after the extensive cross-examination, essentially now 4 matters are or can be put forth by Ms Wong to challenge his credibility. They are :

a. By reference to the contents of the 641 WP Letters and some of Chin’s answers on certain questions relating to them, Ms Wong criticized that P’s case “changes in every possible aspect”, and hence there was lack of credibility on the part of Chin;

b. Chin hitherto until cross-examination never mentioned anywhere that he had communicated the Revival Threat to Chan;

c. Chin said in cross-examination, for the first time, that in the September 2019 Meeting after he had asked Churk to leave the table but before doing so, Churk said that he promised to pay the balance outstanding, interest and costs; and

d. Chin gave different or inconsistent versions as to the precise reason why he could not or did not speak with Churk “pending a criminal investigation”.

55.  As said, I will deal with matters relating to the 641 WP Letters below, and would discuss the rest here.

56.  On the second matter, I think there is some force in Ms Wong’s point essentially that if the Revival Threat was spoken at the time as Chin now said, Chin ought to have been aware of the significance of such communication, and as his style and character would have it, Chin ought to have mentioned it in his rather detailed witness statement. I would accept on balance of probabilities that this particular aspect was an afterthought on Chin’s part to embellish P’s case. However, save this particular aspect, I would accept Chin’s evidence that he had called Chan to demand repayment (but without speaking the Revival Threat) and would accept his explanation that he did not mention this conversation as it seemed to him an insignificant detail. In my judgment, considering all the matters in the round, this one instance of embellishment is not at all sufficient or significant enough to dissuade me from my overall assessment of Chin’s general credibility.

57.  On the third matter, apart from challenging such evidence as not having been mentioned in Chin’s witness statement, Ms Wong also confronted Chin in cross-examination that his such evidence was contradictory to what was pleaded in §3(4)(b) of P’s Reply, that “… During the Meeting, Mr. Chin did not speak with Churk, who sat at a separate table, as Mr Chin and Mr Churk could not have any communications pending a criminal investigation”. Chin’s answer was that it was pleaded that he did not speak with Churk, but not Churk did not speak with him. Ms Wong submitted that such was a “fallacious argument” and showed that Chin was an unreliable and incredible witness. With respect to Ms Wong, I accept Chin’s answer as accurate and logical and not a “fallacious argument”. I also accept Chin’s explanation as to why Churk’s such words were not mentioned in his witness statement, which was that what Churk promised was not the subject matter of this action. In fact, that is consistent with the gist of P’s case that after the agreed sale of the Property and payment of the sale proceeds to P, only Chan’s and Ki’s liability would be completely discharged, and there was no promise that Churk’s liability would be completely discharged.

58.  On the fourth matter, I think Ms Wong’s criticisms over Chin’s answers over what he meant or understood as the reason why he could not speak with Churk when the criminal investigation against Churk was still pending are but nitpicks, that I will not place weight on in assessing Chin’s credibility.

59.  One matter I would particularly take note in considering Chin’s general credibility, which is this. Chin were upfront in the Statement of Claim and Reply[23] in that it was pleaded there (essentially divulging at the first opportunity) that Churk and Chin’s 2 friends (whom now Chan accused as triad society members) were also present in the crucial September 2019 Meeting, and that Mr Chan was named by Chan to Chin in the September 2019 Meeting as the person to contact for follow up and Chin did met with Mr Chan who confirmed that Chan was willing to sell the Property; and P/Chin readily accepted and not at all dispute Chan’s version that Lai and his friend were also present in the restaurant during the September 2019 Meeting. The significance of these is that P/Chin readily expose the crucial events of P’s case to easy challenge by D calling Churk, Lai, Lai’s friend, and Mr Chan as witnesses, to rebut P’s present allegations. Yet, as I will say more, none of these people were called as witnesses, with no, or with no good, explanations proffered by Chan.

60.  In all, I do not accept Ms Wong’s submission that Chin was not a credible or reliable witness. On the contrary, I find his evidence generally consistent, cogent, logical and credible.

61.  Chan received education up to Primary 5, been a housewife for a long time, and since 1989, she owned and operated a small laundry shop.

62.  Ms Leung, counsel for P, submitted that it was demonstrated by examining several aspects of Chan’s evidence that the same was devoid of credibility. In her closing submissions, she referred to many parts of Chan’s evidence and quoted them to substantiate. Ms Wong submitted that in evaluating the inherent probability of events and matters, “it is essential to consider [the witnesses’] background, personal characteristics and level of sophistication”. Indeed and is trite, the Court, no less this Court, would consider and weigh all the pertinent matters, not only limited to those mentioned by Ms Wong, to evaluate the evidence, their credibility, as well as the inherent probability of matters spoken to by witnesses.

63.  Ms Wong attempted to draw a sharp contrast between Chin, being an experienced and successful entrepreneur, and Chan, whom she described as an unsophisticated, uneducated, ignorant, and muddled layperson that had difficulties and struggled to understand but simple and straightforward sentences.

64.  Having carefully observed and heard Chan giving evidence, I am unable to accept Ms Wong’s description of Chan as a witness. I do not think Chan was as simplistically minded, uninterested, ignorant, uninvolved or unable to be involved with Churk’s affairs and business and with Ki’s affairs as she appeared or as she said. Nor do I think she was a victim of circumstances, of the entire fault of Churk or of the false accusations of Chin, as she attempted to portrait or suggest to be in the witness box. In my judgment, she is more thoughtful and calculating a person than she appeared. I think the frustration and the apparent inability to comprehend a question she many times showed when pressed in cross-examination were often times but one of the means she employed to try to evade answering the question directly and forthrightly when she was cornered. That said, I would reiterate that in understanding and evaluating the matters discussed in the next paragraph, I have already borne very much in mind the pertinent matters relating to her background.

65.  I consider that the following matters or aspects of Chan’s evidence are telling in informing this Court that Chan is not a credible witness :

a. The broad effect of Chan’s evidence was that (a) she was unclear and knew little about Churk’s work situation, (b) she knew nothing about Zhenwei, (c) prior to the Whatsapp messages mentioned in due course, she knew nothing about and was completely uninvolved with the arrangement of depositing P’s money into the Zhenwei BOC Account (not to mention the unauthorized withdrawals by Churk), (d) she was not involved with and knew little, if anything, about how much, how and when Chin paid the 2 daughters money in funding their education overseas.

b. When asked about Churk’s work situation, Chan initially was very vague about it, she repeatedly said merely that Churk worked for Chin. Later, when pressed and only after being asked many times, she finally said that Churk had his own transportation business and had hire-purchased trucks. I find Chan was evasive in answering questions concerning Churk’s work.

c. In evidence, Chan initially confirmed that she disputed the provision of financial assistance by Chin as mentioned in paragraph 7 above. However, later in cross-examination when confronted with one of the messages Churk sent to Chin on 1 April 2014 which Chin forwarded to Chan the same day: “几十年来你一直默默地帮我、从不計較得失、这一点我是好佩服你、而且欠你的不能用錢銀量度…” and some similar messages that she changed her stance and did not dispute them seriously and instead said that she did not request such assistance from Chin and further said without giving any details, that it was because Chin and Churk “有協商，有另外交易” that Chin agreed to provide such assistance; and then yet later in cross-examination, Chan said to the effect that Chin had a secret love for her and said to her “既然衰佬對你咁差，你放心我照顧你三個仔女，你第日有好日子過，如果你無錢我畀生活費”。I find Chan had been shifting her such evidence.

d. As said, Chan denied having any involvement with or having any knowledge as to how much, how and when Chin financed the 2 daughters’ education overseas. I would also record that when this Court specifically enquired in the opening stage whether Chin’s provisions of such financial assistance to the 2 daughters’ (apart from other financial assistance) were disputed, after taking instructions, Ms Wong confirmed that they were. As the trial and the taking of evidence proceeded, Chan shifted her stance and did not seriously challenge them. Concerning Chan’s such professed lack of knowledge, involvement and interest, I accept Ms Leung’s submission that as a mother who apparently had good relationship with her 2 daughters, it is inherently improbable that Chan would be so totally nonchalant and uninterested to a point of not even having asked or learnt about it. I note however that (i) it was Chin’s evidence that the Trust Agreement originated from Churk and Chan’s request for Chin to continue to finance the 2 daughters’ education at the time when all of P’s, it subsidiaries’ and Chin’s bank accounts were effectively frozen, and (ii) Churk in §10 of his Defence filed in HCA 641[24] averred that certain payments made from the Zhenwei BOC Account authorized by P of HK$16,000, HK$85,000, HK$10,000, HK$10,000 and another HK$15,000 from August 2013 to March 2014 were for paying the airfare to the UK for, school fees for, living expenses of, and trip to Norway for, the 2^nd Daughter, but that those sums had not been taken into account by P in calculating the Balance. I find valid Ms Leung’s comment that Chan was not truthful and was purposefully distancing herself from the knowledge of those payments which were made from P’s fund in the Zhenwei BOC Account.

e. In oral evidence, Chin said directly that he was very angry on 31 March 2014 and 1 April 2014 when he learned of the unauthorized withdrawals having taken place in almost 2 years and that bank statements were forged to deceive him; and when Churk did not appear on 1 April 2014 and could not be contacted by telephone. Chin repeatedly called Ki and then whatsapp her on 31 March 2014[25]. On 1 April 2014, Chin exchanged a number of whatsapp messages with Churk[26] threatening Churk that he would report the matter to the police that day if Churk did not return his phone call and return the Balance as promised; Chin then also simultaneously forwarded his exchanges with Churk to Chan and whatsapp with Chan[27] (“the Whatsapp Messages With Chan”); and also simultaneously forwarded his exchanges with Churk to Ki[28]. In cross-examination, Chan was confronted with the following part of the Whatsapp Messages With Chan[29] :

“…

Chin: 我現在到了警察总部、明不露面报了警我是不能控制的。Chan: 我無法找到他，希望想一想好嗎我，再想

Chin 只是报警才能解決、到时可能琪是个最大伤害

Chan: 阿釗，為什麼都唔想下就告他呢，又何苦，個死老唔做都做咗，你都大人有大涼 (sic) 就唔 (sic) 比個机會佢呢，你幫都幫咗更多更多啦，你這樣做會傷害我和3個仔女，你兩兄弟真是斗到上庭嗎？ 三十幾年兄弟真要是斗到死為止，又何苦呢？我很真是很傷痛呀！我真不想呀！” (my emphasis)

Chan was cross-examined that if in fact she knew nothing about P’s funds being put in the Zhenwei BOC Account and that Churk had misappropriated those funds, her reaction upon receiving those messages from Chin should in all inherent probability be that of surprise and puzzle, of querying Chin what happened, and even denying Chin’s allegations in the meantime because she could not reach Churk. However, the above quoted messages said that while Chan could not reach Churk, she did not at all show surprise or puzzle, nor did she ask Chin what it was all about that Chin would report Churk to the police implicating Ki. So confronted, Chan said in cross-examination that she in fact had talked to Chin by phone that day, had asked Chin about what in fact happened, and in fact scolded Chin for framing Ki and Churk. I accept Ms Leung’s comment that it is most inherently improbable that on the same day, Chan would say one version in the Whatsapp Messages With Chan and say another version over the alleged phone call with Chin. In any case, such alleged telephone conversation with Chin that day was not mentioned in her witness statement and was not even put to Chin in his cross-examination. It also seems to me that being unable to reach Churk and (as she claimed) not knowing anything beforehand about P’s money having been deposited in the Zhenwei BOC Account and having been misappropriated, then whether Chan in fact had talked to Chin over phone or not, it is most inherently improbable that Chan would admit to Chin in the Whatsapp Messages With Chan that : “個死老唔做都做咗”. When pressed, Chan then said she was busy attending the laundry business, she then further said that she was flabbergasted and frustrated (我好煩), and said to the effect that on that day she immediate deleted messages from Chin upon their receipt. When further pressed, Chan was very equivocal and unsure about when she deleted the whatsapp messages sent by Chin. Moreover still, while Chan said that Churk could not be reached, Ki, on the other hand, responded to Chin by whatsapp message sent around the same time that “老豆話佢打比你, 你冇聽”, thereby indicated that Ki in fact had successfully reached Churk. I find Chan’s above responses typical of an untruthful witness trying to make up excuses to get herself out when being cornered. Based on Chan’s said contemporaneous response of “個死老唔做都做咗”, I find that Chan was not as ignorant and unknowing of the arrangement of P having put money in the Zhenwei BOC Account and Churk’s unauthorized withdrawals as she said she was at the time.

f. Moreover, in the Whatsapp Messages With Chan sent by Chin on 25 April 2014, Chin confronted Chan with the Oral Guarantee, thus :

“卓太，你在2012年2月和阿明一起在名爵饮茶时向我保证、款存放在阿明公司中國銀行帐戶是不会拿用的、而且你要求我继续帮助你二女完成在英国学业、結果我对你承诺了，现在存放在中国銀行帐戶800万元全部不见、而你只是說阿明是有办法偿还800万元給我的、而阿明又失踪你应该怎样做、你的担保又怎祥？我发短訊給你沒有回复、你们要面对我。 秦 cc琪”[30]

When pressed in cross-examination as to why she did not respond to this serious allegation by Chin, if what Chin alleged about the Oral Guarantee were utterly untrue, Chan initially said to the effect that she had not read this message, then she said she had deleted the message without reading it; and when further pressed, she was equivocal and unsure as to when it was deleted.

g. In all, I find her explanations regarding, and her evidence on, the Whatsapp Messages With Chan as mentioned above evasive, unsatisfactory, incredible and inconsistent with her broad stance that she was not at all involved with and had completely no knowledge about P’s fund having been put into the Zhenwei BOC Account, and was not present in the January 2012 Meeting at all and had not made the Oral Guarantee.

h. Based on Chin’s evidence (which I prefer), Fu’s evidence that I find credible, Chin’s message sent on 25 April 2014 confronting Chan and Chan’s such evasive and incredible evidence in response, I am prepared to find, for the purpose of this action and evaluating the witnesses’ credibility, in favour of P’s allegation that Chan was present in the January 2012 Meeting and had made the Oral Guarantee. Therefore, I find Chan was untruthful when she said she was not present in the January 2012 Meeting at all.

i. At trial, Chan all along insisted that the “third parties” were triad members and they harassed her and Churk at Chin’s behest. Yet, in her statement given to the police on 29 April 2020 (the only police statement proffered by Chan), apart from reporting a harassing incident that occurred on that morning, she also reported similar incidents that occurred in August 2019 and October 2019 thus :

“5. 係2019年8月同2019年10月，我舖頭都試過俾人淋紅油，但嗰兩次淨係大門比人淋紅油，冇淋到人。我有2個女一個仔，佢哋同我都冇欠債或者同人結怨。不過我丈夫以前同人做生意時有欠人債，金額大約幾百萬。佢已經搵咗律師去解決件事。喺今次事件上我除咗俾人淋到成身紅油外，冇受傷 …”[31].

As can be seen, and very much contrary to her present allegations, Chan reported to the police that the 2 harassment incidents in 2019 were related to a business debt incurred by Churk; and Chin, P, the demands made by the “third parties” to Churk and her to repay the Balance were not mentioned at all.

j. I find Chan’s explanation for not calling Churk, Lai, and Lai’s friend as witnesses far from credible.

66.  I thus find that Chan was an incredible, unreliable and untruthful witness who was willing to say anything though untrue or inaccurate to further her own cause. Unless corroborated by reliable or objective evidence, I would reject Chan’s evidence and prefer Chin’s whenever they conflict.

Adverse inference drawn against Chan’s version of the September 2019 Meeting for failure to call Churk, Mr Chan, Lai and Lai’s friend as witnesses

67.  In her opening submissions, Ms Leung already indicated that P would be asking the Court to draw such an adverse inference.

68.  Ms Wong in her opening submissions contended that there was no property in a witness and P should and could have also called Churk and thus no such adverse inference should be drawn against Chan. With respect to Ms Wong, such contention need only to be stated to be rejected. Churk is Chan’s husband, he was sued with Chan as co-defendants by P in HCA 641 for, among others, having together made and being liable under the Oral Guarantee, for perpetrating the unauthorized withdrawals, for fraudulent concealment and conspiracy to injure by unlawful means. If P subpoena Churk to be P’s witness, P would be bound by Churk’s evidence unless leave is obtained to turn him into a hostile witness. To even suggest that P should call Churk as its witness is wholly unrealistic and wholly without merits.

69.  As should become very apparent by now, Chan’s factual case regarding the September 2019 Meeting consists of an event that occurred in plain sight of Churk, Lai and Lai’s friend - that save the initial 2-sentence exchange of greetings between Chan and Chin, there were no verbal exchanges whatsoever between Chin and Chan, and then Chin left while Chan, Churk, Lai and Lai’s friend together spoke with the “third parties”. The potential witnesses would not even be required to remember any conversation. The evidence that Churk, Lai and Lai’s friend need to give to completely rebut P’s version could indeed be very simple and straight forward.

70.  In my judgment, this is a clear instance that had Chan’s version about the crucial September 2019 Meeting been true, it should be a no-brainer for Chan to call Churk, Lai and Lai’s friend as witnesses to corroborate her version.

71.  Such considerations apply with greater force to the situation of Mr Chan. According to P and Chin, Mr Chan at the time was an employee of IT&Co and Chin and Mr Chan met in the office of IT&Co. Evidently, there would be the additional complication for P to try to call Mr Chan, an employee of Chan’s solicitors, as P’s witness. On the other hand, if Chan’s version were true, there should be little problem for Chan in asking one of the employees of her solicitors to testify. Additionally, Mr Chan’s evidence could arguably be of greater probative value as, unlike Lai and Churk who are related to Chan, Mr Chan would be an independent witness. His evidence would also be very straightforward – that there was no such meeting or conversation with Chin ever having taken place as Chin alleged. Or if there was no such Mr Chan in the employ of IT&Co at the material time, someone from IT&Co could also give simple but direct evidence on it.

72.  In my view, this is a clear case that unless good reason can be given by Chan why they were not called as witnesses, this Court is entitled to draw the inference that the reason for not calling them was that Chan was afraid that their evidence would not substantiate her version.

73.  In cross-examination, the reasons given by Chan for not calling them were :

a. The reason for not calling Churk was that she had asked, but Churk refused and said that he did not want to face it (佢吾想面對) and she let him.

b. The reason for not calling Lai and his friend was in gist that they did not want to trouble themselves with ramifications by testifying against Chin.

c. There was not really any explanation given as to why Mr Chan was not called.

74.  The reason given for not calling Churk is clearly untenable. In the whatsapp messages Churk exchanged with Chin (which was forwarded to Chan), Churk had expressed that he was sorry for having done this to Chin, that he would take up the responsibility and he would not want to hurt his family. While the tenor of Chan’s evidence at trial was that she blamed Churk for his fault and felt herself a victim of Churk’s misdeeds and of Chin’s false accusations and that she expressed a great desire that she should be able to keep her half share in the Property. Such being the setting, in my view it is completely incredible and inherently improbable that she would just let Churk have his wish of not testifying, instead of subpoenaing him, about which in all probability Chan would have been advised by IT&Co.

75.  In closing submissions, Ms Wong shifted her contention and argued that Churk would be mindful that he would have to give incriminating evidence if he was called to be a witness. First, that is a contention made without any evidentiary basis as Chan never said in evidence that Churk was so mindful about having to give incriminating evidence, but only that he did not want to face it. Second, Churk would have been protected by the privilege against self-incrimination and could have refused to answer questions relating to the alleged forgery. And as I outlined above, the evidence these potential witnesses, including Churk, could give to completely rebut P’s case concerns what actually occurred in the September 2019 Meeting, which is totally unrelated to the forgery. With respect, the argument is as unsupported by evidence as is untenable and unmeritorious.

76.  Equally incredible was the reason given as to why Lai and Lai’s friend were not called. Lai was a close relative of Chan. He and his friend were not afraid of ramifications when they accompanied Chan and Churk to attend the September 2019 Meeting, fully prepared to deal with Chin face to face. According to Chan’s version, during the September 2019 Meeting Chin just left the restaurant without saying or doing much, if anything. In the circumstances, I am unable to accept as credible that Lai and his friend are now afraid, years later, to testify for Chan in a court of law in relation to a lawsuit commenced by P.

77.  I reject these as mere excuses given by Chan to justify not calling Churk, Lai and his friend. There is simply no reason why Mr Chan was not called by Chan.

78.  For these reasons, I will draw an adverse inference against Chan’s version on what happened in the September 2019 Meeting.

79.  For completeness, I will deal with 2 more matters.

80.  First, I record that I will not draw an adverse inference against Chan for not calling Ki as a witness, as Ms Leung submitted I should. Ki’s evidence would primarily be concerned with the financing of her education, the alleged forgery and the communications with Chin from 30 March 2014 to perhaps at most late April 2014 (when the message quoted in §65(f) was forwarded to her by Chin). Such evidence would not be nearly as material as the said evidence of the other said potential witnesses. Moreover, the concern for self-discrimination clearly would be much more apposite in her situation.

81.  Second, in closing submissions Ms Wong argued that Chin “should be equally blamed” for not having called as witnesses his 2 friends attending the restaurant during the September 2019 Meeting. For two reasons I do not agree. First, according to Chin’s case, the 2 friends merely came along, sat at another table from the start, was not even introduced to Churk or Chan. Their evidence would only be that they saw Chin and Chan sit together and talk. With the passage of time, one wonders whether their brief encounter on that occasion would enable them now to even recognize the woman talking to Chin then was Chan. Thus, their evidence would be far from material and the Court would not have expected P to call them to a point of drawing adverse inference for not calling them. Second, unlike Ms Leung who has given prior and fair warning in her opening submissions to Chan about P’s intention to ask the Court to draw such an adverse inference such that Chan could prepare herself to give explanations in oral evidence and Chan was asked in cross-examination to give explanations, no such intimation was given in Chan’s opening submissions, not even during oral opening, nor in cross-examination was Chin confronted and given an opportunity to explain.

The 641 WP Letters

82.  The parties spent much time at trial disputing the wording, the purport and the other’s reliance on them. Ms Wong cross-examined Chin rather extensively on them and relied heavily on his answers to challenge Chin’s general credibility. As explained below, I think the respective use and reliance that both parties sought to place on the 641 WP Letters were misplaced and the disputes over these letters are red-herrings.

83.  The 641 WP Letters consist of altogether 7 letters, 2 of which were in fact open letters while the rest without prejudice as to the disputes in HCA 641. They are, in chronological order :

a. IT&Co’s WP letter (expressed to be acting for Churk) to HTW dated 24 December 2019[32], in which in gist IT&Co proposed to HTW that the 641 Mareva Injunction be varied to allow Churk to dispose of his assets to pay the Summary Judgment Sum or that the 641 Mareva Injunction be discharged upon Churk’s undertaking to pay.

b. HTW’s WP response to IT&Co by a short letter dated 31 December 2019[33] asking about what Churk’s assets were that he was minded to dispose of, asking for the valuation of the Property if it was to be sold, stating that they had no objection to varying the 641 Mareva Injunction if any surplus of sale proceeds after paying the Summary Judgment Sum, if any, was to be paid into court pending the outcome of the case regarding the outstanding claims.

c. HTW’s open short letter to IT&Co dated 7 April 2020[34] recording that there was no reply to their WP letter of 31 December 2019 and stated that unless there was a constructive reply within the next 7 days, a statutory demand would be served on Churk.

d. IT&Co’s WP letter to HTW dated 20 April 2020[35] in response to HTW’s letters of 31 December 2019 and 7 April 2020, in which were set out the Property and Churk’s stocks as the assets Churk intended to dispose of and their estimated value (the Property was valued at HK$5,910,000 and half value of HK$2,955,000 was stated to be the value of Churk’s interest), and a draft consent summons was said to be enclosed (but the copy letter in the trial bundles does not have the enclosure).

e. IT&Co’s WP letter to HTW dated 14 May 2020[36] in which HTW’s letter of 31 December 2019 was referred to again (but without referring to IT&Co’s own WP letter dated 20 April 2020). It was there stated that

“We are instructed that our respective client by themselves have reached a full and final settlement in the captioned action … in the following terms:

1. Our client shall pay your client a sum of HK$7,500,000 within a month after completion of sale of [the Property];

2. Our client shall pay to his solicitors his share in the net sale proceeds of the [Property] … to stakehold;

3. The net proceeds shall be applied to satisfy payment in the sum of HK$7,500,000, any surplus shall be returned to our client;

4. There be no order as to costs … in this action …”

And a draft consent summons was enclosed. Note-worthily, the draft consent summons provided for the variation of the 641 Mareva Injunction, and among others, additionally provided (a) for the sale of Churk’s stocks, (b) that all outstanding claims against Churk be dismissed.

f. HTW’s WP letter to IT&Co dated 21 May 2020[37] responding to IT&Co’s WP letter of 14 May 2020. There, HTW stated that they were instructed by P that there was a total misunderstanding between the respective clients and HTW then stated that there was a meeting in or about September 2019 between Chan and Chin to the effect that the Settlement Agreement was reached. HTW then denied that Chin had ever agreed to accepting HK$7,500,000 in full and final settlement. HTW then said that interest over HK$3,850,000 had accrued (and enclosed a table containing the calculations) which Churk was liable to pay, that there was still outstanding disputed sum of over HK$2,000,000 and Churk was liable to pay the costs of the action. HTW then rejected the draft consent summons and threatened to proceed with HCA 641.

g. HTW’s open short letter to IT&Co dated 31 July 2020[38] referring to Churk’s summons to vary the 641 Mareva Injunction returnable on 24 July 2020. HTW reiterated their stance expressed in their letter of 31 December 2019 regarding the intended variation of the 641 Mareva Injunction.

84.  In opening submissions, Ms Leung emphasized the utterance in IT&Co’s letter of 14 May 2020 that the respective clients had reached a full and final settlement and that the sale of the Property and then use of the proceeds to satisfy P’s claim were agreed to, and submitted that such “greatly diminish the likelihood that nothing was discussed or agreed between the Plaintiff and the Defendant”. Ms Wong, on behalf of Chan took great exception to these and contended that IT&Co was then merely acting for Churk and not Chan, that the sale of the Property was agreed to by Churk only. Both counsel then explored with, and pressed questions to, respectively Chin and Chan with various suggestions including, on the part of Ms Leung, that it was impractical that Churk as only one of the joint owners agreed to sell the Property (without Chan’s agreement) and that behind this something had to have been discussed with Chan, that there could not have been any surplus if only half of the proceeds of the sale of the Property (instead of the entire proceeds) was used to pay off HK$7,500,000; and on the part of Ms Wong, that despite HTW was diligent and wrote all these letters, HTW did not mention at the first opportunity (say in HTW’s letter of 31 December 2019) about the Settlement Agreement, but sought clarification (from Churk) what assets he was minded to dispose of, that there were clear references in IT&Co’s letter of 20 April 2020 and 14 May 2020 here and there about Churk paying P only half of the sale proceeds of the sale of the Property, and P/HTW ought to have immediately clarify with IT&Co, and the terms of settlement set out by IT&Co were different from those of the Settlement Agreement. I note that Ms Wong in making these contentions and comments, at the same time maintained strenuously that IT&Co at the time only acted for Churk and not for Chan in connection with HCA 641.

85.  I give a broad overview of the arguments and cross-examination questions on the 641 WP Letters above to make the point that in my view both counsel were over-reaching with rather far-fetched suggestions and arguments on the 641 WP Letters that were far removed from a fair reading of those letters.

86.  Rather, relating to the 641 WP Letters :

a. I accept Chan’s stance, as clearly stated in the IT&Co letters, that IT&Co only acted for Churk and not for Chan. Moreover and evidently, the 641 WP Letters began, and was principally concerned, with Churk’s intended application to vary or discharge the 641 Mareva Injunction, which only concerned Churk and not Chan. The 641 WP Letters should be read fairly in such setting as context.

b. It follows that :

i. I take the view that P’s such said reliance on the 641 WP Letters was misplaced.

ii. I accept Chan’s evidence that she in fact had not read or been explained to the 641 WP Letters.

iii. In the same vein, I also accept Chin’s evidence that at the time he had left the matter (variation of the 641 Mareva Injunction) to be handled by HTW.

iv. I do not accept, as Ms Wong argued, that by so saying Chin was dodging the questions as to why the Settlement Agreement was not stated in the earlier letters of HTW. I bear very much in mind that the 641 WP Letters up to the one by IT&Co of 20 April 2020 were still dealing with Churk’s intended application. In this connection, I also accept Chin’s evidence that when he met Mr Chan in IT&Co’s office, Mr Chan told him that after having obtained Chan’s written authority, IT&Co (on behalf of Chan) would issue a letter to HTW. The 641 WP Letters, though issued by IT&Co, was issued on behalf of Churk and not Chan.

v. Insofar as it is suggested or argued by Ms Wong that because the terms of settlement set out in the IT&Co letter of 14 May 2020 were different from those of the Settlement Agreement, it is shown that there was “no meeting of minds” or no actual agreement, such argument is misplaced. In that it is Chan’s stance that Churk was then IT&Co’s client and the letter was issued on behalf of Churk. With no evidence from Churk, and Chan’s evidence, which I accept, was that she had never read or been explained to on those letters, it is misconceived to use the terms set out in the IT&Co’s letter to contrast those in the Settlement Agreement.

c. I find that it was in IT&Co’s letter of 14 May 2020 that IT&Co for the first time intimated that a settlement has been reached by “our respective client” themselves, and that HTW responded within a week on 21 May 2020 disputing the agreement and the terms mentioned by IT&Co, clarifying and setting out that in fact the Settlement Agreement was reached in September 2019 and what its terms were and P’s other stance in respect of P’s claim against Churk.

d. Thus, save that the Settlement Agreement was stated in writing for the first time by HTW in their letter dated 21 May 2020 which was sent to IT&Co (acting for Churk) and not responded to by IT&Co (also acting for Churk), I do not find the 641 WP Letters of any particular probative value for or against either party’s case in relation to the dispute at hand.

Further discussions and my findings

87.  By reason of the above-said, I draw the adverse inference against Chan for not calling Churk, Lai, Lai’s friend and Mr Chan as witnesses, I reject Chan’s evidence relating to and on the September 2019 Meeting, and find against Chan’s version.

88.  Ms Wong placed great emphasis on the fact that Chin has not reduced the Settlement Agreement in writing for Chan to sign to confirm, nor has he recorded it in any contemporaneous communication or documents, like whatsapp messages, and P did not seek to enforce the Settlement Agreement until the commencement of this action on 11 December 2020. She essentially submitted that such alone, regardless of whether I accept Chan’s version, was sufficient for me to find on balance of probabilities that the oral Settlement Agreement was not proved.

89.  Chin’s explanations given in evidence essentially are (a) all along, his previous monetary dealings with Churk and Chan were not reduced into writing, (b) he trusted Chan, and Chan has told him in the September 2019 Meeting that Mr Chan of IT&Co would be handling the matter, he visited Mr Chan shortly after, Mr Chan confirmed that Chan would sell the Property and would sent a letter to HTW once written authorization from Chan was obtained, (c) when he was informed by HTW that IT&Co mentioned a settlement agreement and its terms, he immediate instructed HTW to write their letter of 21 May 2020 disputing that and setting out, among others, the Settlement Agreement.

90.  It is not disputed by Chan that save the Chinese AOD, the loans previously made by Chin to Chan and/or Churk and Chin’s promise and/or arrangement to finance the 2 daughters’ education overseas for years were not reduced in writing, whether contemporaneously or otherwise. Churk in his Defence filed in HCA 641 expressly averred that the Trust Agreement was made orally (though he disputed some of the terms) and not evidenced by any document. The evidence concerning the Chinese AOD, I find, is that Chin became very apprehensive that Churk has misappropriated the Balance and could not repay it, and as he said, even became very angry, and not trusting Churk as much he would Chan, he urgently asked Lam to prepare the Chinese AOD for Churk to sign in anticipation of the March 2014 Meeting. I thus view the Chinese AOD as an exception. I accept Chin’s first explanation.

91.  On the second, having carefully observed and heard Chin and Chan gave evidence during those several days of trial and done my best along the way to understand their relationship dynamics and assess their respective credibility, I believe Chin and accept his evidence when he said in cross-examination that at the time of the September 2019 Meeting he still trusted Chan to an extent. I also note the evidence of Chin, which I accept, that in their telephone call prior to the September 2019 Meeting, there was no discussion on the terms of settlement; and therefore, there was no opportunity for Chin to prepare anything in writing in advance before the September 2019 Meeting for Chan to sign. I accept Chin’s evidence that he was informed by Chan in the September 2019 Meeting that he was asked to contact Mr Chan of IT&Co who presumably would be making the detail arrangements and Chin shortly after met with Mr Chan and everything seemed to be progressing. Thus, I do not find his not reducing the Settlement Agreement into writing then was anything out of ordinary, nor do I view his not doing so under such circumstances was indicative that no such agreement in fact had been reached.

92.  I also accept the third matter Chin gave by way of explanation, which indeed I have already noted above that he lost little time to instruct HTW to write their letter of 21 May 2020 to unequivocally set out, among others, the Settlement Agreement to respond to IT&Co’s letter of 14 May 2020. I also fail to see how commencing this action in December 2020, as opposed to any time sooner between May 2020 and then, in the time frame of things in this action, has such significance as Chan is now ascribing to it, such as to indicate that the Settlement Agreement in fact has not been reached.

93.  In the circumstances, I will not place much weight on the matters mentioned in §88 above.

94.  Accepting Chin’s evidence and finding for his version, I specifically find the following : (a) since around July 2019 after Chin was acquitted in DCCC 919/2015, he contacted Chan by phone to demand repayment of the Balance, that Chan reverted to Chin, told Chin that she had discussed with Churk and they arranged the September 2019 Meeting, (b) in that meeting, Churk was asked by Chin to sit apart, but before doing so, Churk said that he would be responsible for the outstanding amount of the Balance, interest and costs after the proceeds of sale were used to repay P, to which Chin did not respond, (c) Chan then agreed to sell the Property and to use the entire proceeds to repay P, while whatever remaining amount owing to P after such payment would be paid by Churk, in consideration Chan’s and Ki’s liabilities on the matters complained against them in HCA 641 would be completely discharged, that Chin on behalf of P and Chan have reached the Settlement Agreement to that effect, Chan then informed Chin to contact Mr Chan of IT&Co to follow up on the sale of the Property, (c) shortly after Chin met with Mr Chan at IT&Co’s office and Mr Chan orally confirmed that Chan was willing to sell the Property and that after having obtained Chan’s written authority, IT&Co would issue a letter to HTW.

95.  I would now deal with 2 remaining issues, which were not pleaded by Chan nor addressed to in her witness statement, which Ms Wong now sought to make into significant matters of contention. As I said earlier, it is only right and fair that I deal with them as part of Chan’s putting P to proof, and no more.

96.  First, I would unhesitatingly reject Chan’s contention that there was no intention to create legal relations by the Settlement Agreement in that it was “only a domestic agreement”. Chin and Chan were friends, so I am unable to understand what was exactly meant by “domestic” and P has been suing Chan and Ki in HCA 641. Moreover, on either Chan’s version (even though I reject it) or Chin’s version, the September 2019 Meeting was convened and was intended to be a serious discussion and/or negotiation specifically on how Chan would repay P the Balance and the Settlement Agreement was reached therein. On such facts, this contention is a complete non-starter.

97.  Another such issue raised was that the Settlement Agreement was “lacking in some essential terms and is uncertain, vague and/or ambiguous”.

98.  It is said that there were no provisions on when to sell the Property, the mode of sale, the identity of the estate agent and lawyer to be appointed and on the reserve price. The fact, as I find, was that Chan informed Chin in the September 2019 Meeting that Mr Chan of IT&Co was to be contacted for follow up arrangements and Chin accepted that. It is therefore clear that the parties understood and implicitly agreed that the other detail arrangements were to be agreed on and finalized. In my view, this is evidently a case that the Court would not find an agreement not reached, or reached but unenforceable, simply because such details were left to be further agreed. Rather, the Court would imply that the parties were to agree on such matters reasonably, and I do so hold in this case.

99.  For completeness, I will also briefly address the contention raised by Chan here and there that Chan only owned half interest in the Property but the term of the Settlement Agreement orally agreed was that Chan agreed to the sale of the entire Property and agreed to the payment of the entire proceeds of the sale to P. The trite law is that the language of an agreement is to be properly construed objectively by reference to the factual matrix. The factual matrix to the Settlement Agreement was that (a) Churk was already adjudged in July 2016 to be liable to pay P the Summary Judgment Sum, over which Churk has not made any payment and his assets (including his half interest in the Property) were liable to be enforced on by P, (b) Chan has indicated to Chin that she had discussed with Churk, and in the September 2019 Meeting Churk was sitting nearby Chin and Chan and Chan could have easily conferred with Churk there and then if she had any doubt on Churk’s intention or position, (c) Chan owned the other half share in the Property the sale of which in practice would require her agreement (as the other co-owner) or commencement of another set of proceeding to force a sale against her wish, and (d) both Chan and Chin were not lawyers and would not have been familiar with the intricacies, niceties and precise language relating to a settlement agreement reached with only one of the co-owners concerning the sale of a co-owned property to settle liabilities jointly owed by the 2 co-owners and a third person, but discharging the liabilities of only one co-owner and the third party but not those of the other co-owner. In my judgment, construing the Settlement Agreement against such factual matrix, the terms of the agreement were that Chan, on her part as the other co-owner, agreed to the sale of the Property and to pay her half share of the proceeds to P in consideration of P’s complete discharge of her and Ki’s liabilities.

THE CONSIDERATION ISSUE

100.  In her opening submissions, Chan stated that the contention was that P’s consideration given for the Settlement Agreement was a forbearance to sue on an invalid claim – as P’s claim against Chan and Ki were struck out for having defaulted to pay security for costs - which was not good consideration. In closing, the contention was refined to that any new claim brought by P against Chan and Ki on the same facts and subject matters as in HCA 641 would be struck out as an abuse of process, such that, or that, Chin did not in good faith believe he has a chance of success in P bringing such new claim, or that Chin knew such new claim would be baseless.

101.  The general principles concerning forbearance to sue as consideration are not disputed by parties though each relies on different authorities.

102.  Ms Leung cited and relied on the following passages from Foskett on Compromise (9^th ed) §§3-08, 3-09 and 3-11 ;

“3-08 ‘Every day a compromise is effected on the grounds that the party making it has a chance of succeeding in it, and if he bona fide believes he has a fair chance of success, he has a reasonable ground for suing, and his forbearance to sue will constitute a good consideration. When such a person forbears to sue he gives up what he believes to be a right of action, and the other party gets an advantage, and, instead of being annoyed with the action, he escapes from the vexations incident to it.’

3-09 ‘[I]f an intending litigant bona fide forbears a right to litigate a question of law or fact which it is not vexatious or frivolous to litigate, he does give up something of value. It is a mistake to suppose it is not an advantage, which is suitor is capable of appreciating, to be able to litigate his claim, even if he turns out to be wrong. It seems to me it is equally a mistake to suppose that it is not sometimes a disadvantage to a man to have to defend an action even if in the end he succeeds in his defence; and I think therefore that the reality of the claim which is given up must be measured, not by the state of the law as it is ultimately discovered to be, but by the state of the knowledge of the person who at the time has to judge and make the concession. Otherwise you would have to try the whole cause to know if the man had a right to compromise it’

Baseless, frivolous, vexatious or illegal claim

3-11 it would seem that a forbearance from pursuing a claim (a) known by the claimant to be baseless or (b) which is vexatious or frivolous would constitute no consideration for a compromise based upon it. Equally, a forbearance to pursue an illegal claim, for example, one made illegal by statue, would represent no consideration. So too a forbearance which itself is prohibited by law or is contrary to public policy is no consideration.”

103.  Ms Leung also referred to the judgment of K Yeung J in Tse Yong Lai v Chan Ting Lai [2023] HKCFI 1416 in which he cited with approval at §21(j) a passage in Chitty on Contracts, 34^th ed., vol 1 at §6-050 :

“A compromise of a claim which is legally invalid and which is either known by the party asserting it to be invalid or not believed by that party to be valid is not contractually binding. This rule can be explained either on the ground that merely making or performing a promise to give up a worthless claim cannot constitute consideration for the counter-promise, or (preferably) on grounds of public policy. As Tindal CJ said in Wade v Simeon:

‘It is almost contra bonos mores and certainly contrary to all the principles of natural justice that a man should institute proceedings against another when he is conscious that he has no good cause of action’.”

104.  Ms Wong cited and relied on the statement of law in CFL Finance v Laser Trust and Another [2021] Costs LR 231 at §37 :

“37. A promise to forgo either a claim or a defence can, of course, constitute consideration (see e.g. Chitty on Contracts, 33^rd ed., at 4-048). The principle extends to the renunciation of a claim which was in fact invalid “so long as it was ‘a reasonable claim’ (i.e. one made on reasonable grounds) which was in good faith believed by the party forbearing to have at any rate a fair chance of success” (Chitty on Contracts, at 4-053). Thus, in Cook v Wright (1861) 1 B&S 559 Cockburn CJ, Wightman J and Blackburn J said at 569 that “unless there was a reasonable claim on the other side, which it was bona fide intended to pursue, there would be no ground for a compromise” and in Callisher v Bischoffsheim (1870) LR 5 QB 449, Cockburn CJ said at 452:

‘Every day a compromise is effected on the grounds that the party making it has a chance of succeeding in it, and if he bona fide believes he has a fair chance of success, he has a reasonable ground for suing, and his forbearance to sue will constitute a good consideration’.”

105.  On P’s ability to bring a new claim against Chan and Ki on the same facts and subject matters when its claims against them in HCA 641 were struck out for default of paying the security for costs, Ms Wong and Ms Leung disputed on the applicable principles.

106.  Ms Leung cited Hu Hung Chiu v Pacific Electric Wire & Cable Co Ltd [2018] 5 HKLRD 767 and Global Bridge Assets Ltd v Sun Hung Kai Financial Ltd [2015] 5 HKLRD 453 as examples that the Court has an inherent jurisdiction to stay the second action sued on the same subject matter until the costs of the first action had been paid. Ms Leung essentially submitted that upon payment of the costs of the 641 Action, P would have no other hurdle to overcome in bringing a new claim. While the Court in the above 2 actions did hold that it has such a jurisdiction to stay the second action (indeed, in Global Bridge Assets Ltd DHCJ Le Pichon (as the retired learned JA then sat as) held that the Court has jurisdiction to strike out the second action if such costs were not paid), the related first or earlier proceedings, the underlying facts, and the procedural history in these 2 actions were rather usual and together rather complex. The 2 cases are clearly distinguishable.

107.  I do not accept that the only hurdle P would face if it were to commence a new action would only be the payment of the costs of HCA 641. Payment of such costs would be but one of the matters P may have to comply with. That does not displace the principles as to striking out the second action for abuse of process as submitted by Ms Wong, as set out in the next paragraph.

108.  I accept as correct Ms Wong’s submission that the principles for striking out as an abuse of process a second action brought on the same facts and subject matters as the first action which was struck out for failure to comply with a peremptory order are as set out in §9 of the English Court of Appeal case of Harbour Castle Limited v David Wilson Homes Limited [2019] EWCA Civ 505:

“Where, as in the present case, the question is whether to strike out a second set of proceedings raising the same issues as in the first, the authorities established that a proper basis for finding the second action to be an abuse will be shown if (but this is not intended to be an exhaustive list) the first action was struck out for a deliberate failure to comply with a peremptory order or for inordinate and inexcusable delay in its prosecution or for a wholesale disregard of the rules: see Janov v Morris [1981] 1 WLR 1389, Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 1 WLR 1426, Securum Finance Ltd v Ashton [2001] Ch 291, and Aktas v Adepta.”

109.  I will apply these principles to the facts.

110.  I have mentioned that at trial Chan broadly challenged that P did not have a reasonable claim against Chan and Ki in HCA 641, even on the merits. By reason of all the matters I said earlier, I think it is evidently clear without need for further labouring on it that P has a fair chance of success in at least some of the causes of action pleaded against Chan and Ki in HCA 641.

111.  I think it is very evident from reading the whatsapp messages Chin sent to Churk, Chan and Ki in the period between 1 April 2014 to late April 2014, no less the message he sent to Chan on 25 April 2014 confronting her with the Oral Guarantee, that he felt indignant (if not very angry as he said) that after all the help he had provided to them, Churk, Chan and Ki broke the trust, misappropriated P’s funds for over 2 years but covered them up fraudulently by presenting to him persistently the Forged Bank Statements. It is equally evident from hearing his live evidence that he remained indignant and still harboured a strong sense of injustice that Churk and Chan could so blatantly steal P’s money and covered it up fraudulently and still resisting to fully repay P to date.

112.  On the evidence before me, I find it very evident that Chin has been believing bona fide and all along that P has an undeniable claim against Churk, a very good claim against Chan at least on the Oral Guarantee and a fair claim against Ki. Indeed, I would even say that Chin has been harbouring a strong conviction to ventilate P’s claim against Churk and Chan.

113.  While I accept that in cross-examination Chin initially was rather hesitant and equivocal about his intentions relating to pursuing the criminal complaint of forgery against Ki, but when pressed he did towards the latter part of his cross-examination express to the effect that he had had good relationship with and still cared about Ki and did not want to harm her (which evidence I believe and accept). That said, I am not at all persuaded by the various intertwine and argumentative matters raised by Ms Wong in her closing submissions under the sections “The Scope of Forbearance to Sue : The Matters which it Covers” and “The Scope of Forbearance to Sue : The Parties which it Covers”, relying on such hesitancy and equivocalness over pursuing the criminal complaint against Ki, and enlarging it to also encompass the civil claims, and submitted that P did not believe in good faith it had a fair chance of success or did not intend to pursue the civil claims. I firmly reject such submissions.

114.  It seems to me, applying the principles, the remaining pertinent issues are (a) whether, as Ms Wong submitted, that if P were to bring a new claim, such new claim would invariably be struck out as an abuse of process, (b) if indeed such intended new claim would invariably be struck out as an abuse of process, whether P on its part knew about it at the time of the Settlement Agreement, and (c) regardless of the answers to (a) and (b), did P believe bona fide that at the time of the Settlement Agreement that it still has a reasonable claim against Chan and Ki after the claims against them in HCA 641 was so struck out in January 2017.

115.  Whether such new claim would be struck out as an abuse of process depends on whether P can show, and the burden is on P to show at the time of an application to strike out, that it did not deliberately fail to comply with the Order for payment of security for costs.

116.  Chin directly and simply explained in evidence that P’s and its subsidiaries’ bank accounts had been frozen since January 2012, and by November 2016 to January 2017 (the period in which P was required to pay the security under the original Order and then a subsequent Unless Order), the bank accounts had been frozen for almost 5 years and P thus could not pay the security.

117.  Ms Wong strenuously disputed that and submitted that P would be bound to fail in resisting such a striking out application. She contended that (a) P in fact instructed HTW and commenced HCA 641 in 2014 and had taken many steps, including having applied for and obtained a disclosure order and the 641 Mareva Injunction and filed 3 witness statements; thus Chin’s claim that P had no funds was false, and (b) P should have urgently or hastily enforced against Churk the payment of the Summary Judgment Sum (judgment obtained on 25 July 2016) by timely seeking the required court orders to sell Churk’s stocks (which IT&Co divulged for the first time Churk had in their WP letter to HTW dated 20 April 2020), which should be in time (within 28 days after 7 November 2016) to pay the security with the cash so obtained from such sale.

118.  On the first contention, as the undisputed fact remains that all the bank accounts of P and its subsidiaries were in fact so frozen since January 2012 (which was almost 5 years prior to the time P was required to pay the security) and the restraint order was discharged only on 18 October 2019, and having found Chin generally credible, I accept Chin’s evidence that P did not have the financial resources to fund HCA 641, which was funded by a third party who by late 2016 refused to put up further money to fund the litigation by paying the security.

119.  On the second contention, I understand Ms Wong’s argument effectively was saying that such failure on P’s part to foresee, and to get prepared in advance of, Chan’s and Ki’s success in obtaining the order to pay the security for costs and thereby failed to urgently enforce the payment of the Summary Judgment Sum against Churk in time to obtain the money from Churk (which money P otherwise could have successfully obtained but for such failures) to pay the security made P’s failure to pay the security deliberate. I have set out the time frame above and would only need say that such argument and its premises are very much debatable.

120.  For present purpose, I am not required to, and indeed should not, come to any firm view as to whether P could successfully resist a striking out application for abuse of process by Chan and/or Ki if P were to commence a new claim. Suffice for me to conclude on present materials, and I do so conclude, and do so by considering the matters in the round, that P at least would have a fair chance of success in persuading the Court then that it did not deliberately fail to comply with the order to pay security for costs and therefore is not abusing the process in commencing a new claim.

121.  As I do not find for the contention that the striking out would surely succeed, there is no question about P/Chin knowing it at the time of the Settlement Agreement.

122.  Based on the above-said in this section and the fact, as I find, that Chin called Chan in early September 2019 demanding settlement of the Balance and Chin’s own evidence that at that time (and up to now still) he believed that P has a good claim against Chan and Ki, I find at the time of the Settlement Agreement, P did believe bona fide, that P still had a claim with fair chance of success against Chan and Ki and I also find that in fact P then had such a claim.

123.  I thus find that the Settlement Agreement was supported by good consideration.

124.  For completeness, I will briefly mention 2 matters. First, it is trite law that consideration need only to be sufficient and not adequate. Therefore, in my view, P’s bona fide belief that it has (and as a matter of fact it has) a claim with fair chance of success against Chan alone was already sufficient consideration to support the Settlement Agreement regardless of whether that was so in respect of P’s claim against Ki. Second, the principles on forbearance to sue as consideration do not require the actual threat to sue to have to be expressly communicated, therefore the fact, as I find, that Chin had not communicated to Chan the Revival Threat is neither here nor there.

DISPOSAL AND RELIEF

125.  In the premises, I find for P’s claim and give judgment to P.

126.  In P’s Amended Statement of Claim, P does not seek specific performance, but seeks the relief by way of damages, being the payment by Chan of the sale proceeds or a sum equivalent to the sale proceeds or equivalent to the market value of the Property. On my holding of the true construction of the Settlement Agreement above, Chan only promised to pay to P her half share of the proceeds of sale of the Property.

127.  Neither P nor Chan has adduced any valuation report compiled specifically for this action nor did they say anything in their witness statements or their closing submissions on the question of quantum. The only material before me is the valuation report of K.T. Liu Surveyors Limited dated 3 August 2020 commissioned by P, which pre-dated the commencement of this action. There, the market value of the Property, with the alienation restriction (which I understand is the case), was opined at HK$4,150,000.

128.  Based on such only evidence, I will give judgment ordering Chan to pay P half of HK$ HK$4,150,000, that is HK$2,075,000, with interest thereon at HSBC prime lending rate from the date of writ to this judgment and thereafter at judgment rate until full payment. As I have not heard counsel on relief, I will direct that the Judgment herein be not sealed until 14 days after hand-down, within which time the parties may comment on the relief.

129.  As this action was commenced when the monetary jurisdiction of the District Court has already been increased to HK$3,000,000 and the judgment sum I give is below that, I will order on nisi basis that Chan do pay P’s costs of this action, including all costs reserved, at District Court Scale, to be taxed if not agreed, which order will become absolute within 14 days unless any party applies to vary within that time.

130.  Lastly, I thank counsel for their assistance.