DELIGHT WEALTHY COMPANY LTD AND ANOTHER v. CRYSTAL GOLD INVESTMENT LTD AND OTHERS

HCA 1651/2021

[2025] HKCFI 4538

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1651 OF 2021

______________

BETWEEN

(By Original Action)

AND BETWEEN

(By Counterclaim)

____________________

____________________

JUDGMENT

____________________

A. Introduction and Undisputed Background

1.  By this action, the 1^st Plaintiff (“Delight Wealthy”) and the 2^nd Plaintiff (“Fair Million”) (collectively, “Ps”), seek inter alia to recover against the 1^st Defendant (“Crystal Gold”) and the 4^th Defendant (“Eric”): (a) a loan of EUR 8,085,000 (“8.085M Loan”) advanced by Delight Wealthy to Crystal Gold, pursuant to a written loan agreement dated 29 September 2017 (“the Loan Agreement”); and (b) a loan of EUR 3,350,000 (“3.35M Loan”) lent by the 3^rd Defendant by counterclaim (“Kenneth”) to Eric pursuant to an oral agreement in around June or July 2017, which was subsequently reduced into writing and documented by a Deed of Agreement dated 17 October 2017 (“the Deed”) executed between Crystal Gold (as borrower), Kenneth (as lender) and Eric (as guarantor).[1] Subsequently, on 19 November 2019, Kenneth’s rights, title and interest in the Deed was assigned to Fair Million.

2.  Ps are investment holding companies wholly owned and controlled by Kenneth[2].

3.  Kenneth and Eric had known each other since secondary school at the German Swiss International School and were good friends prior to the matters leading to these proceedings. When Kenneth married his wife (“Jessica”), Eric was a groomsman at both their weddings in Hong Kong and Guangzhou. Jessica’s father (“Dr Chau”) owned inter alia a large real estate developer in Guangzhou (“Kingold”). Dr Chau also founded and is the chairman of Guangdong Huaxing Bank of which Kenneth is an executive director. Kenneth’s mother also comes from a banking family which owns the Tai Sang Bank in Hong Kong.

4.  Since graduating from university, Eric and Kenneth would meet to discuss topics including business investment opportunities. From 2004, Kenneth had made various investments with Eric.[3] Between 2011-2015, Kenneth invested into the 5^th Defendant (“Celera”), a BVI company set up by Eric since 2012, for which another corporate vehicle of Eric’s (“TCG Holdings Ltd”) was used to hold shares in Celera on trust for Kenneth.[4] However, Eric’s case is that he had ceased to be a shareholder in Celera after 31 August 2017.[5] Eric had also set up a number of other “TCG” and “Celera” prefixed companies.[6]

5.  It is not disputed that the 8.085M Loan and the 3.35M Loan arose because of an investment opportunity which Eric came across to acquire an absolute majority and controlling shareholding in HKB, a German bank, via the acquisition of the 3^rd Defendant (“Socrates”) in around July 2017. The required capital for the acquisition of Socrates was in excess of any resources that Eric could raise so Eric first approached Kenneth about this investment opportunity to buy “a clean German bank” on 6 July 2017 by WeChat.[7]

6.  It is also not disputed that Eric had explained to Kenneth that HKB was then subject to restrictions imposed by the German Federal Financial Supervisory Authority (“BaFin”) restricting it from continuing its deposits and credit business (“the Restriction”). Eric’s plan was after acquiring the shares in HKB, he could work on approval from BaFin to lift the Restriction and once lifted the shares in HKB would be worth a lot more.[8]

7.  On 10 July 2017, by WeChat, Eric asked Kenneth if he could provide “a placeholder convertible loan” to lock up the spot for acquiring HKB. When told the amount would not exceed EUR 500,000, Kenneth replied, “should be ok”.[9]

8.  By a WeChat message on 11 July 2017[10], Eric asked Kenneth: “If we need to inject eur3m this week as a prelude to buying 95% for 13m all pending due diligence passing are u still cool with that for the bank or u won’t have the capital till 4 weeks later”. On 12 July 2017, Kenneth replied: “Depends on the structure this week is indeed very rushed.”

9.  On 13 July 2017, Eric sent to Kenneth an email which stated that they would contribute EUR 1M and EUR 12M in total respectively through their respective corporate vehicles and they would hold the beneficial interest in the acquired shares in corresponding proportion of their contribution[11].

10.  On 16 July 2017, Eric sent by WhatsApp a HKB holding structure which depicted that Clear Crystal (which holds Socrates which in turn holds HKB) would be held by an unknown BVI company of Kenneth’s, and also by Celera Management Ltd (BVI) in turn held by TCG Holdings Ltd for Eric [12].

11.  There is no dispute that on 17 July 2017, Kenneth arranged two sums: (1) EUR 350,000[13]; and (2) EUR 3M[14]; from Great Unity Investment Limited, a company owned by Dr Chau, to accounts designated by Eric pending the parties’ final agreement on the form of Kenneth’s participation.[15]

12.  Eric’s case is that he also caused a sum of EUR 264,970.41 be transferred in July 2017 as part of his equity contribution (“Eric’s Contribution”).[16]

13.  According to Eric, on 17 July 2017[17] over lunch at Sushi Kado, Kenneth told Eric that Dr Chau was in the middle of a defamation lawsuit in Australia where Dr Chau was pursuing a claim against an Australian news channel that had falsely alleged that Dr Chau was a Chinese spy. To avoid any potential queries and difficulties in getting the approval from BaFin for the transfer of ownership of HKB shares, it was proposed by Eric that Kenneth could use one of Eric’s corporate vehicles, Vauban Investments Limited (“Vauban”), to hold his indirect interest in HKB (“the Vauban Structure”). Furthermore, according to Eric, it was agreed that Eric would act as Kenneth’s nominee and use Eric’s corporate vehicles to front the acquisition of HKB so it would appear Eric was the sole applicant for the ownership of the HKB shares to be acquired.[18]

14.  Whilst they might (but Kenneth says he cannot recall) have had lunch at Sushi Kado on 17 July 2017, Kenneth denies any discussion relating to Dr Chau or agreement on a nominee or trust arrangement.[19] Kenneth’s case is that notwithstanding his initial interest in the acquisition of the shares in HKB, after receiving advice that it was too risky, the notion was eventually abandoned and the Vauban Structure was never implemented. There is now no dispute that the documents prepared by Eric for the Vauban Structure[20] were never signed and returned by Kenneth[21] despite a chaser by email from Eric to Kenneth on 14 September 2017[22].

15.  On around 21 September 2017, Eric asked Anthony Fung (“Anthony”)[23] about what the lawyers advised and what he needed to sign. [24] Anthony replied later that day: “Hi Mr Wong, sorry for late reply, confirmed with Lawyer and will use a loan to CGIL to finance new issue of shares. As you instructed, the fund will be wired to CCIL. Docs would be ready tomorrow.”[25] Ps’ case is that Anthony had made it clear by 21 September 2017 or alternatively, 29 September 2017, that Kenneth was only prepared to finance the intended acquisition of HKB by Eric by way of a loan to Crystal Gold and would re-evaluate the prospects of purchasing the shareholding in HKB from Eric in the future after Eric acquires control of HKB and procures the lifting of the Restriction.[26]

16.  The draft Loan Agreement and various other documents were sent out by Anthony to Eric by email on 22 September 2017[27]. There were further discussion on the terms of those documents, in particular the provision of a personal guarantee from Eric, by emails between Eric and Anthony on 24 and 25 September 2017[28]. It can be seen that Eric had proposed revisions to almost every page of those draft documents. Anthony then informed Eric by WeChat on 25 September 2017 that, “Lawyers said (1) cannot remove personal guarantee.”[29]

17.  Eventually, the Loan Agreement[30], a Charge on Shares in Clear Crystal[31] (“2017 Charge”), a Deed of Personal Guarantee[32] (“Deed”) and a Warning Notice[33] (collectively, “the Loan Documents”) were all executed on around 29 September 2017.

18.  It is common ground that on 10 and 11 October 2017, Kenneth procured Kingson to advance two tranches of remittance totaling EUR 8.085M to the bank account of Clear Crystal as designated by Eric.[34]

19.  It is also common ground that a change of ownership in the HKB Bank was subject to the approval by BaFin pursuant to section 2C of the German Banking Act (“2C Application”).[35] Ultimately, by the end of March 2018, it was known that Eric’s 2C Application was not successful and Eric was fined by BaFin for not fully complying with the requirements in relation to his 2C Application.[36] Whilst around mid-2018, Anthony and his assistant, Ida Chan[37] (“Ida”) began to liaise with Eric and their respective advisors about the acquisition of shares of HKB from Socrates by Kenneth’s nominee company, Profit Tune Investment Limited (“Profit Tune”), whereby the purchase price was intended to be set-off against the 8.085M Loan and 3.35M Loan, and Kenneth made his own 2C Application, by September 2019, discussion in respect of the intended acquisition ceased and Kenneth withdrew his 2C Application. [38]

20.  Ps respectively issued demands for repayment of the 8.085M Loan and 3.35M Loan on 29 November 2019.[39]

21.  Eric does not deny that the Loan Documents were signed by him and other individuals authorized by him to sign. However, D1-D4’s pleaded case is that the Loan Documents were not intended to take legal effect and they were signed in reliance on and/or pursuant to:

(1) An alleged assurance/representation made by Kenneth that the loan structure is for auditing and formality purposes only and would not be enforced (“the Representation”); and

(2) An alleged “True Arrangement” whereby Kenneth and Eric had agreed, inter alia, to be equity partners in the acquisition of HKB via Socrates and that Eric would be reimbursed for any professional services rendered by professionals and other incidental expense and costs for the purpose of the acquisition (“the Expenses”).[40]

22.  Eric counterclaims from Kenneth the Expenses totaling HK$4.66M, and EUR697,260.50, being the fine by BaFin (“BaFin Penalty”), incurred under the True Arrangement.[41] During closing submissions, Eric confirmed that he was only seeking contribution from Kenneth for 12/13 share of the BaFin Penalty. Ps admit that Kenneth had agreed to reimburse Kenneth’s expense in relation to the HKB acquisition at the early stage, prior to 21 September 2017, but it was not supported by consideration and/or was subject to the implied understanding that the promise to reimburse was not binding if the equity structure was abandoned[42]. In cross-examination, Kenneth admitted that from September 2017 to around the time Kenneth withdrew his 2C Application, his staff had processed Eric’s applications for reimbursement of expenses but it was out of good faith and having a “soft spot” for Eric.[43]

23.  Apart from seeking recovery of the 8.085M Loan and the 3.35M Loan, Ps further claim that Eric had caused Clear Crystal to create a fixed and floating charge dated 28 April 2021 (registered on 5 May 2021) over all its assets in favour of Celera (“D5’s Charge”)[44]. D5’s Charge was purportedly entered into around 30 June 2017 to secure: (1) a facility agreement dated 27 July 2016 between Logik Communication Pte. Ltd [45] as borrower and Celera Trading Ltd[46] as lender; and (2) a loan agreement dated 30 June 2017 between Celera Markets Limited[47] as borrower and Celera as lender (collectively, “Purported Loan Agreements”) [48].

24.  Ps seek for D5’s Charge be declared null and void on the basis that it is not entered into by the parties in good faith but for the predominant purpose of stripping the assets of Clear Crystal in turn rendering the 2017 Charge valueless. Alternatively, Ps claim damages against Ds for breaches of the Loan Agreement, 2017 Charge and/or for procuring a breach of contract and/or conspiracy to injure Delight Wealthy by unlawful means.[49]

25.  Save where the parties’ respective case or contention is stated, the above undisputed background facts should be treated as forming part of my finding of facts.

26.  Apart from filing a Defence and Further and Better Particulars of the Defence of the 5^th Defendant (By Original Action)[50], Celera took no further steps and has not appeared at the trial of this action. Ms Au together with Ms Lam, counsel, appeared at the trial of this action on behalf of Ps. Eric appeared, not legally represented, to represent Crystal Gold, Clear Crystal, Socrates and himself (collectively, “D1-D4”). I am grateful to them all for their assistance in the trial of this action.

B. The Issues

27.  Ms Au submitted a revised List of Issues (“Revised List of Issues”) during closing submissions which was agreed by Eric as being the issues that requires determination:

(1) Whether, before the signing of the Loan Agreement, 2017 Charge, and Deed (collectively, the Loan Documents), Kenneth and Eric reached the alleged “True Arrangement” as defined in paragraph 50 of DCC. In particular:-

1.1 Whether, during an alleged phone call on 13 July 2017 (“13 July Phone Call”), Kenneth and Eric orally agreed to adopt an equity structure in relation to the acquisition of HKB;

1.2 Whether Kenneth and Eric, at an alleged lunch at Sushi Kado on 17 July 2017 (“17 July Lunch”), orally agreed that upon the acquisition of HKB, Eric (or entities owned and/or controlled by him) would hold Kenneth’s interest in HKB on trust for Kenneth and/or adopt the Vauban Structure; and

1.3 Whether, during an alleged phone call on 25 September 2017 (“25 September Phone Call”), Kenneth orally assured or represented to Eric that the Loan Documents are only for auditing and formality purposes and would not be enforced (“Representation”);

(2) If Issue 1 is in the affirmative:

2.1 Whether it was the common and/or mutual intention of Kenneth (and therefore Ps) on the one hand and Eric (and D1-D3) on the other hand that the Loan Documents would not create legal rights or obligations they appeared to have created by the said documentations (“Sham Defence”);

2.2 Whether the Representation and the True Arrangement constituted an oral collateral agreement such that, to the extent of any divergence and/or inconsistency between the terms of the collateral agreement and that of the Loan Documents, the former should prevail (“Collateral Agreement Defence”);

2.3 Whether, by reason of the Representation and/or the True Arrangement, Ps are estopped from seeking to enforce payment obligations against Eric, Crystal Gold and Clear Crystal pursuant to the express terms of the Loan Documents (“Estoppel Defence”); and

2.4 Whether the Loan Documents are liable to be set aside by reason that the Representation is false and was fraudulently made (“Fraudulent Misrepresentation Defence”);

(3) If Issue 1 is answered in the negative, what sums should be repaid to Ps pursuant to the Loan Documents;

(4) Whether D5’s Charge was on Ps’ case created on or around 28 April 2021 or on D1-D4’s case on 30 June 2017;

(5) Whether at the time when D5’s Charge was created and registered, Celera was, as Ps contend, ultimately owned and/or controlled by Eric, or as D1-D4 as well as D5 contend, neither owned nor controlled by Eric;

(6) In relation to Issues 4 and 5 above, whether an adverse inference should be drawn against D1-D4 (on the one hand) and D5 (on the other hand) on the basis of their failure to testify and/or procure relevant witness(es) to testify;

(7) If Issues 4 and 5 are determined in Ps’ favour:

7.1 Whether D5’s Charge is voidable pursuant to s.60 of the Conveyancing and Property Ordinance, Cap. 219 (“CPO”);

7.2 Alternatively to 7.1 above, whether the creation and/or registration of D5’s Charge constituted a breach of the Loan Agreement and/or 2017 Charge;

7.3 If the answer to 7.2 above is in the affirmative, whether Celera procured, assisted and/or facilitated the said breach(es);

7.4 Whether Eric, Clear Crystal and Celera conspired with intent to injure, and did injure, Delight Wealthy by unlawful means; and

7.5 What remedy should Ps be entitled to;

(8) Whether Kenneth is under legally binding obligation to reimburse D1-D4 the expenses and costs as well as 12/13 of the BaFin Penalty incurred for the purpose of the acquisition of HKB via Socrates and resolving any obstacles on the way;

(9) If Issue 8 is answered in the affirmative, what remedy should D1-D4 be entitled to; and

(10) Whether a final permanent injunction should be granted in terms of the undertaking given by D1-D4 on 5 November 2021 as set out in the Order of Coleman J dated 5 November 2021.

C. Applicable principles

28.  Since most of the issues I have to decide depend on whether the True Arrangement was agreed orally and the Representation was made orally, which Eric’s and Kenneth’s evidence are diametrically opposed, much turns on my assessment of the credibility of the witnesses. The approach for such assessment was helpfully explained by DHCJ H Au-Yeung (as he then was) in Hu Lan v David Golden [2023] HKCFI 873 at §36:

“When I consider the credibility of various witnesses who had given evidence in court, I shall take into the following matters into account:

(1) 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;

(2) Importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3) The court will also attach 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;

(4) The court should consider a witness’ motive for deliberately not giving truthful testimony. For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest;

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

(6) On the other hand, where it is shown that a witness has been discredited over one or more matters to which he has testified, this fact is relevant to the assessment of his overall credibility;

(7) While the court is entitled to take demeanour into account when assessing testimony, it should be borne in mind that demeanour can be deceptive and is therefore to be approached with care.”

29.  Furthermore, I find relevant and agree with the observations and approach summarised by DHCJ Jin Pao SC in Leung Chin Sing, Rabo & Anor v Ko Chun Hay, Kelvin [2021] HKCFI 2242 (a case where the plaintiffs were suing for breach of an alleged oral finder’s fee agreement) at §§42-43:

“42. It is rare in modern commercial litigation to encounter a claim based on an agreement which is not only said to have been purely by word of mouth but of which there is no contemporaneous documentary record of any kind. The prevalence of e-mails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic imprint: Blue v Ashley [2017] EWHC 1928 (Comm) at [65] per Leggatt J (as he then was); Music Holdings Property HK Ltd v Ooi Lean Choo [2020] HKCFI 1312 at [58] per Ng J. Because the value of a written record is understood by anyone with business experience, its absence may, depending on the circumstances, tend to suggest that no contract was concluded: Blue v Ashley at [49]; Wing Hing (1956) Co Ltd v Nissin Foods Co Ltd [2021] HKCFI 638 at [56] per DHCJ Abraham Chan SC.

43. In Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [16-20], Leggatt J (as he then was) set out a detailed analysis on the unreliability of human memory and the impact on the civil litigation process on recalling past events. In view of these considerations, at [22], it was held that the best approach for a judge to adopt in the trial of a commercial case is to place little if any reliance on witnesses’ recollection of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. These observations were cited with approval by Kwan VP in Galleria (Hong Kong) Ltd v DBS Bank, Hong Kong Branch [2021] HKCA 611 at [175]. I have found these observations to be of assistance and particular relevance in approaching the witness evidence in this case, and I respectfully agree with them.”

D. The Witnesses and My Overall Assessment of their Evidence

30.  The witnesses who testified for Ps were Kenneth, Anthony and Ida. Eric was the only witness for D1-D4.

D1. Kenneth’s evidence

31.  I did not find Kenneth’s evidence to be hugely shaken in cross-examination. Generally, he gave short answers and directly answered the questions that he was able to. There were many occasions that he frankly admitted that he could not recall the details or had not read emails to which he had been copied in, particularly after he had delegated to Anthony and later Ida matters relating to the 3.35M Loan and 8.085M Loan. I did not find him to be an evasive witness taking into account that these matters took place 8 years ago and it is not disputed that he had from around mid-August 2017 after asking Anthony and later Ida to take over matters relating to the intended HKB acquisition he assumed a more passive role having “delegated” this matter to them. However, given his admitted inability to recall details of the material events, and bearing in mind that he has an obvious motive to give evidence favourable to Ps’ case, I would place greater reliance on the contemporaneous documentary evidence and known or probable facts in making my findings of fact.

D2. Anthony’s evidence

32.  Anthony’s involvement in the HKB acquisition was only from around mid- to end of August 2017[51] until he handed over the matter to Ida in around December 2017.

33.  There were one or two matters when cross-examined by Eric which demonstrates that he was not as forthcoming in his evidence. One instance was his insistence that in the draft loan agreement the default interest rate stated to be 14% per month was not a typo when plainly it had to be when read with the definition of “default interest rate” in clause 1.1 which provide for interest per annum with 12% in square brackets [52]. Another instance is that when asked if he had discussion with Eric in respect of BaFin, he said he did not recall and tried to distance himself with the regulatory approval aspect of the HKB acquisition.[53] However, from the contemporaneous email, it is apparent that Anthony and Eric did have such discussion and he was aware of the need for approval from BaFin.[54]

34.  Whilst I would not find him as an outright dishonest witness, again his recollection was demonstrated to be unreliable at times, I would place greater weight on the contemporaneous documents and known or probable facts.

D3. Ida’s evidence

35.  I also did not find Ida’s evidence to be greatly shaken by Eric’s cross-examination. Compared to Ps’ other witnesses, she was more forthcoming in answering questions and fairly admitted that she had no knowledge of matters prior to her joining Kingson. I found her generally to be a truthful witness. However, as she only was assigned the role of assisting in the recovery of the 3.35M Loan and 8.085M Loan from about December 2017, and processing the reimbursement of Eric’s expenses, her evidence is of limited assistance.

D4. Eric’s evidence

36.  Eric, clearly a well-educated and seasoned investor, was well prepared for the trial, despite the lack of legal representation, as demonstrated by his ability to foreshadow questions to be asked of him and to digress from answering the question he perceived would weaken D1-D4’s case.

37.  He openly admitted that he was prepared to and had put forward inaccurate or misleading documents to the relevant regulatory authorities including: a shareholding structure he prepared depicting the companies owned by him[55]; and his CV submitted to BaFin[56], to exaggerate his assets or experience[57].

38.  There were a number of material matters which came out in the witness box for the first time which was never pleaded or mentioned in his witness statement for which there is no satisfactory explanation for. These included:

(1) There was a telephone call on 13 July 2017, which preceded the email exchange on 13 July 2017[58], which according to him constituted a binding oral agreement between him and Kenneth on the adoption of the equity structure[59];

(2) The fact that the Vauban Structure was never abandoned but existed side by side with an allegedly agreed trust/nominee arrangement between him and Kenneth[60]; and

(3) In a phone call, which he recalled in the witness box took place on 25 September 2017, Kenneth said words to the effect that he would “protect” Eric (but was not able to recall the exact words used by Kenneth)[61].

39.  He also gave evidence on matters which were inconsistent with the pleaded case of D1-D4. For example:

(1) He accepted in cross-examination that the documents for the Vauban Structure were never signed and returned[62];

(2) He said in cross-examination that he did not know who caused Celera to date the undated D5’s Charge.[63] However, in the Answer to FBPs, it was stated that Mr Lin Wang was responsible for dating the charge[64];

(3) He denied in cross-examination that the HKB opportunity was attractive for himself, saying it would only be attractive for someone who had the resources and strategic reason to acquire HKB[65] which contradicts the pleaded case and what he stated in his witness statement[66]. After further questions, he finally came around to admitting that in a broad sense it presented an opportunity for profit making; and

(4) When cross-examined, he stated that his understanding of the True Arrangement was that he would be the trustee for Kenneth whereas D1-D4’s pleaded case is that Eric via Socrates would hold HKB shares on trust for Kenneth[67].

40.  Overall, given his obvious self interest in these proceedings, the internal inconsistencies in his evidence and evolution of his case during the course of the trial, regrettably, I did not find Eric a credible and reliable witness. Again, I would prefer to place greater weight on the contemporaneous documents and known or probable facts in making my findings of fact.

E. My Findings on the Revised List of Issues

E1. Whether before signing the Loan Documents, Kenneth and Eric reached the True Arrangement

41.  It is inherently improbable and contrary to commercial sense that there was no written agreement or even a piece of record evidencing the alleged trust arrangement between Eric and Kenneth to protect both sides’ interests if they had reached the True Arrangement and/or the Representation was made. This court has seen a great number of WeChat, WhatsApp and email records between the parties. There were also numerous legal documents professionally drafted or prepared by lawyers.

(a) 13 July Phone Call

42.  If there was the 13 July Phone Call and if what was allegedly orally agreed was true, it is surprising that no reference was made to that telephone call and record of what was agreed in the email of 13 July 2017.

43.  It is also contrary to D1-D4’s pleaded case that the initial confirmation (suggesting it was first time that there was confirmation) by Kenneth was by email on 13 July 2017[68].

44.  It was submitted in Eric’s closing submissions that Kenneth conveyed on the 13 July Phone Call that Dr Chau would be the primary investor. However, that was never the pleaded case. The pleaded case was that after discussion with Dr Chau, Kenneth confirmed that he, via his corporate vehicles, would like to acquire the HKB shares indirectly via Socrates.[69]

45.  Moreover, I do not accept that the mere fact of Eric’s Contribution was an unequivocal act in furtherance of an alleged partnership agreement between Eric and Kenneth having been reached. It is equally consistent with Eric going ahead with the acquisition with the funding advanced as an interim loan pending agreement as to what structure is adopted.

46.  Eric had also admitted in cross-examination that at the time of the advance of the EUR 3.35M, which was after this alleged phone call, it was pending their agreement on the form of Kenneth’s participation in the HKB acquisition[70]. So there cannot have had been an agreement on the equity structure as alleged by Eric during the 13 July Phone Call.

47.  Bearing in mind that the burden of proof rests on D1-D4 to prove the phone call took place and the oral agreement made during that phone call, in view of the lack of contemporaneous record of the call, the internal inconsistency of Eric’s evidence and inconsistency with the pleaded case, and given my view that Eric is not a credible and reliable witness, I am not satisfied that the 13 July Phone Call is proved on the balance of probabilities.

(b) 17 July 2017 Lunch

48.  As for the 17 July 2017 Lunch, again I am not satisfied it has been proved on the balance of probabilities that it was orally agreed that Eric would hold Kenneth’s interest on trust and/or adopt the Vauban Structure. Even according to Eric’s recollection, at that stage the exact structure had not been figured out and was unclear even in his mind.[71] Whilst he also said in cross-examination that it was agreed that he would hold on trust Kenneth’s interest in HKB, as mentioned above, this is inconsistent with the Answer to FBP.

49.  The conversation concerning Dr Chau’s litigation and that Kenneth’s name should not appear in the 2C Application is contradicted by the Vauban Structure itself where Kenneth’s shareholding via Vauban would be seen and revealed to the regulators “on a need to know basis”[72]. In cross-examination, Eric first suggested that the regulators would only see Kenneth’s interest if all the documents executed were accurately reported to the regulators. He later added that his plan was to delay execution of the Vauban documents and meanwhile he would hold on trust Kenneth’s interest.[73] These were not matters included in his witness statement and there is no good reason given for not including it if true. It also is inconsistent with his preparing and chasing for the execution of the Vauban documents in September 2017 if there was the alleged conversation about Dr Chau’s litigation and the plan was to delay the execution of the Vauban documents and thus there was no urgency for the execution of those documents.

50.  Furthermore, if the alleged trust arrangement had been agreed by the time of this lunch, it flies in the face of Eric’s acceptance that even by 21 September 2017, Kenneth’s side had not confirmed what structure would be adopted[74].

51.  In his email of 24 September 2017[75] enclosing inter alia his edits to the draft documents Anthony had sent out, whilst he made reference to the eventual ownership by Kenneth of HKB share and replacement of the loan agreement with “long term ownership structure involving Ken”, plainly at that point in time Eric appreciated that the structure adopted would be a loan and further proposed, “I recommend increasing the 2^nd tranche loan amount to EUR 8,650,000 bringing the total loan amount to the originally planned on EUR 12,000,000 from the Kingold side…”. This contradicts that there was already an agreement on a trust structure to be adopted and not a loan.

52.  Eric had admitted that he was very meticulous when it came to paper work and even in business dealing with Kenneth, despite their friendship, paperwork would come later to formalize their dealings.[76] This is consistent with the numerous documentations including declaration of trusts prepared by Eric prior to the HKB acquisition which declared certain investments were in fact held on behalf of Kenneth[77]. For the HKB acquisition to be held on trust for Kenneth, an investment involving even greater sums of monies, it is unlikely that when Eric went to the trouble to prepare the numerous documents for the Vauban Structure, for Eric not require them to be signed by Kenneth if the Vauban Structure had not been abandoned as claimed by him. Even if, as submitted in Eric’s closing submissions, the fact that these documents were drafted may demonstrate that a trust was contemplated as the path forward, it does not mean that parties could not have altered that path as demonstrated by the fact the formal documents for the Vauban Structure were not signed but the Loan Documents were.

53.  In cross-examination, Eric admitted that the signing of the Vauban documents prepared by him were crucial in order to reflect the shareholding structure allegedly agreed and served to protect him by having something in writing.[78] If to his mind there was already a binding agreement or trust arrangement between Eric and Kenneth, he would not have needed to draft those documents and pressed for them to be returned signed. The fact that they were not signed and he did not further chase Kenneth to sign those documents or other declarations of trust after the Loan Documents were signed is more consistent with Ps’ case that the equity structure was abandoned in favour of a loan structure even if an equity structure was initially proposed by Eric.

(c) 25 September Phone Call

54.  Furthermore, I am also not satisfied on a balance of probabilities that there was the 25 September Phone Call and the Representation was made by Kenneth.

55.  The fact that there was such a call on 25 September 2017 and the details as to where it took place first came out in the witness box in cross-examination.[79]

56.  Even in Eric’s recollection of that phone call, despite he was able to recall the exact location where he had that phone call, who he saw and how he felt “jubilant” after the phone call, he was not able to recall the precise words used by Eric but said that the pleaded case that Kenneth assured him the loan structure “is for auditing and formality purposes only and would not be enforced (which was defined as “the Representation”)[80] were not the actual words used by Kenneth.

57.  More importantly, there is not one contemporaneous document recording such a crucial phone call and what allegedly had been agreed. Even though Eric tried to suggest to have the True Arrangement in writing or have some paper trail may be prejudicial to his 2C Application, and further that he trusted Kenneth, there is no reason why he could not have recorded their agreement in a private message or email between just the two of them. As mentioned already, Eric clearly appreciated the need to have proper documentation of any agreement made between him and Kenneth.

58.  On the other hand, a number of contemporaneous documents and conduct by Eric directly contradict that the True Arrangement had been reached during the 25 September Phone Call:

(1) From his email of 25 September 2017 to Anthony[81], it is evident at that point in time he appreciated that “we are using the loan instead of shares in CGIL in the interim”;

(2) During November 2018, in the discussion of the proposed sale of HKB shares to Profit Tune, Eric’s lawyers, Messrs Simmons & Simmons (“Simmons”) mentioned the need to sign a Deed of Release and by email dated 27 November 2018[82] from Jan De Bolle[83] attached 3 draft deeds of release drafted by Simmons. In cross-examination, Eric accepted that he had instructed Simmons to draft the release as otherwise his obligations under the Deed would not be released[84]. Clearly, this would have been unnecessary if there had been reached the True Arrangement and he would not have regarded himself as under any legally binding obligations under the Deed;

(3) By WeChat message on 19 September 2019[85], Eric informed that “I would like to have the personal guarantee for the loan removed… I can’t try to solve the problem with that personal guarantee hanging over me”. There was no protest to Ida that there was the True Arrangement. If the True Arrangement existed, he would not have said the Deed was hanging over him and was having an effect on his ability to solve problems; and

(4) In a WeChat message on 15 October 2019, when asked by Ida what were the latest options of repaying the loan, rather than to protest that he had no legal obligation to repay the loan, he clearly accepted that he was obliged to repay the loan to Kenneth’s entity by replying, “the best option is to sell the shares… one issue that came up when exploring options is that if the loan is called in which leads to the shares in all or any of the intermediate holding vehicles holding the bank shares being turned over to the lending entity, it and the UBO of the lending entity (Ken I believe) would be fined by Bafin…”[86].

59.  Whilst Eric tried to suggest that he sought to be released from the personal guarantee under the Deed because he was concerned that Kenneth’s staff (Anthony or Ida) or some “higher power” (i.e. Kingson) would enforce those documents against him despite the alleged Representation and/or protection from Kenneth, eventually he did accept that the Loan Documents were legally enforceable.[87] The suggestion that anyone or any entity apart from Kenneth or his entities would enforce the Loan Documents is clearly contradicted by his own WeChat message with Ida on 15 October 2019 that the loan was due to Kenneth. As mentioned above, it is not even the pleaded case of D1-D4. Furthermore, on D1-D4’s pleaded case, under the True Arrangement, Kenneth and Kenneth’s nominees would not seek repayment of the EUR 8.085M and EUR 3.35M advanced[88]. The suggestion that Dr Chau, his entities or their nominees would seek to enforce the Loan Documents is plainly a recent invention and cannot explain Eric’s conduct in seeking to release himself from his personal guarantee under the Deed.

60.  Moreover, if the True Arrangement had been agreed whereby inter alia Kenneth would make a 2C Application for all the shares in HKB[89], apart from the assertion in cross-examination that Eric did protest to Kenneth, there is no written record, as one would expect if the True Arrangement existed, of him protesting against the withdrawal of Kenneth’s 2C Application leaving him on his case as the 100% and not 1:13 equity owner of the acquisition. [90]

61.  I also noted that in Crystal Gold’s letter (signed by Eric) to Fair Million and Kenneth, and Eric’s letters to Kenneth dated 10 December 2019, whilst a “true arrangement” was for the first time alleged, apart from asserting that there has never been a loan made to Crystal Gold, the 3.35M advanced to Crystal Gold was received as agent for Kenneth’s own purposes (the intended acquisition of HKB) and the Deed was never intended to create legal rights or obligations, the True Arrangement as now pleaded and relied upon was never set out, in particular the fact that Kenneth was to make a 2C application for all the shares in HKB and Eric would be reimbursed for professional services rendered. [91]

(d) Eric’s other submissions

62.  In Eric’s closing submissions, he submitted that Ps’ own conduct corroborated the True Arrangement or was irreconcilable with a loan as opposed to a partnership. I disagree.

63.  Firstly, Eric submitted that there was lack of due diligence prior to the advance of EUR multi-millions which was commercially reckless. However, it was common ground that EUR 3.35M was advanced when funds were needed urgently. There was no time for due diligence even by Eric when the first tranche went out and this was before Anthony was brought in and advice from external advisors obtained. Kenneth explained that he was prepared to advance EUR 3.35M, without due diligence or a chance to even read the information sent by Eric and lack of documentation, partly because of their friendship and trust and partly because of the attractive opportunity that was presented by Eric.[92] When Anthony and the external advisors were consulted, it was then decided that Eric’s proposed equity structure was too risky and further sums to be advanced for the HKB acquisition would be by way of a loan because there was no sufficient time to do due diligence[93]. Moreover, the fact that there was no due diligence on Eric done is nothing of moment when Eric and Kenneth had known each other for so many years and knew of each other’s background[94]. The fact that Eric and Kenneth were friends was also known by Anthony.[95] In the circumstances of this case, I do not accept that the fact that according to Eric no “rigorous due diligence” was conducted by Anthony is consistent with Ps knowing that they were not lenders at all.

64.  Secondly, Eric submitted the fact that for over a year from July 2017 to October 2018 Kingson had reimbursed Eric’s expense is consistent with the True Arrangement. However, it is also consistent with Ps’ case that it was not out of legal obligations but rather because Kenneth had a “soft spot” for Eric and ultimately, if Eric’s 2C Application was successful, it was more likely that Eric could repay the 3.35M Loan and 8.085M Loan or there would be security for the loans.[96]

65.  Thirdly, Eric also submitted that the terms of the loans were non-commercial. Whilst Eric submitted that the default interest was dramatically reduced from 14% per month to 8% per annum, I do not accept that there was any “casual indifference” by Ps. Evidently, these documents were legally prepared, discussed and revised. Anthony gave a reasonable explanation for the interest rate and lack of repayment schedule bearing in mind the known purpose of the loan.[97]

66.  Besides, any favourable terms in favour of Eric does not equivocally point to a lack of intention to be legally enforceable but can be explained by the friendship between Kenneth and Eric as well as the known purpose of the loans were for the acquisition of HKB which would require time for approval and may not reap immediate profits[98]. In any event, the fact an agreement is uncommercial or unfavourable to one side does not mean it is a sham or was not intended be legally enforced: see Hui Cheung Fai & Anor v Daiwa Development Limited & Ors (unrep) HCA 1734/2009, 8 April 2012, §72 citing Hitch v Stone [2001] STC 214 at 230 where Arden J explained:

“Third, the fact that the act or document is uncommercial, or even artificial, does not mean that it is a sham. A distinction is to be drawn between the situation where parties make an agreement which is unfavourable to one of them, or artificial, and a situation where they intend some other arrangement to bind them. In the former situation, they intend the agreement to take effect according to its tenor. In the latter situation, the agreement is not to bind their relationship.”

67.  Lastly, Eric also relied on the fact that Ps never requested for interest payments for two years and did not call in the loan and seize the HKB shares, as being inconsistent with them being lenders but rather “a partner weathering the initial storms of a long-term investment”. However, I have no reason to doubt the explanation given by Ida that this was the only option as advised by Allen & Overy, “to do recovery of the loan”[99]. It also made commercial sense to seek to acquire the shares which were presented as an attractive opportunity to Kenneth.

68.  In all, I am not satisfied on a balance of probabilities that the True Arrangement or the Representation is proved. I would find Issue 1 in the negative.

E2. Whether the Sham Defence, Collateral Agreement Defence, Estoppel Defence and Misrepresentation Defence are established

69.  In view of my answer to Issue 1, the defences which are all premised on the True Arrangement and the Representation are not established.

70.  Even if I were wrong, in respect of the Sham Defence:

(1) The courts do not lightly find legal documents are a sham and require cogent evidence to establish a sham. On the contrary, there is a strong presumption that the parties intend to be bound by the provisions of the agreement into which they enter and intend those agreements to take effect: see Poon Ka Man Jason v Cheng Wai Tao & Ors [2019] HKCFI 1141 at §101;

(2) The burden of proof falls on the party alleging a sham and the burden is a heavy one: Asia Jet Partners Limited v Wild Wing LLC & Ors [2019] HKCFI 402 at §61.1; and

(3) The essential elements to establish a sham are: (i) common intention of (ii) both parties (iii) that the document was not to create legal rights (iv) but to give to third parties the appearance of the document creating legal rights between them (v) different from the actual legal rights between the parties: see Poon Ka Man Jason at §100 and Hui Cheung Fai & Anor v Daiwa Development Ltd & Or Anor (unrep) HCA 1734/2009, 8 April 2014, §71.

71.  Given that Eric himself admitted in cross-examination that the Loan Documents were legally enforceable, there plainly was no common intention of both parties that the Loan Documents were not to create legal rights or obligation they appear to create.

72.  Furthermore, it was never clearly pleaded that the Loan Documents were to mislead or give an appearance of a document creating legal rights to third parties. Thus this is also fatal to D1-D4’s case of a sham.

73.  In respect of the Collateral Agreement Defence, as a matter of law, due to the presence of an entire agreement in the Loan Agreement[100] and the Deed[101], this defence is legally unsustainable: see China Jianxin Credit Services Limited v IR Resources Limited [2021] HKCFI 575 per DHCJ MK Liu at §31(1) and New World Finance Company Limited v Utahloy (China Holdings) Company Limited (unrep) HCA 3367/2002, 22 March 2005 per DHCJ Mutrrie at §§26-27. The effect of the True Arrangement and the Representation is to modify the contents of the Loan Documents and is precluded by the entire agreement clause.

74.  As for the Estoppel Defence, even if I had found that Kenneth had made the Representation, it would also fail because with the admission by Eric that the Loan Documents were intended to create legally binding rights and obligations, there could have been no reasonable reliance on the Representation.[102] This is consistent with the clear conduct of Eric as mentioned at paragraph 58 above, acknowledging that they would proceed by way of a loan in the interim and seeking to remove himself as guarantor and seeking his release from the personal guarantee given in the Deed. In these circumstances, it would not be inequitable for Kenneth to go back on the Representation even if made when no reliance was placed on it. The elements of promissory estoppel cannot be made out.

75.  Lastly, as for the Misrepresentation Defence, it would not assist D1-D4. Setting aside or rescission of the Loan Documents requires that restitution must be possible: see Cartwright, Misrepresentation, Mistake and Non-Disclosure, 7^th Edn, §4-56. Crystal Gold must give back what is received under the Loan Documents i.e. the EUR 8.085M and EUR 3.35M.

E3. What sums should be repaid to Ps if Issue 1 is answered in the negative

76.  As my answer to Issue 1 is in the negative and none of the defences raised by D1-D4 can be made out, Ps are entitled to repayment of EUR 3.35M and EUR 8.085M in accordance with the terms of the Loan Documents. Ps should be entitled to payment of:

(1) EUR 8.085M together with interest: (a) at 9% per annum from 10 October 2017 to 13 December 2019; at (b) 8% per annum from 14 December 2019 to date of judgment;

(2) EUR 3.35M together with interest at prime rate plus 4% from 17 July 2017 to date of judgment; and

(3) Post-judgment interest at judgment rate until payment in full.

E4. Whether D5’s Charge was created on 28 April 2021 or 30 June 2017 and whether adverse inference should be drawn against Ds

77.  D5’s Charge was dated or stated to be made on 28 April 2021[103]. Ds’ case that it was created on 30 June 2017 is contradicted by D5’s Charge itself.

78.  Furthermore, given at around the time D5’s Charge was allegedly created on Ds’ case, it is not disputed that Clear Crystal’s only known asset comprised a few hundred dollars in its bank accounts and accounts receivable due from Crystal Gold, there is no commercial reason why D5’s Charge would have been acceptable as security for the Purported Loan Agreements. Ds’ case is therefore incredible. Whilst Eric explained Celera held tangible value through its potential to secure a CEPA JV leasing license in China this only came out for the first time in cross-examination[104]. Eric offered no real explanation why this was never mentioned in his witness statement when he appreciated the genuineness of D5’s Charge was in issue. He simply said that he neglected to do so.

79.  Eric also gave the explanation for the fact that a charge created in 2017 was only dated and registered in 2021 was that it was not uncommon for creditors holding a signed but undated security only to be perfected when necessary. I do not accept this is a common practice, for which there is no evidence apart from Eric’s own say so. Besides, he himself accepted in cross-examination that priority of a charge takes effect when it is registered[105] so it would be contrary to commercial sense to not register the charge as soon as it was created.

80.  Even without the need to draw any adverse inference in failing to call Celera and those individual behind D5 i.e. Mr Lin Wang (“Lin”) and Mr Xinli Song (“Song”), I am not satisfied that D1-D4 has proved that D5’s Charge was created on 30 June 2017 rather than when it was dated, i.e. 28 April 2021.

E5. Whether at the time D5’s Charge was created and registered, D5 was ultimately owned and/or controlled by Eric and whether adverse inference should be drawn against Ds

81.  Eric’s evidence was that he disposed of the last of his interest in Celera by 31 August 2017[106]. However, when cross-examined, he was evasive about the details of this disposition such as the consideration received and from whom exactly[107].

82.  His case is contradicted by the contemporaneous documents which he himself created and submitted to BaFin:

(1) His CV which represented himself as a director of Celera from “July 2021-present”[108];

(2) In a document entitled “List of companies for which Eric Wong is a Managing Director” submitted to BaFin, he represented that he was a managing director of Celera[109]; and

(3) In a document entitled “Statement of Eric Wong’s financial circumstances and source of funds”, he represented that that he was a managing director of Celera[110].

83.  As mentioned above, he explained that he had deliberately created the above documents to mislead BaFin to exaggerate his assets and experience. However, for reasons explained above, I do not find Eric’s evidence reliable and I would place greater weight on the face of the contemporaneous documents.

84.  Moreover, it was never disputed that the documentary evidence shows that Eric still received emails sent to Celera’s email since they were automatically forwarded to him. Eric’s explanation why the emails sent to Celera would still be received by him 6 years after he supposedly had ceased to own and control of Celera because he was kept on the mailing list as those now in control of Celera “did not care very much” and there was not much emails anyways[111] are, to say the least, unconvincing. There is no independent evidence from those now in control of Celera to support his bare assertion.

85.  Furthermore, it has also been demonstrated that Celera and other companies owned by Eric shared the same address after he had ceased to have any interest in Celera[112]:

(1) From 2018 to 2020, Celera’s mailing address was 11G, 51 Man Yue Street, Hunghom. This was the same address shared by companies wholly owned by Eric including: Clear Crystal, Celera Telecom Ltd, Celera Markets Ltd (BVI), Celera Holdings Ltd, Celera Management Ltd, and Celera Financial Ltd; and

(2) From 2020 to 2022, Celera’s registered office was K3-A, 11/F, 51 Man Yue Street, Hunghom. This address was shared by Clear Crystal and Celera Trading Ltd.

86.  Based on the documentary and circumstantial evidence before me, which has not been contradicted by credible evidence, I am satisfied that at the very least there is a prima facie case that Celera was under the control and ultimately owned by Eric in 2021.

87.  Furthermore, I accept Ms Au’s invitation to draw adverse inference against D1-D4 and Celera for failing to call those who, on their case, control and own Celera (which according to Eric included Lin and Song with whom he admitted to be in contact[113]) to give evidence on the true ownership of Celera, the timing and circumstances of the entering into of D5’s Charge. Mr Patrick Pang who is the authorised signatory of Celera’s bank account[114] and witnessed the execution of D5’s Charge could also have been called to give evidence. I do not accept Eric’s explanation why these individuals were not called and there is no suggestion that he had even tried to ask them to be witnesses for D1-D4.

88.  In all, I am satisfied on the balance of probabilities that Eric remained the ultimate controller and beneficial owners of Celera at the time D5’s Charge was executed.

E6. If Issues 4 and 5 are determined in favour of Ps whether D5’s Charge should be voidable under s.60 of CPO or alternatively, constitute a breach of the Loan Agreement and/or the 2017 Charge which Celera had procured, assisted or facilitated such breach, and whether Eric, Clear Crystal and Celera conspired to injure Delight Wealthy by unlawful means

89.  As I have found that D5’s Charge was created after the Loan Documents were executed, I find that:

(1) Celera purported to create an encumbrance over all assets of Clear Crystal rendering the 2017 Charge valueless;

(2) I do not accept Eric’s evidence that there were genuine commercial reasons for D5’s Charge. In the absence of any independent evidence from D1-D4 and any evidence from Celera, I find that D5’s Charge was executed with intent to defraud creditors or at least Delight Wealthy has been prejudiced by this. D5’s Charge should be set aside pursuant to s.60(1) of CPO;

(3) Even if I were wrong, alternatively, the creation and registration of D5’s Charge was in breach of the Loan Documents in that: (a) Crystal Gold was in breach of clause 14.11(c) of the Loan Agreement[115] and clause 7.1(a) of the 2017 Charge[116]; (b) Clear Crystal was in breach of Clause 14.4(a) of the Loan Agreement[117] in creating D5’s Charge without the written consent of Delight Wealthy; and (c) Eric in failing to procure Clear Crystal not to create D5’s Charge and to guarantee Crystal Gold’s and Clear Crystal’s performance of the Loan Agreement and the Deed, he was also in breach of clause 14B.1(b) of the Loan Agreement[118] and clauses 2.1(a) and 4(d) of the Deed[119];

(4) Given that I have found that at the time of execution of D5’s Charge, Eric ultimately controlled and owned Celera, I would attribute Eric’s knowledge to Celera. I would therefore also find that: (a) Celera did procure Crystal Gold, Clear Crystal and Eric to breach their respective obligations under the Loan Documents by execution and registering of D5’s Charge as a result of which Delight Wealthy has suffered loss and damages to be assessed; and/or (b) Eric, Clear Crystal and Celera conspired together with intent to injure Delight Wealthy by unlawful means. The unlawful means was the breach of the mentioned obligations under the Loan Documents.

E7. What remedies should Ps be entitled to if Issues 4 and 5 are held in Ps’ favour?

90.  Since I have found Issues 4 and 5 in Ps’ favour, Ps are entitled to a declaration that D5’s Charge is null, void, invalid or otherwise unenforceable and its registration should be removed from the Companies Registry.

91.  With such relief granted, Ps’ alternative claim for damages for breach of the Loan Documents and conspiracy to injure as a result of creation of D5’s Charge does not arise for determination. In any event, with the declarations granted and if costs of bringing this action to set aside D5’s Charge are awarded to Ps, there should be no further damage suffered by the creation and registering of D5’s Charge.

E8. Whether Kenneth is legally obliged to reimburse D1-D4 the expenses and costs as well as the 12/13 share of the BaFin Penalty, and if so what reliefs D1-D4 are entitled to

92.  As Eric’s claim for reimbursements rests on the existence of the True Arrangement, specifically an oral agreement during the 13 July Phone Call, which I have rejected, Kenneth is not legally obliged to reimburse D1-D4 the expenses and costs in relation to the HKB acquisition as claimed.

93.  In any event, given the undisputed background facts as found by me, any promise for reimbursements by Kenneth was made at a stage when parties had not confirmed the structure to be adopted, and even on Eric’s own case there was no detailed discussion and agreement on what expenses would be agreed (for example, whether Eric’s could fly business class or economy and stay in 4- or 5- star hotel)[120], there could not have been any intention to create legal relations between them so as to make any such promise legally enforceable. This is consistent with Eric accepting that Kenneth was “quite generous” and given there was no discussion and agreement on the exact type and nature of expenses to be reimbursed that Kenneth would have “some latitude” in approving his expenses.[121]

94.  It was also not disputed that the expenses now claimed by Eric in his counterclaim were never submitted to Ps (whether Anthony or Ida) for reimbursement prior to these proceedings[122]. If they were genuine expenses incurred in relation to the HKB acquisition, there is no reason why they were not submitted to Ps prior to these proceedings were commenced.

95.  Furthermore, some of the expenses now claimed clearly could not fall within any agreement of Kenneth to reimburse Eric relating to the HKB acquisition. Eric admitted that one of the expenses he sought reimbursement was for a spa treatment at a 5-star hotel and another was for a health treatment (physiotherapy).[123] Even on Eric’s case, I cannot see how they were related to costs (or even incidental costs) incurred by him in relation to the HKB acquisition. The fact that he sought to claim and maintained in cross-examination the reimbursement for such expenses as being justified, despite they plainly do not relate to the HKB acquisition and this was pointed out to him, further casts doubt on Eric’s credibility. The fact that Eric claimed for all expenses and not 12:13, which should be the true extent of Kenneth’s liability even on Eric’s case of the True Arrangement, also casts doubt on the genuineness of D1-D4’s counterclaim.

96.  Accordingly, I find that D1-D4 are not entitled to the relief claimed.

E9. Whether a final permanent injunction should be granted in terms of the undertaking given by D1-D4 on 5 November 2021 as set out in the Order of Coleman J dated 5 November 2021

97.  Eric admitted in cross-examination that Ps were and are entitled to seek the injunctive relief against D1-D4 in terms of the Order of Coleman J dated 5 November 2021[124] (“the Order”).[125]

98.  In the premises, Delight Wealthy should be entitled to a final injunction against D1-D4 in terms of the undertakings given by them as reflected in the Order.

F. Conclusion and Orders

99.  To conclude, I would order:

(1) Crystal Gold and Eric be jointly and severally liable to Delight Wealthy for EUR 8.085M (or its Hong Kong dollar equivalent at the time of payment) together with interest: (a) at 9% per annum from 10 October 2017 to 13 December 2019; at (b) 8% per annum from 14 December 2019 to date of judgment; and (c) thereafter post-judgment interest at judgment rate until payment in full;

(2) Crystal Gold and Eric be jointly and severally liable to Fair Million for EUR 3.35M (or its Hong Kong dollar equivalent at the time of payment) together with interest: (a) at prime rate plus 4% from 17 July 2017 to date of judgment; and (b) thereafter post-judgment interest at judgment rate until payment in full;

(3) A declaration that D5’s Charge is null, void, invalid and otherwise unenforceable and its registration be removed from the Companies Registry;

(4) A final injunction against D1-D4 in terms of the undertaking given by term as reflected in the Order; and

(5) D1-D4’s counterclaim be dismissed.

100.  I see no reason why costs should not follow the event. I therefore make a costs order nisi that Ds should pay the costs of Ps and Eric of this action (including the counterclaim), with one certificate for counsel, to be taxed if not agreed. In the absence of any application to vary within 14 days from the handing down of this Judgment, the costs order nisi shall become absolute.

Appendix