WONG CHAU PAN v. POON CHUK YING

DCCJ 3119/2020

[2024] HKDC 555

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3119 OF 2020

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BETWEEN

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JUDGMENT

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A. Introduction

1.  This is a case about financial dealings between two co-workers whilst they were in a romantic relationship and shortly after such a relationship ended.

2.  The Plaintiff (“P”) and the Defendant (“D”) were co-workers of an insurance company and developed a romantic relationship around the end of 2015. This relationship later ended in around the end of 2016. There were various monetary transactions from P to D during and after that period. The question is whether D is liable to return the money she received from P.

3.  D participated in the earlier stages of the action and filed her defence and documentary evidence. However, D did not file any witness statement and did not attempt to call any witness to testify. D was further absent during various subsequent interlocutory hearings.

4.  D was absent during the trial. Having been satisfied that D had been properly notified about the trial dates and venue, the Court decided to proceed with the trial despite D’s voluntary absence.

B. P’s Case

5.  P’s claim against D is for the sum of HK$103,000, being the total amount loaned and transferred by P to D at D’s request and repayable on demand between January 2016 and April 2017 without interest.

6.  The sum is an aggregate of eight different transfers by way of bank remittance to D’s account with the Hongkong and Shanghai Banking Corporation Limited as follows (referred to as “Eight Payments” in aggregate and as “Payment x” individually hereinbelow):

Payment No	Date	Amount (HK$)
1.	22.1.2016	4,000
2.	5.2.2016	10,000
3.	5.2.2016	50,000
4.	26.11.2016	2,000
5.	28.12.2016	10,000
6.	26.1.2017	10,000
7.	7.3.2017	7,000
8.	23.4.2017	10,000

7.  D refused to repay these payments despite repeated demands.

8.  P as the only witness orally testified during the Trial. Since D was absent, I raised various questions based on the case pleaded by D. P provided evidence in an honest, frank, coherent, and logical manner. His evidence is reasonable and well supported by documentary evidence. He is also frank and direct in admitting the defects of his evidence such as the lack of written messages in respect of some payments. He is willing and ready to provide further particulars in a detailed and honest manner when asked. After careful consideration of the content of the witness statement, the documentary evidence filed by both parties, the oral answers given, the demeanour exhibited whilst giving those answers in the witness box, and the overall circumstances, I find P’s evidence to be generally credible and reliable. This is particularly so when D chose not to provide any oral evidence to support her pleaded case or to rebut P’s evidence.

9.  During the closing submissions, P confirmed that he is not asking for any interest before the commencement of this action and is only asking for interest at the judgment rate from the date of the Writ of Summons.

C. D’s Case

10.  D filed a defence denying P’s claims.

11.  D admits the receipt of Payments 2, 3, and 5-8 particularised hereinabove in the total sum of HK$97,000 by denying the receipt of Payments 1 and 4 which add up to HK$6,000.

12.  D avers that Payments 2, 3, 5 and 6 were made as gifts by P out of his love and affection as D’s boyfriend during their romantic relationship and further avers that Payments 7 and 8 were made by P also as gifts as “a small token (小小意思)” to buy food even though this occurred after the romantic relationship had ended.

D. Issues

13.  In light of the above cases of the parties, there are two major issues in the present action:

(1) Whether Payment 1 in the sum of HK$4,000 dated 22 January 2016 and Payment 4 in the sum of HK$2,000 dated 26 November 2016 were made by P to D?

(2) Whether the Eight Payments received by D from P were gifts or loans that D was liable to repay upon demand?

E. Issue 1: Payments Made

14.  The first issue is relatively straightforward.

15.  P has adduced evidence of his bank statements which clearly recorded a transaction of HK$4,000 on 22 January 2016 to the bank account of 558-9-037901, which is the same account of the destination of the other 6 payments from P to D that D admitted. Similarly, a transaction to the same account on 26 November 2016 in the sum of HK$2,000 could be readily seen from P’s bank statement.

16.  Payment 1 is further supported by a WhatsApp message dated 22 January 2016 from D specifically requesting to borrow HK$4,000 from P for the purpose of repaying certain previous debt to a person named “曹正”. Similarly, Payment 4 was preceded by a specific request from D by way of WhatsApp messages sent in the evening of 26 November 2016.

17.  No evidence has been adduced by D to contradict such cogent evidence.

18.  As a result, the bare assertion in the Defence can hardly stand. I find that P had indeed transferred a total sum of HK$103,000 to D through the Eight Payments between 22 January 2016 and 23 April 2017 in the manner pleaded in the Statement of Claim as already discussed hereinabove.

F. Issue 2: Gift or Loan

19.  The second issue is a bit more complicated and consists of two sub-issues:

(1) Whether these payments were gifts?

(2) If not a gift, were they legally enforceable loans?

20.  It is opportune to clarify the relevant legal principles of these two connected but distinct concepts first.

F.1 The Applicable Law on Gift

21.  The relevant principles on gift have recently been very helpfully summarised by DHCJ Paul Lam SC in the case of Ng Kit, the legal representative and the sole beneficiary of The Estate of Ng Kwun Yuen (吳坤元) deceased v Wu Tsun Hua and Ors, [2021] HKCFI 877 at §33 as follows:

“(a) If a gift is claimed, the onus is on the donee to prove it.

(b) A gift made between living persons (inter vivos) may be defined shortly as the transfer of any property from one person to another gratuitously while the donor is alive and not in expectation of death. It is an act whereby something is voluntarily transferred from the true owner in possession with the full intention that the thing shall not return to the donor.

(c) A gift is effective when the donor intends to make it a gift and the recipient takes the thing given and keeps it, knowing that he has done so.

(d) As a general rule, all property, real and personal, may be the subject of gift. With certain exceptions, choses or things in actions are assignable, and may also be the subjects of gift.

(e) A gift inter vivos may be made by various means: by deed or other instrument in writing; by delivery in cases where the subject of the gift admits of delivery; or by declaration of trust, which is the equitable equivalent of a gift.

(f) Gifts of chattels are more often made by delivery than by deed. A gift of chattels is not complete unless accompanied by delivery. Actual delivery is not mere evidence of the gift, but is part of the gift itself. To constitute delivery, the acts must be such, or be accompanied by such words, as to be unequivocal. But actual manual delivery by the donor to the donee of a chattel is not essential. It is sufficient if the donee is put by the donor in possession of the chattel, or if the donee obtains possession with the donor’s consent. Where chattels cannot be actually delivered owing to their bulk, they can be constructively delivered, for example by the delivery of the key of a warehouse in which they are stored. The delivery needs not be made at the time of the gift, delivery first and gift afterwards being as effectual as gift first and delivery afterwards.

(g) Where a gift rests merely in promise, whether written or oral, or in unfulfilled intention, it is incomplete and imperfect, and the court will not compel the intending donor, or those claiming under him, to complete and perfect it, except in circumstances where the donor’s subsequent conduct gives the donee a right to enforce the promise. If a gift is to be valid the donor must have done everything which, according to the nature of the property comprised in the gift, was necessary to be done by him in order to transfer the property and which it was in his power to do.

(h) In order that a voluntary equitable assignment of an equitable chose or thing in action may be valid it must be in all respects complete and perfect, so that the assignee is entitled to demand payment from the trustee or holder of the fund or debt and the trustee or holder is bound to make payment to the assignee, with no further act on the assignor’s part remaining to be done to perfect the assignee’s title.

(i) Save where a presumption of gift may arise, a gift between spouses or civil partners must be established in the same way as a gift between strangers; that is to say it must be made by deed or by delivery, and there must be a clear and distinct act of gift and evidence that a gift was intended, in particular when the claim is made after the death of the alleged donor.

(j) An act showing an intention to change the ownership may constitute sufficient delivery, notwithstanding that the chattels continued to be used by the spouses or civil partners in common: the act, however, must be such or be accompanied by such words as to be unequivocal; for if the facts are equally consistent with an intention to make an absolute gift of the property and an intention to allow the other spouse or civil partner to have the use of it, then title does not pass to that other spouse or civil partner.

(k) Prima facie the donor of a completed gift is not entitled to revoke it nor to recall any payment made voluntarily.”

F.2 The Applicable Law on Intention to Create Legal Relations

22.  It is trite that the mere existence of an agreement is not sufficient, there has to be an intention of creating legal relations for an agreement to be legally binding.

23.  In the family context, agreements without legal intention to be binding are more often found as illustrated in Balfour v Balfour [1919] 2 KB 571 at 579-579:

“… one of the most usual forms of agreement which does not constitute a contract appears to me to be the arrangements which are made between husband and wife. It is quite common, and it is the natural and inevitable result of the relationship of husband and wife, that the two spouses should make arrangements between themselves — agreements such as are in dispute in this action - agreements for allowances, by which the husband agrees that he will pay to his wife a certain sum of money, per week, or per month, or per year, to cover either her own expenses or the necessary expenses of the household and of the children of the marriage, and in which the wife promises either expressly or impliedly to apply the allowance for the purpose for which it is given. To my mind those agreements, or many of them, do not result in contracts at all, and they do not result in contracts even though there may be what as between other parties would constitute consideration for the agreement. … Nevertheless they are not contracts, and they are not contracts because the parties did not intend that they should be attended by legal consequences. … They are not sued upon, not because the parties are reluctant to enforce their legal rights when the agreement is broken, but because the parties, in the inception of the arrangement, never intended that they should be sued upon. Agreements such as these are outside the realm of contracts altogether. …”

24.  The ultimate test is to consider what was communicated between the parties in all the circumstances and decide whether, as understood by a reasonable person, the true inference is that they intended to create legal relations: Jones v Padavatton [1969] 1 WLR 328 at p 332G; Ho Lai King v Kwok Fung Ying [2020] 4 HKLRD 253 (CA) at §43.

25.  Further guidelines have been provided in the following manner:

(1) Evidence of subsequent conduct is admissible for the purpose of determining the parties’ intention at the material time: Blue v Ashley [2017] EWHC 1928 (Comm) at §64; Jones v Padavatton [1969] 1 WLR 328 at p 336H; Ho Lai King v Kwok Fung Ying [2020] 4 HKLRD 253 (CA) at §43.

(2) The subjective understanding of the parties is also admissible in so far as it tends to show whether, objectively, the agreement was intended to be legally binding: Blue v Ashley at §64; Ho Lai King v Kwok Fung Ying at §43.

26.  A presumption may arise in the contexts of family members, at least between close members such as husband and wife and parent and child. This was explained in Jonas v Padavatton at p 332G as follows:

“… as a rule when arrangements are made between close relations, for example, between husband and wife, parent and child or uncle and nephew in relation to an allowance, there is a presumption against an intention of creating any legal relationship. This is not a presumption of law, but of fact. It derives from experience of life and human nature which shows that in such circumstances men and women usually do not intend to create legal rights and obligations, but intend to rely solely on family ties of mutual trust and affection.”

27.  It was previously suggested that such presumption is a “strong one”, however, this was recently disapproved by the Hong Kong Court of Appeal in Ho Lai King v Kwok Fung Ying at §§47-48, reversing the ruling of the DHCJ Keith Yeung SC in this respect, holding that this is nothing but a presumption of fact reversing the burden of proof, the strength or usefulness of which depends very much on the facts and circumstances of each case:

“47. In our judgment, it is not very profitable to proceed on the basis that the presumption is a strong one as if this is a legal presumption. Since it is only a presumption of fact, the strength or usefulness of such presumption must depend very much on the facts and circumstances of each case.

48. The better view is that in respect of agreements between family members, the presumption means that (as opposed to agreements between commercial parties) the onus is reversed: it lies on the party who contends there was an intention to create legal relations to establish such intention. What will satisfy the court in a particular case must depend on the circumstances, including (without being exhaustive) the relationship between the parties, whether they are in amity or estranged, the subject matter of the agreement, the language used in the agreement, the manner in which the agreement has been made. The Judge also alluded to some relevant factors at [60] of the judgment. For oral agreements on maintenance support or other daily domestic arrangements, it may be that convincing evidence is required to discharge that burden: see Gould v Gould [1970] 1 QB 275, 281C (contra the case of a written agreement on transfer of ownership of a matrimonial home upon separation in Merritt v Merritt [1970] 1 WLR 1211).”

28.  The relevant factors summarised in the first instance judgment adopted by the Court of Appeal are as follows ([2019] HKCFI 224 at §60):

“(a) The express terms of the agreement — Balfour v Balfour (per Warrington LJ at page 574).

(b) The necessary implication from the circumstances of the parties, and the transaction generally — Balfour v Balfour (per Warrington LJ at page 574).

(c) Certainty of the agreement. The issue of intention to create legal relationship is closely related to the question of certainty (or lack of it) of the agreement concerned. On the one hand, lack of certainty can of itself be a reason for the unenforceability of the agreement — see Jones v Padavatton, per Salmon LJ at 332F–G and 334C. On the other hand, it can (though not necessarily) be an indication which suggests that no contract was intended — it supports the inference that the parties did not intend to be legally bound — see Jones v Padavatton, per Fenton Atkinson LJ at 336G–H.

(d) The relationship of the parties when the agreement was made, and whether the parties were in amity or estranged. In Merritt v Merritt [1970] 1 WLR 1211, Lord Denning MR, having been referred to Balfour v Balfour and Jones v Padavatton where the parties were living in amity, observed at page 1213 that:

“ I do not think those cases have any application here. The parties there were living together in amity. In such cases their domestic arrangements are ordinarily not intended to create legal relations. It is altogether different when the parties are not living in amity but are separated, or about to separate. They then bargain keenly. They do not rely on honourable understandings. They want everything cut and dried. It may safely be presumed that they intend to create legal relations.”

(e) The subsequent conduct of the parties. In the words of Salmon LJ in Jones v Padavatton (at page 336H):

“ … it is the subsequent history which gives the best guide to the parties’ intention at the material time.”

(f) The consequences of the agreement for the parties, or in other words the extent to which parties have relied on the agreement — see Jones v Padavatton, per Salmon LJ at 333D–H; see further as an illustration Parker v Clark [1960] 1 WLR 286.”

F.3 Analysis

29.  During the trial, P explained that the romantic relationship between him and D was an intimate one, but they were not living together and were financially independent. When they were dating, P would generally pay more but not all of the expenses. For example, P and D may go on trips together whilst P would pay for the hotel accommodation, they would pay for their own airfare independently. P explained that these Eight Payments were different from the expenses that he willingly paid because they were made to D at the specific request to borrow for her own benefit and expressly agreed to be a loan between the two of them. On the contrary, those other expenses that he paid were for the benefit of both of them.

30.  P explained in detail the background and purposes of these Eight Payments, in particular:

(1) Payment 1 was made to repay a prior debt owed by D to another person曹正.

(2) Payments 2 and 3 were made to repay certain loans that D obtained from a money lender.

(3) Payments 4 and 5 were made so that D could use them when she was on a trip.

(4) Payment 6 was made for the purpose of paying certain tuition fees.

(5) Payment 7 was made for the purpose of a business trip to Sanya, China.

(6) Payment 8 was made for some personal matter at the request of D during a meeting between P and D.

31.  It is noted that not every payment was fully documented as to the reason, the background and the purpose of these payments. P frankly admitted that some payments were made at the oral requests of D but he was able to provide details of those oral conversations and requests. In particular, as I already explained above, when asked further, P was willing and ready to explain further details of the relevant circumstances of these payments in line with his pleaded case.

32.  Having considered all the circumstances, and bearing in mind the relevant legal principle that the ultimate test is to consider what was communicated between the parties in all the circumstances to determine the true inference to be drawn by a reasonable person, I find that there was indeed an intention to create a legal loan repayable upon demand between P and D in respect of all the Eight Payments. My reasons are as follows.

33.  Firstly, the relationship between the parties was close but far from being familial. The parties only started dating at the end of 2015. It was a relatively short relationship. It already had its issues in around June 2016 and it ended by the end of 2016, about one year after its commencement. P and D were intimate and close as usual lovers but they did not live together and did live like a family or anything close to a family.

34.  Secondly, it was stated expressly on various occasions when the payments were demanded that they were intended to be loans. The characteristic word “borrow” (“借”) appeared on multiple occasions before the payments were made and sometimes it is coupled with further assurances of repayment (“還”, “轉返”).

35.  On some occasions, they were expressly recorded in WhatsApp messages or WeChat messages:

For Payment 1: “可唔可以借住$4000比我還曹正先”

For Payment 4: “麻煩你借比我先”

For Payment 5: “不過可以借住錢比我嗎？”, “借我點錢吧”, “能先借我嗎”

For Payment 6: “能借錢給我留住課程的名額嗎”, “咁即係借10000比你啦”

36.  For other occasions, P explained that the requests were made orally but the intention to borrow was the same as the other occasions. They were different and distinguishable from those other unrepayable payments he made willingly because these Eight Payments were made for D’s personal benefit, not for the benefit of P and D jointly, unlike those dinner and hotel expenses.

37.  I do not lose sight of the fact that for some payments such as Payments 2 and 3, there was no express word borrow “借” and the wording used may be susceptible to the interpretation of a gift such as “give” (“比”), but I consider this description alone to be inconclusive and the overall circumstances should be looked at.

38.  There is an anomaly regarding Payment 8 which is discussed in more detail hereinbelow.

39.  Thirdly, after the relevant payments were made, P on multiple occasions repeatedly confirmed that those were loans, that P was her creditor and that she would repay the sums she borrowed when she had the money. A lot of these confirmations were by way of written messages. Without repeating all these messages, one message sent by D to P on 8 July 2017 (i.e. after all Eight Payments were made) is particularly telling:

“97000，我會記清楚數目，一定會還清比你，請你放心，我不會欠你什麼！我還給你時會把入數紙拍下發你，知道我把數目還清給你後”

40.  Whilst the amount may not be accurate, the clear intention and recognition of the nature of the payments made is indisputable.

41.  Fourthly, there were repeated demands for repayment subsequently and D never denied the liability. Facebook messages and letters were adduced showing that P repeatedly demanded repayment in 2019 but D chose to remain silent and never disputed the liability to repay.

42.  Fifthly, these payments were a significant burden to P himself. It can be seen from the messages clearly that P himself was not particularly wealthy and had to wait until the date of salary payment before he would have the funds to make those payments to D. P also mentioned on multiple occasions that he was trying his best but he did not have sufficient money to lend to D and only transferred an amount lower than the amount demanded by D.

43.  Sixthly, five of the Eight Payments were made after the relationship had encountered issues and three or four of them were made after the relationship had ended. At least insofar as these latter payments were concerned, the burden of proof is not reversed and D bears the burden to prove lack of intention to create legal relation. However, the pattern remains the same.

44.  Seventhly, apart from Payment 8, D produced no evidence whatsoever to rebut the evidence adduced by P.

45.  In respect of Payment 8, there is a message issued by P on or shortly before 23 April 2017 (i.e. the date when Payment 8 was made) recording that there was a quarrel between P and D the previous evening and P wanted to apologise for what happened. The whole message reads as follows:

“早，尋晚我可能講野太倔，唔識轉彎，我同你道歉！你講得岩，每次我都係唔夠冷靜同你傾，呢段時間要你一個面對，我咩都無幫過，雖然說我地分左，你又唔係好想同我有關係，但我應該要似番個男人，請你今次接受我既道歉。我一陣會過數比你，你就當買野食也好，當我小小意思。希望你領情，謝謝你！”

46.  On this message alone, it may be suggested that this payment was a gift as a token of apology. However, having considered all the circumstances, I would reject this suggestion, because:

(1) Whilst each transaction needs to be assessed on its own, the overall circumstances, the pattern of dealings and the relationship between the parties must be taken into account.

(2) P explained during the trial that D indeed asked to borrow the money and that they had a big quarrel the previous day because of those loan agreements and monetary matters. He sent the message in those terms because a psychologist told him that she was in an unstable status and asked him not to aggravate the situation. The content was therefore mostly to calm D down.

(3) Such an explanation is not unreasonable when the quarrel itself is recorded in the message and as testified by P and corroborated by the various messages produced, P has been particularly kind to D trying to help her as much as he could.

(4) On the other hand, by the time of April 2017, the relationship had ended and there was no particular reason why P would agree to make a gift of HK$10,000 as a token of apology, for effectively no wrong that he had committed as far as I can see.

(5) This was a rather significant sum of money to P, who did not have sufficient savings and was only able to provide the same after his payday. This gift would be too expensive an apology to be reasonable in the circumstances.

(6) This is fully corroborated by the various subsequent messages between the parties, especially the one dated 8 July 2017 sent by D already discussed hereinabove confirming and admitting the nature of these transactions being loans. Notably, the difference between the $103,000 found by me and the $97,000 admitted in that message was generated out of D’s non-admission of Payments 1 and 4 and there was no attempt to exclude Payment 8 or to treat it in a way different from other payments that D received.

47.  Given the limited evidence adduced by D, she has fallen far short of discharging the onus of proving the necessary intention of any gift. The only relevant evidence adduced by P in respect of Payment 8 interpreted in all the circumstances is not sufficient to give rise to an intention of gift as I discussed above.

48.  Moreover, in light of all the circumstances, I find that the presumption of lack of intention to create legal relations between family members only had very limited, if any, application to the Eight Payments being considered here given the less-than-family relationship between the parties and the fact that many transactions occurred after the relationship had already ended. Insofar as such presumption may be applicable to reverse the burden of proof, P has clearly discharged such burden and demonstrated the intention to create legal relations.

G. Conclusion

49.  For the above reasons, I find that P’s claim succeeds in its entirety, and he is entitled to repayment of the full sum of HK$103,000 plus interest and costs.

50.  P asked for interest to be calculated at the judgment rate from the date of the Writ of Summons, but no evidence or basis has been advanced. I do not see any basis to depart from the usual practice of awarding prime rate + 1% as the pre-judgment rate of interest.

51.  Insofar as costs are concerned, the general rule for costs to follow the event should apply.

H. Order

52.  I therefore order that:

(1) The Defendant do pay the Plaintiff the sum of HK$103,000 forthwith;

(2) The Defendant do pay the Plaintiff interest on the sum in paragraph (1) at P + 1% for the period from 23 June 2020 to the date of judgment and thereafter at judgment rate until payment; and

(3) There be cost order nisi that the Defendant do pay the Plaintiff the costs of this action, to be taxed if not agreed.