CHAPMAN INTERNATIONAL MACAO COMMERCIAL OFFSHORE LTD v. HEALTH LIFE TEXTILE (HK) COMPANY LTD

DCCJ 5847/2020

[2024] HKDC 1181

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5847 OF 2020

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BETWEEN

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JUDGMENT

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A. Introduction and summary of the parties’ case

1.  This is the trial of an action whereby, the Plaintiff, Chapman International Macao Commercial Offshore Limited (“P”), claims against the Defendant, Health Life Textile (HK) Company Limited (“D”), a sum of HK$1,001,149.97 (“the Sum”), together with interest and costs.

2.  According to P, the Sum is the total outstanding charges for dyeing services provided by P, through its associated company Dongguan Ming Hoi Dyeing & Finishing Factory Limited (“MHD”), to D from February to December 2017, based on 15 invoices denominated in Hong Kong Dollars (“HKD”) issued by P to D (collectively, “the 15 Invoices”).[1]

3.  Whilst P had also issued to D various invoices denominated in Renmenbi (“the RMB Invoices”) for dyeing services provided by P through MHD, which were separately set out in the monthly statements issued by P to D, P does not claim in this action against D for the outstanding sums under the RMB Invoices.

4.  By the time of closing submissions, D no longer disputes that P is entitled to payment of the 15 Invoices.[2] As Mr Ho, counsel for P, submitted in his Opening, the real issue is whether D had already paid the 15 Invoices.

5.  From the Re-Amended Defence (“RAD”), it can be seen that essentially, D’s pleaded defence is that:

(1) There was an agreement in about early January 2017 between all parties that payments due under the dyeing contracts between P and D would be paid to MHD (“the Agreement”);[3]

(2) Further and in the alternative, it was the long standing practice of trade between P, MHD and D that: (a) all payments due under the dyeing contracts would be paid to MHD; and (b) payments by D to MHD would always be made in RMB (for the RMB Invoices, the RMB payments would be used to settle the RMB Invoices directly, whereas for the HKD denominated invoices (“HKD Invoices”), the receiving party will convert payments from RMB into HKD) (“the Trade Practice”);[4]

(3) Accordingly, between March 2017 and February 2018, D duly effected payment to P for any services rendered by making payment to MHD. A total of 27 payments in the total sum of RMB12,554,000.67 were made by D to MHD between 16 March 2017 and 2 February 2018 (“the 27 Payments”)[5];

(4) It is averred that D, through its subsidiary 江門市海麗紡織有限公司, would confirm with P, through MHD, by written communication in the form of 月份對賬單 (“the Monthly Confirmation”) on the 10^th day of each month that D intended payment to be applied to the specific amount and currency of the outstanding fees due to MHD as stated therein[6];

(5) Further and in the alternative, on 2 January 2017 and 19 January 2017, D issued to P two cheques in the amounts of HK$2,000,000.00 and HK$3,000,000.00 (together, “the HK$5M”). The HK$5M would set off in full the Sum[7]; and

(6) Further and in the alternative, D seeks to set off against the Sum ten payments totaling RMB12,543,000.00 and US$2,457,610.00 (“the 2016/17 Payments”) made by D to MHD between 2 February 2016 and September 2017, pursuant to 入股經營東莞明海整染廠協議書 dated 15 December 2015 (“2015 Agreement”) and 入股經營東莞明海整染廠協議書 dated 20 September 2017, for which the consideration has wholly failed such that P was and still is unjustly enriched[8].

6.  In reply, P has pleaded that:

(1) Both the Agreement and Trade Practice are denied. Rather, it is averred that there was a trade practice between P’s group of companies and D’s group of companies that the invoices of P and Gennon denominated in HKD would be settled by D using HKD[9];

(2) As for the 27 Payments, they were: (a) to settle dyeing services provided to D in 2016, January and February 2017[10]; (b) part settlement of the RMB Invoices[11]; and (c) payments made on behalf of Mr Song De Gang (“Song”) pursuant to the Joint Venture Agreements (“the JVA”), to which neither P nor D were parties thereto[12];

(3) The JVA comprised the following agreements made between Chapman and Song: (a) the 2015 Agreement; (b) 補充協議(一) dated 16 June 2017; (c) 補充協議(二) dated 16 June 2017; as well as 公司經營權承包合同 dated 13 October 2017, made between Chapman, Song and MHD. Song agreed to acquire 49% of the share capital of MHD from Chapman, and Chapman agreed to grant Song the right to operate MHD on terms that Song should guarantee the profits of MHD and Chapman. In the event of MHD incurring a loss, Song should fully indemnify MHD against such loss[13];

(4) It is denied that P has ever received the Monthly Confirmations and that P was informed that P’s right of appropriation as creditor could not arise after one week of the issue of such[14];

(5) The HK$5M was paid by Song (through D) to Chapman (through P) pursuant to the JVA but not to settle the Sum[15];

(6) Whilst it is admitted that MHD received the 2016/17 Payments (save on 1 August 2017 MHD received US$151,078.28 but not US$300,000 as alleged), this was pursuant to the JVA and not for the purpose of satisfying the Sum[16]; and

(7) If, which is denied, consideration for the JVA has failed, that is a matter between Song and Chapman which should and is being litigated before the Dongguan Courts[17].

7.  Both P and D only called one witness respectively to give evidence on its behalf at the trial of this action:

(1) P called Mr Wong Johnny (“Wong”) who is the manager of P; and

(2) D called Madam Wen Miao Xuan (“Wen”) the sole shareholder of D and since 12 March 2018, the sole director of D. Prior to 12 March 2018, Song, who is her husband, was the sole director of D.

B. The Issues

8.  A number of issues were set out in the Revised Agreed List of Issues lodged before the trial of this action:

(1) Were the outstanding charges for dyeing services provide by P to D in the amount of HK$1,001,149.97 or any other sum;

(2) Whether the alleged part payment mentioned in paragraph 8 of RAD was for settlement of the outstanding charges for dyeing services or for the purposes mentioned under paragraph 13A of RAR (ie prior dyeing services and indemnification of loss of MHD pursuant to the JVA on behalf of Song);

(2A) Whether there was any agreement between P and D for payments to be made to MHD;

(2B) Further to (2A) or alternatively, whether there was any trade practice between P and D that all payments due under the dyeing contracts between the parties be paid to MHD;

(3) Whether the payment of the HK$5M was for settlement of the outstanding charges for dyeing services or payment by Song to Chapman pursuant to the JVA;

(4) Whether the 2016/17 Payments was for the settlement of the outstanding charges for dyeing services or for the purposes of payment by Song to Chapman pursuant to the JVA;

(5) Whether D is entitled to set off the outstanding charges for dyeing services against the payments mentioned in paragraphs (3) and (4) above;

(6) Whether the payment in the currency of RMB made by D was to settle both the HKD and RMB Invoices; and

(7) Upon receiving payment in the currency of RMB from D, whether P would convert the said payment into HKD, for the purpose of settling the outstanding invoices in HKD.

9.  However, in D’s Closing submissions, Mr Lo confirmed that he no longer pursued many of D’s alternative defence. In particular, Mr Lo confirmed that D no longer relies on: (1) the Trade Practice; (2) the HK$5M; and (3) the 2016/17 Payments.

10.  It was therefore agreed the only remaining issues requiring determination are (2) and (2A) of the Revised Agreed List of Issues (with issues (6) and (7) being subsumed within those two issues).

11.  Mr Ho referred to the following authorities for the proposition, which was not challenged by Mr Lo, that unless the creditor has asked the debtor to pay directly a third party, a debtor must pay the debt to the creditor directly. If he pays a third party, “he does so at his peril”:

(1) Chitty on Contracts, 35^th Edn, §25-040:

“Payment to a third party If the creditor requests the debtor to pay the debt to a third party, such a payment is equivalent to payment direct to the creditor, and is good discharge of the debt.”

(2) Brar v Brar, [2017] ABQB 792 (Court of Queen’s Bench of Alberta) at §98:

“The question becomes whether the amounts paid by Moga Corp directly to third-party lenders of Dr Brar should be subtracted from the amounts owing to Brar PC by Moga Corp. The general rule is that a debtor must make payment to the creditor personally in order to discharge the debt unless the creditor has asked the debtor to pay a third party directly. In Canadian Pacific Ships v Industry’s Lyon Corduroys [1982] 21 BLR 185 (FCTD) the Court discussed this issue directly at para 13:

‘Where a debtor, instead of paying his creditor, chooses to pay a third party, he does so at his peril. Where the money is not turned over to the creditor, the onus is then on the debtor to establish either: (1) that the creditor actually authorized the third party to receive the money on his behalf, or (2) that the creditor held the third party out as being so authorized, or (3) that the creditor by his conduct or otherwise induced the debtor to come to that conclusion, or (4) that a custom of the trade exists to the effect that in that particular trade and in those particular circumstances, both the creditor and the debtor normally would expect the payment to be made to the third party. No such facts have been established in the case at bar.’ ”

12.  In the present case, it not being contended that there were any payments made by D to P directly, it was accepted by Mr Lo that if D fails to satisfy this Court, on the balance of probabilities, of the existence of the Agreement, or that P had otherwise requested D to make payment to MHD directly (“the Request”), there was no payment by D of the 15 Invoices.

13.  As the 27 Payments were all made to MHD and not P, Mr Ho further submitted that I need not need resolve what the 27 Payments were for, if D fails to prove the Agreement or the Request. In other words, Issue (2) does not arise if the answer to Issue (2A) is “no”.

C. Whether there was the Agreement

14.  Mr Lo accepted that the burden of proof of the Agreement lies with D.

P’s attack

15.  Mr Ho firstly submitted that the plea of the Agreement was defective.

16.  In paragraph 6 of RAD, it was pleaded:

“It is averred that a financial representative known as, 李逢樂 was authorized by both P and MHD in relation to the dyeing contracts. There was an agreement between all parties in about early January 2017 (subject to further discovery) that all payments due under the dyeing contracts would be paid to MHD who provided such dyeing services to D.”

17.  Further, at paragraph 8, it was pleaded:

“In the premises, D has duly effected payment to P for any services rendered by making payment to MHD, as per the request of P. …”

18.  P had requested Further and Better Particulars of the phrase “as per the Request of P” (“P’s FBP”):

“Please state the factual basis of the phrase ‘as per the request of P’. If the request was made in writing, please provide a copy of the writing. If the request was made orally, please state:

i. the name(s) and the position(s) of the person(s) who made the request on behalf of P;

ii. the name(s) and the position(s) of the person(s) who acknowledged the request on behalf of D;

iii. the date(s) which such request(s) was/were made.”

19.  In the Answer to P’s FBP filed on 8 October 2019 (“D’s Answer”), D answered:

“(i) 李逢樂先生 on behalf of MHD, whereby P merely acts a vehicle of MHD in receiving money outside PRC.

(ii) A financial representative authorized by MHD to represent MHD in relation to the dyeing contracts.

(iii) Since early January 2017 (subject to further discovery), the trade practice between MHD and D was that most, if not all payments due under the dyeing contracts, would be paid to MHD who provided such dyeing services to D.”

20.  Mr Ho submitted that D failed to identify anyone who acknowledged the alleged request from P nor answered the date when the request was made. Accordingly, P submitted that as no written agreement was ever produced and assuming it was an oral request, D failed to plead the particulars that one would normally expect, such as who were the parties to the agreement and where it was made.

21.  Mr Ho submitted that the defective plea of the Agreement was a matter which goes to credit.

22.  Mr Ho further submitted that even the evidence of the Agreement or the Request is defective:

(1) There is no documentary evidence to prove the existence of the Agreement or the Request;

(2) Wen was silent in her witness statement on the Agreement and the Request;

(3) Mr Lo did not put any case to Wong on the existence of the Agreement or the Request; and

(4) Wen only first asserted in the witness box (during cross-examination) that on an unspecified date and occasion Li Fung Lok (“Li”) and Song orally agreed that the payments would be made to MHD. When asked by Mr Ho why such evidence was not mentioned in her witness statement, she responded that her professional knowledge was limited. However, as Mr Ho correctly pointed out, and Wen confirmed, she was at all times legally represented. The Agreement being a major plank in D’s defence, he submitted that it is incredible that she did not know or was not advised to mention this in her witness statement.

23.  Mr Ho submitted that without calling Song to give evidence of the Agreement, which he purportedly had made with Li, D has failed to raise even a prima facie case that there was the Agreement or the Request. As a result, he submitted that this court cannot draw any adverse inference from the fact that Li did not testify (to refute the Agreement). He referred to the case of Sky King Machinery Engineering Ltd v China Harbor Engineering Company Ltd [2023] HKCFI 1516 where Madam Recorder Eva Sit SC held at §62:

“(1) An adverse inference can only be drawn from a failure to testify where there is a need to meet an established prima facie case. This means that the person seeking to draw the adverse inference would have to demonstrate that (i) a prima facie case has already been raised by the evidence adduced; and (ii) the party against whom the case is established has evidence (including witness testimony) available which could displace the prima facie case and which it omits to call: Nina Kung v Wang Din Shin (2005) 8 HKCFAR 387, §§367-369; Ip Man Shan Henry v Ching Hing Construction Co Ltd (No 2) [2003] 1 HKC 256, §155.

(2) Thus, adverse inference has no place in the plaintiff’s discharge of his prima facie case – either the plaintiff has adduced sufficient evidence to prove a prima facie case, or he has not. If the evidence relied upon by the plaintiff already discharges his prima facie case, or he has not. If the evidence relied by the plaintiff already discharges his prima facie burden, the fact that he has not called certain persons as witnesses is irrelevant. …”.

D’s Response

24.  On the other hand, Mr Lo relied on D’s Answer (i) that the request for HKD Invoices to be paid in RMB was made by Li. He submitted that this plea was “substantiated” by Wen’s oral evidence.

25.  The oral evidence of Wen relied upon is that already mentioned above. When Wen was cross-examined by Mr Ho, she agreed that one does not see anywhere in her witness statement that there was an agreement in early 2017. At that point, she stated that, in her presence, at the factory of MHD there was an oral agreement that D would settle invoices in RMB to MHD.

26.  Further, Mr Lo submitted that where in the present case “the real protagonists” (Song and Li) were not called to give evidence, I should place most reliance on the contemporaneous documents.

27.  He submitted that as the Monthly Confirmations were not challenged as contemporaneous documents, it not being suggested they were created for the purposes of these proceedings, it is strong proof of the Agreement. He asked rhetorically if P were right, the Monthly Confirmation should not have existed at all.

28.  Mr Lo also submitted D’s case on the Agreement was inherently probable:

(1) Whilst the HKD Invoices were issued by P, the work was in fact done by MHD and expenses were actually borne by Song. He submitted that if P were right, D would be paying P for services in fact performed and paid for by D itself. Thus it was commercially explicable that the HKD Invoices were only issued by P because they were for goods deliverable in HK;

(2) As the parties have always conducted themselves as groups, it was credible that despite P was the invoicing company, payment should be made to MHD who actually provided the services. In fact, this is admittedly the practice of the PRC Invoices; and

(3) The fact that P did not issue any reminder and only took action (over 1 year when the first of the 15 Invoices were due) and did not take action to claim the RMB Invoices suggest that there had been payment of the 15 Invoices and the RMB Invoices.

My evaluation of the evidence

29.  The parties have not disputed the approach on the resolution of factual disputes.

30.  Mr Lo referred me to Chan Kim Hong v Chan Yan Hong & Anor [2022] HKCFI 1188 at §161, where Deputy High Court Judge Winnie Tsui (as she then was) held:

“The resolution of the factual disputes primarily turns on the credibility of the witnesses. My task is to evaluate the competing evidence against the backdrop of undisputed and indisputable facts. I am to weigh the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events. Generally speaking, contemporaneous documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility. The internal consistency (or inconsistency) of the witnesses’ evidence should be taken into account. The court would also be guided by its overall impression of the characters and the motivations of the witnesses. The court should caution itself against the dangers of too readily drawing conclusions about the truthfulness and reliability solely or mainly from the appearance of the witnesses. See, eg, Re B (Children) [2009] 1 AC 11, para 31; Standard Chartered Bank v Li Wai Ping HCA 10587/2000 and 3575/2003, 17 February 2011, para 19; Hui Cheung Fai v Daiwa Development Limited HCA 1734/2009, 8 April 2014, paras 76 to 82.”

31.  Applying the same approach, I am of the view that, on balance, I would prefer the evidence of Wong over that of Wen.

32.  Firstly, on the inherent likelihood of the Agreement or the Request:

(1) Factually, it is not clear from the evidence whether, as alleged by Mr Lo, MHD “did all the work”. According to Wong’s witness statement, §5, prior to the ceasing of business of Gennon in early 2017, when Gennon and D were the contracting parties to the dyeing contracts, D would place business order with Gennon, who would give instructions for dyeing to MHD and would oversee and supervise the production and delivery as well as collect payment from D. After Gennon ceased business, it is not disputed that P took the place of Gennon from 2017. Accordingly, whilst the dyeing works were done by MHD, previously Gennon, and since January 2017, P, would be the one to instruct MHD to do the dyeing, oversee and supervise the production and delivery as well as collect payment from D. Whilst Wong agreed that after Song took over the operations of MHD, he (or MHD) was responsible for delivery, it was not put to Wong that P had no responsibilities such as oversight, supervision and payment collection. Wong also explained in cross-examination that MHD would separately receive payments from P;

(2) In any event, even if most if not all the work was done by MHD, I cannot see how one can say whether it is more likely for there to be the Agreement. It is a matter for contracting parties to agree on the financial arrangement for payment. Because it is not in dispute that P and MHD are associated companies, one cannot say it is inherently unlikely that MHD would do all or most of the work but P would receive payment. On the other hand, there is no dispute that P and D were the contracting parties. Payment to P is not inherently unlikely;

(3) Moreover, as admitted by Wen and demonstrated by the documents before me, prior to 2017 when D and Gennon were the contracting parties, payment of the HKD Invoices would be made by D to Gennon by cheques in the sum of HKD amount. In the circumstances, in the absence of any change in circumstances, it is likely that this modus operandi would continue after P took the place of Gennon;

(4) In respect of the delay in taking these proceedings and not pursuing D for the RMB Invoices, Wong had explained that as Song had owed large sums of RMB to Chapman and there was already litigation on foot in Dongguan, it was considered that there was more of a hurry to pursue those sums first;

(5) Furthermore, in Wong’s witness statement, §§12 and 13, he stated that the amount outstanding under RMB invoices was RMB 351,139.81 and that P will deal with that outstanding sum in the PRC. Thus it is not correct that P is not pursuing D for the RMB Invoices.

33.  Secondly, turning next to the contemporaneous documents and whether the evidence of the parties’ witnesses are consistent with those documents:

(1) The HKD Invoices and the monthly statements (which set out the outstanding sums due under the HKD Invoices and the RMB Invoices) were all issued by P to D. If the Agreement existed, one would have expected MHD to have issued those monthly statements and invoices. It does not seem that P was just the mere invoicing company because for some of the RMB Invoices, MHD would issue the invoices to D. For example, Invoice MHY000982 dated 30 April 2017 was an invoice issued by MHD to D for RMB11,485.44;

(2) The HKD Invoices only set out the orders that were denominated in HKD. Whereas the RMB Invoices only include orders denominated in RMB. Even for the same period, separate invoices would be issued according to the currency, ie a HKD Invoice for HKD denominated orders and a RMB Invoice for RMB denominated orders;

(3) Furthermore, in the monthly statements issued by P, it would set out the HKD Invoices and the RMB Invoices separately. The total amount of the HKD Invoices and the RMB Invoices were also separately added up and the grand total respectively stated. In Wong’s witness statement §16, he has explained the HKD Invoices are for dyeing services on goods for export usually delivered in HK whereas the RMB invoices are for goods for domestic use within the PRC.

34.  It seems to me that if there was the Agreement as alleged by D, it would not be necessary to separate the RMB Invoices and the HKD Invoices from January 2017 onwards. In the monthly statements, it would also not be necessary to separately out the HKD Invoices and the RMB Invoices. P could simply have combined the total outstanding sums from all the invoices.

35.  Furthermore, if there was any agreement for the HKD Invoices to be paid in RMB, given the evidence was that at that time the exchange fluctuated on a daily basis, one would expect the exchange rate be stated and the HKD sum due under the HKD Invoices to be converted into RMB. However, that was not the case.

36.  All in all, I am of the view that the Agreement is contradicted by the HKD Invoices and monthly statements.

37.  As for the Monthly Confirmations, whilst there was no challenge as to its authenticity, and Mr Ho fairly accepted there may be genuine commercial reasons for its existence, P has denied ever receiving the same.

38.  On the face of it, the Monthly Confirmations were issued by 江門市海麗紡織有限公司 to MHD, attention to 黃慶玲 (“Huang”). It was common ground that in 2017, MHD was managed by Song. Huang was an employee of MHD. It was never pleaded that Huang had any position in P.

39.  When Wen was asked under cross-examination why she thought Huang was authorized by P to receive the Monthly Confirmations on behalf of P, she seemed to suggest that from Wong’s evidence which she had heard given in court, that he accepted that Huang worked under him and therefore represented P. However, this was never pleaded nor mentioned in Wen’s witness statement.

40.  Moreover, notwithstanding that it is stated at the bottom of the Monthly Confirmations, “Our company will issue this statement to your company before the 10^th of each month. Please sign and return it within a week for approval. If it is not signed and returned, our company will assume that your company has confirmed it without error”, not one Monthly Confirmation was signed, whether by MHD or P.

41.  In her oral evidence, Wen said that prior to the issuing the Monthly Confirmations, she would orally confirm with Huang first and then the Monthly Confirmations were sent out by post. Again, this matter was never pleaded nor stated in Wen’s witness statement. In paragraph 9 of RAD, it is only pleaded that there would confirmation with P through MHD by way of written communication in the form of the Monthly Confirmation. There was never pleaded any oral confirmation.

42.  Furthermore, if the Monthly Confirmations are evidence of the Agreement, one would expect it to be an account between MHD and D and only in respect of invoices issued by P and settlement by D of those invoices. However, the Monthly Confirmations included amounts admittedly unrelated to P’s invoices. For example:

(1) D’s payment of commissions to Li Lianhong was included in the Monthly Confirmation for January 2017. This was an expense which Wen agreed in cross-examination was unrelated to P; and

(2) According to the judgment of the Dongguan Court (“PRC Judgment”), a number of payments[18] were paid by Song to MHD pursuant to the JVA. However, these were also included in the Monthly Confirmations for August 2017 to February 2018.

43.  Thirdly, turning to the internal consistency of each witness’ evidence. I found Wong’s evidence was generally consistent and was not much shaken in cross-examination. Whilst Mr Lo submitted that Wong tended to exaggerate and twist his evidence to fit P’s case, I do not agree. Mr Lo referred by way of example to Wong’s evidence that the RMB Invoices stated in the monthly statements were invoices issued by MHD instead of P. Whilst this was contrary to P’s pleaded case and his witness statement, I do not find that this error is detrimental to his credibility. In fact, I cannot see how this evidence advances P’s case so I do not agree that Wong exaggerated or twisted his evidence to fit P’s case.

44.  Mr Lo also relied on the fact that in Wong’s witness statement he said that it was D who requested settlement of the HKD Invoices of Gennon in November 2016, December 2016 and of P in January 2017 in RMB. He agreed in cross-examination that that was incorrect. Mr Lo also relied on Wong’s admission in the witness box that he did not check the records of P and MHD to confirm that none of the Monthly Confirmations were sent to P or MHD prior to these proceedings. He confirmed that it was his subordinates who checked. However, I do not find these were material inconsistencies between Wong’s witness statement and his oral evidence. I cannot see how it would have bolstered P’s case. Rather, it demonstrates that he was reasonable and frank in admitting his witness statement was not totally correct.

45.  On the other hand, as already mentioned, Wen sought to testify on matters which was never pleaded (in all versions of D’s pleading including D’s Answer) and was not in her witness statement. Apart from proclaiming her ignorance of the need to include those matters in her witness statement, no reasonable explanation was given by her.

46.  Lastly, my overall impression of Wen’s evidence was that she was not particularly forthcoming and somewhat evasive. Even Mr Lo in his closing submissions accepted that Wen may not have been most astute as to the issues at hand.

47.  Whilst Wen purported to have knowledge of the affairs of D at the material time (she asserted that prior to becoming a director of D in March 2018 she was Song’s financial assistant, but again this was never mentioned in her witness statement) but when asked to explain the documents before this Court, which she admitted was not created by her, she was vague and not always able to provide understandable answers.

48.  An example is when Wen was asked to explain the Monthly Confirmations and how D appropriated payments to settle P’s invoices therein. Another example is when she was asked to show from the documents that P’s invoices had already been settled. At times, she seemed to suggest there were other documents or evidence but had no good explanation why those documents or witness statements from others were not obtained.

49.  When asked why Song was not called to give evidence, she asserted that he had some unspecified medical condition. Whilst she claimed that there were medical records to prove Song’s condition, she admitted that such records had not been disclosed but could not give any reasons why if it was true. On the other hand, she mentioned that Song personally handled the legal proceedings in Dongguan. She somewhat backtracked later by asserting he did not however had to attend any court hearing personally.

50.  When asked why Madam Cheung who prepared the Monthly Confirmations was not asked to give evidence, she simply stated that as she resided in the PRC she could not come to Hong Kong. When put to her by Mr Ho that a visa could have been applied for her to come to Hong Kong, she had no response.

51.  I did not find her explanations credible or satisfactory.

52.  Furthermore, given that Wen is the sole director and shareholder of D, she has a material interest in the outcome of these proceedings. She plainly has a motive to be less than truthful.

53.  On the other hand, as an employee of P, it is not apparent what motivation there was for Wong to lie. He answered the questions in a straightforward and matter of fact manner.

54.  Taking into account all the above, I find D has not established on the balance of probabilities the Agreement or the Request.

55.  As such, I find that D has not paid to P any sums of money to settle the 15 Invoices.

D. Whether the 27 Payments were to settle the 15 Invoices?

56.  Having found against D on issue (2A), strictly speaking as all the 27 Payments were made to MHD and not to P, I need not resolve issue (2).

57.  For completeness, I accept that, as submitted by Mr Ho:

(1) Item 8.1 was for payment for invoices issued by Gennon in relation to the HKD invoices in November 2016, December 2016 and January 2017;

(2) Items 8.2 to 8.7 were to settle the RMB Invoices in January and February 2017;

(3) Items 8.8 to 8.11, 8.15 and 8.20 were partial payments for the RMB Invoices; and

(4) Items 8.12 to 8.14, 8.16 to 8.19, 8.21-8.27 were payments made pursuant to the JVA.

58.  Accordingly, I find that it has not been established on a balance of probabilities that the 27 Payments had settled the 15 Invoices.

E. Conclusion

59.  I would therefore grant judgment to P for the sum of HK$1,001,149.97.

60.  The parties agree that pre-judgment interest on the Sum should be awarded at HSBC prime rate +1%.

61.  As the 15 Invoices were issued between February 2017 to December 2017 with a payment term of 30 days, adopting a broadbrush approach as suggested by Mr Ho, I would award pre-judgment interest on the Sum at HSBC prime rate + 1% from 31 August 2017 (being the mid-point of when the HKD Invoices were due) until the date of judgment, and at judgment rate thereafter until full payment.

62.  Costs should follow the event. I make a costs order nisi that D shall pay to P the costs of this action with certificate for counsel, to be taxed if not agreed.

63.  The above costs order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter within 14 days from the date of this judgment and will be disposed of on paper).