杨建梅 v. CHOW TAK WA

HCA 2507/2016

[2020] HKCFI 387

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2507 OF 2016

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J U D G M E N T

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Introduction

1.  The present dispute is between two former cohabitants.  The plaintiff (P) claims against the defendant (D), for a sum of RMB1m allegedly owed to her and said to be evidenced by a promissory note signed by D on 25 December 2014.

Brief Background

2.  P was born in Sichuan in Mainland China.  She married in 1991 and gave birth to a daughter in 1993.  In 1998, she and her former husband divorced, and she moved to live in Shenzhen to start a new life. 

3.  In October 2004, P met D through friends in a karaoke bar/lounge in Shenzhen, and later in December that year, they started to cohabit in a flat in Shui Wei Village in Futian District in Shenzhen (“Shui Wei Flat”).  It was P’s case that at the time D told her he was not married and was living with his parents in a flat at Chelsea Heights in Tuen Mun.

4.  In March 2005, P had a dispute with D and she told D to move out of the Shui Wei Flat.  P then had a brief relationship with another man.  In May 2005, P and D got back together again.  It was P’s case that although D had paid her household expenses, what he paid was not sufficient and that she had to subsidize and pay towards the household expenses during their cohabitation. 

5.  Further, according to P, from 2004 to the middle of 2007, D repeatedly told her that he needed money for mortgage repayments for the flat in Hong Kong, for the medical expenses of his aged parents, and also for a new vehicle for his business as he was breaking up with his business partner/s. As a result, P said she lent a total of RMB300,000 to D by way of 10 separate payments (“1^st Loan”).

6.  In August 2006, P found out that D was in fact married and had a son.  P said she was very angry and upset and had attempted suicide, but D admitted his fault.  He explained that his marriage was an arranged marriage, and that he was living apart from his wife, and in the end P forgave him. Then at the end of 2006, P found out that in fact D’s parents had already passed away and that D also has a daughter.

7.  Although P said she had asked D to repay the 1^st Loan, D did not do so claiming that his business was not good.

8.  In 2008, P found out that the address at Chelsea Heights given to her by D was a fake address, and that D’s real residential address was at Tai Hing Gardens in Tuen Mun (“Tai Hing Gardens Flat”).

9.  Notwithstanding her discovery of D’s lies to her, according to her, at end of 2009, she lent D RMB100,000 to repay a loan to his elder sister (“2^nd Loan”).

10.  Then in 2011, according to P, D told her that his wife was sick and that he needed money for her medical expenses and that he needed money for the operation of his company and P again lent D RMB150,000 (“3^rd Loan”).

11.  Later in 2012, P lent another RMB 200,000 to D (“4^th Loan”) for “prepayment of wages” to his employees.

12.  According to P, in 2013, D claimed he had frequent heart pain and he purchased an insurance policy in the sum of HK$1m on 25 March 2013 with his son as beneficiary (“Insurance Policy”).  D later changed the name of the beneficiary from his son to P.

13.  In November 2013, D was admitted to the Accident & Emergency Department of a hospital and he needed to undergo angioplasty. P claimed she lent RMB 80,000 to D for his medical expenses (“5^th Loan”).

14.  It was also P’s case that over the years from 2005 to 2014, D kept asking her for loans in small amounts which she did advance to him and that those small loans totalled RMB 122,500 (“Small Loans”).

15.  To summarise, according to P, the total of the 1^st-5^th Loans, plus the Small Loans, came to RMB 952,500 (collectively referred to herein as “Loans”).

16.  On 25 December 2014, the parties had a heated argument, and P gave D two options and demanded D to either (1) pay her RMB1,000,000 as repayment of all the Loans immediately, or (2) to divorce immediately, and not to give any money to his wife and son.  P said D chose Option (2), namely to divorce and he promised P that he would not give further monies to his wife and son.  P then requested him to write out a note and to sign on it (“Note”).

17.  P said thereafter, from time to time until August 2015, she had asked D about the progress of his divorce and that although D told her that it was in progress, he did not tell her the details.  D disputed this.  D had in fact obtained a decree nisi in either March or in June 2015 when the ancillary relief order was made by consent[1].

18.  It would appear that in August 2015 P had met another man. According to D, she then changed her mind about marrying D. 

19.  Anyway, P told D that she would marry that other man and requested D to repay her the Loans, but D said he had no money and proposed to use the Insurance Policy as repayment, namely P to remain the beneficiary and she would receive HK$1m in the event of D’s death.  It was P’s case that she and D then reached an agreement, namely P to forego her claim against D for RMB1m on condition that (i) D to make a monthly payment of RMB5,000 to her for 10 years after her marriage; (ii) D to guarantee that she will remain as beneficiary on the Insurance Policy and the name of the beneficiary will not be changed; and (iii) P is to receive HK$1m as beneficiary under the Insurance Policy (“Agreement”).

20.  D eventually obtained the decree absolute on 2 September 2015[2]. He said without his knowledge, on 10 October 2015, P married her present husband Lu Yong Lin (“Mr Lu”) and has since then been living at an address in Fanling in Hong Kong with Mr Lu.

21.  According to P, although on about 20 November 2015, D paid her RMB3,000 pursuant to the Agreement, D had not paid her anything thereafter.

22.  In January 2016, D had a meeting with P in Shenzhen at the request of P.  P said she requested repayment of the Loans, but D then threatened to change the name of the beneficiary on the Insurance Policy.   P said D stopped answering her calls since about March 2016.

23.  Eventually, on 9 September 2016, P consulted solicitors and the writ herein was issued on 28 September 2016. In her amended statement of claim, she claimed a sum of RMB 1 million plus interests and costs.

24.  On 25 November 2016, P obtained an ex parte Mareva injunction prohibiting D from removing from Hong Kong any of his assets up to the value of RMB1m (“Injunction”) and the Injunction was later continued on 2 December 2016.

25.  In D’s amended defence, although he admitted signing the Note, his case was that there was no consideration for the Note as P had never made any loans to D and that it was P who relied on his financial contributions from time to time from October 2004 to December 2014. 

26.  D’s case was further that he had given at least RMB5,000 per month to P as living expenses during their cohabitation.  It was also D’s case that he had given P HK$110,000 in about 2007 to purchase a flat in her sole name in Zi Guang Ming Yuan You in Futian District (“Futian Flat”). The Futian Flat was purchased with a mortgage and rented out by P for rental income while she continued to cohabit with D at the Shui Wei Flat.  The Futian Flat was later sold by P in November 2009 and she kept all the proceeds.  It was also D’s evidence that on 31 May 2013, he had given P $60,000 and on about 28 January 2015, he gave P another HK$100,000. 

The agreed list of disputed issues

27.  There were 3 agreed disputed issues:

(1)  whether the Note was supported by any consideration;

(2)  whether P had made the Loans on divers dates to D in the approximate sum of RMB 952,500;

(3)  whether D was liable to pay to P RMB 1m as stated in the Note.

The witnesses

28.  The parties called no other witnesses apart from themselves.  Each had made a witness statement and a supplemental witness statement.

29.  P had filed an affirmation on 24 November 2016 in support of her application for the Injunction (“Supporting Affirmation”), and D had filed an affirmation on 30 December 2016 in compliance with his disclosure obligations pursuant to the Injunction (“Disclosure Affirmation”).

Issue (1) – Whether the Note was supported by any consideration

The Note   

30.  The Note[3] states as follows:

“欠條

  本人周德華2004年10月至2014年12月欠楊健梅人民幣壹佰萬，相方協意2015年8月還清。

  立此為據。

  92090018 (簽名)

  2014年12月25日”

(English Translation)

“Debt Note

  I, Chow Tak Wah, from October 2004 to December 2014 owe Yang Jian Mei RMB1,000,000. Both parties agree that all debt shall be repaid in August 2015.

  This is made as evidence.

  92090018 (signed)

  5 December 2014”

The law

31.  Mr Chang had referred the Court to the relevant provisions of the Bills of Exchange Ordinance, Cap 19 (“BEO”).  In particular, section 89 sets out the definition of a promissory note and section 89(1) states as follows:

“A promissory note is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer.”

32.  Further, pursuant to section 95(1) of BEO, the provisions of BEO under Part II relating to bills of exchange apply to promissory notes, with necessary modifications, and subject to the provisions of section 95 and Part IV of BEO.

33.  Thus, pursuant to section 30(1) under Part II of BEO, every party whose signature appears on a promissory note is prima facie deemed to have become a party thereto for value. Further, under section 30(2), every holder of a promissory note is prima facie deemed to be a holder in due course, but if, in an action on a promissory note, it is admitted or proved that the acceptance, issue, or subsequent negotiation of the promissory note is affected with fraud, duress or force and fear, or illegality, the burden of proof is shifted unless and until the holder proves that, subsequent to the alleged fraud or illegality, value has in good faith been given for the promissory note.

34.  Further, under section 27 (1), “valuable consideration” for a promissory note may be constituted by (a) any consideration sufficient to support a simple contract; (b) an antecedent debt or liability.  Such a debt or liability is deemed valuable consideration whether the promissory note is payable on demand or at a future time.

35.  It is further submitted on behalf of P that bare assertion that there has been no consideration is insufficient to displace the provisions of section 30(1)[4].

36.  There was no real dispute about the applicable general legal principles.

The circumstances under which the Note was signed by D

37.  P’s evidence was that on 25 December 2014, D was driving his vehicle and delivering goods himself as his business was not good and that during a telephone conversation with P, he revealed that he was concerned over the future of his son and would like to keep a sum of money for his son.  P said upon hearing this, she became very angry as this meant that D was not concerned about her welfare.  By then, although she knew already that D had lied to her about his residential address in Hong Kong, she deliberately asked D again for his address in Hong Kong.  D told her again the fake address at Chelsea Heights.  P said she then told D not to lie to her any more and asked D to meet with her. 

38.  When they met, P said she demanded D to repay the Loans.  According to P, D suggested to pay her RMB 600,000 which was rejected by P, and D then increased the sum to HK$800,000, but again this was rejected by her.  As mentioned earlier, she then gave D two options and  D chose Option (2) and according to P, she accepted this and decided to give D 8 months to divorce his wife and further requested him to write out the Note himself and to sign on it[5].

39.  It was not denied by D that on 25 December 2014, he and P had a serious argument at the Shui Wei Flat and that P demanded him to divorce his wife immediately and to marry her before August 2015.  It was D’s evidence that she demanded D to sign the Note to ensure that he would divorce his wife by August 2015, and that he wrote out what P told him to write, in order to pacify her.  Further, according to D, P also demanded him to give her RMB100,000 immediately for her to repay her debts.  D said he eventually acceded and applied for a loan of HK$200,000 from Citibank, and that out of the Citibank loan of HK$200,000 granted to him on 28 January 2015, HK$100,000 was given to P.  However, when he finally received the decree absolute, P had already married without his knowledge.  He lost faith in P and eventually changed the name of the beneficiary to his ex-wife.  Upon learning this, P became very angry and tried to harass his family at the Tai Hing Gardens Flat.

Whether the payment in the Note was conditional

40.  It was submitted on behalf of D that there was no unconditional promise to pay and the Note was not a promissory note.

41.  At the trial and during cross examination, P confirmed that (1) D would not have to pay her the RMB1m if he were to obtain a divorce by August 2015 and later (2) there was the Agreement, namely in lieu of paying her immediately a sum of RMB1m in August 2015, D was to pay her RMB5,000 every month for 10 years after her marriage and D was not to change her name as the beneficiary on the Insurance Policy and that she would receive RMB1m under the Insurance Policy, ((1) and (2) collectively referred to as “Conditions”). 

42.  In short, Mr Cheung submitted that P admitted that she had agreed that D did not have to pay her RMB1m if either of the Conditions were fulfilled, and that based on P’s such admissions and her evidence, the payment under the Note was conditional and was not a promissory note with an unconditional promise to pay.

43.  Mr Chang on the other hand submitted that parole evidence would be inadmissible for contradicting the terms of a written document including a promissory note, and that in the present case, the oral evidence of the Conditions should be excluded.

44.  However, in the present case, it was P herself who said she had accepted the Conditions, I do not see why the evidence should be excluded.  It was P’s case that D only had to pay her RMB 1m if the Conditions were not met.  Condition (2) was in fact the Agreement referred to earlier and alleged by P to have been reached between the parties after D failed to pay her and P was threatening to enforce the payment.  This would not in my view make the promise to pay, if any, in the Note a conditional promise or that it was not a promissory note within the definition of section 89(1) of the BEO.

45.  Condition (1) on the other hand is in my view different.  Even though the parties agreed that the sum of RMB 1m was to be repaid in August 2015, it was subject to a condition that by then if D was not divorced. In other words, the payment was on P’s own evidence subject to a condition of there having been no divorce by August 2015.  I am of the view that Condition (1) would render the promise to pay, if any, in the Note a conditional promise.  In fact, in my view the Note appeared to only contain at most an agreement by the parties that the debt was to be repaid in August 2015.  D only “agreed” to repay and he did not “promise” to repay unconditionally.

46.  Having considered the above, I am not satisfied that the Note was a promissory note as defined under section 89(1) of BEO and thus the presumption of there being a valuable consideration in section 30(1) will not apply.  The burden will then be on P to prove that there had been valuable consideration.

Whether the Note was void against public policy

47.  Mr Cheung also argued that that the Note was void for illegality and/or against public policy due to Condition (1) in that if D obtained a divorce by August 2015 then he would not have to pay the amount of RMB1m.

48.  The issue of illegality was not pleaded by D.  Mr Cheung argued that although it was not pleaded, the Court may still declare the Note void as against public policy, as the facts of the making and signing of the Note was pleaded in the Amended Defence and P did not aver to D’s allegations in her Reply and further confirmed D’s allegations at trial.  Thus, the issue of illegality only crystallized at trial. In this respect, Mr Cheung had referred the Court to para 18/8/16 in the Hong Kong Civil Procedure 2019 and also Chao San San v Worldpart Industrial Ltd, unrep, CACV 158/2002, 21 March 2003, per Yuen JA.

49.  I accept what was submitted by Mr Cheung and in my view the Note, being subject to Condition (1), was void and unenforceable against public policy.

50.  Notwithstanding my views above, I will continue to consider the parties’ respective case in the event that the Note was enforceable.  

Whether the Note was supported by any consideration

51.  Whether the Note was supported by consideration will depend on Issue (2).  In light of my earlier finding that D’s agreement to pay in the Note was conditional and the Note was not a promissory note, as said earlier, the presumption in section 30(1) will not apply.  The burden would be on P to prove the existence of the Loans.  In any event, I am of the view that even if the Note was a promissory note within section 89(1) of BEO, and the presumption in section 30(1) did apply, D was able to discharge the burden on him.  The reasons are set out below under Issue (2).

Issue (2) – whetherP had made the Loans as alleged

The parties’ respective case

52.  P’s pleaded case in her amended statement of claim was that in consideration of making the Loans in favour of D, D had agreed to repay RMB1m to P by August 2015 after taking into account of inflation for long period as evidenced by the Note[6].

53.  Thus, P relied on an “antecedent debt or liability”.  The only consideration for D’s agreement to pay RMB1m pleaded by P was that P had made the Loans to D and the sum of RMB1m was made up of the Loans totalling RMB952,500, plus inflation.

54.  The defence raised by D was that P had never paid for any money or consideration and/or advanced any of the Loans to D as alleged or at all and that D was misled into signing the Note[7]. 

55.  The main issue is whether P had made the Loans.

The parties’ relationship

56.  It was P’s allegation that D was not sincere in his relationship with P. and that he had deliberately took advantage of P’s love and trust in him and to borrow money from P on numerous occasions under various pretexts and that D was using P’s money to help maintain his business operations and to discharge his burden of family expenses over the years.

57.  It was not disputed that at the time that the parties met, D was married to Madam Tsing Sau Fong (“Madam Tsing”) and that D had admitted during cross examination, that he had lied to P about his marital status, his residential address in Hong Kong and about his parents being alive.  During the trial, D had explained that as he first met P at a karaoke bar/lounge, he did not know anything about P’s background, nor did he know that a serious relationship would follow, and thus he did not wish to reveal his personal information.  D also explained that he did not tell P his real residential address in Hong Kong as he did not want P to disturb/harass his family.  Although D did not expressly admit to his lying to P in his witness statements, I do not think this would necessarily mean that D, having lied to P, would not be a reliable/credible witness at trial.

58.  In any event, on P’s own case, it was in August 2006 that she learnt about D’s lies in relation to his marital status and at end of 2006 that she found out D’s parents had passed away for over 10 years.  Yet, 2 of the payments which made up the 1^st Loan were according to her advanced to D respectively in December 2006 and January 2007, which was after she had already found out about D’s lies about his marital status and/or his parents being dead.  Further, in 2008, she had found out about his lie in relation to his residential address but the 2^nd Loan was advanced in 2009, after she had found out about his lie about his address in Hong Kong, and in fact after she had found out about all his 3 lies. 

59.  It was not disputed that the relationship between the parties was not a short and casual one and lasted until at least August/September 2015 when P met her present husband Mr Lu.  Although there appeared to be ups and downs, the relationship between P and D had lasted for at least 10 years from May 2005 until August/September 2015 (“Relevant Period”).

60.  In about 2013, P had requested D to provide some security for her future as D had suffered from heart disease, and D agreed to name P as beneficiary on the Insurance Policy which was originally taken out by D with his son as the beneficiary.

61.  It was further not disputed that D did keep his word and commenced divorce proceedings against Madam Tsing shortly after the Note.  As mentioned earlier, the decree nisi was obtained either in March or June 2015, and the decree was made absolute on 2 September 2015, but by then P had met Mr Lu and decided to marry him.  As said earlier, P’s evidence was that D did not give her any details regarding the progress of his divorce. This was denied by D.  I do not find P’s evidence credible.  The evidence indicated that D had commenced divorce proceedings against Madam Tsing in order to keep his agreement with P and there was no reason why D would keep the progress of the divorce from P.  In this respect, I accept D’s evidence, and that he did tell P about the progress of his divorce proceedings.

62.  P had also complained that D was not sincere in obtaining the divorce as he later transferred his interests in the Tai Hing Gardens Flat to Madam Tsing and also he changed the name of the beneficiary on the Insurance Policy to Madam Tsing.  D explained that he changed the name of the beneficiary on the Insurance Policy only after he found out about P’s marriage to Mr Lu and D lost faith in P.  D had further explained that he transferred his interests in the Tai Hing Gardens Flat to Madam Tsing only after P decided to sue him.  According to D, he and Madam Tsing were in an amicable relationship notwithstanding the divorce.

63.  Having considered the evidence, notwithstanding the initial lies, I do not find sufficient evidence that D was insincere or deceiving P in divorcing his wife.  I find that the parties’ relationship during the Relevant Period was a loving one and that D did divorce his wife pursuant to Option 2, and it was only after P’s marriage to Mr Lu that D changed the name of the beneficiary to Madam Tsing, and later it was only because she was about to commence the present action, that D then decided to transfer his interests in the Tai Hing Gardens Flat to Madam Tsing. 

D’s financial situation

64.  According to the Business Registration Certificates produced by D, he was a partner in a business of water and electrical engineering called New Technical Engineering between 1997-2003[8] and thereafter  from about 2004 onwards, he was a shareholder of New Technical Engineering (HK) Limited (“New Technical”).

65.  D had worked as a sub-contractor of Synergy System Consultant Limited (“Synergy”).  Synergy was said to be the direct contractor responsible for installation of electrical wiring, cables and broad-band receiver for digital TV for TVB (main customer). 

66.  According to D, since about May 2011, he started to receive all payments from Synergy in his sole name.  D had produced a summary prepared by Synergy of a list of relevant cheque numbers, amounts, and names of the recipients (either New Technical or D) covering the period from 10 December 2008 to 31 December 2013[9]. The sums received ranged from HK$18,000 to HK$ 1m odd.

67.  It would appear that by end of end of 2014, D had wound up his sub-contractor business and later on 7 January 2016, he had started a new partnership business in internet works (網絡工程) by the name of Gold Technical Engineering Company (“Gold Technical”)[10].

68.  It was also D’s evidence in his witness statement that since July 2016, he started to work as a casual goods delivery worker.  At the time of his Disclosure Affirmation at end of 2016, his income was mainly derived from casual delivery work of stationery and goods through a light vehicle van registered in his sole name.

69.  D had produced a letter dated 5 December 2016 from Citibank[11] which confirmed that he had borrowed 3 term loans from Citibank, namely (i) HK$60,000 on 31 May 2013; (ii) HK$200,000 on 28 January 2015; and (iii) HK$100,000 on 24 October 2016.  This was to support his evidence that he had given a sum of $60,000 on 31 May 2013 to P to help her repay her loss arising out of her pyramid marketing business and that he had given a sum of $100,000 to P in January 2015 from his loan in (ii), which was what was demanded by her at the time of his signing the Note.  He said he then paid the balance of the HK$200,000, namely $100,000 to Madam Tseng for her to repay the mortgage loan on the Tai Hing Gardens Flat as they were in the midst of the divorce process him from part of the Citibank loan of $200,000 in (ii) above. 

70.  The evidence produced by D showed that he had a regular income and even though there were some term loans from Citibank, he would have to repay by fixed monthly instalments and had he been in arrears, it would seem unlikely that he would be able to borrow more.  There was no sufficient evidence that his income was not sufficient to support his expenses of maintaining his family in Hong Kong and also to support his expenses arising out of his cohabitation with P.  Further, D had produced medical receipts to show that his second angioplasty was done in September 2013 and not November 2013 as said by P and that the expenses were paid by Madam Tsing using her credit card.

71.  Having considered all the circumstances of this case, there was no sufficient evidence to show that D was in financial difficulties to the extent that he would have needed to borrow from P.  I also do not find sufficient evidence that D was of a deceitful character in that he was telling P lies or stories in order to obtain monies from her.

P’s financial situation

72.  P was born in June 1970 and she was educated to Grade 3 in Middle School in a village school and graduated at the age of 15 when she started to work as an apprentice to a dress maker.  She later operated a dress maker’s shop and had also worked in a garment factory.  She married at about end of 1991 at the age of 21, and as said earlier, she later divorced her husband who had care of their daughter and thereafter, in 1998 she moved to Shenzhen to start a new life. 

73.  She then started a relationship with a boyfriend whom she cohabited for 8 years until 2004 when she met D.

74.  Although in her 1^st witness statement, P gave information as to what she was doing prior to her moving to Shenzhen, it was not clear how she maintained herself thereafter, save that she was cohabiting with her then boyfriend for 8 years.

75.  It was P’s evidence in her 1^st witness statement that she earned quite a lot of money through sales of properties and shares.

76.  She denied D had given her HK$110,000 in 2007 to assist her in purchasing the Futian Flat.  According to P’s 1^st witness statement, the purchase price of the Futian Flat was RMB 350,000 and she obtained a mortgage loan of RMB200,000.  This would mean there was a down payment of RMB150,000.  She later sold it for RMB788,000 and made RMB600,000 after deducting the mortgage loan.  She also denied D had paid her $60,000 to help her cover her losses over the pyramid selling scheme in May 2013, or HK$100,000 on about 28 January 2015, after the signing of the Note.  She said she had purchased shares from 2007 to 2011, and earned around RMB300,000 – RMB400,000 and at the end of 2008, she introduced a customer to take over a karaoke shop in Shenzhen and gained RMB100,000 as commission. 

77.  She said in her witness statement that in 2011 the losses she suffered from the pyramid marketing scheme were RMB100,000.  She had also said although she had earned around RMB900,000 in the stock market, she eventually lost around RMB200,000 – RMB300,000, leaving her with around several tens thousands of Renmembi in the stock market in 2017 (the time of her 1^st witness statement).  She also claimed that she had purchased a flat in her hometown before meeting D, which was worth around RMB200,000 in 2017.

78.  To summarise, her evidence as to her savings and/or income between December 2004 and December 2014 was:

(i)  She had savings totalling about RMB350,000 when she met D in 2004;

(ii)  She made a profit of RMB500,000 from the sale of the Futian Flat in 2009 (this was her evidence at the trial although she had said RMB600,000 in her witness statement and her Supporting Affirmation).

(iii)  She had received net rental income for about 2 years from the Futian Flat, totaling about RMB16,800 (being rent of RMB2,600 per month (RMB2,300 a month initially) less about RMB1,832 per month for the mortgage, say RMB700 per month x 24 months. 

(iv)  She had made gains of RMB350,000 from stocks and agency fees allegedly between 2007 and 2011.

(v)  She had received RMB140,000 as profits from subscribing to new shares and selling them between 2007 to 2014.

79.  Her evidence during the trial as to her expenses/losses was:

(i)  She had paid HK$20,000 in 2005 for furniture for the Shui Wei Flat  as stated in her witness statement[12];

(ii)  She had paid for living expenses for her and D for about 10 years, namely RMB6000 per month x 120 months or RMB720,000, minus RMB3,000 every other month received from D (ie RMB3,000 x 60 months = RMB180,000), making a total deficit of RMB540,000 on her part;

(iii)  She had lost RMB100,000 in the pyramid marketing scheme.  As pointed out on behalf of D, P gave two different versions, loss of RMB100,000 in her witness statement and later RMB240,000 in her supplemental witness statement.  Then during the trial, she said she lost RMB240,000 in 2011 and later, the net loss in 2003 was only RMB100,000.

80.  P did produce various copies of her bank passbooks and/or bank statements and copies of her securities account card/s (with no statements produced)[13] as evidence of her financial situation. She had held a bank account at Industrial and Commercial Bank (ICBC), bank accounts at China Construction Bank (CCB) and also Ping An Bank.  

81.  The earliest date of transaction seen in her bank statements appeared to be 12 December 2006 and the last date of transaction was on 25 October 2013.  As there were no statements prior to 12 December 2006, there was no sufficient evidence to show that P had $350,000 in savings in 2004 when the parties met. 

82.  There appeared to be a credit of RMB80,000 on 12 December 2006 in her ICBC bank account (ending 092) which was then withdrawn on same day and then RMB20,000 was later credited on the same day. As for her CCB account (ending 323), although she appeared to have a balance of RMB103,001 on 12 December 2006, by 15 January 2007, it was withdrawn.  It was not clear where the RMB103,001 came from or its destination although this account appeared to be used for her mortgage repayments of the Futian Flat.  There was a credit of RMB270,000 on 15 January 2010 in her CCB account (ending 323) which could be from her sale of the Futian Flat.  The statement of her CCB account (ending 327) only showed a balance of HKD 56,000 on 27 August 2009. 

83.  As it was P’s evidence that RMB103,000 was part of 1^st Loan and was withdrawn to lend to D, it was not clear from which bank account was the down payment for her Futian Flat drawn from.  In any event, those statements did not show that she had at any time received those profits/income alleged by her.  In fact, the statements showed that there was a sum of RMB100,000 credited on 11 December 2012, which P said was a loan from her ex-husband, and another sum of RMB20,000 credited on 17 December 2012[14], which P said was a loan from her friend.

84.  Having considered the evidence, I find there was no sufficient evidence to support P’s claim of her savings, assets and/or income during the Relevant Period, nor was there sufficient evidence to support P’s evidence of her expenses/losses during the Relevant Period.  From the evidence produced by P, she would not have sufficient savings and/or income to be able to advance the Loans to D.

The 1^st Loan

85.  For the 1^st Loan, it was P’s evidence in her supporting affirmation and also in her 1^st witness statement that the amount of RMB300,000 was advanced to D in more than 10 payments from 2004 to middle of 2007 in cash.

86.  She claimed that RMB60,000 of the 1^st Loan was withdrawn from her ICBC bank account (ending 092) on 12 December 2006.  As mentioned earlier, her passbook showed a credit of RMB80,000 which P said was from fixed deposit and that later on same day she said RMB20,000 returned to fixed deposit.  According to P, RMB60,000 was withdrawn to lend to D.  Further, as said earlier, a sum RMB103,000 was withdrawn from her CCB (ending 323) on 15 January 2007 which P had said was part of the 1^st Loan to D.  However, it was her evidence in her Supporting Affirmation that the balance of the source of payments of the 1^st Loan of RMB300,000 came from her ICBC bank account.  She had also said  and that she vaguely remembered that the 1^st and 2^nd payments to D should have been about RMB30,000 and RMB40,000 and should be transaction numbers “001” and “002” in her ICBC account (ending 092) as  the opening transaction in her passbook was “003” and according to P, this was a new passbook[15].

87.  During the trial, it was P’s evidence that after withdrawing RMB60,000 from her ICBC account (ending 092) on 12 December 2006, she exchanged the amount to HKD, @1.02 or 1.03 to give to D, and that similarly for the RMB30,000 and RMB40,000, they were withdrawn in cash and exchanged into HKD.  P said again during the trial that items “001” and “002” in her ICBC account should be the withdrawals for the sums of RMB30,000 and RMB40,000. 

88.  However, in paragraph 15 of P’s 1^st witness statement, she had said that the two sums of RMB30,000 and RMB40,000 were withdrawn from her CCB bank account.  When cross examined over this, P then suddenly said there were 4 withdrawals, after the two withdrawals from her ICBC account, then there were 2 further withdrawals respectively of RMB30,000 and RMB40,000 from her CCB account.  She then also said the “001” and “002” withdrawals should be 2005 or prior to December 2006.

89.  According to P’s 1^st witness statement, by end of 2006, she had already lent D RMB200,000, and later in early 2007, she lent him RMB100,000 to buy a car.  During the trial, P said this car was a different from another new car which D bought for HK$300,000 in 2013/2014 which then referred to in paragraph 23 of her witness statement. 

90.  In so far as this Court could gather, it was P’s evidence at the trial that at end of 2006, she had advanced to D RMB130,000 from her ICBC account to D, (namely RMB60,000, RMB30,000 and RMB40,000 as said above).  Then from her CCB account, she had advanced another RMB70,000 to D in January 2017.  Thus, up to 15 January 2007, she had advanced a total of RMB200,000 to D.  Anyway, according to paragraph 15 of her 1^st witness statement, on 15 January 2007, she lent another sum of RMB103,000 to D from P’s CCB bank account.

91.  P had further said under the cross-examination she did not lend D any sums in 2004 and it was only from May 2005 that she started to lend him money.

92.  I have to say, P’s evidence during the trial was extremely confusing.  First of all, the 1^st Loan according to her evidence during the trial, would be from 2005 to about 15 January 2007 and not from 2004 to middle of 2007 as in her written evidence.  Secondly, according to her evidence at the trial, there were only 6 payments and not over 10 payments as said in her written evidence.  Thirdly, there was no sufficient evidence as to what transactions “001” or “002” consisted of, or that there were ever those transaction numbers.  Fourthly, there was no sufficient evidence that any withdrawals from her ICBC account or her CCB account were paid to D.  Fifthly, based on her evidence during the trial, the 1^st Loan would in fact be RMB303,000 and not RMB300,000.

93.  The statement of her CCB account (ending 323) would seem to indicate that the mortgage instalments of her Futian Flat commenced on 20 February 2007 which meant that RMB103,000 withdrawn on 15 January 2007 would appear to be for the payment of the purchase price or part thereof. In any event, if P’s evidence was that RMB103,000 was part of the 1^st Loan paid to D, then there was no evidence how she had paid for the down payment for the Futian Flat as there were no other large withdrawals from her various bank accounts around the time of the purchase of the Futian Flat.  

The 2^nd Loan

94.  The amount of the 2^nd Loan was said to be RMB100,000 at end of 2009 which was for D to repay a loan from his sister.

95.  According to P’s evidence in her 1^st witness statement and Supporting Affirmation, the 2^nd Loan was evidenced by (i) RMB40,000 withdrawn from her CCB account (ending 327) on 31 August 2009, and (ii) the balance of RMB60,000 from the sale proceeds of RMB500,000 of her Futian Flat (of which RMB270,000 was credited into her CCB account (ending 323) on 15 January 2010 and the balance of RMB230,000 was said by P to have been received in cash).

96.  The amount withdrawn by P from her CCB Account (ending 327) on 31 August 2009 was HKD40,000, and not RMB40,000, and also her evidence in her 1^st witness statement was that the 2^nd Loan was advanced to D at end of 2009, and not in August 2009.  When she was cross examined on this, she said she paid D in Renmembi and also said that prior to end of 2009, D had already borrowed from her.  This was never mentioned in her Supporting Affirmation.

97.  There was no sufficient evidence that the net sale proceeds of Shenzhen Flat was RMB500,000, as no such sum was reflected in her bank statements.  There was also no reasonable explanation as to why while RMB270,000 of the net sale proceeds was credited into her bank account and the rest of the net sale proceeds would then be paid to P in cash, as alleged by P.

The 3^rd Loan

98.  According to P’s Supporting Affirmation, the 3^rd Loan of RMB150,000 was made in 2011 as D’s wife was ill at that time and also D said he needed money for his business operation.  Further, according to P, the amount of RMB150,000 was paid over to D by 4-5 payments.  There was no supporting evidence produced by P in relation to the 3^rd Loan.

99.  Under cross-examination, P admitted that she was unable to recall when in 2011 was the 3^rd Loan made or the amount she paid D on each of the 4-5 occasions.  The 3^rd Loan also had to be seen against her evidence at the trial that in 2011, she had to pay the company involved in the pyramid selling about $360,000 and that she lost $240,000 in 2011. 

The 4^th Loan

100.  According to her Supporting Affirmation, it was in 2012 that D asked for the 4^th Loan of RMB200,000 for “prepayment of wages” to his employees, as D told her that TVB would only pay his company after 3-6 months. 

101.  It was P’s evidence in her Supporting Affirmation that the 4^th Loan was advanced to D by 5-6 cash payments.  Under cross examination, P had confirmed that the 4^th Loan was paid to D on more or less 5 or 6 occasions, and that on each of those occasions, sometimes it was several thousands of dollars, sometimes RMB30,000 and sometimes RMB50,000, totalling more or less not more than RMB200,000.

102.  It was however P’s evidence that the 4^th Loan was evidenced by 4 withdrawals from her CCB account (ending 904) and she referred to 4 withdrawals, namely (i) RMB30,000 on 17 August 2012, (ii) RMB100,000 on 24 December 2012 (iii) RMB60,000 on 28 December 2012 and (iv) RMB30,000 on 28 December 2012[16].

103.  When asked why there were 3 withdrawals within 4 days in December 2012 totalling RMB190,000 which did not seem to be consistent with her written evidence that there were 5 to 6 sums of HK$30,000 to HK$50,000 each, P suddenly said according to D, the 3 sums were for “加押金”/additional security deposits.  When asked by this Court to clarify whether 2^nd Loan was according to P for wages or for security deposit, P then changed again and said it was for both.  What she said in her Supporting Affirmation and her witness statement, she had said the 2^nd Loan was for “prepayment of wages”.  When asked by Mr Cheung again, P then said she only told the Court what D had told her.  In any event, there was no mention of any “加押金” in her written evidence.

The 5^th Loan

104.  According to P’s evidence in the Supporting Affirmation and her witness statement, the 5^th Loan of RMB80,000 was for D’s 2^nd angioplasty operation in November 2013.  According to P, she advanced the amount by 2 payments in cash to D, a sum of RMB50,000 withdrawn from her Ping An Bank account on 25 October 2013, and the balance of RMB30,000 was from cash paid to her by D which she kept at home.

105.  However, there were 2 withdrawals shown on her Ping An bank statement, RMB23,577 and RMB26,423 on 25 October 2013[17].  Thus, it would appear that P made 2 withdrawals on same day from her Ping An bank account.  When asked, P said as one withdrawal was not sufficient, she made another.  This did not seem to make sense since her evidence was D borrowed from her RMB80,000 and he must have known the cost of the medical procedure and also there was no reasonable explanation as to why there were two withdrawals in such odd numbers.

106.  Further, what she said about cash paid to her by D and kept by her at home would be inconsistent with her case that D only paid her RMB3,000 every other month and that she had to subsidize the parties’ living expenses.

107.  Anyway, as mentioned earlier, D had produced medical receipts to show that his second procedure/surgery was done in September 2013 and not November 2013 and that the expenses were paid by Madam Tsing’s credit card.

Smaller Loans

108.  According to P’s Supporting Affirmation and her witness statement, there were loans to D during the Relevant Period on 4 – 5 occasions of RMB10,000 – RMB20,000 each and averaging at RMB15,000 x 4.5 times = RMB67,500.  Then there were about 10 occasions when P advanced to D sums between RMB3,000 and RMB8000 amounting on average to RMB55,000.  Thus, the total of these would be RMB122,500 during the Relevant Period.

109.  When cross examined how P would recall all the above small amounts, P then admitted she could not recall.

Findings on the Loans

110.  Mr Chang accepted that P’s evidence on the Loans and the various times that the Loans were made was blurred and not very reliable but submitted on behalf of P that it was clear that she had made no record over the years of the Loans, and that she was only relying on her vague memory of the total sums advanced to D at various stages and that it was only when she was making the present claim and preparing for her application for the Injunction that she tried to work out the amount of the Loans during the Relevant Period and collating her claim and her evidence.

111.  As pointed out by Mr Cheung, in P’s pre-action letter, the outstanding loan due to D was stated to be an exact sum, namely “HK$1,000,000”.  Then in her initial statement of claim, the amount of the loan monies made by her to D was stated to be “in the total sum not less than RMB1,000,000”, and later in her amended statement of claim, the amount was amended to that of “approximate sum of RMB952,500”.  Thus, P had already changed at least twice as to the total amount of the Loans.   

112.  During the trial, P gave this Court an impression that she seemed to be tailoring her evidence of the Loans according to the withdrawals on her bank statements.  Her evidence at trial was also not consistent with her written evidence.  When she was asked by this Court why she would continue to make the Loans to D even after she had found out about his 3 lies, she gave several reasons but mainly that D knew how to please her.  I have to say I do not find P’s continuing to make the Loans to D after finding out about his 3 lies, inherently probable.  In any event, I find P’s evidence on the Loans was so unsatisfactory that I have come to the conclusion that the Loans did not exist. 

113.  Although a bare assertion that there had been no consideration was insufficient to displace the presumption in section 30(1), I am however satisfied D was able to discharge the burden even if the burden were on him.   

114.  D did not dispute that there was a heated argument between him and P on 25 December 2014 and that P demanded him to divorce his wife within the next 6 to 8 months and that was why the deadline was fixed for August 2015.  D maintained that P also demanded D to give her RMB100,000 so that she could repay her immediate debts. D had said that was why he then applied for a loan from Citibank in order to pay HK$100,000 to P.  The Citibank letter alone would not be sufficient evidence as to whether the amounts in the first two loans were in fact paid to P.  However, it showed that D had the ability to borrow and he had no problem in borrowing from a bank.

115.  It was D’s evidence that he acceded to P’s request by signing the Note against his own will solely for the purpose for avoiding further dispute with P.  In other words, D’s evidence was that he wrote out the Note to pacify P.  In this respect, P would appear to be an emotional person as seen in the witness box and further her own evidence was that after she learnt of D’s marriage, she had telephoned D continuously for 3 days to scold him and after 3 days of scolding, she then attempted suicide by turning on the gas and taking 40 to 50 sleeping pills.  I find what D said was credible, that he only wrote out the Note to pacify P.  Although it would appear that D was alleging that the issue of the Note was affected with fear or duress, this was not clearly pleaded.

116.  Primarily, as said earlier, I have found no sufficient evidence to show that D was in financial difficulties to the extent that he would have needed to borrow from P.  It seemed inherently improbable that P would pay D RMB952,500 which would average RMB8,800 per month from 2005 to 2014 (9 years) plus subsidizing the household expenses.  The evidence showed that D had a regular income.  On the other hand, I find P’s evidence of her own financial situation unreliable.  There was no sufficient evidence at all that she had the means of being capable of making the Loans to D.  In fact, as mentioned earlier, her bank statements showed a loan from her former husband and from another friend.  I have found earlier that there was no sufficient evidence that the Loans existed.

117.  Having regard to all the above, I find that D had satisfied this Court that there was no valuable consideration for the Note, even if the burden was to be on him.

Issue (3) – Whether D is liable to pay RMB1,000,000 to P as stated in the Note

118.  Mr Chang argued that the requirement of consideration would be satisfied if the promisee had suffered detriment, at the promissor’s request, even though this conferred no corresponding benefit on the promissor.  Thus, in the present case, not only the antecedent Loans to D could amount to valuable consideration, P’s forbearance in having to assume the responsibility of meeting the balance of the household expenses which D had promised to pay but failed to pay fully could also amount to sufficient consideration.  Further, P’s forbearance for the duration of the Note could also amount to sufficient consideration for the Note. 

119.  However, none of the above was pleaded, and P could not in closing submissions rely on the above. 

120.  Mr Chang also argued that there was contractual estoppel and that when a person signed a legal document, he or she was bound by the act of signature, referring to Bank of China (Hong Kong) Ltd v Fung Chin Kon FACV 16/2001, 4 December 2002.  In the present case, I have found earlier the Loans did not exist and there was no valuable consideration for the Note.  I do not find that the case of contractual estoppel was made out.  In any event, it was not specifically pleaded.

121.  Having considered all the above, I find D is not liable to pay RMB1m to P. 

Conclusion

122.  I am of the view that P’s claims must fail.  I therefore dismiss P’s claims and the Injunction is hereby discharged.  I order P to pay D’s costs of and incidental to this action, including any costs reserved, to be taxed if not agreed.  This is an order nisi, which shall be made final and absolute after 21 days.