TSANG YUEN WANG t/a Second Brother（二師兄） v. LEUNG WANG HONG

DCCJ 2772/2022

[2025] HKDC 1123

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2772 OF 2022

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JUDGMENT

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A. Introduction

1.  The plaintiff (“P”) commenced these proceedings seeking to enforce a written settlement agreement dated 28 April 2022 (the “Settlement Agreement”) against the defendant (“D”), who is a director and a 20% shareholder of a company known as Leader Best International Limited (“LBI”).

2.  It is said that the Settlement Agreement was to resolve the dispute arising out of the early determination of the tenancy agreement (the “Tenancy Agreement”) in respect of the premises known as Shop 4 on the Ground Floor of Tuen Mun Centre, Nos 2, 4, 6 and 8 Wo Ping Path Nos 7-11, 15-25, 29, 33-35 Yan Chung Street, Tuen Mun (the “Premises”) as between P as the tenant and LBI as the landlord.

3.  According to the Settlement Agreement, D was to pay a sum of HK$1,000,000 to P by 30 June 2022, failing which, D would have to also pay contractual interest at 8% per day.  P however contends that the agreed contractual rate of interest is 0.8% per day instead.

4.  P is therefore claiming against D for the sum of HK$1,000,000 together with contractual interest at 0.8% (ie a sum of HK$8,000) per day as from 1 July 2022, ie a total sum of HK$9,972,000 as at the date of the trial before me on 24 June 2025 with further interest at judgment rate on the said sum[1].

5.  D disputes that P is entitled to enforce the Settlement Agreement on the ground that (1) he only entered into the same under duress; (2) the terms thereunder were too vague; and (3) the same is void for want of consideration.

6.  It appears that after the filing of witness statements, D has lost interest in defending the action. He did not attend the PTR on 16 April 2025.

7.  The trial of these proceedings was fixed to be heard before me on 24 June 2025.

8.  Despite D’s absence at the trial, I was satisfied on the affirmation of service filed by P that sufficient notice had been given to D of the trial.  It was appropriate to proceed to hear the evidence of P as well as P’s submissions.

9.  At the start of the trial, P’s counsel, ie Mr Sin, informed the Court that P’s claim together with contractual interest at the daily rate of 0.8% will be limited to HK$3,000,000 and he does not intend to claim any post-judgment interest.

B.  Material Factual Background and The Parties’ Respective Cases

10.  The relevant factual background can be briefly summarised as follows.

11.  P is a merchant who operates a retail business of fresh meat products as a sole proprietor with the trade name of “Second Brother” (二師兄).

12.  D is a director and a 20% shareholder of LBI.

13.  On 19 May 2021, LBI as the landlord and P as the tenant, entered into the Tenancy Agreement[2] in which the Premises was let to P for a term from 1 June 2021 to 15 December 2023, at the monthly rent of HK$45,000.

14.  D was the one who executed the Tenancy Agreement on behalf of LBI.  D contends that the Tenancy Agreement was a sub-tenancy agreement in that the Premises was only part of the premises LBI rented from Woodnesson Development Limited (“WDL”).

15.  In any case, there is no dispute that it was D who informed P that LBI wished to terminate the Tenancy Agreement prior to the expiration of the term.

16.  There is also no dispute that P asked for a sum of HK$1,000,000 as compensation for LBI’s early termination of the Tenancy Agreement.  It is P’s case that the said sum was to be paid in consideration for full and final settlement for all loss and damages suffered by P as a result of LBI’s early termination of the Tenancy Agreement.  The same therefore constituted a promise of an absolute forbearance to sue LBI for its breach of the Tenancy Agreement.

17.  However, D expressed to P that since he only held 20% of LBI, he was not in a position to make any decision on behalf of LBI but he would relate such a concern and request to LBI’s other shareholders.

18.  P’s case is that D subsequently agreed to compensate P in his personal capacity.  In other words, D agreed to pay the sum of HK$1,000,000 (the “Settlement Sum”) as full and final settlement of P’s loss and damage in exchange for an absolute forbearance to sue LBI.

19.  On 28 April 2022, P attended D’s office.

20.  According to P, it was D who then drafted the Settlement Agreement in Chinese, which contained, inter alia, the following material terms[3]:

“…甲方[梁宏康]租借二師兄原租期為2021年6月1日至2023年12月15日，因我方（甲方）原因現鑒於2022年4月29日提早解約，現雙方同意於2022年6月30日，甲方需支付二師兄港幣一百萬元正，$1,000,000.00作為賠償金，和解此事。

如未能於2022年6月30日交付，需支付日息8厘。”

21.  Further, it is P’s pleaded case[4] that:

“Notwithstanding the fact that the Settlement Agreement contained the sentence “If, on 30 June 2022 [Party A] is unable to pay [Second Brother], [Party A] has to pay [Second Brother] interest of 8% per day”, it is the Plaintiff’s case that on 28 April 2022 at the Defendant’s Office and by the time of the conclusion of the Settlement Agreement:

(a)  the Plaintiff said to the Defendant that the former expected from the latter a daily interest at 0.8% as opposed to 8% on the Settlement Sum per day if the Defendant is unable to pay the Settlement Sum in full to the Plaintiff on or before 30 June 2022, to all which the Defendant agreed orally and by conduct; or

(b)  alternatively, the Defendant said to the Plaintiff that the former shall give the latter a daily interest at 0.8% as opposed to 8% on the Settlement Sum per day if the Defendant is unable to pay the Settlement Sum in full to the Plaintiff on or before 30 June 2022, to all which the Plaintiff agreed orally and by conduct; and

(c)  hence parties intended an antecedent express stipulation (the “Antecedent Express Stipulation”), i.e. for the daily interest to be at 0.8% on the Settlement Sum from 1 July 2022 onwards, to be both (i) in addition to what appears in the Settlement Agreement and (ii) continued in force with the words expressly written in the Settlement Agreement; and

accordingly, it is an express term of the Settlement Agreement that, in the event the Defendant is unable to pay the Settlement Sum in full to the Plaintiff, on or before 30 June 2022, the Defendant is to be further liable for an interest of 0.8% per day, on a daily basis, of the Settlement Sum, to the Plaintiff.”

22.  On 29 April 2022, P returned vacant possession of the Premises.

23.  P never commenced any proceedings against LBI for breach of the Tenancy Agreement and D had never paid P the HK$1,000,000 nor any interest in part or in full.

24.  It is therefore P’s case that he is entitled to the sum of HK$1,000,000 together with contractual interest at 0.8% (or HK$8,000) per day as from 1 July 2022.

25.  D’s case is that he did not draft or sign the Settlement Agreement voluntarily.  According to D, he did so under duress of P with threats like P’s business partner had triad background and he knew where D live and they would go after him, his wife and children.  Therefore, it was P who dictated the contents of the Settlement Agreement and forced D to draft and sign the same.

26.  Apart from relying on duress, D also says the terms of the Settlement Agreement were too vague and no consideration was provided.

C.  Relevant Issues

27.  The key issues for this trial[5] are:

(1)  Whether the Settlement Agreement is valid and enforceable:

(a)  Whether the Settlement Agreement was signed under duress;

(b)  Whether the terms of the Settlement Agreement were vague; and

(c)  Whether there was no consideration under the Settlement Agreement;

(2)  Whether D was in breach of the Settlement Agreement; and

(3)  Whether P is entitled to receive damages from D, and if so, the amount of damages that P is entitled to receive from D.

D.  The Viva Voce Evidence

28.  P is the only witness who gave evidence at trial.

29.  As D did not attend court to confirm his witness statement and testify, I will disregard his witness statement in its entirety.

30.  The approach for assessment of the credibility of witnesses is trite:

(1)  Contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2)  In deciding whether to accept a witness’s account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events; and

(3)  In determining a witness’s credibility, it is also important to have regard to the consistency of the witness’s evidence with undisputed or indisputable evidence, and the internal consistency of the witness’s evidence, which type of consistency is often tested by a comparison between the witness’s oral testimony and his or her witness statement.

See: Hui Cheung Fai v Daiwa Development Limited & Anors.[6]

31.  As will be elaborated below, P’s evidence and explanation regarding the 0.8% daily contractual interest is convoluted and filled with inconsistencies.  Overall, I do not find P to be a reliable witness.  I shall only give weight and accept P’s evidence or explanation when they are supported by documentary or other evidence or findings.

E.  Analysis of Issues

E1.  Whether the Settlement Agreement is Valid and Enforceable

32.  Having considered all the relevant evidence available before me, I am satisfied that the Settlement Agreement is valid and enforceable.

33.  First, where D is making a serious allegation of duress to the persons, the burden is on D to prove the same.  However, D did not give evidence in respect of his case.

34.  More importantly, the WhatsApp records[7] produced by P clearly show that:

(1)  On 24 April 2022, it was D who told P that “而家咁，29交場；我29號俾票你” which obviously referred to the demand made to P that he should deliver vacate possession of the Premises on 29 April 2022 and D would give him a cheque;

(2)  P expressly demanded a cheque in the sum of HK$1,000,000 should be given to him by noon on 28 April 2022; and

(3)  D even texted P and said “收到；唉，今次係喺對你不起…”.

35.  The above conversation obviously did not sit well with an allegation of duress or that P had made various threats to D.

36.  The WhatsApp records also show that it was D who asked P to go to his office on 28 April 2022 at 12:30pm and provided the passcode to P.  It is inconceivable that D would invite P to attend his office if P had indeed made various threats to him and his family and/or applied any form of illegitimate pressure.

37.  The fact that D only saw fit to make a report to the police on 27 May 2022[8] appears to be self-serving.

38.  Second, having considered the Settlement Agreement as a whole, I am also not satisfied that its terms were vague.

39.  The parties, the Settlement Sum as well as the time by which the Settlement Sum should be paid and even the contractual interest payable were all clearly stipulated.

40.  I shall specifically deal with P’s case on the contractual interest when I come to the analysis of the relevant issue of damages below.  This however does not have any bearing on whether the Settlement Agreement should be enforceable or not.

41.  Third, I am also not satisfied that the Settlement Agreement is void for no consideration.

42.  The Settlement Agreement clearly provided that it was to resolve or settle the dispute arising out of the early termination of the Tenancy Agreement (ie 和解此事).

43.  It is trite that forbearance to sue amounts to good consideration and that consideration need not move to the promisor: Million (Far East) Ltd v Manley Best (International) Food Ltd and Another.[9]  It is also not for the court to question the “sufficiency” of consideration.

E2.    Whether D was In Breach of The Settlement Agreement

44.  There can be no dispute that D was in breach of the Settlement Agreement.

E3.  Whether P is entitled to receive damages from D, and if so, the amount of damages that P is entitled to receive from D

45.  In view of my determination above, P is entitled to the Settlement Sum of HK$1,000,000.

46.  Insofar as the contractual interest is concerned, P has expressly abandoned the claim of contractual interest at 8% per day which is clearly provided under the Settlement Agreement.

47.  P’s evidence is that despite the said written term, the parties had in fact agreed to 0.8% daily interest being applicable as from 1 July 2022.

48.  I am not satisfied that the parties had indeed agreed to such a contractual rate of interest which is expressly contradicted by the written term of 8% daily interest.

49.  First, P’s pleaded case at §29 of the Amended Statement of Claim[10] was only amended as per Deputy District Judge Chase Pun’s Order on 16 April 2025 at the PTR when the action was commenced on 20 July 2022, ie almost 3 years ago.  P has not come up with an explanation as to why the amendments only came about at the PTR.

50.  The pleaded case itself is also unclear in that P runs an inconsistent alternative as to who first said and raised “a daily interest at 0.8% as opposed to 8% on the Settlement Sum per day” should be paid.

51.  Second, where P tried to orally explain that the 8% stipulated in the Settlement Agreement was a mistake (“手民之誤”), he could not provide a credible explanation as to how the mistake came about.

52.  Initially, P sought to explain that the understanding was that 8% was actually 0.8%(“總之理解就係0.8厘”).  When I asked P why 8% was understood to be 0.8%, he simply repeated his answer that it was a mistake (“手民之誤”) and the parties’ agreement was 0.8% (“大家協議係0.8%”).  At one point, P even tried to suggest “8% was indeed 0.8%” (“8厘咪即係0.8%囉”).

53.  Given that P is a merchant operating his own business, I do not accept his mere assertion that 8% was somehow understood to be 0.8%.

54.  Third, P’s pleaded case and oral explanation as to how the agreement on the contractual interest came about is convoluted and filled with inconsistencies.

55.  P’s case is that he did not raise the issue of interest on 24 April 2022 and the same was only mentioned for the first time on 28 April 2022 at D’s office.  P initially said it was him who told the Defendant that he needed extra protection and interest should be included, and it was P who raised the actual rate of interest ie 8%(“8厘”).  According to P, D even said “yes, the sum is not a big deal, [I] must be able to give you [the sum] within two months” (“佢話好，佢話錢又唔係多一定俾到你，兩個月內一定俾到”).  After this was communicated, D then took out a paper and drafted the Settlement Agreement and P looked at it before signing on the same.

56.  P’s oral account above is inconsistent with §53 of his witness statement which stated that it was D who suggested to pay 8% interest if the Settlement Sum could not be paid within 2 months(“咁啦，我比返八厘息你啦，咁對大家有個保障囉”).[11]

57.  When P was referred to his witness statement and §29 of the Amended Statement of Claim, P then changed his oral evidence and said it was indeed D who suggested the 8% interest but insisted that the parties’ understanding at the time was 0.8% daily interest should apply.

58.  When P’s own counsel further asked him on the basis for such a “mutual understanding” (“俾8厘息，點樣出現0.8厘，0.8%點樣出黎”), P then mentioned for the first time that he took a calculator out and pressed a figure of 8,000 a day; as the Settlement Sum was HK$1,000,000, HK$8,000 per day would be 0.8% (“因為當時呢咁有篤嗰個計數丫嘛，當時有篤計數機，當時100萬係每日八千蚊，所以理解係0.8%；我拎出嚟話，如果還唔到就係呢個利息，成件事就係咁”).

59.  The aforesaid explanation was only mentioned for the very first time in the witness stand.  Further, the fact that it was P who took the calculator out and indicated HK$8,000 per day should be paid as interest is again inconsistent with his clarification that it was D who first raised and mentioned the 8% daily interest.

60.  Fourth, I have already mentioned why I find the so-called understanding of 8% per day should mean 0.8% per day is incredible.  I do not accept P’s evidence that D also had this so-called misunderstanding and he also meant 0.8% per day when he wrote 8% (日息8厘) on the Settlement Agreement.

61.  More importantly, if there was in fact such a misunderstanding or mistake, there is no reason why P did not or could not spot the mistake when he read the Settlement Agreement before signing on the same.  He could have pointed that out to D and demanded the same be revised before signing on the same.

62.  In all circumstances, I do not find P’s evidence relating to the contractual interest payable to be credible or reliable when the same is expressly contradicted by the written term of the Settlement Agreement.

F.  Conclusion

63.  During closing submissions, I enquired with Mr Sin as to P’s position if I were to find against P regarding his case on the 0.8% daily contractual interest.

64.  Mr Sin indicated that P’s fall-back position is that he would nevertheless be entitled to the Settlement Sum of HK$1,000,000 and P would further claim post-judgment interest at judgment rate as from the date of judgment until payment.

65.  In view of my determinations above, I find Mr Sin’s fall-back position to be reasonable, and I accede to the same.

66.  For the above reasons, I make the following orders:

(1)  D is to pay P the sum of HK$1,000,000 together with interest at judgment rate from the date of judgment until payment; and

(2)  There be a cost order nisi that D shall pay P’s costs of this action including all costs reserved, if any, to be taxed if not agreed with certificate for counsel.

67.  The costs order nisi shall become absolute in the absence of any application to vary the same within 14 days of this Judgment.