LI LIANG v. CHIU MAN HON

HCA 2579/2016
HCA 1353/2018
(Consolidated)

[2020] HKCFI 2945

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2579 OF 2016 AND 1353 OF 2018

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J U D G M E N T

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A. INTRODUCTION

1.  This is the trial of two actions consolidated by the Order of Master Ho dated 14 August 2018. 

2.  In the first action (HCA 2579/2016), Mr Li Liang (“Li”) sues Mr Chiu Man Hon (“Chiu”) for the sum of HK$8,000,000, said to be the outstanding principal and interest of a loan Li made to Chiu in December 2014 (“the Loan”). 

3.  In the second action (HCA 1353/2018), Chiu sues Li for the sum of HK$1,300,000, said to be the total of three loans made by Chiu to Li in February, November and December 2015 respectively.

4.  The Order of Master Ho directed Li to be the plaintiff in the consolidated action and Chiu to be the defendant.  Chiu’s claim against Li therefore becomes his counterclaim in the consolidated action.

B.   THE PARTIES’ PLEADED CASES

5.  According to Li’s Statement of Claim:

(1)  By an agreement in writing dated 1 December 2014 (“the Agreement”), Li agreed to lend HK$7,500,000 to Chiu.  Chiu was to pay six sums of HK$300,000 each to Li on the last business day of each month from December 2014 to May 2015 as interest.  The principal was to be repaid on 1 June 2015.

(2)  Li transferred HK$7,500,000 to Chiu’s bank account. Chiu paid interest for December 2014 and January 2015 totalling HK$600,000. However, he did not pay the interest for the next four months, nor did he repay the principal.  Thus, Chiu owed Li HK$8,700,000 (principal of HK$7,500,000 plus four months’ interest of HK$1,200,000).

(3)  Subsequently, Chiu repaid Li a total of HK$700,000 (HK$400,000 on 26 November 2015 and HK$300,000 on 4 December 2015).  Thus, HK$8,000,000 was still outstanding.

(4)  On 3 June 2016, Chiu promised in writing to repay Li HK$7,200,000 by 18 weekly instalments of HK$400,000 each, starting from 15 June 2016. 

6.  Chiu admits that he did borrow HK$7,500,000 from Li with the terms (including interest) as pleaded.  He borrowed the Loan to be used as the capital in a business of bullion trading.  However, after he received the Loan from Li, he decided not to pursue the business and so in mid-January 2015, he paid Li by cheque the sum of HK$7,992,000, being the principal plus interest for the period between 3 December 2014 and mid-January 2015.  Li presented the cheque on 16 January 2015 and the cheque was honoured.  The Agreement was therefore terminated, and the Loan fully repaid, on 16 January 2015.

7.  As for the agreement in writing of 3 June 2016, which Chiu calls “the Intended Loan Agreement”, he says that that was “a contractual arrangement whereby [Chiu] sought to borrow a further HK$7,200,000.00 from [Li]” (§5(2) of Chiu’s Defence).  Chiu says that his intended use of the money did not materialise (as he failed to close the relevant business deal) so Li did not advance any sum to Chiu at all.  Chiu’s case is that this “Intended Loan Agreement”, as he calls it, has nothing to do with the Agreement.

8.  In reply, Li says he did not know Chiu’s purpose of seeking the loan of HK$7,500,000 from him under the Agreement.  The HK$7,992,000 was a repayment by a company called TYG Management Service Limited (“TYG”) for the settlement of a loan from Li to TYG, and was unrelated to the Loan.

9.  As for the agreement of 3 June 2016, Li admits §5(2) of Chiu’s Defence, and further avers that that is not an intended or further loan, but is “the supplemental loan agreement as a result of [Chiu’s] repeated failures to repay the Loan”.   Li avers that it was agreed between him and Chiu that he would accept the 18 instalments in satisfaction of the outstanding balance of HK$8,000,000 under the Agreement, on condition that Chiu repays on time the instalments, and if Chiu fails to repay the HK$7,200,000, Li would be entitled to claim Chiu for the whole HK$8,000,000.  

10.  Li does not say in his pleadings whether Chiu paid any of the instalments under the agreement of 3 June 2016, but since he is claiming the full HK$8,000,000 it appears to be his case that no such instalments have been paid.  This is consistent with Chiu’s own case that the “intended loan” of HK$7,200,000 was never made.  It is therefore common ground that, whatever is the true nature and purpose of this agreement of 3 June 2016, there was no transfer of any sum from Li to Chiu thereunder as such, and no instalments thereunder have been paid by Chiu.

11.  In Chiu’s counterclaim against Li, he simply pleads that he lent Li the sums of HK$600,000 on 3 February 2015, HK$400,000 on 26 November 2015, and HK$300,000 on 4 December 2015.  He sues for their repayment. 

12.  Li denies that he borrowed any of the three sums from Chiu.  He says that the HK$600,000 was the payment of the first two months of interest for the Loan ([5(2)] above), while the HK$400,000 and the HK$300,000 were repayments of the Loan ([5(3)] above).

C.  THE PARTIES’ EVIDENCE

13.  At the trial, only Li and Chiu give evidence.

14.  In his witness statement, Chiu elaborates on why he originally borrowed the Loan from Li and why he decided to repay early: he was to participate in a bullion trading consortium which would be importing gold from a gold mine in Africa and reselling the same in Hong Kong to local traders.  He borrowed the Loan from Li as his capital, that being the agreed method for Li to participate in the project, through providing the Loan and earning interest.  However, subsequently a majority stakeholder withdrew, with the result that there would be less discount from the gold mine operator, and Chiu had to bear greater costs.  So Chiu decided to withdraw from the consortium and since he no longer needed the money he decided to repay Li. 

15.  During his testimony, Chiu says that another (and less important) reason for him to repay Li early was that his former boss, Ms Chan Hor Yee Hilda (“Chan”) (and whom he introduced to Li), or her companies, owed monies to Li which she could not repay and the situation between Li and Chan had become complicated, and he did not want to be involved any more so he wanted to “get out”, by repaying the Loan.

16.  According to Chiu’s statement,

“The reason that I paid [Li] the sum of HK$7,992,000 is as follows:-

(a) HK$7,500,000.00 being repayment of the principal sum under the Loan

(b) HK$440,000.00 for the interests accrued between 3^rd December 2014 and 15^th January 2015 at the interests rate of 4% per month

(c) HK$50,000.00 being 5-days’ worth of interests as compensation to [Li] for early termination of the Agreement out of my goodwill

(d) I am unable to recall the reason for the remaining HK$2,000.00.00.”

17.  This explanation is inconsistent with Chiu’s own pleadings which says that the HK$7,992,000 was the Loan plus interest from 3 December 2014 to mid-January 2015, and elements (c) and (d) are not pleaded. (Chiu tries to blame this on his former solicitors as not stating the position clear, but I note that he did verify the truth of his pleadings personally.)  I further note that in his supplemental statement, Chiu’s case is different on how this total figure came about.   He says that he told Li that he no longer needed the money and asked for the total repayment sum, and Li then told him to pay HK$7,992,000.  So, according to Chiu’s supplemental statement, it was Li who proposed the figure.  But this is not mentioned in his (original) statement, which gives the reader the impression that it was Chiu himself who came up with the figure of HK$7,992,000, including the HK$50,000 compensation “out of [Chiu’s] goodwill”.  But on the basis that it was Li who proposed the figure, Chiu’s case, which he confirms in cross-examination, is that he did not ask Li how the figure was arrived at, because in his supplemental statement he says:

“I made a rough calculation and believe the sum provided by Li is more or less accurate save that there is an odd figure of HK$52,000. It was always my belief that [Li] may have wished to seek compensation for early repayment in the form of 5-days’ worth of interests and the remaining HK$2,000 may relate to some other dealing I may have with [Li]. ”

18.  Chiu does not explain how the five days’ worth of interest as compensation for early repayment came about, i.e. why would there be any compensation and why five days’ worth of interest was chosen.  He agrees that there was never any discussion between the two of them on the question of compensation and how much.   He is unable to give any credible basis of his “belief” that Li wanted five days’ interest as compensation save that he worked it out from the “odd figure” of HK$52,000. 

19.  On the other hand, Li says in his witness statement that he first met Chiu in about 2013.  Chiu told Li that he worked in the management of TYG, which was an investment management company.  Chiu introduced to Li an investment with TYG which guaranteed a monthly return of 4%.  Therefore, Li entered into a “Business Agreement” with TYG (“the TYG Agreement”).    

20.  Chiu accepts during his testimony that at that time he worked for an associated company of TYG (“the Employer”, which was a fund management company), but not TYG itself, and it was he who introduced Li to the investment opportunity eventually covered by the TYG Agreement.  Chiu also introduced Li to Chan, who was the boss of TYG and the Employer.

21.  Under the TYG Agreement, disclosed by Li:

(1)    The effective date was 15 September 2014 and the termination date was 15 January 2015.  That is, the duration thereof was four months, called “the Commitment Period”.

(2)    TYG was to manage its business with the interests of Li, and was to exercise best efforts to ensure that it generated “Potential Business Profits” (defined to mean “each potential business profits generated by [TYG]”), which Li was entitled to share during the Commitment Period.

(3)    TYG

“has agreed to accept an amount of HK$7,400,000 (The Capital) from [Li] in the form of a commercial lending, and [TYG] has agreed to pay [Li] a Business Profit of 8% every 2 months throughout the Commitment Period. [Li] shall receive the 8% business profit on the last business day of each second calendar month, throughout the Commitment Period.”

Li was entitled to receive, in addition, any “Potential Business Profits” generated, on a monthly basis (being 60% of any profits in excess of 4%).  Thus, the 4% per month return appears to be a guaranteed minimum, with the potential for more for Li.

(4)    Li agreed not to request to withdraw the Capital during the Commitment Period.  However, Li had the right to request to terminate the Agreement after three months on giving one month’s written notice. At the end of the Commitment Period, TYG was to return the full amount of the Capital to Li, and Li was to sign a notice to acknowledge receipt thereof.

22.  Even though the TYG Agreement provided Li was to share in any Potential Business Profits, Li says that, to him, it was really a loan for four months of HK$7,400,000 to TYG with 4% monthly interest, with interest payable every two months (i.e. HK$592,000 every two months (HK$7,400,000 x 4% x 2)).  He was paid the first two months’ interest totalling HK$592,000 on 17 November 2014, and the third and fourth months’ interest, plus the Capital, totalling HK$7,992,000 (HK$7,400,000 + HK$592,000) on 16 January 2015.

23.  According to documents produced by Chiu (namely his own bank statements and a copy of the cheque for HK$7,992,000 payable to Li), the HK$592,000 on 17 November 2014 and the HK$7,992,000 on 16 January 2015 received by Li actually came from Chiu’s own bank account, and not directly from TYG. Li says that his “understanding” is that Chiu was paying him the guaranteed 4%, and then it was for Chiu and TYG to work out between them the difference between the 4% and the result of the investment activities.

24.  Li says that after he had received the first HK$592,000 under the TYG Agreement, so that he knew that TYG did honour its contractual promise, in late November 2014, he asked Chiu whether he could enter into further similar agreements with TYG. However, Chiu told him that TYG no longer entered into such agreements, but he could do it with Chiu personally.  Li says that since he knew that Chiu participated in the actual carrying out of the TYG Agreement (which Chiu denies), he was agreeable to enter into similar agreements with Chiu personally.

25.  Li and Chiu therefore, according to Li, entered into the Agreement.   What is not in dispute is that once Li and Chiu agreed on the Loan, the TYG Agreement or an agreement similar to the TYG Agreement which Chiu found was used as the template for their written agreement.  In the Agreement, the “Capital” was HK$7,500,000 and the Commitment Period was from 1 December 2014 to 1 June 2015.  The “Business Profit” was still 4% per month, but payable every month, and not every two months.   Li was also additionally entitled to share in any “Potential Business Profits” but, unlike the TYG Agreement, his share was not stated.  While Li agreed not to request to withdraw “The Capital” during the Commitment Period, he was also given, like the TYG Agreement, a right to request to terminate the Agreement after three months, but by giving one week’s written notice. Otherwise, the terms of the Agreement were the same as those in the TYG Agreement.

26.  According to Li, like the TYG Agreement, the Agreement was to him a loan of HK$7,500,000 to Chiu for six months, with 4% interest per month.   Chiu does accept that the Agreement was a loan (see [6] above).

27.  In his statement, Chiu also mentions that Li had also lent some money to a company (not TYG, and which Chiu in his supplemental statement says is called Howai Inc[1] (“Howai”)) introduced by Chan.  Howai failed to repay the loan to Li and in response Li approached Chiu for the lending of funds, as Li urgently needed money to repay his own creditors.  As it was Chiu who introduced Chan to Li, and in the light of Li’s assurance that he would repay Chiu once Howai repaid him, Chiu made several advances to Li.  This would appear to be the HK$1,300,000 Chiu is now suing Li for.  In his testimony, Chiu says that these loans were all interest free, and were repayable by Li once Chan/Howai[2] repaid Li.

28.  In his supplemental statement, Chiu says that the HK$592,000 payment from his account to Li was made as requested by Chan in about November 2014.  Chan told Chiu that she urgently needed that sum to pay Li and directed him to make out a cheque payable to Li (as he had also done on numerous other occasions when Chan needed to borrow money from Li to pay other third parties).  He now knows that the sum of HK$592,000 was used to repay the loan to Howai from Li.

29.  Chiu says in his supplemental statement that Li is “wrong to believe that the payment of HK$7,992,000 was used for repayment of another loan as he stated in [Li’s] Witness Statement”.

30.  I should also mention that in cross-examining Li, and in his closing submissions, Chiu refers to a meeting sometime in 2015 between Chan, Li and himself where the sum of HK$7,400,000 owed by Chan to Li was discussed (presumably he meant the HK$7,400,000 owed by TYG under the TYG Agreement), and Chan even wrote down a breakdown of scheduled repayments. While Li accepts that he did meet with Chiu and Chan, he says that that was to discuss the Loan still owed by Chiu to him.   The alleged breakdown is not produced before me, and there is in fact no admissible evidence from Chiu that what happened at any meeting between the three of them was as he alleges.

D.  FINDINGS

31.  The payments and receipts of the various sums referred to above, i.e. HK$592,000 on 17 November 2014, HK$7,500,000 on 3 December 2014, HK$7,992,000 on 16 January 2015, HK$600,000 on 3 February 2015, HK$400,000 on 26 November 2015 and HK$300,000 on 4 December 2015, are not in dispute.  That being the case, it appears to me that the issue before me is simply this: what is the nature, purpose and effect of the HK$7,992,000 received by Li on 16 January 2015?  If, as Li says, it has nothing to do with the Loan, then the payment of principal and interest thereunder remains outstanding, and it does not matter ultimately whether the sums totalling HK$1,300,000 paid by Chiu to Li were repayments, or separate loans made, by Chiu, as in either case Li would need to give credit for them.  However, if, as Chiu says, that was intended (and accepted) as repayment in one go of the Loan plus the then accrued interest (up to mid-January 2015), then it would support his case that the parties did terminate the Agreement early by such conduct and everything thereunder had been paid by him.  On this last point, even though Li in his evidence, and Mr Chan, his counsel, in his submissions, have stressed that while the Agreement allowed Li to request to terminate it early on notice, Chiu had no such right, but it is always open to Chiu to so request and for Li to agree to terminate the Agreement early.  The question is whether they did so agree. 

32.  The general principles for a trial judge in considering disputes of fact and assessing the credibility of witnesses were summarised by DHCJ Eugene Fung SC (as he then was) in Hui Cheung Fai v Daiwa Development Limited[3]:

“77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce). It is right to point out, however, that some of the documents in this case are alleged by the Son to be shams and those documents obviously cannot be used to assess the credibility of the parties.

78. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: eg Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).

79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.

80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36-37 (Bokhary PJ)), or from the assessment of the witnesses’ character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)).

81. The practical approach to assessing credibility of witnesses in a case such as the present may have best been summarised by the words of Robert Goff LJ, as he then was, in The Ocean Frost [1985] 1 Lloyd’s Rep 1 at 57:

‘Speaking from my experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities.It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth.’

82. Whilst these words were spoken in the context of a fraud case, I believe they are applicable to any case where a witness’ credibility features prominently in the court’s determination.” 

33.  I accept Li’s evidence on the reason, nature and purpose of the HK$7,992,000 paid by Chiu to Li on 16 January 2015, and reject Chiu’s evidence thereon, for the following reasons:

(1)  The existence and genuineness of the TYG Agreement is not disputed by Chiu. It is therefore an important contemporaneous document.

(2)  The payments of the HK$592,000 and the HK$7,992,000 to Li coincided with the express terms of TYG Agreement in respect of time and quantum, and strongly support Li’s case that those payments were payments under the TYG Agreement.

(3)  On the other hand, Chiu is unable to explain the figure of HK$7,992,000 if it was not a payment under the TYG Agreement according to its terms precisely: the HK$2,000 is always unexplained, while his case on the HK$50,000 being five days’ interest appears to have changed and is unconvincing.  See [16]-[18] above. 

(4)  In particular, if the HK$7,992,000 was a repayment of the Loan, I find it incredible that, whoever it was that came up with that figure, which Chiu says was supposed to include a compensation of five days’ worth of interest, plus $2,000 for something else which he cannot say is what, according to Chiu, there was never any discussion on the compensation, the HK$2,000, or the total figure, which was just agreed to by the other side when presented with a rather odd figure of HK$7,992,000.  This appears to me to be quite improbable, especially when Chiu has emphasised that they were friends and on good terms at the time.  

(5)  The explanation of the payment of HK$592,000 to Li on 17 November 2014 by Chiu (i.e. he was helping Chan to repay a loan owed by Howai to Li, unrelated to the TYG Agreement) is a bare assertion unsupported by any objective evidence.   

(6)  Li says when he paid the HK$7,400,000 as the “Capital” for the TYG Agreement on 15 September 2014 (i.e. the commencement date thereof), he in fact paid the sum into a bank account of Howai (which Li says was as directed by Chiu (which he denies)). Li produces before me the deposit slip. Since Howai and TYG were both companies controlled by Chan, I do not find this allegation of Li, i.e. he paid TYG by depositing into the account of Howai, incredible. 

(7)  On the other hand, it is not in dispute that under the TYG Agreement, Li had to pay HK$7,400,000 on about 15 September 2014 and he was to be paid HK$592,000 according to the terms of the TYG Agreement on 17 November 2014 (the first business day two months after the Agreement).  There is no suggestion that Li did not pay the HK$7,400,000 under the TYG Agreement. Thus, Chiu’s case involves the necessary suggestion that apart from and in addition to the TYG Agreement, Li had made another loan to Howai, in relation to which HK$592,000 was payable to Li on about 17 November 2014 (i.e. in exactly the same amount and at exactly the same time as the sum due under the TYG Agreement).  Li must therefore have entered into two rather similar loan agreements, one with TYG and the other with Howai, around the same time.

(8)  However, in his statement Chiu only mentions that there was this other loan without naming Howai (which he only names in his supplemental statement), and in his testimony he says that he knows nothing about any relationship or transaction between Li and Howai.  I find this to be improbable if indeed there was any transaction between Li and Howai at any time before January 2015, given that it was he who introduced Li to Chan and on either party’s case he remained involved in the relationship between Li, Chan and her companies at least until early 2015.  I reject Chiu’s case that there was another loan between Howai and Li, or that this HK$592,000 was paid by him to assist Howai to repay any loan owed by it to Li.  I find that this HK$592,000 was a payment under the TYG Agreement (being interest for the first two months according to its terms), as was the payment of HK$7,400,000 by Li into the Howai account (being the Capital for the TYG Agreement).

(9)  Further, I reject as incredible the allegation that around the time that a sum of HK$7,992,000 was payable to Li under the TYG Agreement, again unrelatedly (according to Chiu), coincidentally, Chiu paid Li exactly the same sum for another purpose.  This time, the alleged purpose was to repay the Loan, rather than having anything to do with Howai.  As I said above, Chiu cannot fully explain the calculation thereof on his own case, but the quantum and timing coincide exactly with the TYG Agreement.  

34.  I have not overlooked the fact that those two payments (HK$592,000 and HL$7,992,000) were not made to Li by TYG directly, but by Chiu from his own accounts, which appears to me to be odd.  However, the undenied and undeniable fact is that Chiu was involved personally in the TYG Agreement (by at least being the introducer, on his own admission) and in the relationship between Li, Chiu, Chan and her companies, and I do not find it improbable that the payments would somehow be arranged through Chiu.   

35.  On either party’s case, Chiu did pay Li HK$592,000 from his own bank account even though the sum was not owed by him to Li personally, and thus one cannot say that for Chiu to pay Li HK$7,992,000 from his own bank account for a purpose other than to pay off his own liabilities is unbelievable.  While I reject Chiu’s case on the HK$592,000, that is not because I find it improbable that Chiu would be so involved, but on a different ground.  Thus, while of course the sum of HK$7,992,000 is a rather large sum, it is not improbable that Chiu did involve with the TYG Agreement in the sense of transferring the said sum to Li from his own account on 16 January 2015.

36.  I do not believe that this feature is sufficient for me to reject Li’s case, or to accept Chiu’s, given the overwhelming case that the HK$7,992,000 was a payment under the TYG Agreement and not a repayment of the Loan as I discussed above.

37.  Mr Chan also takes a number of points in his submissions:

(1)  First, he argues that, apart from the HK$50,000 and the HK$2,000, there is another flaw in the calculation of the HK$7,992,000 suggested by Chiu.  Chiu says that HK$440,000 was paid as interest for the period between 3 December 2014 and 15 January 2015.  That is, 44 days’ interest was calculated (at HK$10,000 per day). Mr Chan argues, for that period, only 43 days’ interest was payable.  However, I note from Chiu’s bank statement that the HK$7,992,000 was debited from his account on 16 January 2015.  The payment of that sum by Chiu was therefore made on 16, not 15, January 2015, while the Loan (according to Chiu’s bank statement) was deposited into Chiu’s account on 3 December 2014.  On that basis, it is not unreasonable that Chiu had to pay interest for the whole period, including for both 3 December 2014 and 15 January 2015 (which is what he says in his statements).  On my count, that is 44 days, not 43 days.  I reject this criticism by Mr Chan.

(2)  Mr Chan stresses that it is incredible that if Chiu did in fact repay the Loan in full to Li on 16 January 2015, he did not ask for a written supplemental agreement with, or receipt from, Li, pointing to Chiu’s own working experience in in particular the insurance, finance and fund management industries, and the fact that the Agreement itself provided for a receipt to be given by Li at the end of the Commitment Period.   When asked about it, Chiu says that he believed that the banking documents would be sufficient to prove that he had repaid.  I do not find that in all the circumstances, if the HK$7,992,000 was indeed a repayment by Chiu of the Loan, that a written supplemental agreement or receipt would necessarily have to be asked for by Chiu, or that his explanation to be incredible or unreasonable.  I do not take this as a point against Chiu.

38.  In his closing submissions, Chiu also makes a number of points:

(1)  He says that he was only an ex-employee of Chan’s company and there is no reason why he would repay the loan of HK$7,400,000 (i.e. the loan under the TYG Agreement) for her. 

(2)  He also says that if the HK$7,992,000 paid by him was not in repayment of his own Loan owed to Li, he would, together with the HK$1,300,000 he paid to Li, in effect have paid about HK$1,800,000 in interest (as he had paid HK$9,292,000 in total), on top of the HK$8,000,000 now being claimed by Li.  He asks what benefits he would obtain out of this. 

39.  Both of these arguments raise the question of motive.  In effect, Chiu is asking, “why would I do something like that”, namely to pay HK$7,992,000 out of his own account to pay for TYG’s liability to Li.  However, in my judgment, the objective analysis at [33] above shows an overwhelming case in favour of Li, namely that the HK$7,992,000 was indeed a repayment of the loan under the TYG Agreement rather than the Loan and, together with my analysis at [34]-[36] above, and I do not accept these arguments of Chiu as sufficient to displace my analyses and conclusion above.

40.  I find that the HK$7,992,000 paid by Chiu to Li on 15 January 2015 was not a repayment of the Loan (whether principal or interest), but was a payment of the amount due to Li under the TYG Agreement.

41.  In the premises, the making of the Loan by Li to Chiu is not in dispute, and as the sum of HK$7,992,000 was not a repayment for the Loan (whether principal or interest), and since there is no suggestion or evidence that by June 2015 Chiu paid Li anything else under the Agreement apart from the first HK$600,000, I find that as at 1 June 2015 (the due date for the repayment of the Loan under the Agreement) Chiu did owe Li HK$8,700,000.  I find the HK$600,000 paid on 3 February 2015 to be a payment of interest under the Agreement (for the first two months). 

42.  Since Chiu did owe Li the sum of HK$8,700,000, it is most likely, and I do find, that the subsequent two payments of HK$400,000 and HK$300,000 by Chiu to Li were repayments of the Loan rather than separate loans from Chiu to Li (although ultimately it does not matter because the net result is the same: Chiu does owe Li HK$8,000,000, with the HK$700,000 to be deducted from the HK$8,700,000 either by way of partial repayments or by way of set-off (if they are separate loans)). This conclusion is supported, in my judgment, by the following:

(1)  Chiu did not allege that Li owed him HK$1,300,000 until 18 December 2017, when he filed his statement, long after Li started pursuing him for the Loan (the letter before action was sent on 3 August 2016);

(2)  The alleged terms of the loans made by Chiu were, to say the least, unusual.  Not only were they interest-free, Li were to repay Chiu when Chan repaid.  In effect, Chiu took over the liabilities of Chan or her companies to the extent of HK$1,300,000, unless and until Chan or her companies did repay.  Chiu says that he somehow felt responsible because it was he who introduced Chan to Li, but I find it unconvincing that Chiu therefore felt that he had to be put out this sum on those terms. 

43.  I find that Chiu remains indebted to Li in the sum of HK$8,000,000.

E.   DISPOSITION

44.  I give judgment to Li in the sum of HK$8,000,000, together with interest thereon at the rate of 1% above the best lending rate as quoted by the Hongkong and Shanghai Banking Corporation from time to time, from 1 June 2015 to the date of this judgment, and at the judgment rate thereafter until payment.  

45.  Chiu’s counterclaim is dismissed.

46.  The costs of this consolidated action including the costs of both actions before consolidation, Chiu’s counterclaim, and all reserved costs, are to be paid by Chiu to Li, to be taxed if not agreed.