LOK WAI YEE v. MAN KOON HUNG

HCA 1181/2014

[2020] HKCFI 2549

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1181 OF 2014

______________

BETWEEN
	LOK WAI YEE	Plaintiff
and
	MAN KOON HUNG	Defendant

______________

Before:  Hon K Yeung J in Court

Dates of Hearing:  12‑15 June and 5 July 2018

Date of Further Written Submissions by the Plaintiff:  24 August 2020

Date of Further Written Submissions by the Defendant: 27 August 2020

Date of Judgment:  30 September 2020

____________________

JUDGMENT

____________________

A. Introduction

1.  Ms Lok (“P”) and Mr Man (“D”) were a married couple.  At different stages of their relationship (dating, cohabiting, and whilst married), P had advanced monies for D’s use.  She claims that those monies were advanced to him pursuant to a number of legally enforceable loan agreements (the “Loan Agreements”).  P has demanded for their repayment.  D has refused.  P is now suing for repayment of those monies, or alternatively damages.

2.  D denies liability.  Various defences have been raised.  The main one is that the alleged loans were the results of domestic arrangements between them as boy and girl friends and subsequently husband and wife.  There was no intention to be legally bound. 

3.  This is the trial of their disputes.

4.  During the trial, Ms Lorinda Lau (“Ms Lau”) appeared for P.  Mr Michael Chai (“Mr Chai”) and Mr Ryan Law appeared for D.

B.  The Alleged Loan Agreements and the Scott Schedule

5.  P has pleaded 7 Alleged Loan Agreements.  One of them is no longer being pursued.  Six remain.  The 6 categories of relevant loans have been referred to as the “Ronis Loans”, “Citibank Credit Card Loans”, “Wedding Loans”, the “Hang Seng Bank Loans”[1], “D’s Expenses Loans” and “D’s Personal Loans”, which terms I will adopt.  The amounts being claimed (net of part repayments etc) have been set out in the updated revised Scott Schedule (“Revised Scott Schedule”), which may be summarized as follows:

The loans	No of items in Revised Scott Schedule	Amount (HK$)
The Ronis Loans	13	$68,100.00
The Citibank Credit Card Loans	42	$393,954.66
The Wedding Loans	27	- $8,013.00[2]
The Hang Seng Bank Loans	81	$153,002.62[3]
D’s Expenses Loans	153	$255,091.86
D’s Personal Loans	117	$542,994.60
Total:		$1,405,130.74

C.  The parties

6.  The following facts are not in dispute.

7.  As said, P and D were husband and wife. 

8.  Ronis Project Management Limited (“Ronis”) was incorporated on 3 April 2008.  D was its sole director and shareholder.  It was dissolved by striking off on 27 November 2015.

9.  When in business, Ronis accepted orders for construction and decoration works.  It then subcontracted them to other contractors for profits.  From time to time, it needed to pay those sub‑contractors.

10.  In October 2008, P and D decided to get married. They had known each other for some time prior to that.  At some stage, they started to be in a romantic relationship.  When that actually started is in dispute.  I will come back to this.

11.  On 23 September 2010, P and D got married.

12.  On 19 July 2013, P commenced divorce proceedings for their divorce.

13.  The decree absolute for their divorce was granted on 29 January 2014. 

D. The parties’ pleaded cases

14.  P’s Statement of Claim was last amended on 6 September 2017. The end product is the Re‑Re‑Amended Statement of Claim (“RRASoC”).

15.  P’s pleaded case is primarily agreement‑based:

(a)  In respect of the Ronis Loan Agreement, she pleads that:

“ 3. In or about June 2008, by an agreement partly in oral and partly by conduct as evidenced by various bank transfers, [D] orally requested [P] to pay the contractors of Ronis for debts owed by Ronis to the contractors (‘the Ronis Loan Agreement’).

…

 5. Between 3^rd June 2008 to 10^th November 2008, [P] had made 11 entries and lend [sic] [D] a total of HK$73,600 …”

(b)  In respect of the Citibank Credit Card Loan Agreement, she pleads that:

“ 7. In or about June 2008, [D] orally requested [P] to apply for a Citibank credit card for him so that he can use it mainly as an octopus card as the bank refused to grant his application for a credit card.

…

8A. [D] repaid [P] HK$5,000 a month in the beginning. However, [D] spent more and more and he would charge to pay for his personal spending rather than using it mainly as an octopus card for traveling purposes.

9. In or about September 2008, [D] has been charging ten of thousand [sic]of dollars and he could not even afford to repay [P] HK$5,000 a month and requested [P] to settle the monthly Citibank Credit Card bill for him and he promised to repay [P] on demand (‘the Citibank Credit card Loan Agreement’).

10. Between 28^th September 2008 to 18^th August 2013, [P] had settled the Citibank Credit Card bills using her own money per the oral requests of [D] in the sum of HK$393,954.66 ...”

(c)  in respect of the Wedding Loan Agreement, she pleads that:

“ 12. In or about October 2008, [P] and [D] decided to get married. Per the oral request of [D], [P] paid for some of the expenses incurred for the marriage, the wedding photos, wedding ceremony as well as wedding celebration (‘Wedding Expenses’) and [D] agreed to repay [P] on demand (‘the Wedding Loan Agreements’).

13. Between 3^rd November 2008 to 20^th September 2010, [P] has paid Wedding Expenses in the sum of HK$188,944.00 using her own money. [D] ad [P] agreed that [P] to apply for personal loans from Hang Seng Bank to pay for the Wedding Expenses first and [D] would repay the whole sum incurred for wedding to [P].

14. [P] had successfully applied for 3 loans from Hang Seng Bank Limited … [P] subsequently used the said 3 loans applied from Hang Seng Bank Limited to repay part of the Wedding Expenses …”

(d)  in respect of the Hang Seng Bank Loan Agreements, she pleads that[4]:

(i)  by 3 oral agreements made between her and D (the “1^st, 2^nd and 3^rd Hang Seng Bank Loan Agreements”, the 1^st one in about late February 2009, and the 2^nd and 3^rd ones in about August or September 2010), P agreed to lend D respectively the sums of $57,000, $46,000 and $38,000 to be borrowed from the Hang Seng Bank;

(ii)  D agreed to repay P such loans (with bank interest and handling fees) on demand;

(iii)  Pursuant to the 1^st, 2^nd and 3^rd Hang Seng Bank Loan Agreements, P entered into written agreements with Hang Seng Bank for personal loans, and advanced such sums to D by using them to partly repay the Wedding Expenses;

(e)  in respect of the D’s Expenses Loan Agreement, she pleads that:

“ 27. In or about March or April 2010, [D] orally requested [P] to pay on his behalf for services he subscribed, products he used as well as services and products he agreed to pay including instalments for electric appliances, telephone bills, internet services, utility bills, TV cable fees, [D’s] credit card payments etc.; and [D] orally promised to repay [P] on demand (‘the Defendant’s expenses Loan Agreement’).

28. Per the said oral request of [D], [P] paid for the same.

29. Between 12^th April 2010 to 25^th February 2013, [P] had settled all these bills using her own money per the oral requests of [D] in the sum of HK$255,091.86.”

(f)  in respect of the D’s Personal Loan Agreement, P pleads that:

“ 34. Since or about 10^th May 2008 until 25^th August 2011, [D] has orally requested [P] to lend him monies by way of cash or direct bank transfers, and [D] agreed to repay [P] on demand (‘the Personal Loan Agreement’).

35. [D] had expressly asked [P] to keep clear record of each loan transaction, therefore whenever [P] lent monies to [D] by bank transfers, she would transfer the monies to the joint bank account so as to make  a clear record of the loan transactions. Pursuant to the Personal Loan Agreement, [P] lent [D] a sum of 692,994.60.” 

16.  P also avers, and as has been summarised by Ms Lau at §§5 to 10 of her written closing submissions, that:

(a)  D has in certain WhatsApp messages acknowledged the debts owed and made promises to repay;

(b)  D on 7 January 2014 during a hearing on ancillary relief through his lawyer again acknowledged the debts and agreed to repay P the debt of HK$1 million;

(c)  alternatively, D would be unjustly enriched;

(d)  alternatively, D was estopped from denying that he had borrowed the loans from P; and

(e)  alternatively, the consideration for the Alleged Loan Agreements has been wholly failed.

17.  D’s Re‑Re‑Amended Defence is dated 28 September 2017 (the “RRADef”).  D puts P to strict proof of her case.  He denies the existence of any of the Alleged Loan Agreements.  He denies the enforceability of any subsequent alleged admission or acknowledgement.  He relies on the doctrine of past consideration.  As summarized and highlighted by Mr Chai at §5 of his written closing submissions:

“ (a) In respect of the Loan Agreements, even if P is successful in proving the requests for ‘loans’ and promises to repay, taking into account all circumstances of the case, P has failed to prove the intention to create legal relations.

(b) In respect of unjust enrichment, the claim based on the unjust factor relied on, namely ‘total failure of consideration of the Loan Agreements’, fails together with the claim based on the Loan Agreements. In any event, counter-restitution is impossible as the monies were advanced in exchange of D’s love and affection.

(c) In any event, P’s evidence is insufficient to prove the amount which D allegedly owned and due to P.”

18.  In addition to the above, D has also pleaded specifically:

(a)  in relation to the Citibank Credit Card Loan Agreement, that:

(i)  as agreed between him and P, he had been making monthly contributions in the sum of around HK$10,000.00 to HK$15,000.00 as housekeeping expenses (“Housekeeping Monies”) in the form of cash payment or bank transfer to P, and that P was to allocate the Housekeeping Monies for payment of household expenses[5];

(ii)  P had used the Citibank Credit Card for expenses in relation to her own pet dog and for her personal use (such as grooming, personal expenses, meals)[6];

(b)  in relation to the Wedding Loan Agreement, that:

(i)  D had paid for Wedding Expenses by asking his mother for a loan of HK$140,000.00[7]; and

(ii)  It was agreed between P and D that gift monies from relatives and friends (“Gift Money”), which P would collect, would be used to pay Wedding Expenses.  The total Gift Money received was in the sum of approximately HK$144,000.00[8].

(c)  in respect of the D’s Expenses Loan Agreement, that:

(i)  it was agreed between P and D that P was to allocate the Housekeeping Monies towards payment of household expenses[9];

(ii)  as agreed between them, D “paid for rental of the matrimonial home shared between [P] and [D] in the sum of HK$8,800.00 per monthand later in the sum ofHK$9,800 per month at the material time.  The said rental payment was paid by [D] in addition to the Housekeeping Monies”[10];

(iii)  P had herself used the services.  Further, as D had paid his fair share of expenses, P was not entitled to claim for such household expenses[11].

19.  P’s Re‑Amended Reply is dated 10 June 2016.  D’s defences are mostly denied.

E.  The main issues

20.  Despite the very long list of issues which parties have come up with, the main issues are (1) whether the Alleged Loan Agreements existed, and if so (2) whether they are legally enforceable in the sense that parties intended to be legally bound thereby.

21.  The issue of past consideration has been raised.  However:

(a)  at §20 of P’s Re‑Amended Reply, P pleads that:

“… [P] strenuously denies she enforced any promise made by [D] in the telephone messages. [P] only reiterated and confirmed the previous loan agreements made between her and [D] in the telephone messages which [D] also admitted clearly and expressly to such loan agreements. As a result, the rule or principle of past consideration does not apply.”

(b)  at §10 of her written closing submissions.  Ms Lau states that:

“… [P] is no longer claiming under a subsequent repayment agreement for HK$1M (basing on the WhatsApp messages) and hence there would be no issue of past considerations.”

Given the pleadings and Ms Lau’s clarifications, the doctrine of past consideration appears to have no further relevance.

F.  The evidence

F.1.   THE WITNESS STATEMENTS

22.  P has made 2 witness statements.  They are dated 5 October 2015 (“P/1”) and 22 June 2016 (“P/2”).

23.  D has also made 2 witness statements.  They are dated 25 May 2016 (“D/1”) and 28 September 2017 (“D/2”).

24.  Both gave oral evidence before me.

F.2.   CREDIBILITY OF WITNESSES

25.  When considering the credibility of a witness, I remind myself of the importance of considering the inherent likelihood or unlikelihood of the witness’ evidence, the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence.  I need to consider the totality of the evidence.  I warn myself against attaching undue weight on demeanour, though demeanour is obviously relevant when considering credibility. 

26.  For the following reasons, I find that D is neither a credible nor reliable witness.

27.  D was not forthcoming when answering questions. “I have forgotten” was a common answer.  He blamed it on the lapse of time.  A lot of questions on facts which were capable of straightforward answers were qualified by words like “my impression was”.  He would only give a clear answer when confronted by documents.

28.  On many material aspects, his pleaded case and the contents of his witness statements are contradicted by his own answers given under cross‑examination.

29.  In respect of his income:

(a)  At §21 of D/1, D claimed that his income at the material time was about HK$35,000, and described how it was spent: about $8,800 and subsequently $9,800 as rental for the home they co‑habited in, $10,000 as household expenses, $5,000 for repayment of the Citibank Credit Card, $4,000 to 5,000 to his parents, and $5,000 as his own savings;

(b)  he claimed when giving evidence that he received his pay on every 7^th of the month, that he would then make withdrawal from his account and pay into his joint account with P for payment of rent;

(c)  however, upon further cross‑examination, he accepted that he received no regular pay from Ronis.  In fact, from the time of the incorporation of Ronis in April 2008 till early 2010 when he took up employment again, his income had been unsteady;

(d)  But in about March 2010 when he took up employment again, his pay was only about $28,000 to $29,000.

30.  D denied on pleadings P’s case that the Citibank Credit Card was applied for so that D could use it mainly as an Octopus Card[12].  However, D accepted under cross‑examination that due to his credit history, he could not himself get a credit card.  He said that he had to top up his Octopus Card in cash every time.  He accepted that the Citibank Credit Card was obtained so that his Octopus Card could be topped up automatically through it.

31.  Payment of Ronis’ subcontractors:

(a)  D gave contradictory evidence on whether P had used her funds to pay Ronis’ subcontractors;

(b)  When first cross‑examined on the issue, and when referred to a number of payment slips produced by P[13], D claimed that the funds with which P used to pay those sub-contractors belonged to Ronis;

(c)  However, upon further cross‑examination, and when pointed out to him that Ronis had its own account, and that those payment slips (in so far as the number of the paying account were shown) show that the monies came from P’s account, D changed his evidence and accepted that P indeed used her own funds to pay the sub‑contractors.

32.  D lied as to whether he had made payments and incurred expenses for his ex‑girlfriend:

(a)  at §§20 and 52 of D/1, D said categorically that P’s suggestion that he had used the incurred expenses for his ex‑girlfriend was false and ridiculous (“無稽”);

(b)  but upon cross‑examination and when confronted with documents, he had to accept that his denial was incorrect.  He had paid rent for his ex‑girlfriend.  He had settled with the Citibank Credit Card bills relating to his ex‑girlfriend’s dog.  He had even been shown to have settled a supermarket bill in respect of groceries sent to the place occupied by his ex‑girlfriend[14].

33.  Contradictory and inherently improbable evidence relating to the Wedding Expenses:

(a)  In P/1[15], P said that D originally promised to bear all the Wedding Expenses.  But in the course of preparing for the wedding, D told her that his mother had suffered loss speculating in futures.  He had to give to his mother the money which he and P had saved up for wedding and purchase of their matrimonial home so that his mother could repay her debts;

(b)  In D/1[16], D claimed that the Wedding Expenses were to be shared.  He denied having told P that his mother had suffered any investment loss.  He claimed that he got a loan of HK$140,000 from his mother for the Wedding Expenses.  He further claimed that the Gift Money from the guests (he estimated to be about $144,000) had been agreed to be used towards the Wedding Expenses;

(c)  Under cross‑examination, D initially accepted on several occasions that the groom’s side would be responsible for all the Wedding Expenses;

(d)  He gave an incredible and inherently improbable story about how he went to a bank with his mother to withdraw $140,000 in cash and how $100,000 out of that sum was on the next day deposited back into his joint account with P as聘金.  I note that no statement from his mother’s account has been produced;

(e)  Under cross‑examination, he further accepted that his mother round about that time had indeed suffered investment loss, and he had indeed given to his mother their savings (savings of P and D) so that his mother could pay off her debt;

(f)  Given the admitted investment loss by his mother and the fact that she had to take the money saved upon by P and D, it is inherently most improbable that she had the funds to lend $140,000 to D;

(g)  In respect of the balance of the $140,000, D claimed in D/1 that it was to be used towards the Wedding Expenses.  However, when under cross‑examination, he claimed that it was only left at home with P as “spare” money;

(h)  When confronted by the contents of D/1 (and in particular §41 thereof), D reversed his early oral evidence that it was the groom’s side who should be responsible for the Wedding Expenses.  His evidence in this regard is as follows:

「 問： 唔。我向你指出之所以有咁嘅唔一致嘅地方，其實就係因為你從來都冇畀過呢個$140,000出嚟畀樂小姐做結婚錢嘅，從來都只係話喺恒生銀行借咗錢，然後跟住就用嚟到找，你同唔同意呀？

答： 唔同意。

問： 而你從來都係話畀樂小姐知，結婚嘅錢係你畀晒嘅，同唔同意呀？

答： 唔同意。

問： 所以而家你就話結婚錢唔係你畀晒喇。

答： 唔。

問： 同你今日較早我問過你好幾次，你確認嘅而家你推番翻喇，係咪？

答： 係。」

 (i)  In respect of the total value of the Gift Money (人情) that had been received from the guests, D accepted under cross‑examination that it was only about $39,000. That is very different from the sum of $144,000 he gave in D/1;

 (j)  In my view, D’s evidence in relation to the Wedding Expenses is a pack of lies.

34.  I have on the other hand considered P’s evidence.  Her evidence on all material aspects are consistent with the documents.  There is no internal or external inconsistency.  Her evidence is inherently probable.  She also testifies in a straightforward forthcoming manner. 

35.  For the reasons given above, I find that P is an honest and reliable witness.  I find that D is neither a credible nor reliable witness.  In so far as there is any difference between the evidence given by P and D, I accept the version given by P, and reject that given by D.

G. My findings of facts on the existence of the Loan Agreements

36.  I summarize P’s evidence, which I accept, as follows.

37.  On about 11 March 2008, P and D began their romantic relationship.   Ronis was established about three weeks after that.  P accepted that the name “Ronis” was a combination of their respective English names, but denied that the company was established in anticipation of their future family.  They had only just begun dating when Ronis was incorporated. 

38.  In or around March 2008, P was working as a project manager at a company called Elite House Design Limited (“Elite”).  P introduced Ronis to Elite.   Elite did subsequently hire Ronis for construction projects.

39.  P agreed to become the company secretary of Ronis at D’s request so as to assist with the company’s paperwork.  P did so without remuneration.  D provided her with a list of contractors and their bank account numbers so as to make it more convenient for her to pay them.

40.  The workmanship of the construction works performed by Ronis for Elite was initially acceptable.  It progressively deteriorated.  Ronis failed even to complete some projects.  P eventually quitted Elite because it was embarrassing and she could not answer to her supervisor as to why Ronis (ie her boyfriend’s company) was delivering such poor workmanship. 

41.  D’s financial position had been poor.  He frequently failed to pay contractors.  D had requested P to lend him money to pay the contractors and had promised to repay P.  As a result, P kept the list of contractors for her own records. 

42.  Whenever D needed P to lend him money to pay a contractor, he would provide her with the name of the contractor and the sum of money needed.  Pursuant to such instructions, P would transfer money from her account to the contractor.   

43.  Between 3 June 2008 and 10 November 2008, P had transferred a total sum of HK$73,600 to various contractors.  While P made repeated demands for D to repay, D had only repaid 2 sums of HK$500 and HK$5,000, leaving the outstanding balance in the sum of HK$68,100.00. 

44.  Due to D’s poor credit, he was unable to get credit cards.  In around June 2008, D asked P to provide him with a supplementary credit card so that his Octopus card might be topped‑up automatically through it.  D promised he would pay such credit card bills.  Consequently, P successfully applied for a Citibank supplementary credit card and gave it to D.

45.  For the first few payment instalments, D was able to pay off what he had spent on the supplementary credit card.  However, D’s spending progressively increased to a point where he could only manage to pay the minimum amounts. P understood that if she failed to repay the Citibank Credit Card bills, her own credit record would be adversely effected.  She would be regarded as the guarantor.  P had requested D to pay off the outstanding as soon as possible.  D told P that he did not have money to repay and requested P to pay on his behalf first and that he would repay her.  Seeing no alternative, she did so at his request.

46.  As there would be one combined statement for P’s Citibank credit card and D’s supplementary credit card, P stopped using her Citibank credit card so as not to mix up their respective spending. 

47.  Between 28 September 2008 and 18 August 2013, P had on behalf of D paid HK$393,954.66 to Citibank.  Despite repeated demands made orally and via phone messages, D has failed to repay P. 

48.  In or around October 2008, P and D agreed to get marry.  D promised to pay for all Wedding Expenses.  They started to prepare for their wedding.  

49.  In the course of the preparation, D told P that his mother had suffered loss speculating in futures, and that he needed to lend his mother the money they (P & D) had saved up for their wedding and the deposit for the purchase of their home. 

50.  D has never informed P that he had borrowed HK$140,000 from his mother for the wedding.   

51.  Due to his poor credit, D could not obtain any personal loans from banks.  He suggested to P that she should obtain bank loans to pay for the Wedding Expenses and that he would repay those loans and the associated interests and handling fees.   

52.  P was reluctant to raise such loans.  But because they had already announced their marriage and preparation therefor had begun, P did not want the wedding to be cancelled because of money. Furthermore, D had promised to repay the said loan and any associated interest and handling fees.  P therefore proceeded to borrow loans from Hang Seng Bank.

53.  P obtained 3 loans from Hang Seng Bank on 9 March 2009, 14 September 2009 and 16 September 2009.  They were in the sums of HK$57,000.00, HK$46,000.00 and HK$38,000.00 respectively.  The loans were respectively repayable in 24, 36 and 36 monthly instalments.  

54.  Between 9 March 2009 and 12 April 2013, P repaid the 3 Hang Seng Bank Loans.  Interests and handling fees paid were in the total sum of HK$12,302.62.  Despite repeated demands, D has failed to repay P the 3 loans and the Wedding Expenses. 

55.  There has been no agreement between P and D that the wedding banquet would be paid for with the Gift Money to be received from the guests, or that the balance would be paid by both of them.  Of the 18 tables at the banquet, 15 tables were for D’s relatives.  P denied that she was responsible for handling the gift money as D had his own people doing that.  Her side of the family only had several tables and her mother collected the gift money.

56.  Around March or April 2010, D requested P to pay for certain utility bills and purchases.  P subsequently discovered that those bills included some for D’s ex‑girlfriend, grandmother and parents.  That had led to arguments between P and D.  Between 12 April 2010 and 25 February 2013, P paid HK$254,602.58 on behalf of D.  Despite P’s demands for repayment, D has failed to do so. 

57.  D had such poor credit record and in such financial troubles that banks refused to lend him money.  D was only able to borrow money from UA Finance (by using a property in Lok Wah Building, Whampoa Estate, passed down from D’s grandfather to D’s father and himself as security) or P.  P had lent D money by way of cash or through bank transfers and D had promised to repay her.  D asked P to keep a clear record of each loan transaction.  At the time, P trusted D and did not want to spoil their intimate relationship.  Ultimately, P has lent him the total sum of HK$692,994.00.  D did make some repayments to her, leaving the balance of HK$542,994.60.

58.  Save certain specific (and relatively small) amounts, there is little dispute that P had in fact provided money for D’s use.  On the evidence before me, P clearly has.

59.  P has also kept clear records on those sums, which records I also accept.

60.  On the evidence before me, I also accept P’s testimony that all those Loans (the Ronis Loans, the Citibank Credit Card Loans, the Wedding Loans, the Hang Seng Bank Loans, D’s Expenses Loans, and D’s Personal Loans) were incurred upon the request of D, which D has promised to repay.

61.  I find that the Loan Agreements existed.  I find that the related loans were repayable upon demand. 

62.  The issue then is whether those Loan Agreements, albeit exist, are legally enforceable.

H. Intention to be legally bound — the applicable law

63.  I have been cited a considerable number of authorities on the law relevant to the question of intention to be legally bound in the context of domestic arrangements.  I have considered all of them.

64.  The Court of Appeal has recently in Ho Lai King v Kwok Fung Ying and another[2020] HKCA 657 (31 July 2020) explained the legal principles on the question of intention to create legal relations.  In particular, at §§41 to 49 of the Judgment, the Court of Appeal observed that:

“ 41. There is no dispute in this appeal that an agreement that would otherwise be a contract may not be binding if it was made without any intention of creating legal relations. This is sometimes found to be the case for agreements between family members. In the context of agreements between spouses, Atkin LJ said in Balfour v Balfour [1919] 2 KB 571, 578‑579:

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

42. The same approach has been applied to dealings between other relations, such as parent and child. In Jones v Padavatton [1969] 1 WLR 328, Salmon LJ said that:

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

43. It is not in dispute that the question is to be resolved by considering what was communicated between the parties in all the circumstances and deciding whether, as understood by a reasonable person, the true inference is that they intended to create legal relations: Jones v Padavatton, at p 332G; RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) [2010] 1 WLR 753, §45. Evidence of subsequent conduct is admissible for the purpose of determining the parties’ intention at the material time: Blue v Ashley [2017] EWHC 1928 (Comm), §64; Jones v Padavatton, p 336H. It has been said that evidence of the subjective understanding of the parties is also admissible in so far as it tends to show whether, objectively, the agreement was intended to be legally binding: Blue v Ashley, §64.

44. As to the ‘presumption’ referred to in Jones v Padavatton, Mr Cheung, relying on Butterworths Common Law Series, The Law of Contract (1999) at para 2.168, submitted that the presumption is a strong one. The Judge also expressed a similar view at §59 of the judgment.

45. But as Salmon LJ said in Jones v Padavatton, it is but a rebuttable presumption of fact. Like many such presumptions found in the law, it is based on generalised notions of human behaviour viewed in the prevailing social mores and conditions, and provides no substitute for an examination of the circumstances of the individual case. The subject matter of agreements between close relations may vary infinitely, as do the situations of individual families.

46. As Baroness Hale pointed out in Granatino v Radmacher (formerly Granatino) [2011] 1 AC 534 at §142, an agreement between spouses to share the ownership or tenancy of the matrimonial home, bank accounts, savings or other assets may be treated quite differently from agreements for housekeeping or personal allowances. Ultimately, the question of intention is a question of fact that must be determined on the basis of the facts of each case.

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

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

49. Mr Cheung also relied upon §39 of the judgment of Yeung J (as he then was) in Sun Er Jo v Lo Ching [1995‑2000] HKCLRT 14. We do not think the judge was stating a general proposition of law in that paragraph. In any event, with great respect, insofar as that paragraph is read as suggesting as a matter of law that there had to be some prior declaration or statement that an agreement between family member may give rise to legal obligation before it could be legally enforceable, that is plainly wrong as a matter of law.

…

51. One has to be careful in this regard in distinguishing what was subjectively felt or considered by the defendants from the objective facts.  The defendants’ subjective thinking is not relevant unless it is probative that the agreement was objectively intended to be legally binding.  In cases such as Blue v Ashley, supra, it is the subjective understanding the parties derived from the oral communication that the court looked at as being potentially relevant to ascertaining the nature and content of the oral exchange.  Here, the sentiments and internal reasoning of the defendants are not states of mind generated by the agreement and are not relevant for present purposes.”

65.  On 31 July 2020, I brought the Court of Appeal’s decision in Ho Lai King to the attention of the parties and invited Ms Lau and Mr Chai to make submissions on the same.  They both did.  Ms Lau’s are dated 24 August 2020 (“Ms Lau’s Further Submissions”).  Mr Chai’s are dated 27 August 2020 (“Mr Chai’s Further Submissions”).

66.  In both of his opening and closing submissions, Mr Chai has cited to me Sun Er Jo v Lo Ching [1996] 1 HKC 1.  He in particular highlighted to me the following paragraph (unnumbered in the version Mr Chai cited to me), that:

“ I have to make it clear that arrangements or agreements on the family affairs between parents and children, wife and husband, or brothers and sisters have no binding effect in law, unless they have specifically stated in advance that such arrangements or agreements are subject to claims by either party, which clearly shows that both parties have an intention to establish a legal relationship so as to create a situation that they shall be attended by legal consequences.”

The above passage is §39 of the judgment in Sun Er Jo as reported in [1995‑2000] HKCLRT 14, which is precisely the passage the Court of Appeal in effect disapproved at §49 of Ho Lai King.

67.  Mr Chai has further cited to me Lee Sai Nam v Li Shu Chung, unrep, HCA 1711/2009 (9 December 2015).  In Lee Sai Nam, §39 of Sun Er Jo was, amongst other paragraphs, cited and applied (see §208 thereof).  Lee Sai Nam will therefore also have to be read in the light of the Court of Appeal decision in Ho Lai King.

68.  Ms Lau has cited to me Ma Chi Wing Wendy v the Personal Representative of the Estate of Ma Vincent:

(a)  At §21 of her written closing submission, Ms Lau puts down the case number of that case as being “Civil Appeal case No 283 of 2004”.  That is not correct.  Ma Chi WingWendy is not a decision of the Court of Appeal.  The correct case number is HCA 3913/2001 (20 May 2005);

(b)  In Ma Chi Wing Wendy, at §21, Deputy Judge Muttrie observed that:

“ Of course, a family arrangement to look after aged parents may never be intended as a legal contract. The parties may never intend to enter into a legal relationship. Very often that is what happens. Where that happens, the courts will not enforce the agreement. See Balfour v Balfour [1919] 2 KB 571. But there is no presumption that this must be so, simply because the agreement is within the family. The intention of the parties is a question of fact and to be inferred from the terms of the agreement and the surrounding facts and circumstances. See Parker v Clark [1960] 1 WLR 286 and Tanner v Tanner [1975] 1 WLR 1346.” (Emphasis added)

(c)  In my view, by making those observations at §21, the learned Deputy Judge was not suggesting that no rebuttable presumption of the sort discussed existed.  What the learned Deputy Judge observed was that there is no presumption that “this must be so”.  In any event, Ma Chi WingWendy and the strength and operation of any presumption in this area of the law will also have to be read in the light of the Court of Appeal decision in Ho Lai King.

I.   Intention to be legally bound — Discussion

I.1.PARTIES’ SUBMISSIONS

69.  I remind myself of §48 of the Court of Appeal judgment in Ho Lai King, that it lies on the party who contends there was an intention to create legal relations to establish such intention.

70.  Ms Lau submits[17] that given the following matters, P has proved on balance of probabilities that the Loan Agreements are legally enforceable:

(a)  the timing of the various loans (relative to the commencement of the romantic relationship between P and D and the time when they got married),

(b)  P’s demands for repayment,

(c)  the records of the payments kept by P,

(d)  P’s own financial situation (that according to her she only made HK$13,000 a month with which she needed to support her own family),

(e)  the nature of the expenses incurred,

(f)  the pattern as to how D incurred the expenses (including some for his ex‑girlfriend which suggests that D should himself repay them), and

(g)  the format in which D’s Personal Loans were made (through a joint account so that there could be clear records, when their finances were otherwise independent).

71.  Mr Chai submits otherwise.  He[18] points principally to what he described to the loose and uncertain language which the parties employed, the trust and affection between P and D which he submits was the basis of the transactions, the state of the records kept, and P’s support to D notwithstanding limited repayment from D.

I.2.GENERAL CONSIDERATIONS

72.  I start off with some general considerations.

73.  To start with, I do not accept Mr Chai’s submissions that the parties used loose and uncertain language in relation to the Loan Agreements.  They are not complicated commercial loans which require detailed discussions and meticulous documentations.  They are all in the nature of simple loans agreements.  There is sufficient evidence from P on the requests for loans and promises for repayment from D.  I am also satisfied that it is sufficiently certain that, whilst there was no definite term for repayment, the loans were repayable on demand.  I accept also Ms Lau’s submissions[19] that payment on demand means payment within a reasonable time after the demand, and hence is certain.

74.  Nor do I accept that the records kept by P were poor.  She has kept good record.  Payments are also mostly evidenced by bank statements.

75.  There is no dispute that there had been a romantic relationship between P and D leading to their marriage.  There is also no dispute that P had wanted to give D support.  But such relationship between the parties, while capable of grounding a rebuttable presumption on facts against an intention of creating any legal relationship, is not conclusive. Other considerations are at play.  As observed by Warrington L.J in Balfour v Balfour at p.574:

“ … It may be, and I do not for a moment say that it is not, possible for [a legal contract] to be made between husband and wife. The question is whether such a contract was made.”

In any event, as the Court of Appeal has observed in Ho Lai King, since the presumption is only a presumption of fact, the strength or usefulness of such presumption must depend very much on the facts and circumstances of each case.

76.  P’s own financial position at the material time is in my mind an important objective consideration.  I have referred to Ms Lau’s submission in that regard.  P’s following answer, though given when being cross‑examined in the context of D’s Expenses Loans, in my view bears upon all the Loan Agreements:

「 同埋有一個立場，我希望喺呢件事上面清晰嘅就係，當時搬出嚟住，我收入並唔高，而我需要供養父母，如果被告唔係承諾做呢一啲嘢，根本我冇能力去交租、交水、電、煤喇，搬出嚟住呢個說法係根本唔成立㗎，咁我根本冇錢去交租、交水、電、煤，交呢樣嗰樣，仲要養屋企，自己生活，根本我嘅收入都唔足夠應付所有嘅開支，咁如果被告唔承諾，根本就唔會搬出嚟住囉，而唔係搬咗出嚟住先諗水、電、煤、租究竟點交，呢一個係衍生到呢一件事發生嘅始祖。」

77.  While the presence or otherwise of the parties’ intention to be legally bound is in dispute, the fact that P has been out of pocket for more than $1 million in total is not (and at least cannot be).  Viewed objectively, that was a very large sum for a person in P’s position. 

78.  The consequences of D not honouring his promises to repay would be grave for a person in the position of P.  As submitted by Ms Lau[20], which I accept, unless D repaid her the loans, she, and a person in her position, would not be able to shoulder those debts or expenses on her own unless she were to raise funds elsewhere.

79.  The above suggest objectively that P would have relied heavily on the Loan Agreements.  This is one factor which suggests the existence of an intention to be legally bound.

80.  I accept P’s evidence that she kept records of the loans[21]. I accept also her evidence that she has consistently been making demands to D for repayment of the loans[22], which include the WhatsApp and other telephone messages that have been produced before me[23]. Such conduct, though some subsequent, is admissible for the purpose of determining the parties’ intention at the material time: see §43 of the Court of Appeal Decision in Ho Lai King, and see Blue v Ashley, and is, in my view, and as understood by a reasonable person, consistent with and supports objectively P’s case and the inference that they had at the time when the monies were advanced the intention to be legally bound.

I.3.SPECIFIC CONSIDERATIONS

81.  I now move on to certain considerations specific to the loans.

82.  Specifically in relation to the Ronis Loans, I note that they were first made in early June 2008.  That was well before the marriage of P and D, and was only about 3 months after they had started a romantic relationship.  Those loans related to the business of Ronis.  P was neither a director nor shareholder of Ronis.  She had no interest in it.  In my view, the objective implication from the circumstances of the parties and the transactions generally is that P and D did intend the Loan Agreements in relation to the Ronis Loans to be legally binding. 

83.  In relation to the Citibank Credit Card, there were specific reasons for its application.  D could not get a credit card.  He had to top up his Octopus Card in cash every time.  The Citibank supplementary card was obtained so that D could have his Octopus Card topped up automatically through it.  It was for this specific purpose that it was obtained.  It was obtained sometime in August or September 2008, and the expenses first incurred in September 2008.  That was before the parties’ decision to get married (though they were in a romantic relationship).  D also promised to repay P the related expenses (though he subsequently failed to do so).  In my view, the objective implication from the circumstances of the parties and the transactions generally is that P and D did intend the Loan Agreements in relation to the Citibank Credit Card Loans to be legally binding.

84.  Specifically in relation to the Wedding Loans and Hang Seng Bank Loans:

(a)  The 1^st Hang Seng Bank Loan was obtained in March 2009, and the other 2 in September 2009, all before P and D got married (though in a romantic relationship);

(b)  The Wedding Loans and Hang Seng Bank Loans were obtained under a very special set of circumstances.  D had promised to be responsible for the Wedding Expenses.  Then, not only did he fail to, he in fact gave his and P’s savings for their marriage to his mother as she had incurred loss speculating in futures;

(c)  D then suggested P to raise a loan for the Wedding Expenses.  He himself could not because of his credit history;

(d)  It was in such circumstances that P reluctantly raised the Hang Seng Bank Loans.  She had to repay them by instalments over the following several years;

(e)  D had promised P to be responsible for the repayment of those loans together with interest and handling fees;

(f)  Had D been able to, and had he himself raised the loans, he would have been legally liable for repayment of the same.  P in effect only raised them on D’s behalf as he could not.  Assessed objectively, why would the parties have intended D to be in a better position merely because it was P who raised the loans for him?  They in my view would not have;

(g)  In my view, the objective implication from the circumstances of the parties and the transactions generally is that P and D did intend the Loan Agreements in relation to the Wedding Loans and Hang Seng Bank Loans to be legally binding.

85.  In relation to the D’s Expenses Loans:

(a)  It was in March or April 2010 when D requested P to pay for his utility bills and purchases;

(b)  I have considered the nature of those expenses, which fall into the following 10 categories:

(i)  water bills,

(ii)  electricity bills,

(iii)  Town Gas bills,

(iv)  phone services bills,

(v)  Pay TV service bills,

(vi)  internet service bills,

(vii)  instalments of a certain Sony electronic appliance,

(viii)  D’s credit card bills;

(ix)  part of the Wedding Expenses, and

(x)  rental expenses;

(c)  Those 10 categories involve different considerations;

(d)  In so far as categories (i) to (vi) are concerned:

(i)   they are utilities bills;

(ii)  as shown in Section E of the Revised Scott Schedule, most of the items were incurred after P and D had been married;

(iii)  They are very much domestic in nature;

(iv)  The majority of them related to the household of P and D.  While some were not (which related to D’s ex‑girlfriend and D’s own family), P initially was not aware of that;

(v)  Given their nature, and given the time when they were incurred, and despite the general considerations which I have discussed above, I am not satisfied that a couple in the position of P and D would have had any intention to be legally bound in relation to those expenses;

(e)  I will come back to category (vii);

(f)  In so far as the D’s credit card bills (category (viii)) are concerned, 3 of them (Items 142, 143 and 144 on the Revised Scott Schedule) related to the Wedding Expenses.  Category (ix) (Item 149 on the Revised Scott Schedule) is itself part of the Wedding Expenses.  They have been taken into account (as credits to D) at Section C of the Revised Scott Schedule dealing with Wedding Expenses.  I have considered above the issue as to whether the parties had the intention to be legally bound in relation to the Wedding Loans;

(g)  In relation to category (vii) and the balance of category (viii):

(i)  they related inter alia to a Sony appliance (category (vii), being 24 installment repayments between April 2010 and March 2012), a Sony television set (Item 146 on the Revised Scott Schedule, apparently incurred in March 2011), a buffet meal (part of Item 147 on the Revised Scott Schedule, incurred in May 2011) and a sum of $48,664 (Item 148, incurred in July 2011);

(ii)  the evidence is not clear as to their nature.  But as submitted by Mr Chai[24], they could have been domestic in nature.  I highlight P’s answer upon cross‑examination in respect of Item 148, that:

「 問： 唔緊要，係，okay。咁就692頁，都有個(i) 嘅，$48,664，見唔見到？

答： 唔。

問： 冇乜印象呢個係咩嘢嚟，係咪？

答： 呢個應該係--唔敢好老--好實際，我有印象嘅，但係唔敢好落實咁答你，因為答你問題要好小心。

問： 唔緊要，唔係好肯定，唔緊要，係。

答 係呀，我唔想答錯。」

(iii)   given their possible nature, and given the time when they were incurred, and despite the general considerations which I have discussed above, I am not satisfied that a couple in the position of P and D would have had any intention to be legally bound in relation to those expenses;

(h)  In relation to category (x), it related to the rental expenses of their matrimonial home.  I am not satisfied that a couple in the position of P and D would have had any intention to be legally bound in relation to those expenses;

(i)  In summary, in relation to D’s Expenses Loans, with the exception of those items which related to Wedding Expenses (part of category (viii) (ie Items 142, 143 and 144 on the Revised Scott Schedule) and category (ix) (ie Item 149 on the Revised Scott Schedule), I am not satisfied that a couple in the position of P and D would have had any intention to be legally bound in relation to those other expenses. Viewed another way, I am not satisfied that the evidence before me is convincing enough for P to discharge the burden of proof on her in relation to those items — see Ho Lai King at §48.

86.  Specifically in relation to D’s Personal Loans:

(a)  I accept P’s evidence at §20 of P/2, that:

「 我和被告人曾經共同擁有聯名戶口，最初開戶口的目的是用作支付日常家庭開支，但不久我發現被告人沒有入錢到聯名戶口，還經常在戶口提款。由於被告人經常向我借貸，而被告人向我借錢前承諾會還款，還叫我記錄借款，所以我故意由自己的個人戶口轉款到聯名戶口，好讓銀行有記錄方便我向被告人追討還款，而被告人亦可自己從戶口提款。」

(b)  An example of such requests for loans from D can be found in the WhatsApp message from D to P of 16 August 2011 (11:00:57)[25], that:

“ Hey love, just found out only a few hundred in my account … forgot lose a thousand at macau and transferred 2000 from ur account to our account, pls noted down and i will pass back to u before end of month.”

(c)  Those withdrawals from their joint accounts are set out in Section G of the Revised Scott Schedule;

(d)  I accept P’s case that those loans were for the personal use of D, but were not otherwise domestic in nature (like the utilities bills);

(e)  In my view, the objective implication from the circumstances of the parties and the transactions generally is that P and D did intend the Loan Agreements in relation to D’s Personal Loans to be legally binding;

(f)  In respect of D’s Personal Loans, Mr Chai has raised one legal point.  He submits[26], relying on Yung Shu Wu v Vivienne Sung Wu (2011) 14 HKCFAR 39, that in the absence of circumstances indicating a limited purpose, money withdrawn from a joint account by one account holder becomes his or hers outright;

(g)  On this point, I accept Ms Lau’s submission[27] that given D’s requests for loans, and given P’s use of the joint account for that purpose (so that there would be records and D could withdraw the monies himself), there is clear evidence of “limited purpose” — and see also Marshal v Crutwell (1875) L.R. 20 Eq. 328 at 330;

(h)  I reject Mr Chai’s submissions in this regard.

J.   The Conclusion on P’s claim based on the Loan Agreements

87.  For the reasons set out above, I find that P has succeeded in establishing the existence of the Loan Agreements.  I find also that in so far as the Ronis Loans, the Citibank Credit Card Loans, the Wedding Loans, the Hang Seng Bank Loans, the part of D’s Expenses Loans relating to Wedding Expenses, and D’s Personal Loans, P and D had the requisite intentions to be legally bound, and those related agreements and loans are legally enforceable.  In respect of those Loans and items, P has been successful in discharging the onus on her to establish the intention to create legal relationship.

K.  Quantum

88.  In so far as quantum is concerned, Ms Lau has at §15 of her closing written submissions indicated that to save time and costs, P is prepared to waive certain items which D disputes, namely Items B1, B2, E3 (E3 related to Water Bills which I have dismissed in any event), and E151‑153 (E151‑153 related to the rental expenses which I have dismissed in any event).  The total amount which D should repay comes down to $1,405,130.74 LESS $1,898.1 (B1), $2,804.1 (B2) and $181,262.86[28], which is equal to $1,219,165.68.

L.  P’s alternative claims

89.  P is no longer pursuing her alternative claim based upon a separate agreement between her and D for the repayment of HK$1 million[29].

90.  In respect of P’s alternative claim based on Unjust Enrichment:

(a)  P relies on the principles the Court of Final Appeal explained in Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79.  Her alternative claim is predicated on the total failure of consideration of the Loan Agreements;

(b)  Given my conclusion that P is successful in her claim based on the Loan Agreements, her alternative claim is not only not engaged, but is inconsistent with my conclusion;

(c)  In the circumstances, I do not deem it appropriate for me to make any alternative findings in relation to P’s alternative claim.

M. Disposition

91.  For the reasons set out above, I allow P’s claim to the extent of $1,219,165.68.

92.  I make a costs order nisi that D shall bear the costs of the action, to be taxed if not agreed.

	(Keith Yeung)
	Judge of the Court of First Instance
	High Court

Ms Lorinda CW Lau, instructed by Eva Wong & Co, for the Plaintiff

Mr Michael Chai and Mr Ryan Law, instructed by Ho & Associates, for the Defendant

HCA 1181/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1181 OF 2014

________________________

BETWEEN
	LOK WAI YEE	Plaintiff
	and
	MAN KOON HUNG	Defendant

________________________

Before:  Deputy High Court Judge Marlene Ng in Chambers

Date of the plaintiff’s Statement of Costs:  30 May 2016

Date of the defendant’s Summary of Objections:  6 June 2016

Date of Decision on Summary Assessment of Costs (paper disposal):  17 June 2016

__________________________________________________________

DECISION ON SUMMARY ASSESSMENT OF COSTS

__________________________________________________________

1.  On the day of trial on 25 May 2016, I granted leave for the defendant (“D”) to amend his Defence and to file/serve his witness statement, and I also vacated the trial. I further granted consequential case management directions so that the action could progress quickly towards another trial, including assigning the case management to a docketed master, and directing that any eventual re-fixing of fresh trial date(s) shall be made in consultation with counsel’s diaries. I also ordered D to pay the plaintiff (“P”) (a) costs of D’s summons filed on 19 May 2016 (“Summons”) and costs thrown away by the adjournment of the trial to be summarily assessed if not agreed between the parties, and (b) costs occasioned by the Summons to be taxed if not agreed (“Costs Order”). On 30 May 2016, I handed down written reasons for decision (“Reasons”). For convenience, I shall adopt the abbreviations in the Reasons.

2.  P has lodged her statement of costs dated 30 May 2016 in respect of the costs order in paragraph 1(a) above.  D has lodged his summary of objections dated 6 June 2016.  I now proceed to deal with the summary assessment of costs.

3.  The proper approach to summary assessment of costs has been laid down by the Court of Appeal in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512.  For present purpose, it is sufficient to refer to the useful summary in the headnote of the reported judgment at pp 512‑514 as follows:

“(2) As in an ordinary taxation, under O.62 r.28(2) of the Rules of the High Court (Cap.4A) (the RHC), in a summary assessment, party-and-party costs were allowed only if they were ‘necessary or proper’ for the attainment of justice or for enforcing or defending the rights of the receiving party. Pursuant to Practice Direction 14.3, the court adopted a broad‑brush approach to ensure the final figure assessed was not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in O.1A of the RHC, even if there was no challenge to individual items. ……

(3) A summary assessment required a two-stage approach. If total costs claimed appeared proportionate, then all that was normally required was that each item should have been reasonably incurred and the cost reasonable. If the overall costs appeared disproportionate, then the court would have to be satisfied that each item was necessary and its costs was reasonable. A sensible standard of necessity should be adopted allowing fully for the different judgments which those responsible for the litigation could sensibly come to as to what was required. While the threshold was higher than that of reasonableness, it should be achievable by a competent practitioner without undue difficulty. The conduct of the other party was relevant, since a cooperative party could reduce costs, but an uncooperative party could render necessary costs which would otherwise be unnecessary. ……

(6) Since Civil Justice Reform in 2009, taxation of counsel’s fees under a party-and-party taxation was no different from taxation of costs and expenses. The test of ‘necessary or proper’ applied and must take into account the matters set out in para.1(2) of Part II of the First Schedule to O.62 of the RHC, as well as the requirement of reasonable proportionality. Accordingly, paras.62/App/28(5) (p.1172) and 62/App/28A of Hong Kong Civil Procedure 2012 (p.1172), which referred to the previous pre-CJR ‘excessive and unreasonable’ test under the former para.2(5) of Part II of the First Schedule to O.62 of the RHC, should no longer be followed, ……”

4.  Here, P seeks a total sum of $236,050 comprising $106,050 for solicitors’ profit costs and disbursements, and $130,000 for counsel’s fees (of which $90,000 is counsel’s brief fee for the trial[1] and $40,000 is counsel’s brief fee for opposing the Summons[2]).

5.  I propose to adopt a broad-brush approach and not deal with each and every item of P’s statement of costs since it is not the purpose of a summary assessment of costs to carry out a mini-taxation.  Bearing in mind the two-stage approach required for summary assessment, and having considered the nature and scope of the trial and Summons, relevant affirmation, skeleton submissions and list of authorities, what transpired at the Hearing, the involvement of counsel in this matter, the matters noted in the paragraphs below and considering all circumstances, the overall costs claimed by P under her statement of costs appear to be somewhat on the high side on party-and-party basis. I make the following general observations.

6.  First, the costs in question are assessed on party-and-party basis such that only costs that are necessary / proper and reasonable will be allowed. However, there is no merit in the suggestion by D to apply District Court scale based on his belief that P’s eventual claim will not exceed District Court jurisdiction after adjustment in view of D’s Amended Defence. No application was made in the Summons or orally at the Hearing for application of District Court scale to the Costs Order. Pending P’s revised pleadings and further witness evidence in response, it is plainly uncertain whether P’s claim will necessarily fall within District Court jurisdiction.

7.  Secondly, P’s statement of costs does not identify the number of fee earners although the plural “fee earners” adopted suggested there were more than 1 fee earner. I assume it was 1 solicitor and 1 litigation clerk.  An hourly rate of $3,600/hour for the handling solicitor qualified in 2010 for the purpose of the present action (especially when counsel was involved and D did not file any witness statement and/or make any significant discovery) is plainly excessive. I allow $3,100/hour as the notional solicitor fee earner’s rate.

8.  Thirdly, I agree the trial bundles should be re-used and, where necessary, updated for the eventual trial. The cost of the trial bundle does not come within the ambit of costs thrown away. However, there would be some photocopying costs that were wasted by reason of the Summons and adjournment of the trial, and I allow 300 pages, ie $300 for item B1, and $750 for item B2.

9.  Fourthly, P’s stance in respect of item B1 permeates her statement of costs in that she appears to have assumed that all or most costs associated with bringing on the trial at the Hearing would be costs thrown away. That is not correct. If, however, she has indeed limited herself to costs of the Summons and costs thrown away by the vacated trial, then the costs as claimed are excessive on party-and-party basis.

10.  Fifthly, I do not find it necessary and/or proper for the solicitor fee earner to attend on client for 6.5 hours for the Summons and costs thrown away by the vacated trial. For the vacated trial, I accept a pre-trial conference might be wasted in that another pre-trial conference would be necessitated by the eventual fresh trial, but I do not believe such pre-trial conference should exceed 2 hours given the fact that P must have been well familiar with her own claim and witness statement, and D has not filed any witness statement for the purpose of trial. As for the Summons, I am not persuaded that client input would have been significant for opposing it (as evidenced by Ms Lau’s written submissions). I allow 4 hours for attendance on client for item C1. I allow 30 minutes on attendance on other side and 1 hour on attendance on counsel for items C2 and C3 given the last minute nature of the Summons which would have excited some activity, but the Summons is not complicated albeit late. In summary, I allow 5.5 hours x $3,100 = $17,050.

11.  Sixthly, I allow 20 minutes by the litigation clerk (ie $200) for item D1, which I consider reasonable. As for item D2, the trial bundles should be re-used, and hence costs for preparation of the trial bundles would not be costs thrown away.  As for item D3 and item D4, I find 9 hours of time spent excessive.  As for item D3, I cannot see how perusal of the identified documents would require 6 hours by the handling solicitor. After all, the Notice to Act by D’s solicitors is a simple and standard document, Ms Lau’s narrative opening submissions were just 9 pages (and I do not see any need for the handling solicitor to study the annexed schedules in any great detail given counsel’s involvement), and Ms Lau’s list of authorities only comprised 4 cases.  As for item D4, I am again persuaded that perusal of the Summons-related documents would not have required 3 hours by the handling solicitor, especially when the relevant costs were for opposing the Summons (but excluding costs occasioned by the Summons), Hence, I allow 4 hours, ie $12,400, for items D3 and D4.  As for item D5, the Hearing lasted from 10:07am to 12:40pm, ie about 2.6 hours. I allow 2.6 hours x $3,100 = $8,060. Travelling expenses are not chargeable item of disbursement (independent of the overall claim for profit costs) on inter partes assessment/taxation of costs. 

12.  Seventhly, in view of my direction for re-fixing of fresh trial date(s) in consultation with counsel’s diaries, it is inappropriate for D to bear counsel’s brief fee for costs thrown away. On a consideration of what is necessary and/or proper under the prism of reasonableness, I find it appropriate to grant a slightly higher refresher fee for counsel to take into account the costs of the wasted pre-trial conference and also future vicissitudes, I therefore allow $50,000 for item E1. As for item E2, I find the brief fee of $40,000 excessive. The opposition was a straightforward matter given the admitted lateness of the application by way of the Summons, and Ms Lau’s familiarity with the present action. Further, I have not been aided by Ms Lau’s submissions and research on relief against sanction for unless orders which were irrelevant to the Chow Order. I allow item E2 at $28,000.

13.  Eighthly, I disallow item F since travelling expenses are not allowed under party-and-party assessment of costs.

14.  Upon considering the items of costs claimed to see whether or not they are “necessary and its costs reasonable” on the sensible standard of necessity as explained by the Court of Appeal, the total costs of P on his statement of costs are assessed at $116,760[3] to be paid by D within 7 days.

	(Marlene Ng)
	Deputy High Court Judge

Ms Lorinda Lau, instructed by Eva Wong & Co, for the plaintiff

Mr Adonis Cheung and Mr Remy Lam, instructed by John C H Suen & Co, for the defendant

HCA 1181/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1181 OF 2014

________________________

BETWEEN
	LOK WAI YEE	Plaintiff
	and
	MAN KOON HUNG	Defendant

________________________

Before: Deputy High Court Judge Marlene Ng in Court

Date of Hearing: 25 May 2016

Date of Decision: 25 May 2016

Date of Handing Down Reasons for Decision: 30 May 2016

________________________

REASONS FOR DECISION
________________________

I. INTRODUCTION

1.  The plaintiff (“P”) and the defendant (“D”) were married on 23 September 2010. P petitioned for divorce in FCMC10210/2013 on 19 July 2013. A decree absolute was granted on 29 January 2014. At the material time, D was the sole shareholder/director of Ronis Project Management Limited (“Ronis”).

2.  On 25 June 2014 (ie about 5 months after the decree absolute), P commenced the present action against D for the outstanding balance of various alleged loans granted to P in the total sum of $1,498,998.46 (but according to the written opening submissions of Ms Lau, counsel for P, it should be adjusted to $1,435,638.74) and further/alternatively damages with interest and cost. D denied such claim.

3.  25 May 2016 was the day of trial (“Hearing”). On 19 May 2016, ie about a week before the Hearing, D filed a summons for leave to (a) amend his Defence in the manner shown in the draft annexed thereto (“Draft AD”), and (b) serve/adduce at trial his own witness statement as per the draft annexed thereto (“Draft Statement”) with costs to P (“Summons”). On the same day, D filed his own affirmation in support of the application (“D’s Aff”).

4.  The Draft Statement (a) was not signed and/or verified by Statement of Truth, and (b) referred to 2 exhibits that were not annexed to the Summons. Despite the lateness of the application, it transpired that copies of the 2 exhibits were not even served on P’s solicitors (“P’s Solicitors”). Those copies were only served after office hours on the day before the Hearing at the request of P’s Solicitors.  Ms Lau complained that this development aggravated the already unsatisfactory situation wrought by the late Summons. Mr Cheung (and Mr Lam with him), counsel briefed only to deal with the Summons, submitted D would sign/verify his witness statement and serve the same with the exhibits if leave were granted by the court.

5.  This flied in face of the guidance by Bharwaney J in Parsad v Great Wealthy Engineering Co Ltd in respect of late application to serve additional witness statements:[1]

“3. …… when the case has progressed to the stage where it has been or is ready to be set down for trial, a late application for leave to file additional witness statements will only be entertained if the signed witness statement containing a statement of truth is furnished to the [court] in order to enable the [court] to consider the admissibility of its contents, and their relevance and probative value, and to exercise [its] discretion, either to grant or to refuse leave to rely on the statement, after having regard to its admissibility, relevance, probative value and the underlying objectives of the Civil Justice Reform.”

6.  Regrettably, D’s approach, which was akin to treating the Summons as an interlocutory application in the ordinary course of litigation, was wholly inappropriate for a late application made a few days before trial for indulgence to file/serve and rely on fresh witness statement. In such circumstances, the applicant (D in this case) should be anxious to produce the fullness of the material sought to be adduced for consideration by the other side and by the court rather than keep some material up his sleeve in the hope that if indulgence is granted the undisclosed material will be presented. Given the rationale explained in Parsad, ie that the witness should confirm/verify the fullness of the witness statement to be adduced, it must be apposite that the exhibits should be properly annexed to the witness statement for the witness to confirm/verify the fullness of such statement.

7.  When this was pointed out to Mr Cheung, he asked for the Hearing to be stood down for remedial action to be taken. When the Hearing resumed, Mr Cheung handed up D’s signed witness statement dated 25 May 2016 with 2 exhibits annexed thereto (“D’s Statement”).

8.  The trial was scheduled for 1 day. Realistically, should this court decide to accede to the reliefs sought in the Summons, the trial would have to be aborted. Given the inevitable disturbance to the milestone date, D had to demonstrate exceptional circumstances to justify a favourable outcome for the Summons. Not surprisingly, P opposed the application.

9.  After hearing submissions at the Hearing, I granted the following orders, and reserved my reasons for decision which I now give:

(a) leave for D to amend the Defence in the manner marked in red as per the Draft AD;

(b) D shall file/serve Amended Defence within 7 days from the date thereof;

(c) leave for P to file/serve Amended Reply (if so advised) within 14 days thereafter;

(d) leave for D to file/serve D’s Statement on or before 26 May 2016;

(e) leave for P to file/serve witness statement in reply within 28 days thereafter;

(f) trial scheduled on the date of the Hearing be vacated;

(g) all case management conferences (“CMCs”), direction hearings and interlocutory applications in the present action be docketed to be heard and/or dealt with by Master S Kwang who shall be at liberty, where appropriate, to refer any matter or application to be heard by any judge;

(h) the present action be adjourned for CMC before Master S Kwang on a date to be fixed with 1 hour reserved (“Next CMC”);

(i) within 7 days from the date of this order, P (failing whom D) shall attend before the listing clerk to fix the date for the Next CMC;

(j) subject to paragraphs (k) and/or (q) below, the Next CMC shall be heard after 49 days but before 70 days from today;

(k) where appropriate, both P and D may by consent summons or either party may by summons apply to Master S Kwang to expedite the hearing of the Next CMC with reasons on affidavit;

(l) any eventual re-fixing of the trial date(s) shall be made in consultation with counsel’s diaries;

(m) D do pay P (i) costs of the Summons and costs thrown away by the adjournment of the trial to be summarily assessed if not agreed and be paid within 7 days of assessment by the court or agreement between the parties, and (ii) costs occasioned by the Summons to be taxed if not agreed;

(n) P do within 7 days from the date hereof lodge and serve statement of costs not exceeding 1 page pursuant to Practice Direction 14.3 in respect of costs under (m)(i) above;

(o) D do within 7 days thereafter lodge and serve succinct summary of objections of not more than 1 page in respect of P’s statement of costs;

(p) summary assessment of costs will be by paper disposal (unless otherwise directed);

(q) should D fail to pay the full amount of the assessed/agreed costs within the prescribed time, P may unilaterally apply in writing to Master S Kwang (with copy to D) to expedite the hearing of the Next CMC without reasons on affidavit;

(r) time to run during court vacation.

II. PROCEDURAL HISTORY

10.  Given the lateness of the Summons, I start with an account of the procedural history of the present action to put the Summons in context.

11.  On 25 June 2014, P commenced the present action against D. On 22 July 2014, P by her former solicitors filed acknowledgement of service giving notice of intention to defend. On 11 September 2014, Master S Lo granted an unless order that required D to file/serve his Defence and Counterclaim (if any) by 4pm on 10 October 2014. On 16 October 2014, D by his former solicitors filed his Defence. On 13 November 2014, P filed her Reply. On 23 February and 9 October 2015 respectively, P filed her List of Documents and Supplemental List of Documents. Mediation took place on 15 June 2015.

12.  On 21 April 2015, D’s present solicitors (“D’s Solicitors”) filed Notice of Change of Solicitors. On 22 April 2015, D’s Solicitors filed a Listing Questionnaire stating that D (a) did not intend to amend his pleadings, (b) intended to file/serve List of Documents within 21 days, (c) intended to be a defence witness at trial but no witness statement had been filed, and (d) wanted to have mediation.

13.  By the order of Registrar Lung dated 23 April 2015, timetable/ directions were given inter alia for filing/serving List of Documents, exchanging witness statements and making interlocutory applications. On 15 May 2015, D filed his List of Documents.

14.  On 15 October 2015, P filed Notice to Act in Person. On 22 October 2015, P filed a summons for an unless order requiring D to file/serve witness statements. D did not appear at the hearing of such summons on 6 November 2015 when Master Chow granted the following order (“Chow Order”):

“Unless [D] do exchange his witness statement(s) with [P] on or before 17 November 2015, [D] be barred from adducing evidence in the trial hearing without leave of the court.” (my emphasis)

15.  On 10 November 2015, P filed her Listing Questionnaire. D did not file/serve any witness statement within the court-imposed deadline or at all. D was also absent at the case management conference on 18 November 2015 when Registrar Lung granted leave for P to set the case down for trial within 14 days for a 1-day trial before a bilingual judge. The case was set down for trial before this court to be heard on 25 May 2016.

16.  On 23 February 2016, P acting in person filed a summons to adjourn the trial. On the same day, he filed a brief supporting affirmation stating he only received the court’s notice of hearing in January 2016, and he was then seeking legal representation and legal advice.

17.  D appeared in person at the pre-trial review on 25 February 2016. This court was not satisfied on the thin information then before the court that the trial should be adjourned, and dismissed D’s summons with costs. This court also granted usual pre-trial directions for lodging/serving trial bundle, written opening submissions and list of authorities.

18.  On 4 March 2016, Master Hui granted leave for P to amend various court documents to correct a clerical error in respect of D’s name therein. On 15 March 2016, P filed her Amended Statement of Claim (“ASoC”) and Amended Reply.

19.  On 27 April 2016, D’s present solicitors filed Notice to Act. On 19 May 2016, D by his solicitors filed the Summons and D’s Aff.

III.  D’s AFF

20.  D’s Aff stated that in August 2015 his laundry business fell into difficulties as the landlord refused to further lease the premises (“Premises”) for his business. When P’s Solicitors wrote to D’s Solicitors on 8 October 2015 to propose exchange of witness statements on 15 October 2015, his witness statement was not ready because he was concentrating on resolving his business difficulties. On 14 October 2015, he gave Notice to Act in Person. On 19 October 2015, he came into contact with Quality Laundry Limited (“Quality”) that expressed willingness to purchase his laundry business. On 4 November 2015, D and Quality entered into an agreement whereby he sold his laundry business to Quality for $148,000. On 25 November 2015, the landlord repossessed the Premises. On 31 December 2015, D was laid off with effect on 31 January 2016 by his employer for whom he had worked for 3 years. D only secured a new job on 14 March 2016 with a salary of $38,000/month (subject to probation review after 3 months).

21.  D said he was tied up by his grave personal problems from August 2015 to mid-March 2016, but when he had sufficient funds again, he retained D’s Solicitors on 26 April 2016 to represent him and to prepare his draft witness statement and draft amended pleadings. He claimed to have a meritorious defence as P was trying to enforce domestic arrangements made between cohabitees and between married couple that were not legally enforceable.

IV. PARTIES’ RESPECTIVE CASE

22.  P’s claim covered several heads of claim which D disputed.

23.  First, P claimed $68,100 for payments she made on D’s behalf to Ronis’ contractors. P claimed that by an agreement made partly orally and partly by conduct between P and D in/about June 2008 as evidenced by various bank transfers, D orally requested her to pay Ronis’ debts to its contractors (“Ronis Loan Agreement”), and she made 11 bank transfers in a total sum of $73,600 between 3 June and 10 November 2008 (as particularised in Appendix A to the ASoC). But despite demands made orally and by telephone text messages (collectively, “Messages”) since/about 2011, D only repaid $5,500 and failed to repay the balance sum of $68,100 to P.

24.  D denied the Ronis Loan Agreement, and further or alternatively claimed P could not enforce any promise he made in the Messages because any monies P expended for D (which was denied) were before D’s such promise and amounted to past consideration.

25.  P disagreed, and averred she was not involved in Ronis which D established to subcontract decoration business, but as D’s then girlfriend she gave some secretarial/clerical assistance to him. P claimed D was well aware he was liable to repay the loans under the Ronis Loan Agreement, and denied such loans were made before D’s promise to repay. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

26.  Secondly, P claimed $393,954.66 being payment of D’s credit card bills on his behalf. P averred that in/about June 2008 D orally requested her to apply for a Citibank credit card for him to use as an Octopus card. She secured a Citibank Premiermiles card with supplementary card for him. In/about September 2008 D requested P to settle the monthly Citibank credit card bill for him and promised to repay P on demand (“Citibank Credit Card Loan Agreement”), which she did in the total sum of $393,954.66 between 28 September 2008 and 18 August 2013 (as particularised in Appendix B to the ASoC) with her own money. Despite repeated demands by the Messages since/about 2011, D failed to repay P.

27.  D agreed P secured a Citibank Premiermiles card with a supplementary card for him, but denied any Citibank Credit Card Loan Agreement. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration. D claimed that in fact pursuant to an oral agreement with P, he made contributions of about $10,000-$15,000/month to P for housekeeping expenses (“Housekeeping Monies”), and P was to utilise (and D believed P did so utilise) the same for settling household expenses (“Housekeeping Agreement”). D further averred he was not obliged to pay for bills from, say, the vet and pet shop for P’s pet dog, and for P’s own grooming expenses, personal expenses, out-of-home meals that P settled with the Citibank credit card. Further, D denied the Housekeeping Monies should cover P’s personal expenses.

28.  P disagreed. She claimed that all along D was in financial difficulties and his credit record was poor, so he could not obtain any credit card from any bank and requested P to apply for the Citibank supplementary credit card which was initially intended to be used as an Octopus card. Later D used such credit card to pay for his daily expenses, and agreed to repay Citibank himself. Further, the Citibank Credit Card Loan Agreement was formed at the time when D requested P to apply for the Citibank supplementary credit card for his use and when he agreed to pay all expenses incurred by such card. P merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

29.  P admitted D agreed to pay $10,000/month to her for household expenses, but claimed the Housekeeping Monies were unrelated to the Citibank credit card bills. Since D at that time expended $5,000/month, so he had to pay her $10,000/month as Household Monies and $5,000/month as repayment for expenses incurred under the Citibank supplementary credit card, but D subsequently refused/failed to pay P.

30.  P admitted she kept 2 pet dogs, but denied she used the Citibank Premiermiles card herself. P claimed all expenses under the Citibank supplementary credit card were incurred by D, and in fact D used such credit card to pay the expenses of his ex-girlfriend’s pet dogs.

31.  Thirdly, it was common ground that in/about October 2008 P and D decided to get married. P claimed $47,944 being wedding expenses that D promised to pay. P averred D requested her to pay for wedding expenses (eg wedding photographs, wedding ceremony and wedding celebration, “Wedding Expenses”) and promised to repay her on demand (“Wedding Loan Agreement”), and pursuant to such agreement P paid for the Wedding Expenses of $188,944 between 3 November 2008 and 20 September 2010. Due to D’s poor credit with banks, the parties agreed P would apply for personal loans from Hang Seng Bank Ltd (“Hang Seng”) to pay the Wedding Expenses, and D would repay the incurred loans to P. Pursuant thereto, P successfully applied for 3 loans from Hang Seng to cover part of the Wedding Expenses leaving a balance of $47,944. Despite demands made by the Messages since/about 2011, D failed to repay P (as particularised in Appendix C to the ASoC).

32.  D denied P’s claim and any Wedding Loan Agreement. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration. D averred he also paid for costs/expenses of the marriage by borrowing $140,000 from his mother, and the parties also agreed to apply gift monies from relatives/ friends (“Gift Money”) towards the Wedding Expenses. It was agreed that P would (and D believed P did) collect and apply the Gift Money ($144,000) for such purpose, and the respective parties would bear any outstanding balance.

33.  P claimed that at the material time the parties agreed D would sell his futures to pay for all Wedding Expenses and down payment of their matrimonial home, but during preparation for the wedding celebrations D told her the monies had to be used to help his mother who suffered loss in the stock market (but P had no knowledge of any loan to D by his mother), so D asked her to pay the Wedding Expenses by promising to repay her. P was reluctant but eventually agreed to the Wedding Loan Agreement as their marriage had been announced to relatives/friends. P denied any oral agreement that the respective parties would bear the difference between the Wedding Expenses and Gift Money. P’s mother only received the Gift Money from her relatives/friends (which was in a modest sum) for 2 out of 18 tables for the wedding dinner, and D received the rest of the Gift Money. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

34.  However, I note from Ms Lau’s written opening submissions that P no longer maintained a claim for $47,944 under this head, and in fact would give credit for the sum of $405.

35.  Fourthly, P claimed that by 3 oral agreements made between the parties in/about late February 2009, August/September 2010 and August/ September 2010, P agreed to lend to D $57,000, $46,000 and $38,000 respectively that were sourced from loans by Hang Seng, and D agreed to repay such loans (with bank interest and handling fees) on demand (“1^st, 2^nd and 3^rd Hang Seng Bank Loan Agreements”). Pursuant thereto, P entered into written agreements with Hang Seng for personal loans respectively repayable by 24, 36 and 36 monthly instalments bearing interest at 6.77% pa, and advanced such loan sums to D by using them to partly repay the Wedding Expenses. P incurred $153,302.62 being principal and interest under her loan agreements with Hang Seng. Despite repeated demands by the Messages since/about 2011, D failed to repay (as particularised in Appendix D to the ASoC).

36.  D denied such claim, and the 1^st, 2^nd and 3^rd Hang Seng Bank Loan Agreements. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration.

37.  P claimed D used to live extravagantly and was all along in financial difficulties. He used to pay his expenses by credit card and to repay only the minimum amount, so he had poor credit with banks due to ever-increasing loan liability, and he was constrained to apply for loans from finance company by using a real property left to him by his grandfather/ father as collateral. On the other hand, P had no need to borrow bank loans but for the 1^st, 2^nd and 3^rd Hang Seng Bank Loan Agreements, and D was well aware of his liability to repay her under such agreements. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

38.  Fifthly, P claimed $254,602.58 (adjusted to $255,091.86 according to Ms Lau’s written opening submissions) for expenses in respect of utilities and other household services. In/about March/April 2010, D orally requested her to pay on his behalf services/products he subscribed, used and/or agreed, eg instalment payments for electric appliances, payments for telephone bills, internet services, utility services and cable television services, D’s credit card payments etc, and D orally promised to repay her on demand (“D’s Expenses Loan Agreement”). Pursuant thereto, P settled such bills/expenses between 12 April 2010 and 25 February 2013 (as particularised in Appendix E to the ASoC). Despite repeated demands by the Messages since/about 2011, D failed to repay P.

39.  D denied such claim, and D’s Expenses Loan Agreement. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration. D averred that between March 2010 and February 2013 his monthly salary was about $35,000/month, and between March 2010 and February 2013 his monthly salary was about $21,000/month. Apart from the Housekeeping Agreement, D and P orally agreed to share rental payment for the matrimonial home of $8,800/month (later increased to $9,800/month). Further, P also used household utilities and services for which D paid his share by the Household Monies, so P had no claim against him. D further averred P double-claimed a total sum of $89,240.74 being certain alleged loans D borrowed from her shown in item D of Appendix D and item E of Appendix E to the ASoC (as particularised in Appendix (i) to the Defence).

40.  P claimed she earned $13,000/month between October 2010 and February 2013, and had no knowledge of D’s monthly salary. She further claimed the parties agreed that (a) D would pay $10,000/month to P for household expenses but in the end she had to pay the household expenses herself as D defaulted such payment, and (b) D would pay the monthly rental on top of the household expenses ($10,000) and credit card repayments ($5,000). Further, cable TV and internet services were subscribed at D’s request as he watched football matches via such services. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration. P denied Appendix (i) annexed to the Defence, and also denied she double-claimed $89,240.74 as D alleged for she had deducted the loans by Hang Seng from the Wedding Expenses.

41.  Sixthly, P claimed $22,600 for D’s living expenses which D promised to repay. P claimed that despite the parties’ oral agreement in/about May 2009 that D would pay her $10,000/month for household expenses, D defaulted payment of $22,600 for the period from 1 May 2009 to 31 March 2012 (ie day D left the matrimonial home) (“Living Expenses Loan Agreement”). Despite repeated demands made by the Messages since/about April 2014, D failed to repay P (as particularised in Appendix F to the ASoC).

42.  D denied such claim, and the Living Expenses Loan Agreement. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

43.  Seventhly, P claimed $548,494.60 for repayment of personal loans that P granted to D. P claimed that since/about 10 May 2008 until 25 August 2011 D had orally requested P to lend him monies which he agreed to repay on demand (“Personal Loan Agreement”). Pursuant thereto, P lent D $692,994.60 (now adjusted to $687,494.60 according to Ms Lau’s written opening submissions), but between 15 October 2008 and 25 August 2011 D repaid $144,500 (being loans incurred between 10 May and 24 July 2008) leaving an outstanding balance of $548,494.60 (now adjusted to $542,994.60 according to Ms Lau’s written opening submissions) (being loans incurred between 8 August to 25 August 2011). Despite repeated demands made by the Messages since/about 2011, D failed to repay P (as particularised in Appendix G to the ASoC).

44.  D denied such claim, and the Personal Loan Agreement. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration.

45.  P claimed D would request P to lend money whenever he was in need of money. The parties agreed D would repay such personal loans to P, and he was well aware of his liability to repay P. P also said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

46.  Eighthly, P claimed $10,000 being legal costs payable by D. On/about 22 May 2014, D offered to pay P $10,000 for costs of the divorce proceedings FCMC10210/2013. On/about 27 May 2014, P accepted such offer on the basis D would pay $10,000 within 7 days. Despite repeated demands, D failed to repay the sum of $10,000.

47.  D claimed (and P in the Amended Reply agreed) that he settled the sum of $10,000 on 2 July 2014 after commencement of the present action.

48.  P claimed that on/about 30 September 2013 D acknowledged he roughly owed her over a million dollars, so by the Messages he offered to make repayment by 80 monthly instalments of $10,000 each and to defer payment of the outstanding balance to a later stage to be mutually agreed. P averred that D discussed repayment with her because he was well aware of his liability to repay all loans he borrowed from her, but she turned down such offer because she knew D had no intention to repay her and was adopting delaying tactics. P said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, which was not related to any maintenance payment in FCMC10210/2013. P denied she threatened to sue for variation of maintenance payment as she had not contacted D except for the Messages, and noted D did not raise such complaint until his Defence even though he was legally represented in FCMC10201/2013. P said she merely reiterated/confirmed in the Messages the previous loan agreements she had made with D, and there was no past consideration.

49.  D denied P’s assertions. He agreed he had sent some Messages to P on/about 30 September 2013 as he was negotiating amicable maintenance settlement with her in FCMC10210/2013 on without prejudice basis, and there was never any loan agreement with P. Further or alternatively, D claimed P could not enforce any promise he made in the Messages because any monies P expended for him (which was denied) were before D’s such promise and amounted to past consideration. D further agreed he exchanged Messages with P on/about 23-24 April 2014 because P requested him for maintenance payment notwithstanding the nominal maintenance of $1 awarded by the court. Since P threatened to seek variation of maintenance payment, D offered to pay her monies to get rid of her unreasonable threats/demands in order to save time/money, but in the end no agreement was reached. There was never any loan agreement between the parties.

V. LATENESS

50.  Mr Cheung did not shy from the fact that the Summons was made very late. Although D’s Aff explained D’s personal circumstances, I am not persuaded they amounted to good reasons for the delay. D knew he had to prepare, file and serve his witness statement, and yet no attempt was made either to approach P’s Solicitors or the court to ascertain what to do after his solicitors ceased to act. He also chose not to attend court hearings since then. Whilst the court sympathised with his financial plight, each litigant would have his own personal concerns and/or difficulties. Litigation cannot be properly pursued/defended if parties choose to ignore case management directions and proceed according to their own personal timetable. If there were any sound basis for extension of time or adjournment of hearing arising from his personal circumstances or for any other reason, it was incumbent upon D to make proper application to the court for indulgence instead of simply ignoring the proceedings. Whilst I accept D had given an explanation for the delay, I am not satisfied it offered good or satisfactory excuse. However, in the balancing exercise called for by the Summons, I take note that D was self-represented since October 2015, and that the present action moved rather swiftly since then to the trial scheduled on 25 May 2016.

VI. AMENDMENT OF PLEADINGS

51.  D proposed to amend the Defence by adding the following:

“50A. Defendant Loan Agreements Not Enforceable

Further or alternatively, the Defendant Loan Agreements were domestic arrangements made between [D] and [P] as cohabitees or, after 23^rd September 2010, as husband and wife, and they did not intend thereby to create legal relations.

……

57A. Further or alternatively, [D’s] enrichment by the monies to him as P’s cohabitee or husband (after 23^rd September 2010) is not unjust. The monies were advanced to him as P’s cohabitee or husband (after 23^rd September 2010) in exchange of his love and affection. Counter-restitution of his love and affection is impossible and [P’s] claim is thereby barred.”

52.  The principles for late amendment of pleadings have been discussed in Li Xiao Yun & anor v China Gas Holdings Limited,[2]DBS Bank (Hong Kong) Limited v Sit Pan Jit,[3] and Lam Sik Ying, administrator for the Estate of Lam Tim alias Stan Lam Tim, deceased v Lam Sik Shi& anor,[4] which principles I shall adopt but not repeat here.

53.  Mr Cheung submitted the court has wide powers to allow amendment of pleadings at any stage of the proceedings as may be just, and mere delay is not sufficient to bar an application to amend. He argued that generally all such amendments that ought to be made for the purpose of determining the real question in controversy between the parties or for correcting any defect or error in any pleadings should be allowed, and the court is not to punish a party for his error or mistake if such amendment can be made without injustice to the other side. Mr Cheung contended there is no injustice if the other side can be compensated by costs. 

54.  But as explained in Lam Sik Ying, in a late application, these broad principles are tempered by the following considerations:

(a) It is clear the court will not order a pleading to be amended unless it is of the opinion the order is necessary for disposing fairly of the cause or matter or for saving costs, and the onus lies on the party seeking the amendment to so satisfy the court.

(b) An amendment will not be allowed if it causes injustice or prejudice to the other party that cannot be compensated by costs. There is also a clear difference between allowing amendments to clarify issues in dispute and those that provide a distinct defence/claim to be raised for the first time. Much depends on the nature of the proposed amendment and the pleaded defence in the particular case.

(c) As explained in DBS Bank (Hong Kong) Limited, such broad principles must be viewed through the prism of delay (especially when it is unexplained and/or unjustified) in the case of a late application, which brings into focus (i) the underlying objectives in Order 1A rule 1 of the Rules of the High Court (“RHC”), including the need to increase cost-effectiveness, ensure expedition, promote reasonable proportion, and ensure fairness between the parties, and (b) the necessary recognition that the later an application is made to shift the litigation goalposts in terms of pleadings, the more likely it is to cause real prejudice to the other party.

55.  The first consideration is whether the proposed amendments are necessary for fairly disposing of the cause or matter or for saving costs. Here, the proposed amendments concern a single line of defence, ie that the financial arrangements between P and D at the time when they were cohabitees as well as man and wife were domestic arrangements not intended to form legal relations with enforceable obligations. This also underpins the further challenge to the restitutionary claim on the basis that counter-restitution will be impossible in such circumstances.

56.  Mr Cheung submitted that in light of the material facts pleaded in the Defence, this line of defence contention based on the trite principles in Balfour v Balfour[5] should have been obvious to the pleader, and was plainly an omission.  He also referred to Tsoi Yiu Chung v ING Life Insurance Co (Bermuda) Ltd[6]which concerned a post-CJR late application to amend pleadings, file further witness statement and make further discovery that would result in vacation of the trial dates, and in that case the court considered it would be an intolerable outcome if a party personally blameless for the way in which his case had been pleaded by inexperienced counsel was forced to go to trial on defective pleadings. The learned judge was unimpressed by the alternative open to that party, ie to start another expensive and risky action against his former legal advisors “to get what he says are his just desserts”.

57.  Ms Lau fairly and rightly accepted that the Balfour defence now proposed to be advanced by D is arguable. As seen in Part IV above, given the nature and breadth of P’s claim that covered a whole spectrum of expenses from business-related expenses to wedding, household, utilities and miscellaneous expenses during her cohabitation/marriage with D, and further given D’s denial of such claims, I am of the view that such contextual background plainly suggests the Balfour defence is not unarguable even on P’s own case.

58.  As evident from Ms Lau’s written opening submissions, the issues are whether D owes P the alleged debts and whether D has agreed to repay P the same. Quite irrespective of any positive defence case, P has to discharge her burden of proof to satisfy the court she has a viable claim (based on legally binding contracts) that is legally enforceable. The establishment of an intention to create legal relations is a matter of inference to be drawn from primary findings of fact. In the cases cited by Ms Lau,[7] the courts plainly accepted that intention of the parties was a question of fact usually to be inferred from the terms of the agreement, and depending on the surrounding facts and circumstances, the parties could have entered into a legally binding agreement or an unenforceable family arrangement.

59.  Thus, even without express pleading of the Balfour defence, the matter of legal relations would have been a necessary hurdle that P has to cross in order to succeed in her claim. So P should not be surprised by the proposed amendments, which do not seek to go on any new tangent or direction. I am satisfied the Balfour defence is a relevant and necessary argument that can be raised even without witness evidence from D. Indeed, at the pre-trial review, this court asked Ms Lau to address on such issue at trial, and quite fairly Ms Lau canvassed such matter in her written opening submissions.

60.  That leaves the question of the lateness of the application. Taking in account the whole of the circumstances, I am persuaded that notwithstanding the lateness (and bearing in mind that P previously acted in person and may not be familiar with the nuances of the legal issues that give rise to this additional point), fairness and justice dictate that the proposed amendments be allowed.

VII. WITNESS STATEMENT

61.  D has sought to bolster his case by his proposed witness statement.

An initial issue is whether the Chow Order is a proper unless order with an automatic sanction such that it debars further application for leave to file/serve witness statement unless proper application is made for relief against sanction under Order 2 rule 5 of the RHC.

62.  At first blush, the Chow Order appears to be an unless order. However, on careful scrutiny, it does not carry an automatic sanction in that if D fails to comply with the order within the prescribed time, he will be barred from adducing evidence in the trial hearing “without leave of the court”. This proviso means that if the court grants leave for D to adduce witness evidence then the sanction becomes inapplicable. So the relevant application is not so much as for relief against a sanction that has become effective automatically upon default, but for leave of the court to file, serve and adduce witness statement which if granted will render the sanction inapplicable. Hence, the general principles for relief against sanction discussed in Lee Sai Nam v Li Shu Chung & anor[8] and Li Oi Hung v Famoso Company Limited[9] are not applicable.

63.  The principles for a late application to serve witness statement, supplemental witness statement or witness statement of a substitute/ replacement witness have been set out in Civic Limited v余綺妙& ors,[10]Nam Ching Wan v Tsun Un Pawn Shop also known as Tsun Yun Pawn Shop with Tang Yam Wan as trustee by Yeung Fook Mui ad Tang Ying Ip as administrators of the estate of Tang Pui King alias Tang Yum (or Yam) Wan alias Tang Kin Cheung, deceased & ors,[11] and Liu Chen v Chan Poon Wing & anor,[12] which principles I shall adopt but not repeat here.

64.  Here, D has filed a Defence. Even without the proposed amendments, it raises various strands of defence contentions against the allegations in the ASoC, including denial of the loan agreements as alleged by P, and the defence of past consideration. Witness evidence is necessary to give such defence contentions substance. At the very least, it is necessary and relevant to set out the personal and business (if any) relationships between P and D in order to put P’s claim and D’s denial in context from the defence’s perspective. In my view, it affronts the court’s sense of fairness and justice that having mounted arguable lines of defence D should be constrained to proceed to trial with both of his hands tied, ie he will be left without any witness evidence at all to support his case, unless any such permission for D to adduce witness evidence will cause irreparable prejudice to P.

65.  Ms Lau raised the spectre of inevitable delay caused by the adjournment of the trial if D were allowed to adduce witness evidence. Mr Cheung assured me D is willing to compensate P by way of costs. I have no doubt that any adjournment of the trial is against the CJR objectives, but Order 1A rule 2(2) of the RHC requires this court to recognise the primary aim in exercising the powers of case management is to secure the just resolution of disputes in accordance with the substantive rights of the parties. Hence, the inevitable delay must be tempered by the injustice of disallowing D’s application.  In my view, the consequences of abortion of the trial can be ameliorated by tightened case management that will ensure the present action will move steadily forward again with all due speed towards a fresh trial.

66.  Ms Lau raised another concern. She pointed out that according to land search records in respect of a property jointly owned by D and 2 other parties, such property was mortgaged to a finance company in August 2015 for all monies up to a maximum amount of $600,000, and in February 2016 (ie a few months before the trial) it was mortgaged for all monies up to a maximum amount of $1,200,000. Ms Lau feared this might be a dissipation exercise, and expressed concern that any delay might leave P with an empty judgment. But the further charge on the jointly-owned property in February 2016 of itself and without more is not cogent evidence of dissipation by D, especially bearing in mind that the property is jointly owned by 2 other parties. Further, D has been frank that his financial embarrassments reached a low point at the end of January 2016 when he sold his laundry business and lost his job. It would not be surprising if he needed funds at that point to support himself and/or to search for legal representation. On the materials before me, I am unable to read the land search records in the sinister light cast by Ms Lau.

67.  In light of all the above matters, bearing in mind the length and reason for the delay, the merits of the proposed application, the primary aim of securing the just resolution of the dispute, the likely prejudice caused to P by the delay, and the amelioration of such prejudice by costs and other case management measures, I am satisfied that fairness and justice require that D be allowed to file/serve and rely on his witness statement.

68.  Ms Lau submitted that the contents of D’s Statement travelled beyond his Defence, and reserved P’s right to object to the same. First, a witness statement is not intended to be a copybook replication of a pleading. Secondly, whist material facts are asserted in a pleading, the witness statement sets out the relevant evidence. This means that witness statements are normally fuller than pleadings as factual evidence that give context to the pleaded issues are often included. Thirdly, Ms Lau complained about the depth D had gone into about Ronis in his witness statement. But such complaint must be viewed not just from P’s perspective but also D’s perspective that the Ronis Loan Agreement did not exist, hence P’s and D’s roles at Ronis are arguably relevant. Fourthly, it is unnecessary for me to form any definitive view at this stage as the trial will be adjourned as a result of a favourable outcome of the Summons for D.

VIII.  POSTSCRIPT

69.  In all the circumstances, I find there are exceptional circumstances in the present case to grant the reliefs sought in the Summons notwithstanding their adverse impact on the trial, which must now be adjourned. However, this is an exceptional case-specific situation and does not set any precedent. Litigants generally should not expect the court to smile kindly on late applications that may impact on milestone events.

70.  To assist the parties and the docketed master in the further conduct of the proceedings, I should add a few words. First, I note that D’s List of Documents only disclosed a handful of Ronis’ documents. D should carefully consider whether he has already made proper discovery or whether some more documents in his possession, custody or control that are relevant to the disputed issues will need to be further disclosed in light of the Amended Defence to be filed and the contents of D’s Statement. If there is such need, D should consider filing and serving Supplemental List of Documents as soon as possible. It must be remembered that if a further round of amendment of pleadings and/or additional witness statement becomes necessary due to any belated discovery after P has filed witness statement in reply, it may have implications in costs.

71.  Secondly, the parties should give careful attention to the preparation of comprehensive Scott Schedules to assist the trial judge. Time should not be spent at trial to trawl through bundles of individual invoices, receipts, credit card slips, etc. These documents should be carefully analysed by both parties to elicit the disputed items with cross-reference to the original records. Thus, the Scott Schedules should contain itemised breakdown of P’s various heads of claim, the parties’ respective stance on such items, the reasons therefor, and cross-reference to paginated pages of the primary documents bundle. These steps should be completed well before the present action is to be set down for trial again. The docketed master should seize of this matter and give specific case management guidance on the proper preparation of such Scott Schedules that will be helpful to the trial judge for appreciation of the scope of the dispute and the parties’ respective contentions.

72.  Thirdly, given (a) the amount of P’s claim (which is less than $1,500,000) and legal costs incurred and to be incurred in bringing the matter to trial, and (b) the parties have chosen not to avail themselves of provisions in section 44 of the District Court Ordinance Cap 336, I urge the parties to proactively reconsider further attempt at mediation when the dispute is more clearly drawn after completion of the current round of revised pleadings and witness statements (ie when parties are more attuned to real issues and their likely exposure in respect of the present litigation).

73.  Fourthly, in light of the adjustments to P’s claim as explained in Ms Lau’s written opening submissions, P should also consider whether the ASoC needs to be further re-amended to reflect such adjustments.

74.  The parties should be ready to address the docketed master in respect of the above matters at the Next CMC.

(Marlene Ng) Deputy High Court Judge

Ms Lorinda Lau, instructed by Eva Wong & Co, for the plaintiff

Mr Adonis Cheung and Mr Ryan Law, instructed by John C H Suen & Co, for the defendant