CHAN SAU HA v. LEUNG ON YU

DCCJ 1493/2023

[2025] HKDC 927

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1493 OF 2023

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DECISION

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INTRODUCTION

1.  On 24 April 2025, this Court handed down the decision, allowing the appeal of the Plaintiff (“P”) against the Order of Master Andrea Yu made on 11 September 2024 (the “11/9/2024 Order”)[1] and ordered the 11/9/2024 Order be set aside. This Court also made a costs order nisi that D shall bear the costs of and occasioned by the appeal and the 6/11/2023 Summons and the hearings below, to be taxed on a party and party basis if not agreed, with certificate for counsel. (the “Decision”)

2.  In other words, by virtue of the Decision, the Default Judgment was reinstated and the Defence and Counterclaim filed by D on 26 September 2024 pursuant to the 11/9/2024 Order can no longer stand.

3.  On 7 May 2025, D applied, by way of a summons, for leave to appeal against the Decision (the “7/5/2025 Summons”). In support of the 7/5/2025 Summons, D filed an affirmation made by himself on 7 May 2025 (the “7/5/2025 Affirmation”).[2]

4.  On 8 May 2025, this Court received a 1-page handwritten note dated 7 May 2025 (the “7/5/2025 Note”) together with another affirmation made by D on 8 May 2025 (the “8/5/2025 Affirmation”). Like the 7/5/2025 Affirmation, the 8/5/2025 Affirmation is a lengthy document, containing a 46-page long appended document (the “Appended Document”) with exhibits “A” to “YY”[3] (collectively as the “Exhibits” and individually as “Exhibit A”, “Exhibit B” … “Exhibit YY” respectively). In the 7/5/2025 Note, D informed this Court that the 7/5/2025 Affirmation had a documentary design defect and was incomprehensible to the readers, that the 8/5/2025 Affirmation was filed to replace the 7/5/2025 Affirmation to assist this Court to understand and comprehend D’s legal viewpoints and that this Court could ignore the 7/5/2025 Affirmation. At the substantive leave hearing on 26 May 2025, D confirmed with this Court that the 8/5/2025 Affirmation replaced the 7/5/2025 Affirmation, that typos aside, an important difference between the 7/5/2025 Affirmation and the 8/5/2025 Affirmation was that the exhibits to the 8/5/2025 Affirmation had been marked as “A” to “YY” and that this Court did not need to read the 7/5/2025 Affirmation.

5.  On 22 May 2025, D filed his 3^rd Affirmation, containing a 4-page appended document with a title of “上訴許可申請重點摘要” (translated as “Leave Application Bullet Points”) (the “22/5/2025 Affirmation”).

6.  In opposing P’s leave application, P via her counsel filed her Skeleton Submissions on 21 May 2025 (“P’s Submissions”).

7.  At the leave hearing, Mr Edward Lun represented P, whereas D acted in person and submitted to the Court a 27-page long speaking note written in Chinese[4] (the “SN”). The substantive leave hearing took more than 1 half day and was part heard to 15 July 2025.

8.  For the resumed leave hearing on 15 July 2025, D filed an additional 45-page long affirmation with 15 exhibits on 8 July 2025 (“the 8/7/2025 Affirmation”). Apart from the fact that the 8/7/2025 Affirmation was filed without leave, the exhibits thereto are all new evidence. I therefore ruled to exclude the 8/7/2025 Affirmation and its exhibits from the Court’s consideration.

9.  At the resumed leave hearing, D lodged an additional 19-page long Reply (“the Reply”) with some loose WhatsApp documents. I treated the Reply as D’s supplemental written submissions and allowed the Reply to be admitted for the Court’s consideration. However, I disallowed those loose WhatsApp documents since they were new evidence and were adduced without leave of the Court and in defiance of the relevant procedural rules.

APPLICABLE LEGAL PRINCIPLES

10.  The test for granting leave to appeal to the Court of Appeal from a judgment, order or decision of a judge, as set out in s 63A(2) of the District Court Ordinance, Cap 336, is as follows:

“(2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

11.  The party that seeks to appeal bears the burden of satisfying the Court that his or her appeal has a reasonable prospect of success. This means an appeal with prospects that are more than fanciful but which do not need to be shown to be probable, see SMSE v KL [2009] 4 HKLRD 125 at §17.

12.  To meet the “reasonable prospect of success” test, the applicant for leave to appeal is required to show more than just an arguable case, but an appeal that has merits and ought to be heard, although the applicant does not have to demonstrate that the appeal will probably succeed, see Wynn Resorts (Macau) SA v Mong Henry, HCA 192/2009, judgment of Chu J (as she then was) dated 10 August 2009.

13.  Moreover, in秦錦釗 v 香港特別行政區[2018] HKCA 167 at §8, Kwan JA (as she then was) held that, in light of the function of the Court of Appeal, it would be futile for an appellant to rehearse the contentions that were rejected by the first instance judge. Instead of doing so, the appellant should focus on the first instance judge’s reasoning and pinpoint the error in respect thereof.[5]

14.  It is trite that an appeal will not be entertained from an order which was within the discretion of the judge to make, unless it be shown that he exercised his discretion under a mistake of law, or in disregard of principle, or under a misapprehension as to the facts or that he took into account irrelevant matters or failed to exercise his discretion or the conclusion which the judge reached in the exercise of his discretion was “outside the generous ambit within which a reasonable disagreement is possible”, see Hong Kong Civil Procedure 2025 Vol 1, at pp. 1255-1256, §59/0/54.

INTENDED GROUNDS OF APPEAL

15.  In the 7/5/2025 Summons, D advanced the following general intended grounds of appeal:

(a)  Error of law;

(b)  Disregard of important evidence;

(c)  Error of legal viewpoint;

(d)  An abundance of strong and forceful evidence showing that the sum of HK$200,000.00 provided by P to D was not a loan, but for their joint investment purpose.

16.  Although D advanced the aforesaid general intended grounds of appeal, he nevertheless has not compartmentalized his reasons in support of each and every intended ground of appeal. The 8/5/2025 Affirmation, the Appended Document, the 22/5/2025 Affirmation, the SN and the Reply are argumentative in nature. D’s submissions therein was a verbose repetition of what he had submitted before this Court at the appeal hearing on 27 January 2025 except the argument of “soft loan” first raised by D at the resumed leave hearing. I shall come back to this newly raised argument in the later part of this Decision.[6]

17.  An application for leave to appeal shall not be an elaborate process and filing of evidence should only be permitted when there is good justification for the same.[7] This is particularly so where the evidence filed is argumentative in nature. D is only required to take out the 7/5/2025 Summons within time and should not have filed the 7/5/2025 Affirmation, the 8/5/2025 Affirmation, the 22/5/2025 Affirmation and the 8/7/2025 Affirmation. The 8/5/2025 Affirmation also contained documents which, I suspect, are new documents. Hence, clarification from the parties is required.

New Evidence

18.  D elaborated his reasons to support his intended appeal in the Appended Document. Before I embark on analyzing D’s reasons for his intended appeal, I must say that Exhibits “A” to “E”, “L” to “N”, “Q”, “X”, “AA” to “FF”, “HH”, “PP” to “SS”, “XX”, “YY” and part of Exhibits “K” and “O” to the 8/5/2025 Affirmation[8] are new evidence and have not been adduced by D at the appeal hearing before this Court on 27 January 2025. D has not taken out a summons to apply for leave to adduce such new evidence and has not explained why he did not adduce such evidence at the earlier hearing before this Court.

19.  As stated in Man Lin Heung, The Administratrix of the Estate of Man Kwai Yin also known as Man Kwai Yin v 梁根林[2019] HKCA 846 at footnote 1, an application for leave to adduce new evidence for an appeal cannot be entertained until after leave to appeal has been granted. A party may however rely on the proposed new evidence in support of his application for leave to appeal if he can demonstrate that it is reasonably arguable that leave to adduce such evidence would be granted by reference to the criteria in Ladd v Marshall [1954] 1 WLR 1489 at 1491.

20.  The three conditions for determining whether new evidence should be admitted for the intended appeal are as follows:

(a)  the evidence could not have been obtained with reasonable diligence for use at the hearing below;

(b)  the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and

(c)  the evidence must be such as is presumably to be believed or it must be apparently credible, though it need not be incontrovertible. All three conditions must be satisfied for the new evidence to be admitted on appeal.

21.  I have perused Exhibits “A” to “E”, “K” to “O”, “Q”, “X”, “AA” to “FF”, “HH”, “PP” to “SS”, “XX” and “YY” to the 8/5/2025 Affirmation de bene esse and come to the view that even if D had taken out a summons for leave to adduce Exhibits “A” to “E”, “K” to “O”, “Q”, “X”, “AA” to “FF”, “HH”, “PP” to “SS”, “XX” and “YY”, I would not have exercised my discretion to give leave to D to adduce such new evidence. The reason is obvious. It would not be difficult for D to adduce such new evidence; if D had exercised reasonable diligence, he could have obtained Exhibits “A” to “E”, “K” to “O”, “Q”, “X”, “AA” to “FF”, “HH”, “PP” to “SS”, “XX” and “YY” for use at the earlier appeal hearing and even at the hearing before Master Andrea Yu on 11 September 2024. Furthermore, those Exhibits, if admitted, would not probably have an important influence on the result of this case. Therefore, it cannot be shown that it is reasonably arguable that the Court of Appeal would grant leave to admit such new evidence under the criteria in Ladd v Marshall (supra).

22.  In these premises, Exhibits “A” to “E”, “K” to “O”, “Q”, “X”, “AA” to “FF”, “HH”, “PP” to “SS”, “XX” and “YY” to the 8/5/2025 Affirmation will not be considered by this Court in D’s leave application.

Merits of the Intended Appeal

Arguments relating to service of Court Documents

23.  D has taken issue on §§32 and 33 of the Decision, see the Appended Documents at pp. 1-15.

24.  §31 of the Decision recited the explanation given by D as to his failure to serve and file his Defence within the deadline, ie 31 May 2023. §32 of the Decision expressed the reason why this Court did not accept that the explanation given by D was a good one.

25.  It is worthy of mention that D all along has not taken any issue as to the service of the Writ and that the Writ has come to his notice. Neither has D taken any issue as to the regularity of the Default Judgment. §33 of the Decision expressed the opinion of this Court as to why the Default Judgment was a regular judgment. This Court only stressed that there was no need for P to issue and serve the Notice of Intention to Enter Judgment dated 26 July 2023 (the “Notice”) for the Default Judgment to be entered since D did not have a solicitor on the record in the proceedings and had not stated a Hong Kong address or any address at all in the acknowledgement of service form at which he can be served.

26.  Viewed thus, I cannot discern the relevancy of D’s submission when he took issue on §§32 and 33 of the Decision.

27.  During the leave hearing, D said that he did not know the law and therefore, he did not know whether to take issue on the regularity of the Default Judgment. D went on to refer to Exhibit H to the 8/5/2025 Affirmation and say that on 12 March 2023, he could not find P’s legal documents sent to D by post at D’s mail box at D’s residential address in Shatin and he particularly asked P to send the documents to him by WhatsApp. He further said that P knew that the only point of contact with him was by WhatsApp and that P should not have sent further documents to his Shatin address. As pointed out by this Court during the leave hearing, D’s Shatin address was D’s address last known to P and D had not informed P either by WhatsApp or in whatever way that his Shatin Address ceased to be his correspondence address and that his mother-in-law’s residential address in Fanling was his correspondence address for future service of documents. D cannot be heard of complaining that the Notice should not have been left in the letterbox at his Shatin address and that such service was not proper service. Furthermore, as rightly pointed out by Mr Lun that at that time, D knew that P was represented by her own solicitors and should not have contacted P directly to tell her to send the documents to him by WhatsApp. D should have contacted P’s solicitors on this.

28.  D has taken issue on §32 of the Decision and, during the leave hearing, emphasized that he had not read clause 2 of the “Directions for Acknowledgement of Service” and the “Directions for Acknowledgement of Service” accompanying the Writ and the reason why this was so. The point made in §32 of the Decision is a logical and “common sense” reaction to D’s position that he did not know the requirement of him to file and serve his defence. It is reasonable to expect any defendant who receives a writ of summons would have known that the document was an important document and would have read the document carefully.

29.  Even if I accept D’s explanation that at the material time, he did not know the requirement of him to file and serve his defence, this does not mean that his explanation is a good and excusable reason for not filing and serving his defence in time. Otherwise, litigants in person could easily but wrongly be perceived as litigants with special privilege of not complying with the procedural rules. This must not be right.

Arguments relating to the merits of D’s defence

D’s cash flow

30.  At p. 16 of the Appended Document, D mentioned that he was in a stable financial condition and was not short of capital.

31.  At the leave hearing, D reiterated that he was not short of money and did not need to borrow HK$200,000 from P at the material time. D referred to his bank balance of HK$567,108.42 at his bank account as of 29 July 2021[9] and the balance of HK$66,000 at one of his securities account numbered 1001xxx12xxx2935 with Futu (富途牛牛) (“D’s HK Trading Account”) as of 28 July 2021[10]. In other words, D at the material time had a total of HK$633,108.42. After P transferred to D the sum of HK$200,000 which eventually reached D’s HK Trading Account, D had further sums deposited into D’s HK Trading Account.

32.  Mr Lun submitted that Exhibit J to the 8/5/2025 Affirmation only showed the bank balance at a particular point of time, ie 29 July 2021. D at the time was doing “特賣場” business which would require a lot of cash capital. Ms Lun therefore further submitted that Exhibits J and K to the 8/5/2025 Affirmation were not enough proof of D’s sound cash flow to obviate D’s need to borrow money from P for investment purpose. I agree.

33.  At the leave hearing, D said for the first time that on 29 July 2021, he had already ceased his “特賣場” business and worked full time trading in shares for short-term gain. D’s bare assertion runs counter to my understanding of the D’s case and in a way contradicts what he said in §4 of his Affirmation filed on 6 May 2024[11]: “但陳小姐 [P] 知道我輸掉所有本金，本人的生意亦很差的時候甚至錄得損失便提出分手，然後就不停追回她投資的本金”. (Emphasis added)

34.  Furthermore, even if D at the material time had sound cash flow, it does not mean that D would not borrow money from P.

D’s claim of joint investment

35.  At pp. 16-18, 28-29 and 39-45 of the Appended Document, D referred to the evidence in support of D’s claim of joint investment.

36.  At the leave hearing, D relied heavily on P’s conducts post transfer of HK$200,000. These include P’s access to and “watch over” D’s Trading Accounts, P’s participation jointly with D in the purchase of shares through D’s Trading Accounts, P’s various advices to D as to the purchase price offered to purchase shares on the stock market and P’s unilateral decision to purchase 保利協鑫能源 (stock code: 380) through D’s HK Trading Account. On this, D referred to Exhibits “Y”, “Z” and “BB” to “MM”[12] to the 8/5/2025 Affirmation. The documents relied on by D, namely Exhibits “HH” to “MM” to the 8/5/2025 Affirmation do not support D’s assertion that P unilaterally purchased 保利協鑫能源 (stock code: 380) without prior discussion with D.

37.  I have considered this matter in §§25(e) and 36(h) of the Decision and opined that at that time, P and D were in intimate relationship and it was not unusual for P who also had prior experience in investing in Hong Kong shares to be concerned about D’s personal investment in securities.

38.  In my view, D’s present submission was only a second bite to rehearse his contentions which have been considered and rejected by this Court.

§36 of the Decision

39.  At pp. 18-45 of the Appended Document, D replied to §36 of the Decision.

40.  In §35 of the Decision, I explained that in assessing whether or not D has a meritorious defence with a real prospect of success, the Court is not obliged to suspend its critical faculties and assume that D’s evidence is accurate. The parties have exhibited their contemporaneous WhatsApp communication records and I was obliged to scrutinize them closely in determining whether D’s defence has reached the requisite threshold. My analysis and reasons are contained in §36 of the Decision. I do not want to repeat the same here.

41.  As I have said, D’s arguments for leave here were a repetition of his submissions before this Court at the appeal hearing. Before I arrived at the Decision, I had already considered D’s submissions. To avoid turning this decision into a prolix document, I would only address some points raised in his submissions that, in my view, deserve my reply.

42.  Firstly, D attempted to explain the use of the word “return” in the early part of his WhatsApp communications with P. He explained that the word “return” was related to return on short-term investment rather than the return of the loan. When one looks at the totality of the WhatsApp communications between the parties, D’s explanation was a futile one. Furthermore, D did not have a crystal ball to foresee that their investment would lead to profits, when the profits would come about and how much the profits would be. D being an investor could not possibly have informed P at the very beginning of their investment journey that he would return her the money soon and discussed which bank of P to which D could transfer the money.

43.  Secondly, D said that he told P that he would not evade payment in the WhatsApp communications was to maintain his relationship with P at the time when their relationship was turbulent. This, said D, does not mean that he has confirmed he was indebted to P. Neither was such utterance a rational promise. As I have said, I have already taken into account this contention in the Decision[13] and have not simply taken into account what D had told P in the WhatsApp record when their relationship was on the verge of breakup. This contention comes nowhere near to a ground of appeal with a reasonable prospect of success. Furthermore, Mr Lun rightly pointed out and identified the relevant WhatsApp record at the leave hearing that D in fact admitted his obligation to return the money or at the very least did not deny his obligation to return the money (though the total sum was disputed) even after D’s relationship with P had already broken up.[14]

44.  Thirdly, D said that P had suggested that she would bear the investment risk jointly (共同承擔 投資風險) and D had clearly accepted P’s suggestion. There is no WhatsApp record, clearly showing that P had made such a suggestion and D accepted it. As I have said in §36(c)(iv) of the Decision, it was only on 9 July 2022 when P chased D for repayment of the sum of HK$200,000.00 on various occasions that D raised “共同承擔” as an answer to P’s repayment pursuit but P immediately answered, “你reject了 “. Had there been such a “共同承擔” agreement, D would not have waited until 9 July 2022 to raise this as a defence to P’s repayment pursuit.

The “soft loan” argument

45.  At the resumed leave hearing, D raised for the first time the legal concept of “soft loans” and submitted that there were four requirements of an enforceable loan. On the newly raised legal concept of “soft loans”, I direct the parties to lodge and serve a list of authorities relating to the law of soft loans on or before 21 July 2025, which the parties did. I do not think it is necessary for me to refer to those cases cited in detail. After surveying all the authorities cited by the parties, “hard vs soft loan”, simply put, is an issue commonly arisen within financial remedy proceedings. If it is considered as a “soft loan” or “soft liability”, the amount may be left out of the court’s calculation of the parties’ liabilities in the computation table in the family financial ancillary relief post divorce. There is no statutory definition of a “soft loan”, however, case law provides guidance[15]. The issue of “soft loan” recently raised by D is a red herring. At the end of the day, there is nothing to stop even a husband and wife, or those in a romantic relationship from having an intention to create a legal relationship with each other and entering into a loan agreement.[16]

CONCLUSION & DISPOSITION

46.  In the course of writing this Decision, it was brought to my attention that D had taken out a summons on 22 July 2025 (the “22/7/2025 Summons”) to seek leave to adduce an affirmation made on 21 July 2025 (the “21/7/2025 Affirmation”) together with a bulk of exhibits and that a hearing of the 22/7/2025 Summons had been fixed on 31 July 2025 at 2:30 pm. I have had a quick look at the 21/7/2025 Affirmation and the exhibits thereto. It is obvious that the predominant intention of D to adduce the 21/7/2025 Affirmation and its exhibits is to answer the questions and points raised by Mr Lun and this Court and to bypass my ruling to exclude the 8/7/2025 Affirmation at the resumed leave hearing. Hence, I reject D’s application for leave to adduce the 21/7/2025 Affirmation and direct that the hearing of the 22/7/2025 Summons on 31 July 2025 be vacated with costs of the 22/7/2025 Summons be paid by D to P, to be summarily assessed, if not agreed.

47.  By reason of the aforesaid, D fails to establish that his intended appeal has a reasonable prospect of success or that there is some other reason in the interests of justice that leave of appeal should be granted. Accordingly, I also dismiss the 7/5/2025 Summons. There is no reason why costs should not follow the event. D should pay P the costs of and occasioned by the 7/5/2025 Summons, to be summarily assessed, if not agreed.

48.  The costs orders made in §§46 and 47 hereinabove are nisi orders and shall be made absolute unless application for variation is made within 14 days from the date of this Decision.

49.  If no party applies for variation of the aforesaid costs orders nisi within the aforesaid 14-day period, P should lodge and serve its Statement of Costs (limited to 4 pages) within 14 days from the expiry of the aforesaid 14-day period and D should lodge and serve any objections to P’s Statement of Costs (limited to 4 pages) within 7 days thereafter for summary assessment by me on paper.

Mr Edward Lun, instructed by Chang & Co, for the Plaintiff

The Defendant appeared in person

DCCJ 1493/2023

[2025] HKDC 676

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1493 OF 2023

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DECISION

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INTRODUCTION

1.  This is the appeal against the Order of Master Andrea Yu made on 11 September 2024[1] (the “11/9/2024 Order”)  which allowed the summons issued by the Defendant (“D”)  on 6 November 2023[2] (the “6/11/2023 Summons”), applying for, inter alia, the default judgment entered by the Plaintiff (“P”)  against D on 31 October 2023[3] (the “Default Judgment”)  be set aside.[4] (the “Appeal”)

2.  By the 11/9/2024 Order, D was given leave to file and serve his defence within 28 days from the 11/9/2024 Order.  In other words, the deadline for D to file and serve his defence would fall on 9 October 2024.

3.  On 23 September 2024, D filed his defence and counterclaim without signing a statement of truth (the “D&C”)[5]. However, D only served the D&C on P by ordinary post dispatching the same to P’s solicitors on 8 November 2024.[6]  The service of the D&C is deemed to be effected on 10 November 2024[7] and there was a delay by about 1 month. P took issue on D’s late service of the D&C.  On 29 November 2024, HH Judge Alan Kwong directed that the matter concerning D’s late service of the D&C be dealt with at the substantive hearing of the Appeal.[8]

4.  At the substantive hearing of the Appeal, P was represented by Mr Edward Lun of Counsel and D appeared in person. Mr Lun confirmed that P no longer took issue on D’s late service of the D&C, to wit if the Appeal was unsuccessful, P would not take issue on D’s late service of the D&C.

5.  At the end of the substantive hearing, D informed the Court that he understood English and agreed to my decision to be written in English.  I reserved my decision to be handed down on or before 27 April 2025.

6.  This I now do.

BACKGROUND

7.  The following is the indisputable background of this case.

8.  P and D were lovers between about October 2020 and late 2021.  They often communicated with each other by WhatsApp.

9.  On 29 July 2021, P transferred HK$1 and HK$129,999 from her savings account numbered 012-xxx-x-xxx638-9 at Bank of China (Hong Kong)  Limited (“P’s BOC Account”)  to D’s BOC account numbered 012-xxx-x-xxx736-3 (“D’s BOC Account”).[9]  On the same day, P transferred a further sum of HK$70,000 from her Standard Chartered Bank account numbered 407-x-xxx185-1 (“P’s SCB Account”)  to D’s BOC Account.[10]

10.  At the material time,

(a)  D held two securities trading account with a securities company called Futu (富途牛牛)  (“Futu”), one in Hong Kong currency numbered 1001xxx12xxx2935[11] and another one in US currency numbered 1001xxx52xxx4616[12] (respectively “D’s HK Trading Account”, “D’s US Trading Account” and collectively “D’s Trading Accounts”);

(b)  D was trading securities via the “富途牛牛” apps under Futu; and

(c)  P had access to D’s Trading Accounts.

11.  As of 10 August 2021,

(a)  D held in D’s HK Trading Account various securities of the total value of HK$386,691.00 and cash of HK$77,380.78[13]; and

(b)  D held in D’s US Trading Account various securities of the total value of US$5,223.57 and cash of US$641.67[14].

12.  As of 28 February 2022, D held in D’s HK Trading Account various securities of the total value of HK$14,540.00 and cash of HK$90,082.21.[15]

13.  As of 1 March 2022, D held in D’s US Trading Account securities of the total value of US$969.81 and cash of -US$11,416.07.[16]

14.  On or about 8 July 2022, P demanded D to repay the sum of HK$200,000.00 via WhatsApp.[17]

15.  On 28 February 2023, P’s solicitors Chang & Co issued a demand letter to D for the repayment of the loan of HK$200,000.00 advanced by P to D on 29 July 2021 (the “Demand Letter”).[18]

16.  Despite the Demand Letter, D has not repaid P the sum of HK$200,000.00.

17.  On 13 April 2023, P issued her specially-indorsed Writ of Summons (the “Writ”).[19]

18.  On 28 April 2023, D was deemed to have been served with the Writ.[20]

19.  On 3 May 2023, D acknowledged service of the Writ, intending to contest the proceedings.[21] In D’s acknowledgement of service form, D has failed to give his residential address for service.

20.  On or before 31 May 2023, D should have filed and served his defence, but failed to do so.[22]

21.  On 28 July 2023, P filed a Notice of Intention to Enter Judgment dated 26 July 2023 pursuant to Order 19, rule 8A of RDC(the “Notice”).[23]  The Notice was served on D by leaving in the letterbox at the last known address of D on 28 July 2023[24] and was deemed to be served on D on 31 July 2023[25].

22.  On 31 October 2023, P entered the Default Judgment against D for, inter alia, the sum of HK$200,000.00.

THE PARTIES’ RESPECTIVE CASES

23.  P’s case is simple and straightforward. P claims[26] as follows:-

(a)  During a discussion over telephone in or about July 2021, P entered into an oral agreement with D whereby P would lend D the sum of HK$200,000.00 without interest and to be repayable upon demand (the “Loan Agreement”).[27]

(b)  Alternatively, it was implied by law under the Loan Agreement that the loan of HK$200,000.00 was repayable upon demand.

(c)  Despite the Demand Letter, D still fails and/or refuses to repay P the loan of HK$200,000.00.

(d)  D remains indebted to P in the sum of HK$200,000.00 and P is entitled to the repayment of HK$200,000.00.

(e)  Further or in the alternative, D holds the sum of HK$200,000.00 on trust for P.

24.  P has abandoned her claim for a declaratory relief that D holds the sum of HK$200,000.00 on trust for P, and relied solely on his liquidated monetary claim for the said sum.[28]

25.  As gleaned from various Affirmations filed by D[29] in support of the 6/11/2023 Summons and the D&C[30], D’s case is as follows:-

(a)  The sum of HK$200,000.00 was not a loan, but a sum provided by P to D for investment purpose.  If the investment was successful, there would be return. But if the investment was not favourable, P would be responsible for her own loss and D needed not return the sum claimed to her.[31]

(b)  Since P’s parents had invested in the Hong Kong stock market and gained money, P encouraged and proposed to D to make investment in the Hong Kong stock market.[32]

(c)  On 29 July 2021, despite D’s refusal, P insisted on transferring the sum of HK$200,000.00 to D as joint investment capital.  The sum of HK$200,000.00 was then transferred to D’s HK Trading Account.  D himself also invested a sum of HK$300,000.00 as joint investment capital.[33]

(d)  D told P that he was confident that he would win back the capital very soon and that he could get back or transfer back to P the profits from the joint investment and the capital very soon.[34]

(e)  P also participated in investing in securities by using her mobile phone to access D’s HK Trading Account.  All along, P had “watched over” what shares D had purchased and had participated jointly with D in the investment of Hong Kong shares.  P also made joint decision with D on how to invest in shares and used D’s HK Trading Account to carry on the sale and purchase of the Hong Kong stock 3800 (保利協鑫能源).[35]

(f)  Their joint investment suffered tremendous loss.  As of 28 February and 1 March 2022, D’s Trading Accounts were only left with HK$21,054.00.  Proportional to their respective investment amount, P was able to get back HK$8,421.00 from D’s Trading Accounts though D could pursue P for HK$50,000.00 as P was willing to bear jointly the loss arising from their joint investment.[36]

(g)  Before P broke up with D, P had admitted that the sum of HK$200,000.00 was advanced to D for joint investment purpose.  The total joint investment sum was HK$500,000.00 and P still owed him HK$50,000.00.[37]

(h)  Whenever P quarrelled to break up with D, D would think of using his savings to compensate P’s loss of investment capital in a bid to make her feel happy and to salvage their relationship.[38]

(i)  Only after P broke up with D did P begin to regard the sum of HK$200,000.00 as a loan advanced by her to D and chase D for the sum.[39]

(j)  D is now married to another woman, and his daughter was born on 17 July 2023.[40]

26.  In the D&C, D counterclaimed for a sum of HK$200,000.00 to compensate him for out of job for 2 years and his trauma.[41]

RELEVANT LEGAL PRINCIPLES

Appeal under Order 58, rule 1 of RDC[42]

27.  An appeal from the master to the judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time, save that the party appealing, even though the original application was not by him but against him, has the right as well as the obligation to open the appeal.  The judge will of course give the weight it deserves to the previous decision of the Master; but he is in no way bound by it.  The judge in chambers is in no way fettered by the previous exercise of the master’s discretion.[43]

Setting Aside Default Judgment

28.  The legal principles in setting aside default judgment entered in pursuance of Order 19 of RHC (counterpart of Order 19 RDC)  were adumbrated by DHCJ Marlene Ng (as she then was)  in Shun Pong Limited v Chan Koo Kai Felix and Others[2018] HKCFI 2628 in §§ 47-51:-

“47. Setting aside default judgment Order 19 rule 9 of the RHC provides that “[the] Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order”. The rule gives the court a discretion to set aside a default judgment. “The purpose of the power is to avoid any injustice that may be caused by the entering of judgment in default. Two underlying principles that come into play in the exercise of this power are, on the one hand, that a party should observe procedural rules with judgment entered against him in default and, on the other, that a party should not be deprived of an adjudication of the case on its merits”.

48. If a default judgment is regular, the defendant must show a meritorious defence with a real prospect of success or which carries some degree of conviction. Bare assertions are not sufficient for this purpose. Unless potentially credible affidavit evidence from the defendant has demonstrated a real likelihood that he will succeed on fact, he cannot have shown that he has a real prospect of success. This requires the court to form some provisional view of the probable outcome of the action. Where the outcome depends on whose evidence is likely to be accepted, the appropriate test for determining whether the defendant has a real prospect of success is to ask whether the defence “could well be established” at trial or whether the defence witnesses could well be believed at trial.

49. It is not correct to adopt the approach that if the defendant can show he has an arguable defence, a default judgment against him ought to be set aside unless there is incontrovertible evidence before the court to negate it. The court is also entitled on assessment of the affirmation evidence to come to a view that the defence put forward is inherently unbelievable and the defendant therefore has failed to discharge the burden of putting forward a defence with a real prospect of success.

50. But, on the other hand, the Court of Appeal in Maryo Development Limited v Tsang Yau May[44] explained that:

“13.  Godfrey JA speaks in terms of the defendant being required to show ‘a real prospect of success’ and the court forming a provisional view of ‘the probable outcome of the action’.  These formulations have their origin in the judgment of the English Court of Appeal in the ‘Saudi Eagle’.  There is a danger that they can be read as requiring the court to undertake a mini-trial on the affirmations as to the likely outcome if the matter goes to trial.  This is not what is required and perhaps the correct approach can be more helpfully summarised as requiring the court to form a provisional view as to whether or not the defendant has a realistic prospect of successfully defending the action. Determining this will involve assessing whether or not the defendant’s evidence on disputed factual matters has a realistic prospect of being accepted and, if it has, that the defendant has a realistic prospect of establishing a defence in law.  The assessment has to be carried out mindful of the interlocutory nature of the application and with a sense of proportionality.”

51. There are other considerations which a court must consider in deciding whether or not to set aside a default judgment, such as the reason why default judgment was allowed to occur in the first place, and any delay in setting aside and any consequent prejudice caused to the plaintiff. The court’s approach is to conduct a balancing exercise of all relevant factors. But the critical factor and starting point are the merits of the defence. If the defence has no real prospects of success, there is no point in setting aside the same.”[45]

ANALYSIS

Regular Default Judgment and D’s explanation for failing to file the defence in time

29.  There was a lapse of 5 months between the prescribed deadline for D to file and serve his defence[46] and the entry of the Default Judgment[47].  There was a further lapse of 6 days between the entry of the Default Judgment and the 6/11/2023 Summons.

30.  In D’s 1^st Affirmation made and filed on 6 November 2023, D deposed that since he was not clear about the legal procedure, he only filed his acknowledgement of service form giving his intention to defend the proceedings but failed to file his defence.[48]

31.  In the conclusionary paragraph of D’s 3^rd Affirmation filed on 6 May 2024[49], D further deposed the following:-

(a)  He did not have sufficient legal knowledge, so he did not know that he was required to submit his defence 28 days after he received the letter from the court.

(b)  He only received the Notice after the deadline since he had moved to live with his mother-in-law in Fanling after his daughter was born on 17 July 2023.  He had lived in Fanling for about 1.5 year so that his daughter could be taken care of by his mother-in-law.  At the time, he did not return to live in his Shatin residence, so he did not receive the court documents.

32.  I do not accept that the explanation given by D is a good one.  Neither do I accept in particular that D did not know the time requirement of filing and serving his defence.  In clause 2 of the “Directions for Acknowledgement of Service” both in English and Chinese accompanying the Writ, the time for filing and serving the defence[50] which was described as “IMPORTANT” in both English and Chinese at the 1^st and 2^nd pages of the Writ must have been brought to the attention of D.  D must have read the “Directions for Acknowledgement of Service” accompanying the Writ.  Otherwise, he would not have been able to file his acknowledgement of Service giving his intention to defend the proceedings within time.

33.  As I have said earlier on[51], there was no need for P to issue and serve the Notice since D does not have a solicitor on the record in the proceedings and has not stated a Hong Kong address or any address at all in the acknowledgement of service form at which he can be served.  This being the case, P was at liberty to enter the Default Judgment after the deadline for D to file and serve his defence on 31 May 2023.

34.  In my view, the Default Judgment is a regular judgment and D has not taken any issue as to the regularity of the Default Judgment.

Defence with No Real Prospect of Success

35.  In the instant case, D must show a meritorious defence with a real prospect of success or which carries with it some degree of conviction.  The Court is required by the law to form a provisional view as to whether or not D has a realistic prospect of successfully defending the instant action.  In assessing whether or not D has a meritorious defence with a real prospect of success, the Court is not obliged to suspend its critical faculties and assume that D’s evidence is accurate.  If, having regard to inherent plausibility, inconsistency with contemporaneous documents and other compelling evidence, D’s defence does not reach the requisite threshold, the Court must say so.  I am also mindful of the interlocutory nature of the application and the assessment has to be carried out with a sense of proportionality.

36.  After deliberating on all the relevant evidence and the submissions of Mr Lun and D, I am driven to the view that D has failed to show a meritorious defence with a real prospect of success.  My reasons are as follows: -

(a)  The essential issue in the instant case is whether the transfer of the HK$200,000.00 from P’s bank accounts to D’s BOC Account on 29 July 2021 was a loan or a sum provided by P to D for joint investment purpose.

(b)  P’s case is that the loan agreement was entered into orally and not in writing.  This however does not automatically follow that the instant action must be tried.  This is particularly so where at the time of the transfer of the said HK$200,000.00, P and D were lovers and in an intimate and romantic relationship.[52]

(c)  That said, both P and D have exhibited their WhatsApp communication records to their affirmations in support of or in opposition to the 6/11/2023 Summons and I am required to look at the WhatsApp communication records closely.  The WhatsApp communication records are contemporaneous records evidencing the parties’ intention at the material time. The closer the WhatsApp communication records to the time of the transfer of the said HK$200,000.00, the more probative would be those records of the parties’ intention.  It is because closer to the time of the transfer, the relationship between P and D was still harmonious and there was no reason why D had to say something to pacify P and to salvage their relationship.  According to the WhatsApp communication records, there are a lot of conversations between P and D suggesting strongly if not overwhelmingly that the transfer of the said HK$200,000.00 by P to D was in the nature of a loan.  The following are the relevant excerpts from the WhatsApp communication records:-

(i)  After the sum of HK$130,000.00 (ie part of the said HK$200,000.00)  was transferred from P’s BOC Account to D’s BOC Account on 29 July 2021, D said, “Ok thank u I would return soon by hangseng maybe”[53] and “Ok return you soon”[54].  When P told D that only after Standard Chartered Bank approved D’s new registration could she use P’s SCB Account to transfer the money to D, D replied, “No problem Don’t worry Would return u soon”[55].  D also mentioned that it would be easier for him to remember the sum if the whole sum was HK$200,000.00.[56]  P and D then discussed which bank of P D could transfer the money to and thereafter, P said, “到時可以 directly transfer to China Bank”.[57] In the same conversation, D asked P whether she would feel scared and P replied, “真正買既人係你  應該你驚d  ”.[58]

(ii)  On 14 September 2021 when the relationship between P and D was bumpy, D said, “I would return you 100k as soon as possible”.[59]  Thereafter on the same day, there was a discussion on whether D had already returned HK$100,000.00 to P or the earlier transfer of HK$100,000.00 by D to P had failed.  In the same conversation, D said, “放心   我唔會走你錢  俾少少時間我  我賣左 d野會俾翻你”.[60]

(iii)  When P and D were on the verge of breakup:-

(aa)  On 9 November 2021, P told D that she saw him losing money “睇到你輸左錢”[61].

(bb)  On 11 November 2021, D uttered, “我同你相處得好辛苦 .. 那我們分手吧  你唔使擔心我無錢還俾d時間我就可以！  我唔會再揾你  我會儘快還俾你  你可以俾定戶口我  影俾我”[62].  P then forwarded to D P’s BOC Account information.

(cc)  On 15 November 2021, D asked P, “錢個度  你係咪要我馬上還”. Then P said, “果20萬 你可以既時候就過返數界我” and D asked, “有無deadline”. P said, “acc你睇返record就有” and D replied by asking, “我諗要d時間”. P then answered, “ok”. D asked P again, “有無deadline？” P said, “你自己決定”.[63]

(dd)  On 16 November 2021, D implored P to go out with him. During conversations, D said, “你可以咁絕  我唔會無義的  我唔會走你錢”. P then retorted, “我唔係絕  係太了解你了”.[64]

(ee)  On 8 December 2021, D again implored P to see him the last time. During the imploration, D told P, “我以後唔煩你  我問人借錢還翻俾你 以後不煩你”[65].

(iv)  After P broke up with D, P chased D for the repayment of the sum of HK$200,000.00 on various occasions.  On 9 July 2022, D raised that P said before “共同承擔” as an answer to P’s pursuit of the repayment of the said sum. P immediately answered, “你reject了 “.[66]

(d)  In light of the WhatsApp communication records, D’s defence that the transfer of the HK$200,000.00 by P to D was not a loan but for a joint investment purpose, cannot stand up to scrutiny.  If the said transfer was in the nature of capital injected by P for a joint investment, D would not have told P just after receipt of HK$130,000.00 from P that he would return the money to P soon and inquired with P as to which bank of hers he should directly transfer the sum of HK$200,000.00 to.  They should have been more interested in exploring ways to profit from their joint capital, such as what particular shares they should purchase and whether those shares should be held for long term or short term.  There was indeed no mention of the said transfer being for a joint investment purpose or anything about return on investment.  Remember also that at the early stage of the said transfer, P already told D that D was the person who purchased securities and D should be the one who was scared.

(e)  All along, D had acknowledged to repay P the HK$200,000.00.  It was only in July 2022 that D began to dispute the repayment.

(f)  Furthermore, D’s case has been varying all along.  In D’s 1^st Affirmation filed on 6 November 2023 in opposition, D deposed that the sum of HK$200,000.00 was provided by P to him for investment purpose and if the investment was not favourable, P would be responsible for her own loss and D needed not return the sum claimed to her.[67] In D’s 2^nd Affirmation filed on 24 January 2024 in opposition, D deposed that their joint investment suffered tremendous loss and as D’s Trading Accounts were only left with HK$21,054.00, P was able to get back HK$8,421.00 from D’s Trading Accounts though D could pursue P for HK$50,000.00 as P was willing to bear the loss jointly arising from their joint investment.[68]  In D’s 3^rd Affirmation filed on 6 May 2024 in opposition, D deposed that the total joint investment sum was HK$500,000.00 and P still owed him HK$50,000.00.[69]  In the D&C, D did not raise a counterclaim against P for the said sum of HK$50,000.00, but only counterclaimed for a sum of HK$200,000.00 to compensate him for out of job for 2 years and his trauma.[70]

(g)  D’s case is that only after P broke up with D did P begin to chase D for the sum of HK$200,000.00.[71] D’s case on when P broke up with D in his 3^rd Affirmation filed on 6 May 2024 is at variance with his case in the D&C.  In his 3^rd Affirmation filed on 6 May 2024, D deposed that P broke up with him in late December 2021.[72]  Whereas, in the D&C, D pleaded that P broke up with him in November 2021.[73]  If P broke up with D in November 2021, there would be no reason why D approached P in December 2021 to inform her that he would return the said sum of HK$200,000.00 to her unless the said sum was a loan and D was truly indebted to P.

(h)  I am also alive to D’s case that P had “watched over” what shares D had purchased and had participated jointly with D in the investment of Hong Kong shares.  This part of D’s case is neither here nor there since P and D were in intimate relationship and it was not unusual for P who also had prior experience in investing in Hong Kong shares to be concerned about D’s personal investment in securities.

37.  For the above reasons, I conclude that D has failed to discharge the onus on him to establish a defence with a real prospect of success.  I also find that it has not been shown by D that there are other reasons or considerations for this Court to exercise its discretion to set aside the Default Judgment.

DISPOSITION

38.  For all the reasons stated above, I would allow the Appeal and the 11/9/2024 Order be set aside. On costs, I order on a nisi basis that D shall bear the costs of and occasioned by the Appeal and the 6/11/2023 Summons and the hearings below, to be taxed on a party and party basis if not agreed, with certificate for counsel.  This costs order nisi shall become absolute after 14 days from today’s date unless any party applies to vary the same within the 14-day period.

Mr Edward Lun, instructed by Chang & Co, for the Plaintiff

The Defendant appeared in person