Kwan Kwok Ki v. Tang Shing Bor and Another

HCA 1465/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1465 OF 2012

_______________

_______________

HCA 85/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 85 OF 2013

_______________

_______________

_______________

D E C I S I O N

_______________

INTRODUCTION

1.I have before me the following two summonses:-

(1)  a summons dated 22 May 2015 taken out by Kwan Kwok Ki (“Kwan”) seeking an order that interrogatories 1(e) and (f) without order served on him by Tang Shing Bor (“Tang”) and Kaiser 2000 Limited (“Kaiser”) on 8 May 2015 be withdrawn; and

(2)  a summons dated 9 September 2015 issued by Tang and Kaiser seeking an unless order to compel Kwan to (a) comply with the previous directions given by the court by consent for the exchange of provisional expert reports and (b) answer the interrogatories without order served on him on 8 May 2015 (including interrogatories 1(e) and (f) mentioned in (1) above).

2.At the commencement of the hearing this afternoon, I was informed by Mr Lee (for Tang and Kaiser) and Mr Lam (for Kwan) that save in relation to interrogatories 1(e) and (f), the parties had reached agreement on how to dispose of the summons of 9 September 2015.  Accordingly, the focus of this decision will be on interrogatories 1(e) and (f).

Basic facts

3.The background facts of this case are of some considerable complexity.  However, for the present purposes, it is necessary only to mention the following.

4.Kaiser, a company incorporated in Hong Kong, was at all material times and is:-

(1)  beneficially owned and controlled by Tang; and

(2)  the registered owner of the property (“the Property”) known as 297-303, Jaffe Road, Wanchai, Hong Kong, on which a 25-storeyed building (“the Building”) has been erected.

5.Kwan and Tang were at all material times and are each a 50% beneficial owner of two Hong Kong ong Kong companies known as Wealthy Vantage Limited (“Wealthy”) and Golden Field Holdings Limited (“Golden”).  These two companies were at all material times, and are, actively operated by Kwan.

6.In addition, Kwan, Tang and a third party hold 50%, 40% and 10% respectively of another Hong Kong company called Gaineer Limited (“Gaineer”).

7.It is not in dispute that Kaiser entered into a sale and purchase agreement in respect of the Property on 26 November 1999 and paid the price of HK$135,000,000 for the purchase of the Property.  At the time of that agreement, construction of the Building had not yet been completed.  It was completed in or about mid-2002 by Kaiser after its purchase of the Property.

8.Although the Property was purchased and paid for by Kaiser, Kwan alleges that in or around mid 2003, he and Tang entered into an oral joint venture agreement (“the Alleged JV Agreement”) under which, inter alia:-

(1)  Kwan and Tang would each have a half-share in the joint venture in respect of an entertainment and hotel business to be run or operated at the Property;

(2)  the Property would eventually be sold at a resale price to be agreed by Kwan and Tang, and the net profit (ie the difference between (i) the resale price and (ii) the purchase price and all expenses incidental to the resale) would be shared equally between Kwan and Tang; and

(3)  during the currency of the joint venture, in consideration of the payment by Kwan of a monthly licence fee in the sum of HK$400,000, Kaiser would grant to Kwan a licence to use and occupy the Property for the purpose of setting up, running, managing and operating an entertainment cum hotel complex at the Property.

9.According to Kwan, pursuant to the aforesaid licence, he has, since around 2004, been in possession of the Property for the purpose of operating, running and managing an entertainment cum hotel complex at the Property, and to that end has permitted Wealthy and Golden (as sub-licensees) to use and occupy different parts of the Property for operating the businesses carried on at the Property.  Further, it is Kwan’s pleaded case that Gaineer has been responsible for the management and operation of a restaurant and karaoke at the Property since December 2004.

10.Tang and Kaiser deny the Alleged JV Agreement.  It is their case that Wealthy and Golden were Kaiser’s tenants in respect of the Property pursuant to written tenancy agreements dated 12 December 2003. Notices to quit were issued by Kaiser on 5 June 2012, and the tenancy agreements of Wealthy and Golden expired on 31 December 2012.

11.By this consolidated action, Kwan seeks (inter alia) declaratory relief in respect of the Alleged JV Agreement, as well as specific performance of that agreement.  By their counterclaim, Kaiser seeks (inter alia) orders for possession of the Property against Kwan, Wealthy and Golden, as well as mesne profits from 1 January 2013 to the date of delivery up of possession of the Property.

Interrogatories 1(e) and (f)

12.It appears, from documents previously discovered by Kwan, that different parts of the Property have been sub-let or sub-licensed by Wealthy, Golden and/or Gaineer starting from around 2004. However, according Mr Lee (which is not disputed by Mr Lam) the discovery produced by Kwan is not complete in that the documents discovered relate to some floors of the Building only.

13.By interrogatories 1(a) to (f), Tang and Kaiser seek answers from Kwan in respect of the sub-tenancies or sub-licences during the period from 1 January 2004 to date, including:-

(a)  the names of the sub-tenants or sub-licensees;

(b)  the periods of their occupation;

(c)   the business names of the sub-tenants or sub-licensees;

(d)  the dates of the sub-tenancy agreements or sub-licence agreements;

(e)   the relevant rents or licence fees payable by the sub-tenants or sub-licensees; and

(f)   the actual rents or licence fees received by Wealthy, Golden and/or Gaineer.

14.Mr Lam submits that the rents or licence fees payable or actually paid by the sub-tenants or sub-licensees are not relevant to any of the remedies sought by Tang and Kaiser.  Furthermore, requesting Kwan to provide the information sought is over-burdensome and will escalate rather than save costs pursuant to Order 26, rule 1(1)(b) of the Rules of the High Court.  On the other hand, Mr Lee submits that the information sought is directed at “undermining or weakening” Kwan’s case regarding the Alleged JV Agreement, in that the rents or licence fees payable to and received by Wealthy, Golden and/or Gaineer, which would accrue to the benefit of Kwan (through his 50% shareholding in those companies), would provide sufficient compensation for his time and effort in the joint venture and there was no reason why he should, in addition, be compensated by 50% of the net profit upon the resale of the Property.

15.In my view, the information sought by Tang and Kaiser is relevant to place the whole transaction between the parties into proper context, and provide the essential background for assessing Kwan’s claim in respect of the Alleged JV Agreement.

16.Also, I note that Kwan has no objection to answering interrogatories 1(a) to (d).  That being the position, it seems to me that the answers to interrogatories 1(e) to (f) should also be provided to give a complete picture.  I do not accept Mr Lam’s submission that it would be burdensome for Kwan to provide the answers to interrogatories 1(e) to (f). Wealthy, Golden and/or Gaineer are all Hong Kong companies.  In the ordinary course of the events, the relevant information should be readily ascertainable from their books or records.

17.In all, I consider that Kwan should provide answers to interrogatories 1(e) to (f).  I shall hear the parties on the exact form of the order and on the question of costs.

Mr Bernard Lam, of Tung, Ng, Tse & Heung, for the plaintiff in HCA 1465/2012

Mr Lee Tung Ming, instructed by Arthur K H Chan & Co., for the 1^st and 2^nd defendants in HCA 1465/2012

Mr Lee Tung Ming, instructed by Arthur K H Chan & Co., for the plaintiff in HCA 85/2013

Mr Bernard Lam, of Tung, Ng, Tse & Heung, for the 3^rd defendant in HCA 85/2013