Million Decade Ltd v. Tung Fai also known as Dong Hui
Read the full judgment text of HCA 1062/2013 on BabelCite. This High Court CFI judgment was delivered on 13 November 2015.
1. This is the hearing of the applications by way of:
Cites 4 cases
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HCA 1062/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO 1062 OF 2013 ________________________ BETWEEN
AND HCA 1063/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO 1063 OF 2013 ________________________ BETWEEN
AND HCA 1660/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO 1660 OF 2013 ________________________ BETWEEN
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_____________ DECISION THE APPLICATIONS 1.This is the hearing of the applications by way of:
2.These applications are contested and the parties are legally represented.[1] THE FACTUAL BACKGROUND 3.I had set out the brief factual background in my previous Decision, which was delivered on 15 September 2015. Here I wish to focus the relevant facts on the applications below. 4.HCA 1062/2013 and HCA 1063/2013 are two actions taken out by Wei Dong through the companies under his control, viz: Million Decade Ltd (“Million Decade”) and Top Ample Ltd (“Top Ample”) against Tung Fai for repayments of the respective loans of $25,400,000 and $9,600,000 allegedly made by the companies to him. Tung Fai is the plaintiff in HCA 1660/2013 claiming against Wei Dong for HK$51,101,323.30 (plus interest) pursuant to an oral agreement as set out below. 5.The disputes between Wei Dong and Tung Fai arose from their agreement in Chinese “境外上市合作協議” dated 7 June 2003 [2] （”the Cooperation Agreement”）whereby Tung Fai agreed to assist Wei Dong to have Fu Ji Food and Catering Services Holdings Ltd. (“Fu Ji”) listed in the Stock Exchange of Hong Kong. Under the Cooperation Agreement, Tung Fai would, if Fu Ji was successfully listed in the Hong Kong Stock Exchange, obtain certain percentage of the shareholdings of Fu Ji subject to the conditions stated therein. 6.The Cooperation Agreement was not signed because in around June 2004, Tung Fai advised Wei Dong that “it would give rise to serious problems in relation to the proposed listing of Fu Ji under the laws and regulations of Hong Kong and therefore had to be cancelled. Accordingly, the Cooperation Agreement was cancelled by mutual agreement…”[3] 7.Fu Ji was successfully listed in the Hong Kong Stock Exchange and Wei Dong admits that Tung Fai had assisted in the listing of Fu Ji. [4] 8.The above facts were not in dispute. What follow are issues of dispute between Wai Dong and Tung Fai. 9.Tung Fai says that in place of the Cooperation Agreement, there had been an oral agreement (“the Oral Agreement”) between him and Wei Dong that in consideration of the works to be done by him, Wei Dong would pay him $150 million for successful listing of Fu Ji and would further award him $50 million if he continued to work at Fu Ji after its successful listing for five years. 10.Tung Fai says that he had performed the terms of the Oral Agreement and is therefore entitled to $200 million from Wei Dong whereas Wei Dong denies that he had entered into the Oral Agreement as alleged, or any other agreement on like terms with Tung Fai.[5] However, the pleadings have been amended to say that Tung did not perform his obligations under the Alleged Oral Agreement. He failed to participate in the whole process of the listing application and did not pay all the costs of the listing. In the further alternative, Wei Dong pleaded that Tung Fai did not stay in management for 5 years after listing as Fu Ji went into voluntary liquidation and provisional liquidators were appointed in October 2009.[6] 11.Wei Dong admits that Tung Fai had advised and assisted on the listing of Fu Ji, which was ultimately successful in December 2004, and that he was an executive director for a period of not less than 5 years[7]and that Million Decade had paid him the amount of$38,688,676.70 during the period between 2005 to 2008 as ex gratia payment. The claims in HCA 1062 and 1063 of 2013 are for the amounts of $25,400,000 and $9,600,000 respectively paid by Million Decade and Top Ample, both controlled by Wei Dong as loans to Tung Fai. 12.Tung Fai admitted receipt of the amounts claimed, but he disclaims liability of repayment because the moneys were paid in satisfaction of the agreed sums totally $200 million under the Oral Agreement.[8] 13.Tung Fai also says that another sum of $80 million was paid by Wei Dong into a joint venture company controlled by his wife and Wei Dong’s wife for a hotel project in China. Taking all the monies received into account, Tung Fai therefore claims against Wei Dong the balance of HK$51,101,323.30 (plus interest) in HCA 1660/2013. 14.The above are the factual bases for the applications. FURTHER AND BETTER PARTICULARS The relevant legal principles 15.This application is made under Order 18 rule 12 of the Rules of the High Court (RHC), the relevant provisions of which are:
16.Wei Dong relies upon the legal principles set out in Well Joint Trading v Chiu, (unrep., HCA1768/2011, 9 July 2012), §§14-17:
Tung Fai has no dispute about the above principles. 17.Tung Fai relies upon the legal principles in Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd & Ors [1994] 2 HKC 264 Bokhary JA (as he then was) said at 269E-270E that the purpose of pleadings are:
18.Pleadings should be as brief as the nature of the case will admit. (per Lord Denman CJ in Williams v Wilcox [1838] 8 A&E 314 at 331; Shun Lin Weaving Factory Ltd v Eva Siu Cheung Yee Wah & Another [1980] 1 HKC 605 at 613). 19.As long as the pleadings do convey the nature of the party’s case and state the material facts, they should not attract applications for further and better particulars to clarify pleadings even though some details that are likely to come forth in discovery or witness statements are not disclosed. McPhilemy v Times Newspapers Ltd & Ors [1999] 3 All ER 775 20.“…excessive particulars can achieve directly the opposite result from that which is intended. They can obscure the issues rather than providing clarification. In addition, after disclosure and the exchange of witness statements, pleadings frequently become of only historic interest. ……the case is overburdened with particulars and simpler and shorter statements of case would have been sufficient. Unless there is some obvious purpose to be served by fighting over the precise terms of a pleading, contests over their terms are to be discouraged….” Lord Woolf’s remarks at p.793 of McPhilemy. 21.In assessing whether it is “necessary” to order the provision of further and better particulars, one must bear in mind the fundamental functions of pleadings, as stated by Ma CJHC (as he then was) in Wing Hang Bank Ltd v Crystal Jet International & Others [2005] 2 HKLRD 795 at 799:
22.Requests for further and better particulars should not be made for the purpose of cross-examining the other side. If the case pleaded by the other side is clear, then it is not for the receiving end to demand for F&BP simply in the hope that it would expose some weaknesses of such a pleaded case: see Qihoo 360 Technology Co Ltd v Fu Sheng (unreported, HCA 1637/2011, 30 April 2013) at §13 per Master H. Au-Yeung. The particulars requested under paragraph 13 23.These particulars, as submitted by Wei Dong, relate to the alternative pleaded defence, viz. Tung Fai has not fully performed the terms of the Oral Agreement and he wants the particulars of Tung Fai’s performance. 24.Wei Dong submits that as his alternative case is based on Tung Fai’s failure to fully perform the Alleged Oral Agreement, it entitles him to succeed in his defence in HCA1660/2013 even if the existence of the Alleged Oral Agreement is proved.Wei Dong expressly denies that Tung Fai had performed his obligations under the Alleged Oral Agreement. Tung Fai submits that Wei Dong’s defences are bare denials. 25.Paragraph 13 of the Statement of Claim in HCA1660/2013 pleads that Tung Fai had fully performed his obligations under the Cooperation and/or the Oral Agreement, in particular, for the purpose of the Listing Application, he:
26.Tung Fai opposes these requests. He says that the current requests ask for more “particulars” about the particulars already pleaded in §13(a) to (j) of the Statement of Claim. The particulars include:
27.There is no restriction on making particulars upon particulars given if those given are not clear enough or insufficient. The courts are hearing similar applications from time to time. The fundamental principle is that evidence should not be pleaded in the pleadings, only the necessary particulars of the claim should be pleaded. See O.18, rule 12(1) above. 28.Before discussing the arguments between the parties, it will be useful to look at the Amended Defence, in particular, §9, which disputes paragraph 13 of the Statement of Claim. I shall set out the full terms of this paragraph below:
29.Paragraph 12(c) of the Statement of Claim pleads “The plaintiff shall participate and be involved in the whole process of the Listing Application.” 30.Paragraph 12(d) of the Statement of Claim pleads “The plaintiff shall be responsible for paying all the costs of the Listing Application, …” 31.Whether the requests for further and better particulars should be entertained has to be ultimately determined by reference to the basic principles as set out in the authorities above, in particular, Ping Kai Engineering Co Ltd v Hong Kong Teakwood Works Ltd (unreported, HCCT 2/2001, Ma J (as he then was) 6 February 2002) “17. The function of particulars is to inform an opponent of the case he has to meet at trial: see Hong Kong Civil Procedures 2002 at paragraph 18/12/1. Thus, the provision of full and proper particulars not only enables the parties and the Court properly to prepare for trial, it also serves the important function of encouraging settlement. Settlements rarely occur without each side knowing the full and precise extent of the case made against him.” 32.Wei Dong submits that the purpose of asking for the particulars is to allow him to prepare his case against Tung Fai in his defence in HCA 1660/2013, such as if Tung Fai says that he had engaged auditors and accountants or legal advisors or the investment banks, he must be able to verify with those named identities in order to test Tung Fai’s evidence at trial. Otherwise, if Tung Fai claims in the course of cross-examination for the first time that he had engaged certain professionals or intermediaries who are not identified in the pleadings, it will be too late by then for Wei Dong to carry out investigations or seek discovery to verify whether Tung Fai is telling the truth. It is clearly necessary to have particulars of these matters now.[11] 33.Tung Fai certainly has the burden of proof of the facts as stated in his Statement of Claim, in particular, those facts as pleaded in paragraphs 12 and 13, subject to cross-examination by counsel acting for Wei Dong at the trial. 34.However, I have referred to Tung Fai’s witness statement, in which he said that he had caused his company Sky Achieve Limited to pay the expenses and as the events took place more 10 years ago, he did not keep documentary records; he had stood as the guarantor for the tenancy of an office of the company for the listing of Fu Ji and he had introduced “法資里昂証卷旗下投資基金公司” to Fu Ji. 35.Paragraph 13 of the Statement of Claim sets out the particulars of the works done under the Oral Agreement. Tung Fai now complains that what Wei Dong is asking are the evidence in support of the particulars. I tend to agree with Tung Fai’s argument. 36.The purpose of the particularized pleadings is to inform the other party the nature of one’s case so that the other is in a position to prepare his case. Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd & Ors. 37.The fact remains that Wei Dong has amended his Defence upon the existing Statement of Claim. He is putting Tung Fai to proof of his case. The fact also remains that Fu Ji had been successfully listed in Hong Kong Stock Exchange. Wei Dong had admitted that Tung Fai had rendered assistance for the listing of Fu Ji and Million Decade had paid him the amount of $38,688,676.70 during the period between 2005 to 2008 as ex gratia payment. Wei Dong is in control of Million Decade and the payments were made for Tung Fai’s performance. 38.The particulars under paragraph 13 of the Statement of Claim were set out in support of the performance of the terms of the Oral Agreement as pleaded in paragraph 12 of the Statement of Claim. Tung Fai is not obliged to plead the evidence for proof of the particulars in the pleadings. Shun Lin Weaving Factory Ltd. 39.Wei Dong’s concern that some professionals may be called at the trial is, in my view, too remote and even unreal. Tung Fai has served the witness statements and if he is to summon someone not mentioned in the witness statements, he has to obtain leave from the court. If he is to subpoena a witness to give evidence at trial, he has to apply for it and Wei Dong can raise objections to such applications. 40.I also agree that such requests for particulars amounts to cross-examination of Tung Fai on the particulars, which is prohibited as held in Well Joint Trading. Paragraph 20 41.The particulars in relation to paragraph 20 (c) and (d) of the Statement of Claim in HCA 1660/2013 refer to the injection of $80 million to the joint venture company for the hotel project in China. 42.Wei Dong submits: “it is true that some of these matters have been covered in evidence: see 1st Tung WS, §31(8)-(10) [C/53] where Tung claims that there was an oral agreement on the matters in §59 above in around April and May 2005…. It is necessary to bind Tung to his pleaded case. The alleged agreement that HK$80 million be treated as partial payment or set-off, as presently pleaded, is undated. While Tung seems to suggest in his witness statement that this agreement was made in April/May 2005, when cornered at trial he may rely on other dates or other oral agreements on the matter with impunity unless he is bound to a definite case on his pleadings. [12]” 43.Obviously, the purpose of asking for particulars of this paragraph is to either establish Wei Dong’s case that the Oral Agreement is non-existent or to destroy Tung Fai’s case alleging otherwise.[13] 44.Wei Dong’s argument in his application for the 3rd supplemental witness statements had been dealt with and it would not be appropriate for me to re-discuss the arguments here. Suffice it to say, the Decision was based upon the fact that first, Wei Dong and Yao Juan said that their 3rd supplemental witness statements are substantially the same as their previous witness statements, such facts having been set out in the previous witness statements as this issue was in the original pleadings; and second, the parties had expressed their views that this issue was irrelevant to the actions. See paragraphs 17 & 21 of the previous Decision. It would be quite clear that if the 3rd supplemental witness statements are substantially the same as the previous ones and they are irrelevant to the actions, Wei Dong had simply failed to demonstrate that the 3rd supplemental witness statements were necessary for fair disposal of the matter or for saving costs. Quite the contrary. 45.The consideration for the present application is different from that for the application for the supplemental witness statements that I had previously dealt with. 46.Here, Tung Fai had pleaded that he had taken into account of the payment of $80 million by Wei Dong into the joint venture company for the hotel project jointly held by their respective wives. Therefore he claims the balance of about $51 million. The question is: given the situation as stated above, should further and better particulars be ordered by this Court? 47.Tung Fai submits that there is no point in seeking further and better particulars on a point which (i) is not in issue between the parties, and (ii) does not affect the outcome of these actions. For the purpose of pleadings, i.e. identifying the issues to be tried, it is clearly not necessary for Wei to make those requests. Such requests are also not necessary for the fair disposal of the actions. [14] 48.I agree with Tung Fai. In HCA 1660/2013, Tung Fai relies upon this $80 million set-off to reach his claim of about $51 million. Wei Dong’s primary case is that the Oral Agreement is non-existent. He will only rely upon this issue after the court has found that the Oral Agreement did exist, in which event, it cannot be envisaged that he would dispute the $80 million set-off. Those particulars are not for a fair trial or saving costs. The requests for paragraph 20 are dismissed. INTERROGATORIES 49.I shall now come to the application in relation to interrogatories withdrawal. 50.The relevant legal principles in relation to interrogatory are not in dispute. 51.The jurisdiction for interrogatories is provided under Order 26 r.1 RHC:
52.In Lee Nui Foon v Ocean Park Corp. (No.2) [1995] 2 HKC 395 the court dealt with the admissibility of interrogatory. This authority confirms the legal principlesthat the interrogatories must relate to a matter in question between the parties. The court further held that the court retained an overriding discretion as to whether or not to allow them to be administered even if they were relevant. 53.In the Decision of Kao Lee & Yip (a firm) v Donald Koo Hoi Yan & Others (unreported, HCA8847/1993, 23 April 2002), Ma J (as he then was), the law of interrogatory has taken a further development where the learned judge held that to order interrogatory once admissibility was demonstrated was wrong, emphasizing the importance of necessity. 54.Tung Fai’s application for Wei Dong’s interrogatories to be withdrawn can be disposed of quite short, bearing in mind of the important legal principles as enunciated in the authorities above. 55.The first interrogatory is on the circumstances under which Tung Fai came to the view relating to the operational and compliance issues and the Cooperation Agreement. This issue is clearly not relevant to the issues in dispute in HCA1660/2013 because this is a common issue between the parties. Tung Fai told Wei Dong that the Cooperation Agreement would give rise to serious problems in relation to the proposed listing of Fu Ji and it was mutually agreed to be cancelled.[15] The answers to the questions would not be necessary for the trial as this is not an issue in dispute. This interrogatory has to be withdrawn. 56.The second interrogatory asked Tung Fai the question whether he had received reimbursement of the alleged payments for the fees of auditors and accountants, PRC legal advisers, investment bankers public relations firms, property valuers and surveyors and the overheads of the Listed Entity. Wei Dong submits that such information will throw light on whether the Oral Agreement did exist because if reimbursements had been made prior to the listing of Fu Ji, Tung Fai would have no reason to claim that the Oral Agreement existed because he had not paid the expenses. 57.This interrogatory has to be withdrawn for the reasons that if Wei Dong had the knowledge, as reimbursement must be from him or his company, he would have to adduce such evidence himself and it would be wasting time and costs for him to raise those questions. Second, I tend to agree with Tung Fai that whether reimbursements would vitiate the Oral Agreement is uncertain. The answers would not assist the court for a fair trial or saving costs. 58.The third interrogatory is the nature of the two sums of $80 million each injected to Crown Treasure as capital for its subsidiaries whether they are credited in the management or unaudited accounts of Crown Treasure and the audited accounts of Crown Treasure or otherwise. This question is objectionable because: first, this is not an issue in dispute in this action and Wei Dong had raised no objection as to the treatment of the money injected into Crown Treasure; second, there is no evidence that Tung Fai has control of Crown Treasure to supply the information requested and thus is oppressive; third, the answers to the question would not be for a fair trial or saving costs, quite the contrary is true. Wei Dong submits that Tung Fai could procure the information from his wife, who is in joint control of the company with Wei Dong’s wife. It begs the question why should not Wei Dong obtain such information from his own wife? Although in Tung Fai’s witness statement, it was stated that Mrs. Wei would not take part in the operation of the hotel project, she is, nevertheless the director of the company from which she has the power to obtain the accounts.[16] It must be withdrawn. 59.The fourth interrogatory asks Tung Fai as to how the sum of HK$16 million paid by Mr. Wei Ming to Strong Nation was treated. 60.Again, there is simply no evidence to show that Tung Fai has control of Strong Nation or its holding company. This request is therefore oppressive. It has no relevance to this action as no pleadings have been set for the factual background for this issue. It has to be withdrawn. 61.The fifth interrogatory relates to why Tung Fai took the view that it was not necessary for him to report his rewards under the Oral Agreement to the Inland Revenue Department. 62.As far as I can see from the pleadings in this action, Tung Fai has not pleaded this issue in his pleadings whereas Wei Dong has raised this issue in his defence in this action. Wei Dong is not permitted to raise the question, which was raised by himself, to obtain an answer from Tung Fai. This issue may be pursued in the cross-examination at trial. But to apply for interrogatory under O.26 RHC, one has to comply with the requirements under this Order, ie. the issue must be related to any matter in question between the parties. The phrase “any matter in question” may have a wider scope than any issues in the pleadings. However, one must not see it as having a free hand in administering interrogatories in civil litigation as Ma J. (as he then was) in Kao Lee & Yip (a firm) v Donald Koo Hoi Yan & Others (unreported, HCA8847/1993, 23 April 2002) had set out the guidelines for its operation. He said at paragraph 7 of his Decision as follows:
63.For the reasons above, the 5th interrogatory has to be withdrawn. So I order. 64.Tung Fai’s summons for Wei Dong to withdraw the interrogatories succeeds. COSTS AND ORDER 65.As to costs of the applications, they should follow the event. The costs are assessed under O.62, r.9A RHC to be $125,430 to be paid by Wei Dong within 14 days from the date hereof. 66.I shall now make an order in terms as follows:
CASE MANAGEMENT CONFERENCE
Mr. John Hui, instructed by Sit, Fung, Kwong & Shum, for the plaintiff of HCA 1660/2013 and the defendants of HCA 1062/2013 and HCA 1063/2013 Mr. Douglas Lam SC and Mr. Jason Yu, instructed by Henry Wai & Co. for the defendant of HCA 1660/2013 and the plaintiffs of HCA 1062/2013 and HCA 1063/2013 [1] See end of this Decision [2] §6 of the Amended Reply of HCA 1062/3013 [3] §9(1) & (2) ibid [4] See §§12 and 13(3) of the Amended Reply in HCA1062/2013 [5] §9 ibid [6] §14(2)(3) of written submissions; [7] §13 of written submissions; [8] §§23(b) & 24 of the Amended Defence in HCA 1062/2013 and §§23(b) & 24 of the Amended Defence in HCA 1063/2013 [9] §13 of the Statement of Claim in HCA1660/2013 [10] See §21 of written submissions; [11] §57 of written submissions; [12] §62 of written submissions; [13] See §58 of written submissions; [14] §33 of written submissions; [15] See §8(1) & (2) of the Amended Defence in HCA 1660/2013 [A-102] [16] Paragraph 31(8) [C-53] |
Cases cited in this judgment
Further hearings and rulings under HCA 1062/2013