Li Sek Keung v. Tsui Hin Chi and Another
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HCA 2020/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO 2020 OF 2012 ________________________ BETWEEN
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_______________ D E C I S I O N THE APPLICATIONS 1.By three summonses all dated 27 January 2015, the 1st and 2nd defendants make the following applications:-
2.The defendants contend that the ground for the Striking Out Application and the Withdrawal Application is on a point of law in that the materials in question are not relevant and hence they have not filed any evidence in support. On the other hand, the plaintiff has filed his 2nd Affirmation in opposition to the Striking Out Application and his 1st Affirmation in opposition to the Withdrawal Application. 3.As to the Discovery Application, the defendants’ ground of application is that there is a prima facie case on the existence of the audio recordings. The defendants rely on the Affirmation of 1st defendant to set out the background leading to the late discovery of certain audio recordings by the plaintiff and the procedural background of the application. The plaintiff has filed his 3rd Affirmation in opposition to the Discovery Application. 4.At the call-over hearing of all the three summonses on 17 December 2014, the plaintiff (who was then acting in person) and the defendants (who were represented by counsel) agreed that the summonses should be adjourned for argument with 3 hours reserved. The hearing for argument was then fixed on 8 September 2015 before me with 3 hours reserved. 5.On 3 July 2015, the plaintiff (who was then legally represented) took out a summons to re-fix the hearing for argument to another date with 1 day reserved (“Re-fixing Application”) as the 3 hours allotted would not be sufficient to deal with all three summonses. 6.The Re-fixing Application was heard by Master Ho on 22 July 2015. At the hearing, the defendants’ counsel informed Master Ho that the defendants’ submission would not take more than one hour. Master Ho then made no order in respect of the Re-fixing Application and reserved the costs of the Re-fixing Application for me to deal with on 8 September 2015. 7.Thus, apart from the three summonses, I also need to deal with the costs of the Re-fixing Application. THE PLAINTIFF’S CASE 8.In gist, the plaintiff’s pleaded case is that the defendants had informed the plaintiff that they were the shareholders and beneficiary owners of a Hong Kong company called China Investment Group International Finance Limited (“CIGIF”), which held a 60% stake in a Guangzhou company called 广州远兴房产有限公司 (“the Land Company”), and the Land Company had interests in a property project at 德政南路19-49號in the city of Guangzhou (“the Property Project”). 9.The beneficiary owner of the other 40% stake in the Land Company was a PRC resident named Ms Liang Jun Xian (“Liang”) who was the defendants’ partner in China. Liang was originally the sole beneficiary owner of CIGIF but the defendants paid HKD 50 million to Liang in exchange of all the shares of CIGIF. 10.The defendants had a serious dispute with Liang on the shareholding of CIGIF and the management and control of the Property Project. Liang instituted a legal action in Hong Kong (ie HCA 2288/2007) against the defendants for the return of all the shares in CIGIF. There was also another action (ie HCA 2586/2007) in which CIGIF made a claim against Liang. 11.The defendants informed the plaintiff that they were very much afraid of Liang as her husband was holding important position in the Police Force in Guangzhou and Liang herself was a representative of Peoples’ Congress in Yue Xiu District, Guangzhou and has significant influence in Guangzhou which may affect the management and control of the Property Project. 12.As both the 1st and 2nd defendants are Hong Kong residents and do not have experience in handling disputes with Liang, they obtained the plaintiff’s service to help them to negotiate with Liang and to get back their investment as much as possible. 13.After various discussion and meetings between the defendants and the plaintiff, on 24 October 2007, the 1st and 2nd defendants appointed the plaintiff as an agent of the defendants and CIGIF to negotiate with Liang and to deal with all the matters in relation to the Property Project, including assisting the defendants in handling the legal action HCA2288/2007. It was agreed between the plaintiff and the defendants that the plaintiff would charge his fees on a time-spent basis for the said services (“the 1st Agreement”). 14.During the course of negotiation with Liang, the plaintiff was informed by the defendants that Liang was going to sell the Land Company. As Liang was the Legal Representative of the Land Company, Liang had the legal right to sell the Land Company. The defendants then requested the plaintiff to prevent Liang from selling the Land Company and to find people to develop the Property Project or alternatively to find prospective buyers for the defendants to sell CIGIF and to get back their investment as much as possible. 15.To prevent Liang from selling the Land Company, it was orally agreed between the plaintiff and the defendants that the plaintiff would provide service to change the Legal Representative of the Land Company from Liang to an agent of the plaintiff for a fee of HKD 2.5 million (“the 2nd Agreement”). The 2nd Agreement was made on 15 November 2007 when the 1st defendant called the plaintiff who was in Guangzhou at that time. The 1st defendant said that he also represented the 2nd defendant and the fee of HKD 2.5 million was other than the usual time costs already charged by the plaintiff on ordinary ground work. The defendant did not have to pay if the change of Legal Representative was not confirmed. 16.In November 2007, the plaintiff successfully changed the Legal Representative of the Land Company and the service fee of HKD 2.5 million was paid. 17.As to the finding of people to develop the Property Project or alternatively finding potential buyers to purchase CIGIF, the plaintiff successfully found a buyer who was willing to purchase CIGIF with RMB 83 million in about June 2010. On 13 June 2010, when the plaintiff was in Guangzhou, the 1st defendant called the plaintiff and said that he also represented the 2nd defendant, and they entered into an oral agreement (“the 3rd Agreement”) whereby the plaintiff would be paid a remuneration of RMB 13 million if the deal for the potential buyer to pay RMB 83 million to purchase 100% shares of CIGIF was successful. 18.The deal was completed, but the defendants only made a partial payment of RMB 6.2 million to the plaintiff leaving an unpaid balance of RMB 6.8 million, which forms the subject claim of the plaintiff in this action. 19.It is pleaded in paragraph 16 of the Statement of Claim that the reason for making verbal contracts for the services provided by the plaintiff under the 2nd and 3rd Agreements was that the additional services (missions) involved very complicated issues of human factors, employing specific China agents with strong relationship and influences on that particular mission in China. The plaintiff would first investigate the complexities of each mission and see how much he could charge for the mission. Then, the plaintiff would quote a fixed price to the 1st and 2nd defendants verbally. The plaintiff would request the 1st and 2nd defendants to pay the agreed fees of each mission to the companies or persons designated by the plaintiff for his own sake of convenience. 20.The plaintiff also gives the reasons why the 2nd and 3rd Agreements between him and the defendants were made orally in paragraph 15 of his Reply as follows:-
THE DEFENDANTS’ CASE 21.The defendants’ pleaded case is that the 2nd defendant had only met the plaintiff about two times in about 2008 in Hong Kong and that he, his servants and agents had no dealings or contacts with the plaintiff whatsoever as alleged in the Statement of Claim. Only the 1st defendant had various meetings with the plaintiff and had told the plaintiff that he had a land investment project in Guangzhou and had invested in CIGIF. In HCA 2288/2007, Liang only claimed against the 1st defendant as the sole defendant. 22.Concerning the 1st Agreement, the defendants contend that there was only a written agreement (“the Time-Spent Agreement”) entered into between a firm operated by the plaintiff called Anderson and Company and the 1st defendant. Anderson and Company was to handle the matters arising from the 1st defendant’s investment in CIGIF and the service of Anderson and Company was charged at the rate of $1,500.00 per hour to be performed by the plaintiff. 23.However, the defendants deny the existence of the 2nd and 3rd Agreements. They contend that the services rendered by the plaintiff in relation to the change of the Legal Representative of the Land Company and the sale of the 1st defendant’s interest in CIGIF were within the Time-Spent Agreement, and that Anderson and Company had already charged the 1st defendant for such services in its two invoices (numbered A009-110335 dated 27 December 2007 and A008-023711 dated 28 April 2011 respectively) which were duly paid by the 1st defendant. ISSUES 24.The defendants submit that the only issue of this action is the existence of the 3rd Agreement, and in fact the plaintiff also stated in his latest CMC questionnaire that it is the only issue. 25.However, the plaintiff in his Skeleton Submissions stated that the main issues in dispute are as follows:-
26.The plaintiff also stated in his Further Supplemental Skeleton Submissions that this case involves the issues such as (a) whether the plaintiff had entered into the 2nd Agreement with the defendants; (b) whether the plaintiff entered into the 3rd Agreement which entitled him to be paid RMB 13 million; (c) If so, whether the plaintiff was paid RMB 6.2 million, leaving an outstanding balance of RMB 6.8 million; (d) whether the 2nd defendant was the 1st defendant’s nominee in respect of the shares of CIGIF; (e) whether the 2nd defendant also entered into the 3rd Agreement with the plaintiff; and (f) whether the 2nd defendant had only seen the plaintiff twice in 2008 and neither he nor his servants or agents had any dealing or contact with the plaintiff. 27.No doubt the main issue in this case is the existence of the 3rd Agreement. However, I do not agree with the defendants that this is the only issue. For example, the involvement of the 2nd defendant is clearly an issue that requires determination. If the court finds that there was this telephone conversation made between the plaintiff and the 1st defendant on 13 June 2010, the court still needs to determine whether the 1st defendant could represent the 2nd defendant and whether the 2nd defendant is liable under the 3rd Agreement or not. 28.Moreover, the determination of the parties to the 1st Agreement or the Time-Spent Agreement and the scope of these agreements are also relevant and important as it will help to decide whether the service of finding a buyer for CIGIF was provided by whom to whom and whether it was covered by the 3rd Agreement or the Time-Spent Agreement. 29.In fact, the existence of the 2nd Agreement is also an important background fact that will help the court to determine the scope of the 1st Agreement or the Time-Spent Agreement, which will in turn help the court to decide whether the 3rd Agreement is likely to exist or not. Moreover, the 2nd and 3rd Agreements are part and parcel of the exit strategy by which the defendants hoped to recoup their investment in the Property Project. The existence of the 2nd Agreement will support the existence of the 3rd Agreement. 30.As conceded by the defendants, the plaintiff may adduce evidence in relation to other disputed matters as found in the pleadings subject to the caveat that such evidence would assist the court in understanding the background of the action and in resolving the subject dispute. Thus, the disputed background facts that will assist the court in determining the existence of the 3rd Agreement are also issues in this case. 31.Moreover, although the main issue is of course whether the parties have entered into the 3rd Agreement, the credibility of the parties is also in issue when the defendants flatly deny there was such an agreement. The 3rd Agreement is orally made and hence there is little, if any, of documentary evidence of the agreement. When the parties’ respective cases are diametrically opposite, the court would need to go into some of the relevant background facts to ascertain the credibility of each witness so as to decide who is to be believed. STRIKING-OUT APPLICATION Legal Principles 32.The legal principles of striking out witness statement had been summarized in Talent Weaving Dyeing & Printing Ltd v Able Billion Textiles Ltd [2013] 2 HKLRD 479 at paragraph 5 as follows:-
33.The Court of Final Appeal had emphasised twice recently the importance of pleadings in defining the issues in a trial. In Sinoearn International Ltd v Hyundai-CCECC Joint Venture (2013) 16 HKCFAR 632, Ribeiro PJ held that:-
34.Also in Kwok Chin Wing v 21 Holdings Ltd, (2013) 16 HKCFAR 663, Ma CJ held that:-
35.Thus, it is for the court to exercise its case management function at this stage to exclude irrelevant matters by reference to the issues defined in the pleadings. 36.However, the court has to be prudent in exercising its discretion and should only strike out those parts that are clearly objectionable. In case of doubt, the court should leave it to the trial judge to decide. In Ng Yuk Pui Kelly v Dung Wai Man and others (unreported) HCA 1826/2011, Registrar Lung dismissed the summons to strike out parts of the witness statement and said this:-
37.The Registrar found an analogy with the approach to admissibility of expert evidence which may be of doubtful relevance as adumbrated in the case of Wong Hoi Fung v American International Assurance Company (Bermuda) Limited & Another [2002] 3 HKLRD 507. Impugned parts of the plaintiff’s witness statement 38.The defendants seek to strike out all together 39 paragraphs of the plaintiff’s witness statement either in whole or in part on the ground that they are irrelevant. However, the plaintiff contends that
39.Applying the above legal principles, I shall deal with the impugned parts of the witness statement in turn as stated below. (1) Paragraphs 14, 15 (except the first sentence) and 17 40.Paragraph 14 reads as follows:-
41.Paragraph 15 reads as follows:-
42.Paragraph 17 reads as follows:-
43.The defendants submit that these paragraphs are problematic because the plaintiff gave his opinion on the documents provided. In gist, he illustrated as to how the transactions and documents were abnormal and suspicious (concerning the transfers of shares from Liang to the 1st defendant, etc). They refer to pre-contract negotiation of the Time-Spent Agreement and are not relevant issues. They demonstrated the desire of the plaintiff to discredit the defendants with ungrounded accusations of wrongdoings. Not only that the defendants have to rebut the allegation that there were no such exchanges between the plaintiff and the defendants, but more importantly the impropriety of the defendants as suggested in this paragraph. These matters if admitted in evidence would involve considerable examination of records and possibly other documents which may well be relevant to two High Court Actions between the 1st defendant and Liang. They have however no relevance to the issue of the present case. 44.The defendants further submit that in these paragraphs, by reference to the accusations made by Liang against the defendants, the plaintiff is in fact making an allegation of fraud against the defendants through the backdoor while these matters were not pleaded at all, and that the plaintiff’s subjective opinion on those documents as abnormal or suspicious were not matters fit for trial. 45.I disagree with the defendants’ submissions. These paragraphs show what were discussed during the meetings in October 2007 between the plaintiff and both defendants. The evidence if accepted will establish the involvement of the 2nd defendant which is clearly in issue. I see no objection at all for the plaintiff to give details of what were said at the meetings including the opinions he gave to the defendants, as they can establish the authenticity of such meetings with both defendants if accepted. 46.Moreover, the plaintiff pleads in paragraph 5(d) of the Statement of Claim that the defendants had a serious dispute with Liang on the shareholding of CIGIF, which is denied by the defendants in paragraph 8 of the Defence. Paragraphs 14, 15 and 17 explain why Liang became the defendants’ nemesis, which is clearly in issue. 47.The defendants, referring to some authorities, submit that evidence of pre-contract negotiation and parties’ subject intention are inadmissible, but we are not dealing with interpretation of a written contract here. Such evidence is just to establish the background facts leading to the existence of the oral contracts. I think our case is different from the authorities cited by the defendants. (2) Paragraph 19 48.Paragraph19 reads as follows:-
49.The defendants submit that the background of Liang is irrelevant and in any event more than necessary. I disagree. Paragraph 19 supports paragraph 6 of the Statement of Claim which pleads that Liang was powerful and the defendants were very afraid of her. The defendants deny all this in paragraph 9 of the Defence. It also explains why the plaintiff tried to keep the 2nd and 3rd Agreements confidential and left not much of a paper trail. Obviously the defendants’ state of mind and Liang’s connections are in issue. (3) Paragraph 36 (except the first sentence), paragraph 37 (except the last sentence) and the first sentence of paragraph 38 50.The defendants seek to strike out paragraph 36 except the first sentence. Paragraph 36 reads as follows:-
51.The defendants seek to strike out paragraph 37 except the last sentence. Paragraph 37 reads as follows:-
52.The defendants seek to strike out the first sentence of paragraph 38, which reads as follows:-
53.The defendants submit that these paragraphs are irrelevant, but the plaintiff uses these paragraphs to disprove paragraph 5 of the Defence which denies that the plaintiff had met the 2nd defendant’s agents, but Messrs Kenneth Ng and Ross Yuen were the 2nd defendant’s agents. Such evidence if accepted will show that the defendants were telling a lie in this respect and the 2nd defendant was trying to distance himself from the deal with the plaintiff. 54.Thus, I do not agree with the defendants that these passages are irrelevant. (4) Paragraph 43 55.Paragraph 43 reads as follows:-
56.The defendants submit that paragraph 43 sets out the legal action taken by Liang against the 1st defendant, but it is unknown as to how the matters are relevant to this action as they are not dealing with the trials of HCA 2288/2007 or HCA 2586/2007. 57.The defendants further submit that it is common ground that there is indeed dispute Liang and the defendants and this is only evidence about pre-contract negotiation. More importantly, it includes more than necessary background to be considered by the court. 58.However, the defendants deny they had a serious dispute with Liang in paragraph 8 of the Defence save that the 1st defendant had informed the plaintiff of the legal action HCA 2288/2007. Paragraph 43 is therefore relevant to show the acrimonious relationship between Liang and the defendants. As aforesaid, I do not agree that the plaintiff cannot adduce pre-contract negotiation to establish the background facts leading to the oral agreements as we are not dealing with interpretation of written contract here. (5) Paragraphs 45 to 47 and part of paragraph 48 59.Paragraph 45 reads as follows:-
60.Paragraph 46 reads as follows:-
61.Paragraph 47 reads as follows:-
62.The defendants seek to strike out the underlined parts of paragraph 48 as stated below:-
63.Paragraphs 45 to 47 refer to the meeting between the plaintiff, the 1st defendant, Zhang (who had invested in the Property Project) and Xiao (former staff of Liang). The content of these paragraphs is about the risk of Liang selling the Land Company which led to the proposal of change of legal representative of the Land Company and hence the 2nd Agreement. Although the fact that there was a need and the proposal at the material time to change the legal representative is not in dispute, the existence of the 2nd Agreement is in dispute. The involvement of the 2nd defendant is also in dispute. The phone call made by the 1st defendant to the 2nd defendant will show the involvement of the 2nd defendant. Thus, the content of these paragraphs will provide the background leading to the existence of the 2nd Agreement which will in turn support the existence of the 3rd Agreement. 64.Moreover, if paragraphs 45 to 47 are deleted, there is no reference to the meeting of 5 November 2007 at all and the reader cannot make sense of the first part of paragraph 48, which does not refer to the time, venue and attendees of the meeting. (6) Paragraphs 53 and 54 65.Paragraph 53 statesthat:-
66.Paragraph 54states that:-
67.The defendants submit that paragraphs 53 and 54 are irrelevant as they are about the action taken by Liang and the investigation works done by the plaintiff, but I agree with the plaintiff that both paragraphs 53 and 54 are relevant as they relate to the background leading to the 2nd Agreement. Although on the plaintiff’s case, the contract sum of HKD 2.5 million was paid by the defendants, in view of the defendants’ denial of the 2nd Agreement, they are relevant not just on the defendants’ general credibility but also on the existence of the 2nd Agreement. The 2nd Agreement was closely related to the 3rd Agreement in that their purposes were the same, namely to help the plaintiff to realize the profits from the Property Project. Thus, they are clearly relevant. (7) Paragraphs 56 (except the first and last sentences) and 58 (except the first two sentences) 68.The relevant part of Paragraph 56 is underlined below:-
69.The defendants seek to strike out Paragraph 58 except its opening sentence as underlined below:-
70.The defendants submit that paragraph 56 except the first and last sentence is about the investigation works done by the plaintiff and is irrelevant, and that paragraph 58 except the first two sentences is about the negotiation between the plaintiff and the person who was later appointed as the legal representative of the Land Company and is also irrelevant. 71.However, paragraphs 56 and 58 show that both Lam Pong and Siu are no more than the plaintiff’s agents in relation to the deal with the defendants and the extent of their involvement in the change of the legal representative of the Land Company. Lam was arranged to be the legal representative of the Land Company in place of Liang. These paragraphs rebut the defendants’ claim in paragraph 17 of the Defence that the legal representative was changed to an agent of the 1st defendant and it is Siu who brought about the change as Siu claims in his witness statement. Paragraph 58 also shows how the figure of HKD 2.5 million was arrived at and this is not an artificial figure and with the explanations, the court would be in a better position to assess whether the plaintiff is telling the truth when he says that there was an oral agreement based on contingency fee. Thus, these paragraphs are relevant. (8) Paragraph 66 72.Paragraph 66 states that:-
73.The defendants submit that paragraph 66 is about the execution of the change of the legal representative and the task done by and the dealings between Lam, Siu and the plaintiff after the change of the legal representative, and they have no bearing to the 2nd and 3rd Agreements. 74.However, paragraph 66 shows that the plaintiff was in charge of the change of legal representative, not Siu as suggested by the defendants. This issue is clearly in dispute. (9) Paragraphs 73 to 80 (including the heading) 75.Paragraph 73 reads:-
76.Paragraph 74 reads:-
77.Paragraph 75 reads:-
78.Paragraph 76 reads:-
79.Paragraph 77 reads:-
80.Paragraph 78 reads:-
81.Paragraph 79 reads:-
82.Paragraph 80 reads:-
83.The defendants submit that paragraphs 73 to 80 are about the development of legal action in the PRC taken out by Liang and the responding measures taken by the plaintiff and they are irrelevant. 84.However, these paragraphs show the plaintiff’s work under the 2nd Agreement and it was the plaintiff who instructed Siu to remit money. It could establish the 2nd Agreement between the plaintiff and the defendants and Siu was working for the plaintiff only. Thus, they are relevant. (10) Paragraph 81 85.Paragraph 81states that:-
86.The defendants say that paragraph 81 is about the negotiation done by the plaintiff with a view to settle the dispute with Liang and is irrelevant. However, paragraph 81shows how influential Liang and her husband were, which in turn justifies the high fee which the plaintiff and the defendants agreed on and the need for confidentiality which caused the parties to make oral agreements. It is therefore relevant. (11) Paragraph 82 87.Paragraph 82 reads:-
88.The defendants say that paragraph 82 is about the mistrust developing between the new legal representative and the plaintiff and is irrelevant. However, paragraph 82 also shows the plaintiff’s involvement in relation to the 2ndAgreement and Siu and Lam’s subsidiary roles which are in dispute. It is therefore relevant. (12) Paragraphs 84 and 89 (except the first two sentences) 89.Paragraph 84 states that:-
90.The defendants seek to strike out the underlined parts of Paragraph 89 as stated below:-
91.The defendants say that paragraphs 84 and 89 are about the action taken by the plaintiff in tracking Liang and are irrelevant. However, paragraph 84 and the relevant parts of paragraph 89 could prove that the plaintiff’s concern about his personal safety is justified as Tse was involved with triad-related agents who could track Liang. So there was the need for confidentiality of the 2nd and 3rdAgreements and also for the high fee. They are relevant. (13) Part of paragraph 100 92.The defendants seek to strike out the underlined parts of paragraph 100 as follows:-
93.The defendants say that paragraph 100 is about the appointment of another agent to work for the defendants. The defendants have no quarrel to include the sentence of “I decided to suggest to Tsui and Mok to employ Tse to station in Guangzhou office on a full time basis to take over Lam’s job” and the last sentence which may serve as a background, but the rest is not necessary. 94.However, the underlined parts of paragraph 100 show that it is the plaintiff who was in charge of all “missions”’ for the change of the legal representative contrary to the defendants’ case. It is the plaintiff who decided on the split of the remuneration among him, Lam and Siu. That shows the subsidiary roles of Siu and Tse. It is therefore relevant. (14) Paragraphs 109 to 112 95.Paragraph 109 states that:-
96.Paragraph 110states that:-
97.Paragraph 111 states that:-
98.Paragraph 112states that:-
99.The defendants say that paragraphs 109 to 112 are about the mistrust between the plaintiff and the new legal representative and are irrelevant. However, paragraphs 109 to 112 show that Siu and Lam are no more than the plaintiff’s agent in relation to the performance of the 2nd Agreement and hence they are relevant. (15) Paragraph 116 (except the first two sentences) 100.Paragraph 116 reads:-
101.The defendants say that paragraph 116 states that it was difficult to find purchaser of CIGIF. The questionable part (ie the whole paragraph except the first two sentences) is giving the details as to how difficult it was and is irrelevant. However, as stressed by the heading of “The difficulties on Finding Buyers of CIGIF”, paragraph 116 relate to the difficulties facing the plaintiff in finding a buyer and the justification of the high fee. It also highlights the complexity of the 3rd Agreement. It gives the background to the 3rd Agreement. Moreover, without paragraph 116, paragraph 124 may not be comprehensible. Thus, the whole of paragraph 116 is relevant. (16) Paragraph 119 (except the first sentence) 102.Paragraph 119 states that:-
103.The defendants say that paragraph 119 states there were previous failed attempts to sell CIGIF. The first sentence already serves the purpose. The rest is giving the details of the failed attempts and is irrelevant. 104.However, these previous failed attempts could show that the defendants were desperate in finding a buyer and were willing to pay the plaintiff a high fee and are relevant. (17) Paragraph 149 105.Paragraph 149 states that:-
106.The defendants submit that paragraph 149 states that the plaintiff escorted the 2nd defendant to the firm of solicitors to make his affirmation in HCA 2288/2007. There is no plea that the plaintiff assisted the 2nd defendant in handling the litigation. It is simply inexplicable as to how it is relevant to the issue as to the existence of the 3rd Agreement. 107.However, this paragraph belies paragraphs 5 and 6 of the Defence wherein the defendants allege that the 2nd defendant did not by himself or his agent involved in any dealings with the plaintiff. It is therefore relevant. (18) Paragraphs 151 & 152 108.Paragraph 151 reads:-
109.Paragraph 152 reads:-
110.The defendants say that paragraphs 151 and 152 are in relation to the plaintiff’s handling of the legal action of HCA 2288/2007 and are irrelevant. However, both paragraphs 151 and 152 demonstrate that the plaintiff was heavily involved in the defendants’ litigation and contradict paragraphs 5 and 6 of the Defence which suggest that the 2nd defendant, his servants and agents had no contact or dealing with the plaintiff. Summary 111.In sum, I find that the paragraphs sought to be struck out are relevant and are not scandalous. They contain admissible evidence which render the plaintiff’s case on the oral agreements more credible and shows that the 2nd defendant was, contrary to the defendants’ allegations, a party to the 3rdAgreement. I do not think that it is right for the court to remove the evidence in the paragraphs as they tend to prove the existence of the 3rdAgreement and the 2nd defendant’s liability. Insofar as the relevant paragraphs concerning Siu, as Siu would be called to give evidence for the defendants, they also form the foundation for cross-examining Siu. Otherwise, questions directed at Siu would be objected to on the grounds of lack of basis if the paragraphs are struck out. 112.Even if such evidence are just marginally relevant or if I have doubt on their relevancy, I should still leave them to the trial judge to decide (see Ng Yuk Pui Kelly, supra). 113.In the circumstances, I agree with the plaintiff that the Striking Out Application should be dismissed with costs. WITHDRAWAL APPLICATION Legal Principles 114.The principles governing applications for interrogatories are clear and are set out in Lee Nui Foon v Ocean Park Corporation (No 2) [1995] 2 HKC 395. In sum, the interrogatories must: (1) relate to ‘a matter in question’ between the parties; (2) be necessary either for the disposal fairly of the cause or matter or for saving costs; (3) not be fishing; (4) not be oppressive; (5) not be prolix; (6) not be imprecise; (7) not be questions which go to the evidence; (8) not be questions which required an answer which is a matter of opinion or for an expert; (9) not be questions which go to the facts which will assist in establishing the opposing party as opposed to the case of the party seeking to interrogate; and (10) not be effectively asking documents or discovery. 115.The interrogatories must not represent the sort of “deposit-taking exercise” which Ma J (as he then was) warned against in Kao Lee & Yip v. Donald Koo, HCA 8847/1993 as follows:-
116.However, in an application for withdrawal of interrogatories, the burden lies on the applicant to satisfy the court why each ofthe interrogatories ought to be withdrawn (see Mega Yield International Holdings Ltd v Fonfair Company Ltd, (unreported), HCA 948/2009). 117.The overriding principle for administering interrogatories is that interrogatories must relate to a matter in question between the parties and must be necessary either for disposing fairly of the cause or matter or for saving costs. 118.Besides, the guidelines on relevance and necessity can be found in Det Danske Hedeselskabet v KDM International Plc [1994] 2 Lloyd’s 534:-
119.Interrogatories are admissible where they go to support the applicant’s case or destroy the opponent’s (see Kao Lee & Yip (a firm) v Donald Koo Hoi-yan & Ors, unreported,HCA 8847/1993). 120.The right to interrogate is not confined to the fact directly in issue, but extends to any facts the existence or non-existence of which is relevant to the existence or non-existence of the facts directly in issue (see Mega Yield International Holdings Ltd, supra). 121.A matter of evidence is more appropriately dealt with by interrogatories than by further and better particulars (see Hong Kong Civil Procedure 2015, paragraph 26/4/7). Interrogatories 122.In the present case, the defendants have not filed any affirmation to support the Withdrawal Application, but they submit that the present interrogatories administered by the plaintiff are not relevant, fishing and are at best to be put in cross-examination. 123.The plaintiff, on the other hand, submit that the interrogatories have been administered subsequent to filing of the witness statements of 1st defendant, Siu and Chung Cheuk Ming for the plaintiff’s preparation of his case in the trial and thus are not premature. The interrogatories consist of short, direct and simple questions and they do not require the defendants’ detailed or in-depth investigation. Costs incurred by the defendants are not likely to be substantial. 124.The plaintiff also submits that the interrogatories relate to the evidence given by the defendants by way of witness statements instead of their pleaded case. Seeking such information by way of interrogatories is more appropriate than by further and better particulars. The interrogatories do not solely relate to the defendants’ credibility or at all and thus the plaintiff is not dry-running his cross-examination at trial against the defendants. 125.I shall deal with each of the interrogatories below. (1) Interrogatories 1 and 2: details of the alleged trust agreements made between the 1st defendant and the 2nd defendant as to the transfer of 30% and subsequently 70% shareholding of CIGIF from the 1st defendant to the 2nd defendant 126.The defendants say that the questions put under this head are in relation to the transfer of shares of CIGIF by the 1st defendant to the 2nd defendant. They presuppose that there were agreements between the defendants in relation to the transfer which is however not the case of the defendants. The questions are not relevant to the present dispute. At best, it is a deposit taking exercise to have a dry run of cross-examination. 127.However, it is the defendants’ assertion that the 2nd defendant was never involved in any of CIGIF’s matters or investment, or any dealings with the plaintiff. The 1st defendant also denied telling the plaintiff that the 2nd defendant had any beneficial interest in CIGIF or the 1st defendant was acting on behalf of the 2nd defendant. 128.It is inexplicable why the 1st defendant transferred his shares in CIGIF to the 2nd defendant who in turn held them on trust for the 1st defendant, and why the 1st defendant would transfer his shares on two occasions and in such percentage. Despite the defendants, in their Defence, only admitted the 1st defendant told the plaintiff that the 1st defendant had invested in CIGIF, the above version of shareholding transfer and trust arrangement has never been pleaded. 129.Should the details of the agreements only be elicited during cross-examination at trial, or should any written form of such trust agreements be discovered during trial, this is likely to prejudice or disrupt the plaintiff’s conduct of his entire case. As such, I agree with the plaintiff that it is more desirable for the plaintiff to obtain these information at this stage. 130.Besides, the details of the alleged trust agreements between the 1st defendant and the 2nd defendant are highly relevant to the involvement of the 2nd defendant and are also necessary for the plaintiff to properly prepare his case before the next stage is embarked upon, especially whether the 2nd defendant should remain as a defendant in this action and whether the plaintiff should pursue further interlocutory applications, like specific discovery, against the defendants. This should also save unnecessary costs incurred by the parties. (2) Interrogatory 3: details of an alleged payment pursuant to a letter of appointment 131.The defendants submit that the plaintiff is purporting to cross-examine as to whether the 2nd defendant had returned the sale proceeds of CIGIF to the 1st defendant. It is another attempt of fishing and having a dry run of cross-examination. 132.However, this interrogatory is relevant to the 2nd defendant’s involvement in the matters of CIGIF. If the defendants’ version is true and the 1st defendant has all along been the sole beneficial owner of the shares in CIGIF, part of the consideration which was transferred to the 2nd defendant pursuant to the letter of appointment should have been returned to the 1st defendant. 133.Thus, I find that this interrogatory is relevant and should be allowed. (3) Interrogatory 4: details of an alleged agreement made between the 1st defendant and Siu as to the change of legal representative of the Land Company 134.The defendants submit that this interrogatory concerns the agreement between the 1st defendant and Siu whereby the 1st defendant agreed to pay Siu HKD 2.5 million for the change of legal representative of the Land Company. The 1st defendant’s evidence highlights there was an authorization form issued by the 1st defendant authorising an accountant to make a payment of HKD 2.5 million to Siu, but the defendants never paid the plaintiff the said sum as alleged. 135.However, I agree with the plaintiff that this interrogatory is relevant to the existence of the 2nd and 3rd Agreements and is therefore relevant. (4) Interrogatory 5: details of a conversation between the plaintiff and the 1st defendant 136.The plaintiff is willing to withdraw this interrogatory. (5) Interrogatory 6: details of an alleged agreement between the 1st defendant and the buyer of the 1st defendant’s interest in CIGIF 137.The defendants submit that this line of questioning is about the particulars of the agreement of the sale of the shares of CIGIF. There is however no dispute that the buyer was introduced by the plaintiff. The plaintiff should know the details of the agreement better than anyone. This interrogatory has no purpose except fishing. 138.However, this interrogatory is relevant to the existence of the 3rd Agreement and whether the service was covered by the 1st Agreement. In their Defence, the defendants denied that the 3rd Agreement existed and averred that the service of selling the 1st defendant’s interest in CIGIF was within the 1st Agreement. However, in his witness statement, the 1st defendant claimed that it was he who reached a final agreement with a subsequent buyer who was willing to acquire all the shares in CIGIF in the sum of RMB 83 million. It is strange that the 1st defendant would need to communicate with the buyer himself if he already paid for the service pursuant to the 1st Agreement. Clarifying the details under this interrogatory is necessary. (6) Interrogatory 7: details of an alleged appointment made by the 1st defendant that Siu be appointed to sign the agreement of sale of CIGIF 139.It is about the appointment of Siu to assist the plaintiff to sign and complete the sale and purchase agreement of the shares of CIGIF. The defendants say that it is entirely unknown as to the relevancy of this line of questioning, when it is common ground that the buyer was introduced by the plaintiff. 140.The interrogatory is relevant to the existency of the 2nd and 3rd Agreements as to whether the agreements to perform the services of changing the legal representative of CIGIF and selling the 1st defendant’s interest in CIGIF were entered into between the plaintiff and the defendants. (7) Interrogatory 8: details of any agreement made between the 1st defendant and Siu that the 1st defendant be assisted by Siu in the course of selling the 1st defendant’s interest in CIGIF 141.This is in the same situation as in Interrogatory 7. (8) Interrogatory 9: details of communication between the 1st defendant and Siu as to Siu’s knowledge of paying other persons 142.The defendants say that this interrogatory is a fishing exercise, but I think it is relevant to whether Siu was in charge of the mission for looking for a buyer. (9) Interrogatory 10: details of the alleged assistance provided by Siu in relation to matters of CIGIF 143.This is in the same situation as in Interrogatory 7. Summary 144.As aforesaid, I find that all the interrogatories are relevant to the issues in dispute and the administering of interrogatories serves the purpose of saving costs and promoting fair and efficient conduct of the action. Thus, the defendants fail to discharge their burden of proving why each of these interrogatories should be withdrawn. 145.The Withdrawal Application should therefore be dismissed with costs to the plaintiff. DISCOVERY APPLICATION Legal Principles 146.The relevant principles governing Order 24 rule 3 of the Rules of the High Court are well settled. An order may be made for a further and better list of documents where it appears: (a) from the list itself; or (b) from the documents referred to in it; or (c) from admissions made either in the pleadings of the party making discovery or otherwise, that the party making discovery has or has had other relevant documents in his possession, custody or power (seeHong Kong Civil Procedure 2015 paragraph 24/3/7). 147.As to the application under Order 24 rule 7 of the Rules of the High Court, there is no jurisdiction to grant such order unless the party seeking specific discovery can make out a prima facie case that:-
148.In Ngan In leng v Chu Yuent Wah (No 1) [2013] 1 HKLRD 717 at 729, DHCJ Au-Yeung (as she then was) observed that: -
Audio recordings 149.By the Discovery Application, the defendants seek to discover some audio recordings that they say the plaintiff should have. 150.The history of discovery is summarized below:-
151.Subsequent to the taking out of the Discovery Summons, the plaintiff has filed a Supplementary List of Document dated 6 February 2015 covering the said 7 audio recordings. 152.However, the defendants say that it only satisfies paragraphs 1(a) & 1(b) of the Discovery Application. The plaintiff still fails to verify the list by affidavit in accordance with paragraph 2 of the Discovery Application. 153.The plaintiff has not complied with paragraphs 1(c) and 1(d) of the Discovery Application which are in relation to discovery of all audio recordings concerning the 3rd Agreement and the plaintiff’s alleged demand to the defendants for payment of the outstanding fee under the 3rd Agreement. 154.The defendants submit that a prima facie case is established on the existence of such recordings:-
155.On the other hand, the plaintiff, in his witness statement dated 12 December 2014, sets out the background of the audio recordings with file names 001 dated 22 July 2009, 2011042501301900 dated 25 April 2011 and 2011111816270400 dated 18 November 2011 respectively in paragraphs 110, 181, 182 and 200 to 202. These 3 audio recordings are those referred to in paragraph 1(a) of the Discovery Application. 156.By the Supplemental List of Documents dated 12 December 2014, the plaintiff disclosed the transcripts of the above 3 audio recordings. 157.By a letter dated 5 January 2015, the plaintiff informed Ng, Au Yeung & Partners, solicitors for the defendants that a CD containing 13 audio recordings (which include the above 3 recordings and which are all relevant recordings in the plaintiff’s possession) was available for collection. The file names of the audio recordings are as follows: -
158.On 9 January 2015, the above CD was provided to the defendants’ solicitors and they have acknowledged receipts on the same date. In other words, by 9 January 2015, the defendants already obtained files of all the audio recordings as requested by them. 159.By the Further Supplemental List of Documents dated 6 February 2015 (a date after the Summons was taken out), the plaintiff discovered all the audio recordings which included all the above 13 audio recordings. 160.The plaintiff therefore submits that the application under paragraphs 1 and 4 of the Discovery Applicationfor a further list of documents and inspection of documents as specified under paragraphs 1(a) and (b) simply falls away and should not be entertained. 161.As to the documents specified under paragraphs 1(c) and (d) of the Discovery Application, the plaintiff submits that the defendants plainly fail to show that the requested documents are in the plaintiff’s possession or are even in existence for the following reasons:-
162.The plaintiff therefore submits that the defendants fail to make out the prima facie case as to existence and possession of the audio recordings in question. 163.Besides, the plaintiff has already confirmed that there is no other relevant audio recording within his power, custody and possession, apart from those disclosed. As such, it is only a waste of unnecessary costs for the court to order the plaintiff to make another affidavit verifying the Further Supplemental List of Documents. 164.The plaintiff believes that the Discovery Application is a mere fishing exercise and delaying tactic and should not be entertained. My ruling 165.I do not accept that the defendants have established a prima facie case that there are more audio recordings than those that have been disclosed by the plaintiff. The mere fact that the plaintiff had omitted to produce some audio recordings previously does not give rise to the fact that the plaintiff must have some more. The facts relied on by the defendants cannot show that the plaintiff must have recorded each and every single conversation as a habit. The plaintiff has repeatedly said that those audio recordings produced are all he has. I have no reason to disbelieve him. It is clear that if there are any further recordings relating to the oral agreements, the plaintiff should be more than happy to produce them, as the defendants’ case is simply that there was no such oral agreements at all. Any further recordings concerning the oral agreements would just damage the defendants’ case rather than helping them. Thus, there is no reason for the plaintiff to hide such recordings. 166.I also agree with the plaintiff that another affidavit verifying the Further Supplemental List of Documents is simply a waste of costs. 167.Thus, the Discovery Application should be dismissed with costs to the plaintiff. RE-FIXING APPLICATION 168.As can be seen from the correspondence passing between the parties, the Re-fixing Application was taken out by the plaintiff because the plaintiff was advised by counsel that the argument for all three summonses would take at least one day, but the defendants refused to accept this. 169.At the hearing before Master Ho, it is clear that Master Ho did not make any order in respect of the Re-fixing Application because he was told by counsel for the defendants that the defendants’ submission would be within an hour. It does not matter whether the defendants’ counsel was giving a promise or an undertaking at that time. The fact remains that Master Ho did not re-fix the case because of what the defendants’ counsel told him. 170.In actual fact, the defendants’ submission took one hour 45 minutes on 8 September 2015. The plaintiff’s submission took the rest of the 3 hours allotted and yet could not finish. I allowed the parties to go on with the submission in the afternoon on 8 September 2015. The plaintiff’s counsel used the whole of the afternoon and still could not finish the submission. Thus, the case was adjourned to another date with 2 hours reserved. The adjourned hearing was fixed on 27 January 2016 at 2:30 p.m. but the parties could only finish all the submission at about 4:45 p.m. 171.Thus, it is clear that the original estimated hearing time of 3 hours was totally insufficient. The plaintiff could not be blamed when he first agreed to this time estimate as he was acting in person. He acted rightly by taking out the Re-fixing Application after receiving counsel’s advice. On the other hand, it is clearly wrong for the defendants to insist on 3 hours when their own submission took one hour 45 minutes leaving not much time for the plaintiff to submit. 172.There were 39 paragraphs of the plaintiff’s witness statement and 10 interrogatories as well as specific discovery of audio tapes to be dealt with at the hearing. I think it is reasonable to foresee that 3 hours would not be sufficient to deal with all these matters. There is no reason for the defendants to insist on this time estimate. 173.The defendants blamed the plaintiff for not being able to give a time estimate of how long the plaintiff’s submission would take when the plaintiff was asked by Master Ho about this. It is not fair to suggest that the plaintiff was at fault on this. The plaintiff took out the Re-fixing Application because his counsel’s estimate was at least one day and that was a more reasonable estimate. There is simply no reason for the defendants to disagree with the plaintiff’s estimate. 174.In the correspondence passing between the parties, the defendants thought that the plaintiff wanted to re-fix the hearing because his previous counsel was not free on 8 September 2015, but that cannot be the reason for re-fixing because the plaintiff was prepared to use the same day on 8 September 2015 with extended hours. 175.Thus, I am of the view that the defendants should bear the costs of the Re-fixing Application. 176.However, the defendants suggest that there should be two sets of costs, one for the summons itself and the other for the call-over hearing on 22 July 2015. The defendants suggest that there should be no order as to costs for these two sets of costs. I totally disagree. If the parties had agreed to re-fix the hearing, they could have written to the court to re-fix the hearing instead of taking out a summons. The need to take out the summons was caused by the defendants’ disagreement with the plaintiff’s estimate, and hence the defendants should bear the costs. Likewise, the call-over hearing was also caused by the defendants’ disagreement with the plaintiff and hence the defendants should bear the costs. 177.The defendants submit that they should not bear any costs because of their wrong estimate of time. I disagree. The entire costs of the Re-fixing Application was occasioned by the defendants’ fault in giving such a wrong estimate of time and refusal to re-fix. There is no reason for the plaintiff to incur such costs if the defendants had been more reasonable. In fact the defendants had been warned that the plaintiff would apply for costs if they refused to agree to re-fix the hearing. 178.In the circumstances, the defendants must bear all the costs of the Re-fixing Application. CONCLUSION 179.By reasons aforesaid, I hereby order as follows:-
Mr Raymond Lau, instructed by Mike So, Joseph Lau & Co, for the plaintiff Mr Ross Yuen, instructed by Ng, Au Yeung & Partners, for the 1st and 2nd defendants |
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