Chan Kon Fung v. Gallop Pioneer Ltd and Another
Read the full judgment text of HCA 1357/2011 on BabelCite. This High Court CFI judgment.
1. The defendants in the present action, L’Sea Resources International Holdings Limited (“ D2 ”) and its wholly owned subsidiary Gallop Pioneer Limited (“ D1 ”) (collectively, “ Ds ”), took out the following applications:
Cited by 2 cases · Cites 7 cases
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HCA 1357/2011 [2018] HKCFI 766 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO 1357 OF 2011 ________________________
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__________________ DECISION (2) __________________ I. INTRODUCTION 1.The defendants in the present action, L’Sea Resources International Holdings Limited (“D2”) and its wholly owned subsidiary Gallop Pioneer Limited (“D1”) (collectively, “Ds”), took out the following applications:
2.In respect of the Joinder and Amended Joinder Summonses, Ds filed Nie’s 1st affirmation in support on 17 July 2014 (“Nie 1st Aff”), and P filed his 3rd affirmation in opposition on 27 August 2014 (“P 3rd Aff”). On 1 December 2014, the board of directors of HK Yunnan Tin passed a resolution to join in the present action as a defendant. 3.Pursuant to my order made at the hearing on 19 December 2014 (ie the 1st Hearing defined in my Decision handed down on 4 August 2016, “Decision”), Ds on 9 January 2015 served further revision of the 2nd Draft (“Ds’ Draft”) by introducing proposed amendments on the issue of “Cash Calls” and by additionally proposing other amendments. The 1st, 2nd and Ds’ Drafts named PRC Yunnan Tin and/or HK Yunnan Tin as the “Intended 3rd Defendant” and/or “Intended 4th Defendant”,[3] but the counterclaims therein sought reliefs against P only. 4.On 9 January 2015, Ds filed a summons for relief against the sanction imposed by paragraphs 4-5 of the order of Master Ho dated 26 June 2014 (“Sanction”) to allow them to take out the Amended Joinder and Expert Summonses in the event of any breach of the Sanction (which Ds denied) (“Relief Summons”). 5.On 3 June 2015, P filed a summons for leave to amend his Amended Reply and Re-Amended Defence to Amended Counterclaim (“AR&RADAC”) as per the draft attached thereto (“Amendment Summons”). 6.On 27 July 2015, Ds filed a summons for leave to file and serve the 6th affirmation of Ip Ka Fai (“Ip Affirmation Summons”). 7.At the hearing on 28 - 29 July 2015 (ie the 2nd Hearing defined in the Decision), I adjourned the Expert Summons pending the outcome of the other summonses. At such hearing, I granted leave for Ds to file/serve the 6th affirmation of Ip Ka Fai and reserved my decision on costs. By the Decision, I ordered that (a) costs of and occasioned by the Ip Affirmation Summons be costs in the cause of the Joinder Summons (whether to be amended or otherwise), and (b) retrospective leave be given for Ds to file/ serve the Nie 2nd and 3rd Affs in support of the Joinder and Amended Joinder Summonses with costs order nisi that Ds shall pay P costs of and occasioned by the Nie Affirmation Summons in any event to be taxed if not agreed. 8.In the Decision, I have set out the relevant background matters, procedural history and parties’ respective stance in the present action, which I adopt but will not repeat here. Thus, this decision should be read together with the Decision. I also adopt herein the abbreviations in the Decision. 9.By the Decision, I granted inter alia the following orders:
10.By the Decision, I also granted case management directions for lodging and serving the 2nd Core Bundle and supplemental written submissions for the 3rd Hearing. 11.On 31 August 2016, Ds filed their Re-Amended Defence and Counterclaim (“RAD&C”). On 26 October 2016, P filed his Re-Amended Reply and Re-Re-Amended Defence to Amended Counterclaim (“1st RAR&RRADAC”). 12.On 1 March 2017, I granted inter alia the following orders together with provision for costs (“1/3/17 Order”):
13.By 7 March 2017, Ds complied with the 1/3/17 Order (see paragraph 12(b) above) by causing its solicitors to give the Written Notice to PRC Yunnan Tin (and presumably HK Yunnan Tin – see paragraph 18(a) below). 14.On 5 April 2017, PRC Yunnan Tin’s solicitors replied to Ds’ solicitors (with copy to P’s solicitors) as follows:
15.On 10 April 2017, PRC Yunnan Tin’s solicitors filed Notice to Act. 16.On the same day, PRC Yunnan Tin as applicant filed a summons for the following reliefs (“PRCYT Summons”):
17.On 10 and 19 April 2017, PRC Yunnan Tin filed the affirmation of its solicitor Chan Kin Sang (“Chan Aff”) and the affirmation of Yao Jiali (director of PRC Yunnan Tin, “Yao”) (“Yao Aff”) respectively in support of the PRCYT Summons. Notwithstanding the 20/4/17 Order referred to in paragraph 19 below, neither P nor Ds filed any affirmation in opposition in relation to the PRCYT Summons 18.On 13 April 2017, HK Yunnan Tin’s solicitors filed Notice to Act. On the same day,
19.At the call-over hearing on 20 April 2017 attended by the legal representatives of P, Ds and PRC Yunnan Tin, I granted inter alia the following orders together with (i) directions for filing/serving affidavit evidence in respect of the PRCYT Summons and for lodging/serving the 2nd Core Bundle and written submissions / supplemental written submissions, (ii) other case management directions, and (iii) provision for costs (“20/4/17 Order”):
20.On 8 May 2017, P’s solicitors wrote to Ds’ solicitors (with copy to PRC Yunnan Tin’s solicitors) (“8/5/17 Letter”) referring to the 20/4/17 Order and stating as follows:
21.On 9 May 2017, PRC Yunnan Tin’s solicitors wrote to P’s and Ds’ solicitors to welcome P’s pragmatic approach for disposing of the joinder issue, which they presumed also applied towards disposal of the PRCYT Summons, so they looked forward to hear from P and Ds on the proposed order to be made. PRC Yunnan Tin’s solicitors also asked to be consulted on all consequential directions (including directions as to pleadings), and raised the issue of HK Parksong for consideration:
22.On 17 May 2017, Ds’ solicitors replied to P’s solicitors stating that whilst they agreed to have PRC Yunnan Tin and HK Yunnan Tin join in the present action, P should pay Ds’ costs of and occasioned by the Joinder and Amended Joinder Summonses (save for costs of the amendment of the Joinder Summons) to be taxed if not agreed, and urged P to propose a reasonable lump sum for consideration. 23.On 18 May 2017, PRC Yunnan Tin’s solicitors wrote to the solicitors for P, Ds and HK Yunnan Tin as follows:
For convenience, I shall refer to PRC Yunnan Tin’s proposed directions in the aforesaid letter as the “Proposed Directions” below. 24.On 24 May 2017, Ps’ solicitors replied to PRC Yunnan Tin’s solicitors (with copy to Ds’ solicitors) as follows:
25.On 24 May 2017, P’s solicitors wrote to Ds’ solicitors (with copy to PRC Yunnan Tin’s solicitors) to explain that although P adopted a pragmatic approach to dispose of the Amended Joinder and Relief Summonses by consent “having regard to the recent development of the case (which constituted material change in circumstances)” and with a view to have the substantive disputes between the parties resolved as early as possible (and hence save the court’s time and the parties’ costs), P did not accept the Amended Joinder and Relief Summonses were meritorious applications in the first place or P’s opposition was unreasonable, so P did not agree to pay Ds’ costs of and occasioned by the Joinder and Amended Joinder Summonses. But as a further (and final) attempt to save the parties’ time/costs, P offered for the costs of and occasioned by the Joinder and Amended Joinder Summonses (save for costs of the amendment of the Joinder Summons) to be Ds’ costs in the cause. However, P’s agreement to the joinder of PRC Yunnan Tin and HK Yunnan Tin was not dependent on the parties reaching an agreement on the issue of costs. 26.Pursuant to the order of Master J Wong dated 2 June 2017, the 1st RAR&RRADAC was expunged, and leave was granted for P to amend the AR&RADAC as per the draft annexed to the Consent Summons (as between P and Ds) filed on 29 May 2017, and to file the Re-Amended Reply and Re‑Re‑Amended Defence to Amended Counterclaim within 14 days thereof with consequential leave for Ds (if so advised) to file and serve their Reply to Re-Re-Amended Defence to Amended Counterclaim (if any) within 21 days thereafter. 27.On 5 June 2017, Ds’ solicitors replied to P’s solicitors (with copy to the solicitors for PRC Yunnan Tin and HK Yunnan Tin) to say P’s proposal as to costs was unreasonable and not acceptable, and to insist P should pay Ds’ costs since all along P unreasonably resisted the Joinder and Amended Joinder Summonses. But with a view to settle the matter amicably, Ds proposed for P to pay 70% of Ds’ costs of and occasioned by the Joinder and Amended Joinder Summonses (save for costs of the amendment of the Joinder Summons) to be taxed forthwith if not agreed. 28.On the same day, PRC Yunnan Tin’s solicitors replied to P’s solicitors (with copy to the solicitors for Ds and HK Yunnan Tin). In such reply letter, PRC Yunnan Tin’s solicitors noted the Joinder Summons sought to join PRC Yunnan Tin “in these proceedings”, and the title of such summons listed PRC Yunnan Tin as intended 3rd defendant vis-à-vis P, which remained as Ds’ position since their letters dated 17 May and 5 June 2017 proposed agreement with P to join PRC Yunnan Tin “into the proceedings”. PRC Yunnan Tin’s solicitors went on to say as follows:
PRC Yunnan Tin’s solicitors noted PRC Yunnan Tin was the only party who put forward the Proposed Directions to resolve the joinder issue, and neither P nor Ds put forward any proposed directions. PRC Yunnan Tin’s solicitors also replied to the letter by Ds’ solicitors dated 24 May 2017 as follows:
29.On 9 June 2017, Ds’ solicitors wrote to inform the solicitors for P and PRC Yunnan Tin (with copy to HK Yunnan Tin’s solicitors) that Ds agreed for the issues to be dealt with as per the Proposed Directions, and urged P’s solicitors to consider the matter seriously to avoid any unnecessary waste of cost. 30.On 9 June 2017, PRC Yunnan Tin’s solicitors wrote to the solicitors for P, Ds and HK Yunnan Tin to arrange for attendance before the Listing Clerk on 14 June 2017 to fix the dates for the 3rd Hearing. 31.On 12 June 2017, P’s solicitors replied to Ds’ solicitors to reject Ds’ counter-offer on costs, and to reiterate the stance in their letter dated 24 May 2017 that the joinder of PRC Yunnan Tin and HK Yunnan Tin could be proceeded with despite any disagreement between the parties on costs. It was said that P had been “expecting from [Ds] proposed timeline for filing and serving of [Ds’] amended pleading and consequential directions. As all along we were talking about joinder of the new parties as defendants in [Ds’] counterclaim, [Ds] should take the initiative to propose appropriate directions for our consideration”. P’s solicitors added that on 24 May 2017 they had commented that PRC Yunnan Tin’s Proposed Directions were “totally misconceived”. 32.On the same day, P’s solicitors replied to PRC Yunnan Tin’s solicitors (with copy to the solicitors for Ds and HK Yunnan Tin) by denying their allegations, and by asserting (a) the PRCYT Summons was wholly unnecessary for it served no real purpose but to escalate costs for all parties, (b) all along Ds “were asking for joinder of [PRC Yunnan Tin and HK Yunnan Tin] in their counterclaim” and from the outset PRC Yunnan Tin had confirmed to the court its “agreement to such structure of joinder”, (c) it was not for PRC Yunnan Tin to direct P to amend the Writ of Summons and Statement of Claim in whatever way PRC Yunnan Tin tried to dictate, (d) PRC Yunnan Tin’s Proposed Directions were misconceived and P “had been expecting from [Ds’ solicitors] (who are supposed to take the initiative for the joinder in [Ds’] counterclaim) for a set of appropriate proposed directions”, and (e) there was no basis for PRC Yunnan Tin to seek costs from P. P’s solicitors also noted “it appears that only the structure of the joinder and the issue of costs will need to be argued at the 3rd Hearing” given the development of the case. 33.On 12 June 2017, PRC Yunnan Tin’s solicitors replied to P’s solicitors (with copy to the solicitors for Ds and HK Yunnan Tin) to deny PRC Yunnan Tin’s stance was unreasonable, and to assert their Proposed Directions “are practical and will let all parties focus on the issues in dispute”. 34.On 13 June 2017, P’s solicitors wrote to PRC Yunnan Tin’s solicitors (with copy to the solicitors for Ds and HK Yunnan Tin) that (a) as between P and Ds “the only outstanding issue is costs only” and Ds had already indicated that a “costs only” hearing was required for the Joinder, Amended Joinder and Relief Summonses, but (b) as between P and PRC Yunnan Tin the outstanding issues were “both the structure of the joinder and the issue of costs” (even though P alleged that from the outset PRC Yunnan Tin had already agreed to join in Ds’ counterclaim), and the PRCYT Summons did not ask for costs against P. 35.On the same day, PRC Yunnan Tin’s solicitors replied to P’s solicitors (with copy to the solicitors for Ds and HK Yunnan Tin) to say (a) they did not understand the dispute between P and Ds to be confined to “costs only” since the letter by Ds’ solicitors dated 9 June 2017 took the view that “the action can be better dealt with as per [PRC Yunnan Tin’s] Proposed Directions”, and (b) “[it] is wishful thinking on your part that we had at the outset … confirmed … agreement to have the joinder done in the counterclaim”. 36.On 14 June 2017, P filed the Re-Amended Reply and Re‑Re‑Amended Defence to Amended Counterclaim (“2nd RAR&RRADAC”). The latest amendments therein could be summarised as follows:
37.On 21 September 2017, Ds’ solicitors wrote to P’s solicitors (with copy to the solicitors for PRC Yunnan Tin and HK Yunnan Tin) inter alia to note P disagreed with PRC Yunnan Tin’s suggestion that P “should file a statement of claim pleading [P’s] case on the Sum [ie the sum of AUD16,300,000]”, and to say this was “…… without prejudice to our position on the directions proposed by [PRC Yunnan Tin] as per their letter dated 18th May 2017 [ie the Proposed Directions]”. 38.On 26 September 2017, PRC Yunnan Tin’s solicitors wrote to the solicitors for P and Ds (with copy to HK Yunnan Tin’s solicitors) (a) to note “the stance outlined by [Ds’ solicitors] in their [letter dated 21 September 2017] is without prejudice to their position on the directions which we proposed on behalf of [PRC Yunnan Tin] in our letter dated 18th May, 2017 [ie the Proposed Directions]. By this we take it that [Ds] are in agreement with those proposed directions with only [P] resisting the same”, and (b) to urge P to urgently reconsider his position. 39.On 4 October 2017, P’s solicitors wrote to Ds’ solicitors (with copy to the solicitors for PRC Yunnan Tin and HK Yunnan Tin) to confirm P did not intend to make any fresh application to amend his 2nd RAR&RRADAC to plead the New Case (see paragraph 123 of the Decision). 40.On 13 November 2017, PRC Yunnan Tin’s solicitors sent to P’s and Ds’ solicitors copy Writ of Summons in HCA3132/2016 issued by PRC Yunnan Tin against HK Parksong, HK Yunnan Tin and P on 30 November 2016 (“PRCYT Action”). PRC Yunnan Tin’s solicitors explained that the PRCYT Action was issued as protective proceedings pending the outcome of the Joinder, Amended Joinder and Relief Summonses at the 3rd Hearing scheduled to be heard on 19 - 20 December 2017. PRC Yunnan Tin claimed it had to serve the Writ of Summons in the PRCYT Action given its imminent expiry on 30 November 2017, and asked whether P’s and Ds’ solicitors had instructions to accept service. 41.By a Consent Summons (as between P and Ds) filed on 27 November 2017 (“Expert Consent Summons”), P and Ds sought the following reliefs:
42.On 29 November 2017, this court raised written requisitions over the Expert Consent Summons. By their letter to the court dated 6 December 2017, P’s solicitors clarified that P’s consent for Ds to adduce expert evidence under the Expert Consent Summons was limited to the issue set out in paragraph 4 of Schedule 1 attached to the Expert Summons (ie in relation to the issue of production shortfall), and P still opposed Ds’ application for leave to adduce expert evidence on the expert issues in paragraphs 1 - 3 of Schedule 1 attached to the Expert Summons (“Other Expert Issues”). 43.At the 3rd Hearing on 19 December 2017 attended by Mr Li SC (and Mr But with him) for P, Mr Chan SC (and Mr Khaw SC and Ms Seto with him) for Ds, and Mr Wong SC (and Ms Kang with him) for PRC Yunnan Tin (with HK Yunnan Tin absent), I granted inter alia the following orders (“19/12/17 Order”):
44.In light of the 19/12/17 Order, the remaining argument that was heard by this court at the 3rd Hearing was the issue of costs of and occasioned by the Joinder, Amended Joinder and PRCYT Summonses:
45.Pursuant to the 19/12/17 Order (see paragraph 43(b) above), Ds filed the amended Joinder Summons on 21 December 2017. 46.Pursuant to the 19/12/17 Order (see paragraph 43(d) above), P filed his Re-Amended Writ of Summons on 22 December 2017. 47.On 10 and 24 January 2018, D3 and D4 by their respective solicitors filed acknowledgment of service to give notice of intention to defend. 48.On 25 January 2018, I granted inter alia the following orders with provision for costs:
49.On 12 February 2018, I granted extension of time of 35 days from the date thereof for D4 to comply with the 19/12/17 Order (see paragraph 43(g) above) to file and serve its Defence and Counterclaim. 50.On 26 February 2018, I extended time until 19 March 2018 for D3 to file and serve its Defence and Counterclaim (if any) pursuant to the 19/12/17 Order (see paragraph 43(g) above). 51.On 19 March 2018, D3 filed its Defence and Counterclaim whereby D3 raised counterclaim against P, HK Parksong, D4 and D1. 52.On 21 March 2018, HK Parksong by its solicitors filed acknowledgment of service in relation to D3’s counterclaim to give notice of intention to defend. 53.On 21 March 2018, D4 filed a summons (returnable before this court on 18 April 2018) for leave to file and serve its Defence and Counterclaim (if any) within 35 days from the date of the order to be made therein notwithstanding the time for doing so pursuant to my order dated 12 February 2018 had expired (see paragraph 49 above). On the same day, D4 filed the 2nd affidavit of its solicitor Yip Ki Chi Luke in support of such summons. II. PLEADINGS AND AFFIRMATION EVIDENCE 54.On 11 August 2011, P commenced the present action against Ds for recovery of the Receivables, an account/inquiry of all income/ payments to be received by the Review Group for the Receivables, and payment upon such account/inquiry, which claims were premised on the accuracy of the Completion Accounts that there were no Payables but there were Receivables in the sum of AUD15,143,422.44. On 12 October 2011, Ds filed their D&C to deny liability and to plead D1’s counterclaim against P. On 9 December 2011, P filed the Reply and Defence to Counterclaim. Both P’s and Ds’ pleadings were subsequently amended. 55.In the RAD&C, Ds claimed inter alia that the accounts of HK Yunnan Tin as at 4 March 2011 were inaccurate, and averred inter alia that if the correct position (as PRC Yunnan Tin alleged) was that P’s advance of AUD16,300,000 on behalf of PRC Yunnan Tin to HK Yunnan Tin should have been booked as shareholder’s loan to HK Yunnan Tin to form part of the Payables, then “[the] amount of shareholders’ loan assigned by [P] to [D1] is reduced from HK$217,677,147 to HK$92,038,377, the difference being HK$125,638,770, the Hong Kong dollars equivalent of AUD16.3 million on 4 March 2011, date of completion”. 56.In the 2nd RAR&RRADAC, P set out various allegations in relation to PRC Yunnan Tin:
57.A large part of P’s, Ds’ and PRC Yunnan Tin’s affirmation evidence for the Joinder, Amended Joinder and PRCYT Summonses was spent in setting out the background matters,[6] procedural history of the Shenzhen Proceedings referred to in paragraph 65 below,[7] and P’s and Ds’ respective case in relation to the 18% Funds and 16.3m Payment.[8] These matters had been canvassed in detail in the Decision, so I do not propose to recount P’s, Ds’ and PRCYT’s affirmation evidence in any detail below. Rather, I adopt the aforesaid parts of the Decision, and merely highlight below some other matters raised in the affirmation evidence. (a) Ds – Nie 1st, 2nd and 3rd Affs 58.The present action concerned P’s sale and D1’s purchase of the entire share capital of HK Parksong (solely owned by P prior to such transaction). Dispute arose over whether P failed to comply with the guarantees/warranties under the SPA (amended by 4 Supplemental Deeds) concerning inter alia (a) the financial condition of the Group Companies (including HK Yunnan Tin which was owned by HK Parksong (82%) and PRC Yunnan Tin (18%)), and (b) P’s liability for all outstanding Payables as at the Completion Date (see paragraph 49 of the Decision). 59.On such dispute, Ds claimed P misrepresented the Group’s accounts, and Ds were therefore in breach of the guarantees/warranties stipulated in the SPA. Ds alleged P made representations and furnished the A/C Info to the effect that HK Yunnan Tin was indebted to P / HK Parksong for about HK$590,000,000 which debt would be assigned to D1 upon the completion of the SPA. D1 contended the A/C Info failed to reflect the existence of a shareholder’s loan (AUD16,300,000) that was regarded to have been advanced to HK Yunnan Tin as debtor by P / HK Parksong on behalf of PRC Yunnan Tin as creditor, ie the 18% Funds (see paragraph 50 of the Decision). 60.Nie added it was evident from the accounts/ledgers disclosed by P upon discovery and from advice by Ds’ financial expert that there appeared to be further breaches of the SPA in relation to the 18% Funds (AUD16,300,000) given the conflicting treatment over the ownership of such advance to HK Yunnan Tin in the 1st, 2nd and 3rd Sets that were prepared/produced by or on behalf of P (see paragraph 2 of the 1st Schedule to the Decision).[9] Nie claimed that Ds’ financial expert advised that the 18% Funds (AUD16,300,000) could be recorded as loan capital owed to PRC Yunnan Tin in HK Yunnan Tin’s books/accounts, and that a finding to the effect HK Yunnan Tin was liable to repay the shareholder’s loan of AUD16,300,000 to PRC Yunnan Tin would mean (a) it constituted “Payables” under the SPA which P would be liable to repay to Ds, and (b) P would be in breach of warranty under the SPA (see paragraphs 3-6 of the 1st Schedule of the Decision), so Ds’ counterclaim encompassed claims for P’s misrepresentation and fundamental breach of the SPA. 61.On the other hand, P denied the existence of any such shareholder’s loan, misrepresentation and/or breach of warranty, and claimed he / HK Parksong advanced AUD16,300,000 to PRC Yunnan Tin for the latter’s acquisition of the 18% Shares in HK Yunnan Tin (see paragraph 52 of the Decision), which advance was to be repaid by PRC Yunnan Tin from future dividends to be declared by HK Yunnan Tin in favour of PRC Yunnan Tin.[10] P claimed such advance should be regarded as PRC Yunnan Tin’s contribution towards the share capital of HK Yunnan Tin, and should have been booked as such in HK Yunnan Tin’s accounts even though such sum was never so treated/booked and all along HK Yunnan Tin’s share capital remained as HK$10,000 only[11] (see paragraphs 50 - 51 of the Decision). In support of such stance, P pleaded there were “wrong entries” in the A/C Info that treated the 18% Funds as PRC Yunnan Tin’s loan to P (see paragraph 50 and 1st Schedule of the Decision). 62.Although P suggested the 26/8/11 Letter contradicted Ds’ case, Nie disagreed as (a) such letter (not issued on behalf of PRC Yunnan Tin) could not be taken as any indication of PRC Yunnan Tin’s position regarding the 18% Funds (AUD16,300,000), (b) the 8/9/11 Letter (from HK Yunnan Tin to P/Zhou), the letter from P’s solicitors to D1’s former solicitors dated 16 September 2011 (“16/9/11 Reply”), and the 26/9/11 Letter (from D1’s former solicitors to PRC Yunnan Tin) showed that (i) notwithstanding HK Yunnan Tin’s enquiries P’s holding 16/9/11 Reply did not clarify whether the 18% Funds were PRC Yunnan Tin’s shareholder’s loan to or share capital in HK Yunnan Tin, and (ii) there was no reply from PRC Yunnan Tin to the 26/9/11 Letter. Further, PRC Yunnan Tin’s letter to HK Parksong and HK Yunnan Tin dated 10 March 2014 (“10/3/14 Letter”) did not give any clear stance over the 18% Funds (AUD16,300,000), and instead asked the recipients to provide information regarding such sum “無論是以股東貸款的性質還是以出資款的性質”. 63.The dispute referred to in paragraphs 58-62 above was the “share capital versus shareholder loan” dispute and/or 1st Issue referred to in paragraph 79 of the Decision, ie whether funds in the sum of AUD16,3000,000 that PRC Yunnan Tin provided to HK Yunnan Tin (through P / HK Parksong) were PRC Yunnan Tin’s share capital in or shareholder loan to HK Yunnan Tin. I have explained in the Decision the 1st Issue that rested on the 18% Funds and the Commonality[12] was quite different from the 16.m Payment whether under the 2nd Issue[13] or 3rd Issue.[14] 64.Ds claimed the nature/status of the 18% Funds (AUD16,300,000) between PRC Yunnan Tin and HK Yunnan Tin (ie whether or not HK Yunnan Tin owed such sum to PRC Yunnan Tin) would have material impact on the litigation between P and Ds, and the determination of this issue would affect the interests of PRC Yunnan Tin and also those of HK Yunnan Tin (as it might potentially be held liable to repay AUD16,300,000 to PRC Yunnan Tin if the 18% Funds were shareholder’s loan). Nie said this was a real dispute that involved P, Ds, PRC Yunnan Tin and HK Yunnan Tin, so PRC Yunnan Tin and HK Yunnan Tin should be joined “in these proceedings” to enable all interested parties address the disputed issue and be bound by the judgment in the present action. (b) PRC Yunnan Tin – Yao Aff 65.The Yao Aff stated it was filed to support Ds’ Joinder and Amended Joinder Summonses and also the PRCYT Summons. Yao reiterated the background matters in Part IV of the Decision, including the SPA, 16/7/10 Minutes, 18/7/10 Agreement, 19/7/10 Assignment, 6/12/10 Supplement, 1st and 2nd Notices/Receipts and completion of the SPA (see paragraphs 12 and 23-28 of the Decision). The Yao Aff also referred to certain litigation by Xu/Chang against PRC Yunnan Tin in Shenzhen, Mainland China more particularly described in paragraphs 38 - 40 of the Decision (“Shenzhen Proceedings”). 66.Yao explained PRC Yunnan Tin’s case and highlighted the alleged confusion in P’s case as to the nature/status of the sum of AUD16,300,000 (ie the 18% Funds and 16.3m Payment each in the same amount of AUD16,300,000) and the parties’ true relationship as follows:
67.Yao claimed that on the basis of these 3 separate choses, the 1st and 2nd Notices/Receipts showed (a) HK Parksong assigned the Indemnification Chose in favour of P, (b) the parties accepted the Dividend Chose would be used to pay off the Indemnification Chose, and (c) HK Yunnan Tin accepted the Contribution Chose. P then assigned the Indemnification Chose to Xu/Chang who sued PRC Yunnan Tin for the same in the Shenzhen Proceedings, but the Shenzhen courts rejected PRC Yunnan Tin’s argument that the Dividend Chose was the sole means to pay off the Indemnification Chose. Yao said the Shenzhen Proceedings dealt with the Indemnification Chose, but the present action largely concerned the Contribution Chose, ie how it should be treated in the books of HK Yunnan Tin, which issue was related to the rights/liabilities between PRC Yunnan Tin and P / HK Parksong, and which would also affect the rights between P and Ds under the SPA. 68.Yao also referred to draft 2nd RAR&RRADAC circulated in late January 2017 that raised direct/indirect allegations against PRC Yunnan Tin as follows:
69.Yao said such pleas were to deny the existence/relevance and to avoid proper treatment of the Contribution Chose and thereby to deny any liability to Ds by (a) confusing the identities/roles of P and HK Parksong, (b) pleading half-truths through suppression of the full facts, (c) pleading contradictory (not alternative) versions of so-called facts to give P unreal options to put forward illusionary alternatives, (d) creating confusion through undisciplined use of the phrase “the said sum of AUD16.3 million”, and (e) pretending to accede to PRC Yunnan Tin’s case in relation to its 18% Funds when there was no parity of treatment with the 82% Funds from HK Parksong. 70.Yao said it was PRC Yunnan Tin’s case that the 16/7/10 Minutes and 18/7/10 Agreement established a joint venture between PRC Yunnan Tin and HK Parksong with each funding the proportionate share it assumed in such joint venture, and the same route was adopted for such funding by HK Parksong and by HK Parksong acting as agent for PRC Yunnan Tin.[26] Yao further claimed HK Parksong, HK Yunnan Tin and P clearly knew the 18% Funds (AUD16,300,000) acknowledged to have been paid by HK Parksong on behalf of PRC Yunnan Tin to HK Yunnan Tin should be treated in parity with the 82% Funds, but P, HK Parksong and/or HK Yunnan Tin sought to deprive PRC Yunnan Tin of its parity rights over the 18% Funds being P’s / HK Parksong’s contributions by purporting to assign those rights to Ds who had no such entitlement. On such basis, PRC Yunnan Tin supported Ds’ contention that the 18% Funds (AUD16,300,000) should be recorded in HK Yunnan Tin’s accounts as shareholder’s loan due to PRC Yunnan Tin (see paragraph 53 of the Decision) and hence an item of the “Payables” that P was liable to pay D1 (see paragraph 53 of the Decision and paragraphs 7 and 30 of the RAD&C). 71.Yao claimed the rulings in the Shenzhen Proceedings were not determinative of any issue in the present action because (a) the parties to the two proceedings were different, and (b) the Shenzhen Proceedings dealt with the Indemnification/Dividend Choses but the present action was concerned with the Contribution Chose. Yao further noted Xu/Chang resisted PRC Yunnan Tin’s application to stay the Shenzhen Proceedings on the basis that the present action in Hong Kong dealt with different subject matters, and they also objected to have P cross-examined on whether the joint venture partners financed HK Yunnan Tin in the form of share capital or loan capital. Yao claimed the extracts from the judgment dated 25 August 2014 in the Shenzhen Proceedings as pleaded in paragraph 54C(c)(iii) of the 2nd RAR&RRADAC were taken out of context because 廣東省深圳市中級人民法院 was referring therein to HK Parksong’s initial financing before PRC Yunnan Tin’s assumption of actual contribution (see paragraph 39 of the Decision). 72.Yao claimed that for the above reasons, PRC Yunnan Tin was substantially interested in the questions of law/fact between P and Ds and in the reliefs that might be granted in relation to the Contribution Chose that arose out of the same series of transactions, which observation might equally be true for HK Parksong as it would also be interested in the proper resolution of the nature/treatment of the Contribution Chose and consequential liabilities arising therefrom. (c) P – P 3rd Aff 73.P also reiterated the background matters canvassed in the Decision. P claimed his dispute with D1 concerned contractual dispute(s) in respect of the sale and purchase of shares pursuant to the SPA amended by 4 Supplemental Deeds that was completed on 4 March 2011, and D2 was the guarantor of D1’s obligations/liabilities under the SPA. On 11 August 2011, P commenced the present action against Ds for non-payment of monies payable to him by Ds under the SPA. Ds denied liability, and counterclaimed for alleged breaches of the terms and/or warranties of the SPA. 74.P claimed it appeared Ds’ joinder application might only be relevant to part of Ds’ counterclaim concerning alleged misrepresentation over matters related to alleged debts/other obligations of HK Parksong and/or its subsidiaries together with the correctness of the contents of books/accounts furnished to Ds, and consequent alleged breach of warranties under the SPA. But P suggested the Nie 1st Aff seemed to run a provisional new case (contrary to Ds’ previous position under their various witness statements) that there was in fact a shareholder’s loan of AUD16,300,000 that HK Yunnan Tin (as debtor) owed to PRC Yunnan Tin (as creditor) before the Completion, which should have been reflected and/or recorded as “loan capital” in the books/accounts of HK Yunnan Tin. 75.P’s position[27] was that none of the documents/records in relation to HK Yunnan Tin and/or PRC Yunnan Tin disclosed to Ds before the Completion[28] and none of the discovered documents suggested the existence of the alleged loan, and instead these documents (especially the 18/7/10 Agreement executed by PRC Yunnan Tin as a party thereto) showed the following:[29]
76.P further claimed the 26/8/11 Letter by PRC Yunnan Tin’s representatives on the board of directors of HK Yunnan Tin clearly showed PRC Yunnan Tin’s position was that HK Yunnan Tin did not owe any loan to PRC Yunnan Tin because PRC Yunnan Tin provided funds for “capital investment” (投資款) fulfilled by the 18% Shares in the name of PRC Yunnan Tin in accordance with the terms of the 18/7/10 Agreement. It was said with such clear indication from PRC Yunnan Tin itself (which assertion was prima facie against self-interest), Ds’ counterclaim premised on the existence of the alleged loan was doomed to fail, which strongly militated against any necessity for Ds to join PRC Yunnan Tin as a party to the present action, and Ds’ joinder application should be dismissed outright. After all, “[since PRC Yunnan Tin] shares a common position with [P], it is sufficient for [P] as a party alone to adduce evidence to the Court for due adjudication of such issue between [P] and [Ds].” 77.P claimed that even if the court was not minded to “pre‑determine” the merits of Ds’ counterclaim at this stage:
78.P added the fact that he (as creditor) assigned the AUD16,300,000 loan to Xu/Chang made the intended joinder of PRC Yunnan Tin even more remote to the present dispute. P claimed that he was not a party to the Shenzhen Proceedings, and was therefore unable to comment on the progress, merits and/or outcome (if any) of such proceedings,[31] but Xu/Chang and PRC Yunnan Tin were not parties to the present action. P was concerned that if PRC Yunnan Tin was joined as a party, there would be risk for inconsistent findings in different jurisdictions binding on PRC Yunnan Tin. It was said there was little benefit in the intended joinder of PRC Yunnan Tin and HK Yunnan Tin (when the proper role of PRC Yunnan Tin (or its representatives) at trial should be as witness only), but there would be risk of “judicial competition” between different jurisdictions if PRC Yunnan Tin was joined as a party, and all parties (including PRC Yunnan Tin) would have to incur additional unnecessary legal costs and lengthened trial hearing. 79.P feared the intended joinder would cause substantive delay to the present action that had progressed for more than 3 years with completion of exchange of rounds of witness statements. P claimed the case was ready for trial, but if PRC Yunnan Tin and/or HK Yunnan Tin were to be joined, the proceedings would have to start all-over again with further round(s) of witness statements. Moreover, the Nie 1st Aff did not explain why the joinder application was not taken out earlier when Ds were fully aware of the present disputes and there was no real recent development/event, which suggested such application was tactical abuse and satellite litigation to prolong the proceedings to wear P down financially and psychologically. P therefore asked for dismissal of Ds’ joinder application with costs. III. DECISION 80.In the Decision, I have set out the then existing pleaded case of P and Ds respectively (see paragraphs 70-90 of Part VIII(d) of the Decision), which essentially remained their pleaded case as I did not allow P to amend his pleadings to plead the New Case (which I have found did not to sit well with P’s Old Case) and dismissed the Amendment Summons. I adopt the analysis in paragraphs 70-90 of Part VIII(d) of the Decision, and not repeat the same here. 81.Whilst the analysis as to the nature, status and treatment of the 18% Funds and 16.3m Payment both in the sum of AUD16,3000,000 was sufficient to dispose of the Amendment Summons, Mr Wong SC submitted the 18% Funds only formed part of the Funds, and the real issue in the present action was the true state of the accounts of HK Yunnan Tin as at 4 March 2011 in light of the understanding/dealings pertaining to the treatment of all contributions by the involved parties, ie the Funds. IV. LEGAL PRINCIPLES (a) Joinder of parties 82.Order 15 rule 4(1) of the RHC provides as follows:
83.Order 15 rule 6(2)(b) of the RHC provides as follows:
84.The objects of Order 15 rule 6(2)(b) of the RHC as to joinder of parties are (a) to prevent multiplicity of actions and to enable the court to determine disputes between all parties to them in one action, and (b) to prevent the same or substantially the same questions or issues being tried twice with possibly different results, which objects are achieved by enabling a person not a party to be added as a party.[32] In Wing Mou Construction Co Ltd (in liquidation) v Cosmic Insurance Corporation Ltd and Mansion Holdings Ltd (Third Party),[33] it was said the object of Order 15 rule 4(4) of the RHC is to ensure all relevant matters in dispute in the action can be effectively adjudicated upon by the court and all relevant parties are before it, and under Order 15 rule 6(2)(b) of the RHC the court can “on such terms as it thinks just” permit a person to be joined as a defendant thereby allowing that person to participate (to whatever extent permitted by the court) in the action. 85.Hong Kong Civil Procedure 2018 states as follows:[34]
86.Idmiston Ltd v Asian Master Enterprises Ltd & anor[36] applied the test for necessary interest of the party to be joined under Order 15 rule 6(2)(b) of the RHC as formulated by Lord Diplock in Pegang Mining Co v Choong Sam,[37] ie “will his right against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action”. 87.In Wong Chun Loong Tony v Ada Ltd,[38] it was held that the court’s power to add a party under Order 15 rule 6(2)(b)(ii) of the RHC requires some interest in that party which is some way directly related to the subject matter to the action (and mere commercial interest in its outcome divorced from the subject matter of the action is not enough), but the existence of a cause of action between that party and one of the parties to the cause or matter is not a necessary prerequisite for this purpose. But “if the court is to have jurisdiction under (b)(ii) it is initially necessary that the question or issue mentioned in (b)(ii) should be common to (1) the intervener and a party to the cause or matter and (2) the parties to the cause or matter”. 88.In Man Whi Chung v Man Ping Nam & anor,[39] DHCJ A Cheung (as he then was) held that under Order 15 rule 6(2)(b)(i) of the RHC it is essential for an intending defendant to show he is sufficiently interested in the proceedings to be joined as an additional party, and even though the court has a wider jurisdiction to allow joinder under Order 15 rule 6(2)(b)(ii) of the RHC, there must exist between the person seeking to intervene and any party to the cause or matter “a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter”. Although a distinction should be drawn between an intervener with a legal interest and one who merely has an indirect and commercial interest (which is not enough) in the subject matter of the litigation, the court may allow a person with a doubtful interest in the subject matter of the litigation to be joined so that the doubt over his interest can be resolved at trial together with the relevant issues between the original parties. 89.Thus, even though “[generally] a plaintiff who conceives that he has a cause of action against a defendant is entitled to pursue his remedy against that defendant alone”, and “[he] cannot be compelled to proceed against other persons whom he has no desire to sue”, “a person who is not a party may be added as defendant against the wishes of the plaintiff either on the application of the defendant or on his own intervention, or in rare cases by the court on its own motion”, and “the jurisdiction of the court under this rule is entirely discretionary”.[40] “Where the presence of a third party before the court is necessary to ensure that all matters in dispute were effectively dealt with, the court may add the third party as a proper party in the proceedings, even though there is no cause of action against that party ……”[41] 90.Ma J (as he then was) in Wing Mou Construction Co Ltd (in liquidation)[42]held that although “[all] persons who have a legitimate legal or financial interest in the outcome of the matter in dispute are relevant parties”, “[the] court still retains a residual discretion to decide whether or not the order sought should be made”:
91.In Hong Kong Civil Procedure 2018, it was said “…… [the] power given by the rule is, however, widely exercised ……. though the addition of new parties may cause new expense and necessitate new evidence …… But, generally speaking, the court will make all such changes in respect of parties as may be necessary to enable an effectual adjudication to be made concerning all matters in dispute …..”[43] (b) Costs 92.Interlocutory costs Order 62 rule 3 of the RHC provides as follows:
93.It is trite that the issue of costs is a matter of discretion for the court, and subject to established legal principles, the court has a wide discretion, especially in relation to costs in interlocutory proceedings. Hong Kong Civil Procedure 2018[44] states that after the Civil Justice Reform (“CJR”), “…… the principle that costs normally follow the event is no longer the prescribed usual order but is instead just an option”. 94.At the same time, the special matters set out in Order 62 rule 5 of the RHC, to the extent they are applicable, are relevant as to how the court will exercise the discretion in interlocutory applications.[45] Order 62 rule 5 of the RHC provides that:
95.The new post-CJR approach was explained in Waxman & anor v Li Fei Yu & anor,[46] and more recently in Daimler AG (formerly known as Mercedes-Benz AG) v Helge Herbert Leiduck appointed by Order to represent the estate of Herbert Heinz Horst Leiduck, deceased & anor.[47] 96.In Waxman & anor, To J at pp 431 - 432 and 434 summed up the approach as follows:
97.Mr Li SC submitted that given such approach, it was not invariably the case an unsuccessful party in interlocutory proceedings would pay costs to the successful party. He pointed to a number of authorities where the court did not order costs in favour of the party making an application for joinder even though the application was opposed.[48] But Mr Chan SC submitted some of these cases concerned costs order nisi only (which suggested the question of costs had not been fully argued) or agreed costs in the cause. Mr Chan SC referred to two other authorities whereby the court allowed the contested joinder application with costs.[49] Since both Mr Li SC and Mr Chan SC referred to the above authorities for illustration rather than for principle, I do not propose to discuss them in detail although I have considered them. 98.In Daimler AG (formerly known as Mercedes-Benz AG), Lisa Wong J at paras 10 - 14 explained as follows:
99.Settlement The court should consider the terms of the parties’ agreement on the substantive relief sought in order to assess whether the applicant has obtained what they sought. In Re Lucky Ford Industries Ltd,[50] Harris J held that if judgment was entered for relief sought by the petitioner pursuant to a consent order or the respondent had withdrawn his objection to the relief sought by the petitioner resulting in judgment in his favour, costs would follow the event. But the position was more complex where a case was settled and the terms of the settlement did not involve granting any relief, and the petitioner only obtained something substantive under the terms of an agreement. Harris J went on to say:
100.Proper approach In respect of the Joinder and Amended Joinder Summonses, Mr Li SC confirmed it was not P’s contention that Ds acted unreasonably in making their joinder application, but he suggested the pivotal consideration was whether P had acted reasonably in resisting Ds’ joinder application up to May 2017 and later changing his stance over the matter. Mr Chan SC submitted this would not be right approach because such argument if taken to its logical conclusion would mean that even if the applicant acted reasonably in issuing, pursuing and succeeding (after contest or by consent/concession) the interlocutory application, the respondent would not have to pay costs if he had not acted unreasonably. Mr Chan SC submitted in such circumstances justice would have required the respondent to pay costs of the application unless he can show the applicant acted unreasonably. 101.In my view, whilst the court now has greater discretion and flexibility on costs in interlocutory proceedings by taking into account all circumstances (eg the factors in Order 62 rules 5(1)(e) and 5(2) of the RHC), Ds must be regarded as the successful or substantially successful party in relation to their joinder application (when P eventually conceded to join PRC Yunnan Tin and HK Yunnan Tin in the present action) (see paragraph 20 above), and they were therefore assisted by the general rule of costs to follow the event in discharging the evidential burden of showing they were entitled to costs. In the circumstances, it was for P to adduce sufficient evidence/argument to establish his proposed costs orders (see paragraph 44 above) were appropriate, and if cogent evidence/argument in this respect was absent, costs to follow the event would be the appropriate order. 102.Whilst I agree with Mr Li SC that I should bear in mind P’s conduct/manner in resisting Ds’ joinder application and later changing his stance, it would not be the sole or pivotal consideration. In my view, the fact (as Mr Li SC conceded) Ds did not act unreasonably in issuing/pursuing the joinder application and my conclusion that they were the substantially successful party must also be relevant to the exercise of discretion on the question of costs (see Order 62 rule 5(2)(a) of the RHC). The correct approach was for the court to consider the parties’ conduct in the overall context of Ds’ joinder application, but practically speaking, as To J explained in Waxman & anor, it would be obvious to the judge who had heard the interlocutory application what costs order would best serve the justice between the parties without relying on the burden of proof. I propose to turn to the issue of costs on the basis of the above considerations. V. COSTS BETWEEN P AND DS 103.As discussed above, the essence of P’s argument for his stance on costs (see paragraph 44 above) was that he had not acted unreasonably in resisting the joinder application during the period before PRC Yunnan Tin filed the PRCYT Summons on 10 April 2017, and in later changing his stance over the matter. But Ds claimed P failed to adduce sufficient evidence/argument to show P’s proposed lesser costs order would be appropriate.[51] Given the above contentions, it would be necessary to turn to the history of the Joinder and Amended Joinder Applications, which showed that P had resisted Ds’ joinder application for quite a while before he eventually acceded to such application. 104.The Writ of Summons in the present action was issued on 11 August 2011. The Joinder Summons[52] and Amended Joinder Summons[53] were filed on 17 July and 14 November 2014 respectively (ie 3½ years and 3 years before the 3rd Hearing on 19 December 2017). Such summonses came before me at the 1st Hearing on 19 December 2014. After hearing some submissions from Mr Chan SC and Mr Li SC, I adjourned such summonses to the 2nd Hearing that was eventually scheduled to be heard on 28-29 July 2015. 105.Delay Mr Li SC submitted P’s initial opposition to Ds’ joinder application was justified given the delay in taking out such application, and further given the complication it would cause to the present action and the prejudice it would cause to P (ie the case was ready to be set down for trial but for Ds’ joinder application). I am unconvinced by such argument. In my view, if there were significant delay that would result in irreparable prejudice to P, I am unable to see why P would have conceded to have PRC Yunnan Tin and HK Yunnan Tin join as parties to the present action. 106.As for P’s complaint of delay in making the joinder application and delay that might be caused to the trial of the present action, I note Ds’ application for specific discovery was disposed of in December 2013, and P thereafter discovered more than 3,000 pages (5 box files) of documents mostly in connection with accounts/ledgers of the Group Companies. As a result of Ds’ review of such documents and further investigation into the issue of AUD16,300,000 (see footnote 52 above), which required a bit of time, Ds filed the Joinder Summons on 17 July 2014. I am not persuaded there was any significant and/or unjustified delay. I agree with Mr Chan SC there was no cogent basis to suggest Ds’ joinder application was a delaying tactic. 107.I also note, as seen in paragraphs 5-9 above, progress of the present action was interrupted by P’s own Amendment Summons. Further, there were other outstanding interlocutory proceedings, including the Expert Summons (filed on 21 August 2014), that had not been disposed of to date. In the circumstances, notwithstanding completion of rounds of discovery and witness statements by P and Ds, and irrespective whether further work would have to be done after PRC Yunnan Tin and HK Yunnan Tin were joined in the present action, this case was not ready to be set down for trial, and no trial dates had been fixed as yet. I am unconvinced of any unreasonable delay. 108.In any event, P, who was all along under legal advice, must have understood that the power under Order 15 rule 6(2)(b) of the RHC was widely exercised (see paragraphs 85 and 91 above) even though the addition of new parties (when justified) “may cause new expense and necessitate new evidence” (see paragraph 91 above). Bearing in mind that the primary aim in the exercise of the court’s case management discretion was to secure the just resolution of disputes in accordance with the substantive rights of all parties concerned (see Order 1A rule 2(2) of the RHC), and that Ds’ joinder application was a necessary one (see analysis below), Mr Li SC’s complaints of delay had no merits. 109.Basis for joinder From the outset, as evident from the P 3rd Aff, P vigorously opposed Ds’ joinder application by insisting that PRC Yunnan Tin’s injection of AUD16,300,000 into HK Yunnan Tin represented share capital with no loan owed by HK Yunnan Tin to PRC Yunnan Tin (see paragraphs 74-76 above), which stance P claimed was bolstered by the documents/records he disclosed to Ds before the Completion (eg the 16/7/10 Minutes and 18/7/10 Agreement – see paragraph 75 above) and the 26/8/11 Letter (which P claimed demonstrated PRC Yunnan Tin’s position was the same as his – see paragraph 76 above), so there was “no serious issue to be tried in the first place” and consequently no need to join PRC Yunnan Tin and/or HK Yunnan Tin in the present action (see paragraph 76 above). As Mr Chan SC submitted, this was the lynchpin of P’s objection to Ds’ joinder application although there were also other considerations (see paragraphs 77-79 above). 110.But in my view, as canvassed in the Decision, Ds in their pleadings presented an arguable contention that the 18% Funds could not have been share capital (with no obligation to repay such sum to PRC Yunnan Tin), and that it should be loan capital (which loan had to be repaid to PRC Yunnan Tin). P relied on the 16/7/10 Minutes and 18/7/10 Agreement to support his case, but the nature of the Funds, the undisputed matters in relation to the 18% Funds, the documents/pleadings in relation to the comparative nature/status of the 82% Funds and 18% Funds, the Commonality that underlied P’s Old Case and Ds’ case (which case was more akin to that of PRC Yunnan Tin) that PRC Yunnan Tin injected AUD16,300,000 via P / HK Parksong into HK Yunnan Tin, the analysis of the share capital versus shareholder loan dispute, and the nature/status of the 18% Shares and 16.3m Payment discussed in paragraphs 70-90 of the Decision conspired to show there was a reasonably arguable case that the 18% Funds were PRC Yunnan Tin’s shareholder’s loan to HK Yunnan Tin. 111.Thus, even taking P’s case to its highest, his references to and understanding of the 16/7/10 Minutes and 18/7/10 Agreement as to the nature of the 18% Funds (at least at this interlocutory stage of the proceedings before testing of evidence at trial) were equivocal and not determinative, especially when:
112.In my view, such share capital versus shareholder loan dispute and such differences between Ds’ case (shareholder loan) and P’s Old Case (share capital) under the 1st Issue (see paragraphs 58-63 above) were obvious from P’s and Ds’ pleadings and witness statements from the outset or at the very least before Ds filed the Joinder Summons, and these disputes/differences were directly relevant to Ds’ counterclaim in relation to the issue of the sum of AUD16,300,000 and P’s defence thereto. 113.I also note PRC Yunnan Tin had the following claims:[55]
114.As Mr Wong SC pointed out, (a) the common question as to whether HK Yunnan Tin’s accounts as of 4 March 2011 accurately reflected the state of its accounts as at that date pursuant to the agreement/ understanding between P / HK Parksong and PRC Yunnan Tin, and if not, how should it be rectified so as to accord with such agreement/understanding (which question turned inter alia on how the 18% Funds (AUD16,300,000) was and should have been booked in HK Yunnan Tin’s accounts in light of inter alia the treatment for the 82% Funds) and also (b) the findings/ adjudication on such common question would have material impact on (i) the contest of legal rights between P and Ds (including the success or failure of P’s claim for the Receivables) given the joinder of issue between them in the present action over the status of HK Yunnan Tin’s accounts as at 4 March 2011,[56] and (ii) the interests of PRC Yunnan Tin and HK Yunnan Tin given the former’s direct interest in the form of the latter’s accounts in connection with the sum of AUD16,300,000 which should accord with the agreement/ understanding between P / HK Parksong and PRC Yunnan Tin with rectification if necessary. 115.I agree that such common question would not be sufficiently addressed merely by discovery from PRC Yunnan Tin and HK Yunnan Tin because it was the arguably conflicting picture presented by the financial documents produced so far that raised doubt as to whether any, some or all of them reflected the true position (see footnote 52 above). I also bear in mind it was common ground between P and PRC Yunnan Tin that they were the only parties to partnership / joint venture in relation to the acquisition of the 50% stake in the BMTJV. Clearly, PRC Yunnan Tin being the party directly involved with the 18% Funds would be in a better position than Ds (who could only “parrot” PRC Yunnan Tin’s case but Mr Wong SC complained of inaccuracies in such “parroting” by Ds) to advocate fully the relevant agreement/understanding between P / HK Parksong and PRC Yunnan Tin, to examine the A/C Info, and to address the evidence in order to directly deal with or refute the understanding advanced by P. Further, it would not serve the purpose of having PRC Yunnan Tin bound by any findings/adjudication in the present action on the status/nature of the 18% Funds and on the state of HK Yunnan Tin’s accounts as at 4 March 2011 if it only fielded witnesses to give evidence. 116.From the above, it was obvious the aforesaid common question was not a theoretical contention or incidental factual issue (see paragraph 77 above), but one that had substantive/practical consequences. In my view, these matters (which plainly raised serious question to be tried) provided sufficient justification for PRC Yunnan Tin and HK Yunnan Tin to be joined in the present action to ensure such disputes would be effectually/completely determined and adjudicated among all involved/relevant parties so they would be bound by the relevant findings/determination on this issue. Such joinder would also obviate the risk of unnecessary cost/inconvenience of multiplicity of proceedings on the same issues, and injustice of possible inconsistent findings.[57] P raised the risk of inconsistent findings between the Shenzhen proceedings and the present action that might be binding on PRC Yunnan Tin in different jurisdictions (see paragraph 78 above). If there was such risk for PRC Yunnan Tin, it appeared PRC Yunnan Tin was unconcerned about such risk since notwithstanding the findings by the PRC courts in the Shenzhen Proceedings it was still eager to join in the present action. In any event, PRC Yunnan Tin considered the two proceedings to be different (as explained in paragraph 71 above). 117.Although I have referred to PRC Yunnan Tin’s claims in the PRCYT Action to better illustrate the point, I find Ds’ joinder application was proper and necessary even from the outset (ie long before P came to know about the PRCYT Action). In my view, once it was recognised that P and Ds adopted different stance over the nature/status of the 18% Funds, and that Ds’ stance was reasonably arguable, the need to join PRC Yunnan Tin and HK Yunnan Tin in the present action on the rationale explained above was almost inevitable irrespective whether or not PRC Yunnan Tin raised any direct claim against P, HK Parksong, D1 and/or others. 118.PRC Yunnan Tin’s stance But Mr Li SC submitted P’s continued objection to the Joinder and Amended Joinder Summonses until the 8/5/17 Letter (when P finally conceded that PRC Yunnan Tin and HK Yunnan Tin be allowed to be joined in the present action) was justified because PRC Yunnan Tin’s ambivalent position and non-response to inquiries by HK Yunnan Tin and D1 caused P to reasonably believe there was no serious issue to be tried. In this respect, Mr Li SC made the 2 following points. 119.First, P contended the 26/8/11 Letter demonstrated PRC Yunnan Tin’s position was consistent with that of P, ie the injection of AUD16,300,000 into HK Yunnan Tin was PRC Yunnan Tin’s share capital in (and not shareholder’s loan to) HK Yunnan Tin. But I note such letter was not issued by or on behalf of PRC Yunnan Tin but by 2 representatives of PRC Yunnan Tin on the board of directors of HK Yunnan Tin. In any event, for reasons explained in paragraph 95 of the Decision (which I adopt but not repeat here), I do not find the 26/8/11 Letter to be necessarily or wholly inconsistent with Ds’ case. 120.Secondly, P relied on the fact there was no reply from PRC Yunnan Tin when the former solicitors for HK Yunnan Tin and D1 by their 26/9/11 Letter made enquiries with PRC Yunnan Tin as to whether the injection of AUD16,300,000 in HK Yunnan Tin was share capital or shareholder’s loan (which P claimed added to the alleged confusion/ ambivalence). But in my view, for quite some time before the Joinder Summons P well knew the respective stance of D, HK Yunnan Tin and PRC Yunnan Tin over the joinder issue and/or the status/nature of the injection of AUD16,300,000 in HK Yunnan Tin, so there was no real confusion:
121.Service of the relevant summonses P next complained that Ds had not served the Joinder and Amended Joinder Summonses on PRC Yunnan Tin and HK Yunnan Tin until directed by the court by way of the 1/3/17 Order,[59] and suggested that had they done so earlier, PRC Yunnan Tin and HK Yunnan Tin would have taken a position on the joinder application, which would have enabled P to make a better assessment of the position. Again, I disagree. First, HK Yunnan Tin had already expressed its intention to be joined as a party to the present action as early as 1 December 2014, but this had not deterred P from continuing to object to Ds’ joinder application. Secondly, as explained in paragraph 120 above, PRC Yunnan Tin was well aware of the share capital versus shareholder loan dispute and the inquires HK Yunnan Tin and Ds had made on the subject, and Ds could not be faulted if PRC Yunnan Tin took its time to give a substantive response. Thirdly, even after PRC Yunnan Tin by the 24/7/15 Letter clarified its stance, it did not deter P from still arguing PRC Yunnan Tin’s position remained ambivalent and maintaining his opposition to Ds’ joinder application for almost 2 more years until May 2017. In my view, lack of formal service of the Joinder and Amended Joinder Summonses on PRC Yunnan Tin and HK Yunnan Tin had no material effect. 122.P’s change of stance As a result of the Decision handed down on 4 August 2016, P failed to introduce the New Case into his pleadings. On 10 April 2017, PRC Yunnan Tin filed the PRCYT Summons and Chan Aff. On 13 April 2017, HK Yunnan Tin by its solicitors indicated agreement to be joined as the 4th defendant in the present action. On 19 April 2017, PRC Yunnan Tin filed the Yao Aff in support of the PRCYT Summons. It was not until 8 months after the Decision was handed down on 4 August 2016 (ie about 2 years after Ds filed the Joinder Summons) that P finally conceded to dispose of Ds’ joinder application by consent “with no order as to costs”. In my view, although the parties had yet to discuss the precise terms of order to be made, by that time Ds and PRC Yunnan Tin had effectively obtained the reliefs they sought under the Joinder, Amended Joinder and PRCYT Summonses, ie joinder of PRC Yunnan Tin and HK Yunnan Tin in the present action. 123.Mr Li SC submitted it was not unreasonable for P to change his stance after the issuance of the PRCYT Summons, which unequivocally crystallised PRC Yunnan Tin’s position on the proposed joinder, by which time P also took into account the time that had been spent and would have to be spent over the question of joinder. It was said the change of stance at that stage was premised on reasonable grounds, which could not be used to penalise P on costs. I do not accept such argument. 124.In my view, it was obvious P had taken his own good time to come around to his concession for PRC Yunnan Tin and HK Yunnan Tin to be joined in the present action. I note that (a) PRC Yunnan Tin by the 24/7/15 Letter already indicated support for Ds’ stance as to the nature/status of the 18% Funds, but (b) P tried to wriggle out of the Commonality that underlied his Old Case by putting forward the New Case by way of the Amendment Summons. It was after P applied and failed to raise the New Case that he eventually conceded for PRC Yunnan Tin and HK Yunnan Tin to be joined in the present action, and in my view this (ie P’s own conduct and/or considerations) was a material factor that contributed to P’s concession. 125.PRCYT Summons Thus it appeared the only recent objective development that required consideration was the PRCYT Summons filed on 10 April 2017. But, in my view, it should not have affected P’s consideration of the merits/demerits of his opposition to the Joinder and Amended Joinder Summonses as P all along resisted the joinder application on the basis of lack of necessity rather than lack of consent by PRC Yunnan Tin.[60] 126.Anyway, the vitality of Ds’ joinder application did not turn on PRC Yunnan Tin’s exact position over the nature/status of the 18% Funds and/or its agreement to be joined in the present action. Also, the fact P had no claim against PRC Yunnan Tin and/or HK Yunnan Tin was neither here nor there (see footnote 30 above). The purpose of the joinder was to have all interested/involved parties (including PRC Yunnan Tin and HK Yunnan Tin) to become parties and to be bound by the findings/adjudication in the present action. As explained in paragraphs 109-116 above, quite irrespective of PRC Yunnan Tin’s stance, P’s and Ds’ different position on the sum of AUD16,300,000 injected into HK Yunnan Tin was sufficient basis to support the proposed joinder. After all, joinder under Order 15 rule 6(2)(b) of the RHC is not dependent on the stance or consent of the intended party to be joined, and the court’s jurisdiction under such provision to join “any person” may be exercised where it is necessary to ensure all matters in dispute in the cause or matter may be effectually and completely determined, or it would be just and convenient to determine as between such person and an existing party as well as between the parties to the cause or matter. 127.Trial outcome Mr Li SC also argued that costs of Ds’ joinder application were closely connected with the outcome of the share capital versus shareholder loan dispute, and that whether P or Ds were successful at trial would have a strong bearing and inseparable connection with the question of whether it was reasonable for Ds to ask for joinder of PRC Yunnan Tin and HK Yunnan Tin in the first place. Mr Li SC submitted that if this aspect of Ds’ counterclaim was eventually dismissed, Ds should not be entitled to their costs of the joinder application. 128.Mr Chan SC brushed this argument aside by saying the logical conclusion of such contention would be that no successful party in any interlocutory proceeding would ever get his costs. However, I am content to say I do not accept Mr Li SC’s argument in the present context. In a joinder application, the ultimate merits at trial are not particularly relevant. As explained in paragraphs 84-85 above, the underlying basis for joinder is to bring all parties to the dispute relating to a subject matter before the court so that there would be comprehensive, effective and efficient determination of the dispute, and the relevant interest to support joinder is for there to be a bona fide claim and a proper question to be tried, and some interest that is directly related to the subject matter of the action (see paragraph 85-88 above). Indeed, even a doubtful interest may well be sufficient (see paragraph 88 above), and there was no requirement for the applicant to show the merits of his case (see paragraph 85 above and Wong Shan Shan at paragraphs 31-33). In my view, there was no sufficient basis for P to resist Ds’ joinder application, and the reference to ultimate merits did not bring the matter any further. 129.Joinder in claim or counterclaim The solicitors’ correspondence after the 8/5/17 Letter raised inter alia the issue of whether PRC Yunnan Tin and HK Yunnan Tin should be joined as defendants to P’s claim or to Ds’ counterclaim in the present action, which would affect the consequential directions pursuant to the joinder. In my view, this issue had no impact on the question of costs of the Joinder and Amended Joinder Summonses before 8 May 2017. 130.I propose to deal with the following two issues elicited from the solicitors’ correspondence after 8 May 2017 when I come to discuss the question of costs in respect of the PRCYT Summons:
131.Turning back to the issue in paragraph 129 above, the parties’ respective stance was as follows:
132.Mr Li SC submitted that P’s claims against Ds (as pleaded in the Statement of Claim which had not been amended at all) was based solely on payment of the Receivables under the SPA, and neither PRC Yunnan Tin nor HK Yunnan Tin was directly/indirectly involved in or related to P’s claims for the Receivables against Ds. As P had no claim for substantive relief against PRC Yunnan Tin and/or HK Yunnan Tin (and could not be forced to sue them), they had no locus standi to take part in the present action as defendants to P’s claim regarding the Receivables, so they should not be joined as defendants to P’s claims. Mr Li SC submitted the purpose of Ds’ joinder application was to enable PRC Yunnan Tin and HK Yunnan Tin to be heard on the issue of the sum of AUD16,300,000 (ie the 18% Funds and 16.3m Payment) which arose from Ds’ counterclaim. 133.As seen from the 19/12/17 Order, this court eventually granted leave for PRC Yunnan Tin and HK Yunnan Tin to be joined as the 3rd and 4th defendants to P’s claim in the present action (see paragraph 43(d) above). This was consistent with Ds’ and PRC Yunnan Tin’s stance, and Mr Li SC only conceded to such stance at the 3rd Hearing on 19 December 2017. 134.In my view, the rationale for such approach was straightforward. Since 8 May 2017, all parties were agreed that PRC Yunnan Tin and HK Yunnan Tin should be joined as parties in the present action to ensure the issue in relation to the sum of AUD16,300,000 would be effectually and completely determined and adjudicated upon amongst all involved parties. The next question was how should they be joined so as to best give effect to the objectives of Order 15 rule 6(2)(b) of the RHC. The cardinal principle is to enable effective engagement of contrary contentions among P, Ds, PRC Yunnan Tin and HK Yunnan Tin in order to properly elicit the disputed issues for eventual adjudication. Since Ds and PRC Yunnan Tin adopted more closely akin positions in respect of the injection of AUD16,300,000 into HK Yunnan Tin (shareholder’s loan) contrary to P’s stance (share capital), it made logical sense (and indeed it would be a practically convenient way forward) to join PRC Yunnan Tin and HK Yunnan Tin as defendants to P’s claim for PRC Yunnan Tin to plead its case against P in its defence and its case against P / HK Parksong (and perhaps also D1 and HK Yunnan Tin so as to bind them too) in its counterclaim, which pleadings would invite P (and others) to plead his (and their) defence thereto. 135.In my view, the fact at this stage P and Ds did not have direct claims against PRC Yunnan Tin and HK Yunnan Tin was neither here nor there because (a) P and Ds had spelled out their respective stance on the matter of the 18% Funds and 16.3m Payment in their respective pleadings, and (b) the joinder of PRC Yunnan Tin and HK Yunnan Tin was not based on any direct claim by P and/or Ds against them but on the need for them to participate in the present action and be bound by the eventual findings/ adjudication. Indeed, there was no prerequisite requirement that P and/or Ds had to have claims against PRC Yunnan Tin and HK Yunnan Tin (see paragraph 87 above), and under Order 15 rule 6(2)(b) of the RHC a party can be added even against the wishes of the plaintiff (see paragraph 89 above). In fact, the absence of any direct claim by P and/or Ds facilitated a more flexible approach towards effective joinder of PRC Yunnan Tin and HK Yunnan Tin. 136.Further, it was misleading for P to say PRC Yunnan Tin envisaged it should be joined as an additional defendant to Ds’ counterclaim under the PRCYT Summons. In fact, the PRCYT Summons asked for joinder of PRC Yunnan Tin as “an additional 3rd Defendant to [P’s] claim”, and then alternatively to join as “an additional Defendant to [Ds’] Counterclaim”. Thus (and also for the reasons in paragraphs 134-135 above), even if (as Mr Li SC suggested) PRC Yunnan Tin appeared to be only interested in the AUD16,300,000 issue (but there was no need for me to come to any view on this contention), I do not agree with P’s suggestion that as a matter of proper case management it was wrong for PRC Yunnan Tin to insist on joinder in P’s claim. 137.As for Ds, Mr Chan SC explained Ds had no contractual relationship with and had no direct claim against PRC Yunnan Tin, so Ds were only concerned to have PRC Yunnan Tin and HK Yunnan Tin joined as parties in the present action to have them to directly address the disputed issues (without Ds having to “parrot” PRC Yunnan Tin’s stance by hearsay)[61] and to have them bound by the eventual findings/adjudication, but Ds were not concerned (and hence did not propose directions) as to how exactly they were to be joined. It was on such rationale that Ds had no objection to the Proposed Directions. 138.But Mr Li SC reminded that by the Joinder and Amended Joinder Summonses Ds proposed to inter alia issue a “Concurrent Re‑Amended Defence and Counterclaim” and to serve the same on PRC Yunnan Tin out of jurisdiction, so he argued that Ds must have anticipated their re-amended counterclaim would be an originating process to be served on PRC Yunnan Tin and HK Yunnan Tin who would therefore be expected to file acknowledgement of service of such re-amended counterclaim, which in turn meant they were envisaged to become defendants to Ds’ counterclaim instead of P’s claim. 139.In my view, careful reading of the Joinder and Amended Joinder Summonses suggested the position was not as obvious as Mr Li SC would have this court accept. First, as explained in footnotes 1-2 above, the intituling of such summonses named PRC Yunnan Tin and HK Yunnan Tin as the “Intended 3rd Defendant” and “Intended 4th Defendant” in P’s claim rather than in Ds’ counterclaim. Secondly, such summonses asked for joinder of PRC Yunnan Tin and HK Yunnan Tin as defendants “in these proceedings”, and further asked for consequential re-amendment of the AD&C as per the 1st Draft and later the 2nd Draft (and still later as per Ds’ Draft). The 1st, 2nd and Ds’ Drafts all (a) named PRC Yunnan Tin and/or HK Yunnan Tin as the intended 3rd and/or 4th defendants in P’s claim (see intituling and paragraphs 1(f)-(g) thereof), (b) the draft re‑amended counterclaim by D1 and draft amended counterclaim by Ds were against P only with no cause of action or relief against PRC Yunnan Tin and/or HK Yunnan Tin at all, and (c) the 1st and 2nd Drafts (and later Ds’ Draft) which had no substantive claim against PRC Yunnan Tin and/or HK Yunnan Tin was the very pleading Ds sought to issue concurrently for service out of jurisdiction on PRC Yunnan Tin. 140.Whilst I agree the request for issuance of a concurrent Re‑Amended Defence and Counterclaim was somewhat confusing, the 1st, 2nd and/or Ds’ Drafts made available to P clearly suggested Ds proposed for PRC Yunnan Tin and HK Yunnan Tin to be joined as defendants to P’s claim, and Ds themselves had no direct claim against them. However, P did not seek clarification from Ds, but insisted it was “obvious” from the Joinder and Amended Joinder Summonses that Ds proposed to join PRC Yunnan Tin and HK Yunnan Tin in their counterclaim. Indeed, P continued to maintain such stance (until the 3rd Hearing on 19 December 2017) even though Ds clarified its position on 9 June 2017 (see paragraph 29 above). 141.Offers on costs I further note the solicitors’ correspondence after 8 May 2017 canvassed the issue of costs in respect of inter alia the Joinder and Amended Joinder Summonses with proposals by P and Ds for resolving such question. Mr Li SC submitted it was unreasonable for Ds not to accept P’s offers. 142.On 8 May 2017, P offered no order as to costs as between P and Ds in respect of Ds’ joinder application (see paragraph 20 above). On 17 May 2017, Ds asked for costs of the Joinder and Amended Joinder Summonses (save for costs of the amendment of the Joinder Summons) (see paragraph 22 above). On 24 May 2017, P declined to pay such costs, but offered to resolve the matter for such costs to be Ds’ costs in the cause (see paragraph 25 above). On 5 June 2017, Ds rejected such offer, and proposed for P to pay 70% of Ds’ costs of and occasioned by the Joinder and Amended Joinder Summonses (save for costs of the amendment of the Joinder Summons) (see paragraph 27 above). On 12 June 2017, P rejected such counter-offer (see paragraph 31 above). 143.I agree with Mr Chan SC that given the 19/12/17 Order and for all of the above reasons, Ds essentially obtained the substantive reliefs sought under the Joinder and Amended Joinder Summonses, and could be regarded as having “succeeded” on their joinder application. Having considered all the circumstances, I consider it appropriate to order costs to follow the event, and Ds’ rejection of P’s offers was not unreasonable. Indeed, Ds’ offer made on 5 June 2017 was eminently reasonable. 144.Conclusion I therefore order that (a) subject to (b) below, P shall pay Ds’ costs of and occasioned by the Joinder and Amended Joinder Summonses (including costs of the 3rd Hearing on 19 December 2017 and all costs reserved if any) to be taxed forthwith if not agreed with certificate for two counsel, and (b) Ds shall pay P costs of the amendment of the Joinder Summons summarily assessed at HK$1,040 to be paid forthwith. VI. COSTS BETWEEN P AND PRC YUNNAN TIN 145.PRC Yunnan Tin asked for (but P declined to pay) costs of and occasioned by its support to Ds’ joinder application and by the PRCYT Summons. Mr Li SC’s written submissions dated 5 December 2017 stated P’s position was that “there should be “no order as to costs” as between P and [PRC Yunnan Tin] or “costs be in the cause of the action” except that [PRC Yunnan Tin] shall pay P’s costs of [the 3rd Hearing on 19 December 2017]”. 146.As regards costs for PRC Yunnan Tin’s “support” to Ds’ joinder application, I agree with Mr Li SC that PRC Yunnan Tin was not entitled to such costs. There was no suggestion the Joinder and Amended Joinder Summonses were served on PRC Yunnan Tin earlier than 7 March 2017 pursuant to the 1/3/17 Order (see paragraph 13 above). Various enquiries had been directed to PRC Yunnan Tin before then, and it responded to some of them, but it did not formally appear in the present action to support the Joinder and Amended Joinder Summonses (eg to take formal steps such as filing of affidavit to support Ds’ joinder application) until 10 April 2017 when its solicitors filed Notice to Act and the PRCYT Summons (see paragraphs 15-16 above). In my view, PRC Yunnan Tin should not have costs merely for tap-dancing in the wings. 147.Turning to costs of and occasioned by the PRCYT Summons, Mr Li SC argued it was unnecessary for P to issue such summons because:
148.In respect of paragraph 147(a) above, I accept PRC Yunnan Tin issued the Writ of Summons in the PRCYT Action as a protective writ pending the outcome of the Joinder, Amended Joinder and Relief Summonses. The fact it was not served until its imminent expiry on 29 November 2017 testified to this. In my view, PRC Yunnan Tin’s position was somewhat different from that of Ds for PRC Yunnan Tin claimed to be in direct contractual relationship with P in relation to the partnership or joint venture in respect of the acquisition of the 50% stake in the BMTJV, and hence it claimed to have direct contractual claims against P (which were not for Ds to raise). Ds’ stance/objective in their joinder application was a more indirect one of joining all involved/interested parties so that the eventual findings and adjudication in the present action would be binding on all of them, and I note Ds were not defendants in the PRCYT Action and therefore would not be bound by any judgment therein. I am persuaded it was appropriate for PRC Yunnan Tin to raise a more positive/direct case for joinder beyond mere support for Ds’ position. Given the usual objectives for joinder applications and further given the particular context herein as discussed above, I accept it would be far more effective to strive for an efficient resolution of common issues in a single trial in the same action rather than to wait and see if the present action and the PRCYT Action would catch up with each other, and it would save time/costs and avoid inconsistent findings.[62] 149.Mr Li SC next complained the PRCYT Summons was issued on 10 April 2017 without any prior intimation made to P, but even though P had very little time to consider his position in relation thereto, P indicated at the hearing on 20 April 2017 that he might agree to the proposed joinder, which eventually led to his confirmation of such stance to Ds on 8 May 2017 (see paragraph 20 above), and PRC Yunnan Tin understood this also reflected P’s position vis-à-vis the PRCYT Summons (see paragraph 21 above). 150.I am not persuaded by P’s complaint. In my view, for all the reasons explained above, Ds could have made its concession earlier and obviated even the need for the PRCYT Summons. Secondly, as I have found, PRC Yunnan Tin was justified in taking out its independent PRCYT Summons. Thirdly, as Mr Wong SC submitted, PRC Yunnan Tin was only given the Written Notice on 7 March 2017 pursuant to the 1/3/17 Order, so it had to work against time to study the papers and to place the PRCYT Summons before this court for the then upcoming hearing on 20 April 2017. Nevertheless, PRC Yunnan Tin gave some brief forewarning on 5 April 2017 within the available timeframe (see paragraph 14 above), and P intimated agreement to the proposed joinder on 8 May 2017 after the hearing on 20 April 2017. 151.Mr Li SC submitted that the Yao Aff in support of the PRCYT Summons was argumentative and shed no light on PRC Yunnan Tin’s initial position in the 26/8/11 Letter and its subsequent changed position as to the nature of the sum of AUD16,300,000 injected into HK Yunnan Tin, so the costs of the Yao Aff were unnecessary. I am not persuaded by such argument. Once it was shown (as I accept) PRC Yunnan Tin was justified in issuing the PRCYT Summons, it could not be faulted for filing/serving a supporting affirmation. As explained above, it was not necessary for PRC Yunnan Tin to show the merits of its case. Rather, the supporting affirmation should demonstrate PRC Yunnan Tin had a legitimate interest to be joined as a party to the present action. 152.Mr Li SC submitted it was bewildering that PRC Yunnan Tin engaged senior counsel to argue the matter in an elaborate fashion with substantial skeleton submissions and list of authorities when P had indicated he would not oppose the joinder of PRC Yunnan Tin and HK Yunnan Tin. But as P by his solicitors acknowledged, the outstanding issues between P and PRC Yunnan Tin were “both the structure of the joinder and the issue of costs” (see paragraph 34 above). Indeed, P did not agree to have PRC Yunnan Tin and HK Yunnan Tin join as defendants to P’s claim until the 3rd Hearing on 19 December 2017 itself (ie after senior counsel for PRC Yunnan Tin had been briefed and skeleton submissions and list of authorities had been lodged). 153.It was also suggested that PRC Yunnan Tin could not claim for costs of and occasioned by the PRCYT Summons because such summons asked for costs of the application to be in the cause. I disagree. The provision for costs in the PRCYT Summons would have applied had P promptly consented to (and reached agreement on final disposal of) the PRCYT Summons, but in reality PRC Yunnan Tin did not reach comprehensive overall agreement over such summons and there was no final disposal thereof until I granted the 19/12/17 Order at the 3rd Hearing on 19 December 2017. In such circumstances, I cannot see how PRC Yunnan Tin would be bound by the proposed provision for costs in the PRCYT Summons, especially in light of the principles in Daimler AG (formerly known as Mercedes-Benz AG) (see paragraph 98 above). 154.Turning now to the issue in paragraph 130(b) above, it was apparent from the Writ of Summons in the PRCYT Action that P had claims against HK Parksong. Mr Li SC noted there was no application to join HK Parksong in the present action, but if PRC Yunnan Tin were to join in the present action and not pursue the PRCYT Action, then Ds and PRC Yunnan Tin had to address the question of non-joinder of HK Parksong. In my view, there was no real concern that had to be addressed for the purpose of the Joinder, Amended Joinder and PRCYT Summonses. By the time PRC Yunnan Tin and HK Yunnan Tin joined as D3 and D4 in the present action, it would be open for PRC Yunnan Tin as D3 to plead (if it so wished) a counterclaim against inter alia HK Parksong, HK Yunnan Tin and P. If and when that was done, then it would be open for the relevant parties (including HK Parksong as defendant to PRC Yunnan Tin’s counterclaim) to come to terms for closure of the PRCYT Action subject to any question of costs (which sensibly should either be agreed or at least be kept in abeyance pending the final disposal of the present action). 155.As for the issue in paragraph 130(a) above, I agree with Mr Li SC it was wrong for PRC Yunnan Tin to insist that P should plead a case against PRC Yunnan Tin and HK Yunnan Tin as suggested in the Proposed Directions. PRC Yunnan Tin had no right to direct or compel P to amend his pleadings to plead any such case when P had made clear he had no claim (and would not seek any relief) against PRC Yunnan Tin and HK Yunnan Tin. Even if P had contentions contrary to PRC Yunnan Tin’s and/or HK Yunnan Tin’s case or if he had a viable cause of action against such parties, he could not be made to sue such parties against his wish. There being no cause of action by P against such parties, there would not be any material fact necessary to be pleaded in support of any cause of action (see paragraphs 87 and 89 above). Indeed, the purpose of the joinder of PRC Yunnan Tin and HK Yunnan Tin as defendants in the present action was to have them address the disputed issues and be bound by the eventual findings/adjudication. Further, PRC Yunnan Tin had intimated that once it was joined as D3 in the present action, it would raise counterclaim against inter alia HK Parksong, P and HK Yunnan Tin as it was preferable to have all matters dealt with in one action rather than separately in the present action and the PRCYT Action. That being the case, PRC Yunnan Tin would have opportunity to plead its case against P by way of defence and counterclaim, and P would have opportunity to respond thereto by his reply and defence to counterclaim, so the issues in dispute between them would be fully and clearly elicited for eventual determination/adjudication. 156.P by his solicitors had time and again explained to PRC Yunnan Tin this aspect of the Proposed Directions was misconceived (see paragraphs 24 and 31-32 above), but PRC Yunnan Tin had not resiled from its stance (see paragraph 33 above). In my view, this unnecessary and inappropriate skirmish raised by PRC Yunnan Tin should be reflected in the costs order for the PRCYT Summons.[63] Save for this, I find PRC Yunnan Tin had achieved substantial success in relation to the PRCYT Summons. After all, even though P conceded to have PRC Yunnan Tin and HK Yunnan Tin join as parties to the present action, it was only at the 3rd Hearing on 19 December 2017 that P agreed to the structure of the joinder by having them join as D3 and D4 to P’s claim. 157.Mr Li SC made a final complaint that the terms of the 19/12/17 Order looked quite different from the Proposed Directions. I note PRC Yunnan Tin was the only party who proactively made proposals for disposal of the joinder applications, and it invited alternative proposals by P and/or Ds (see paragraphs 23 and 28 above). In my view, there was nothing in Mr Li SC’s contention. The 19/12/17 Order took into account the state of progress of and other outstanding matters in the present litigation, and weaved a case management timetable to fit in those matters (including the Expert Summons). But this did not detract from the fact that PRC Yunnan Tin achieved substantial success in respect of the PRCYT Summons. 158.Having considered all the circumstances and for all the above reasons, I consider that costs should follow the event save that a discount is made to reflect the matters in paragraphs 155-156 above. I therefore order that P shall pay PRC Yunnan Tin 80% of the costs of and occasioned by the PRCYT Summons (including costs of the 3rd Hearing on 19 December 2017 and all costs reserved if any) to be taxed forthwith if not agreed with certificate for two counsel. 159.Although Mr Li SC suggested it might not be appropriate to have certificate for two counsel, the complexity of the matter as explained in this decision spoke to the propriety of having two counsel. I also note P also engaged two counsel to resist Ds’ and PRC Yunnan Tin’s applications for costs.
Mr C Y Li SC and Mr Adrian But, instructed by Vincent T K Cheung Yap & Co, for the plaintiff Mr Chan Chi Hung SC, Mr Richard Khaw SC and Ms Kay Seto, instructed by Benjamin Au & Billy Chan for the 1st and 2nd defendants Mr Ronny Wong SC and Ms Kinsey Kang, instructed by Peter K S Chan & Co for the applicant [1] the intituling of the Joinder Summons named PRC Yunnan Tin as the “Intended 3rd Defendant”, and the body of such summons sought (a) leave for Ds to join the Intended 3rd Defendant “in these proceedings”, (b) leave for Ds to re-amend the AD&C as per the 1st Draft (which draft counterclaims sought reliefs against P only) , (c) leave for Ds to issue a Concurrent Re-Amended Defence and Counterclaim, (d) leave for Ds to serve the Concurrent Re-Amended Defence and Counterclaim out of jurisdiction, and (e) an order that the “Intended 3rd Defendant” file acknowledgment of service of the Concurrent Re-Amended Defence and Counterclaim within 28 days [2] the intituling of the Amended Joinder Summons named PRC Yunnan Tin as the “Intended 3rd Defendant” and HK Yunnan Tin as the “Intended 4th Defendant”, and the draft amended Joinder Summons sought reliefs as set out in footnote 1 above save that the “Intended 3rd Defendant” was replaced by “Intended 3rd Defendant and Intended 4th Defendant” in (a) and (e) above (but the draft counterclaims in the 2nd Draft still sought reliefs against P only) [3] para 1(f) - (g) of the Re-Amended Defence in Ds’ Draft referred to the 3rd and 4th defendants as PRC Yunnan Tin and HK Yunnan Tin [4] Mr Martin Tupila of JLA-Asia for Ds and Mr Wynand Mullins of Ferrier Hodgson for P [5] ie P no longer relied on the “inaccurate” accounts of HK Yunnan Tin as of 4 March 2011 [6] described in Part IV and 1st Schedule of the Decision [7] described in paragraphs 38-40 in Part V of the Decision [8] described in paragraphs 49-54 in Part VII(b), paragraphs 70-90 in Part VIII(b) and the 1st Schedule of the Decision [9] P now regarded the 1st and 2nd Sets as “incorrect” and relied on the 3rd Set [10]Ds claimed PRC Yunnan Tin’s repayment of the loan of AUD16,3000,000 to P (pursuant to the 19/7/10 Assignment) in such manner apparently contradicted P’s case that such sum was advanced by PRC Yunnan Tin to HK Yunnan Tin as capital rather than as loan [11]Ds claimed HK Yunnan Tin had never passed any relevant directors’ or members’ resolution which could have enabled the sum of AUD16,300,000 to be booked as part of its share capital account [12] ie the 18% Funds being investment funds for the acquisition of the 50% stake in the BMTJV that P through HK Parksong injected into HK Yunnan Tin was regarded as attributable to and/or paid on behalf of PRC Yunnan Tin (see paragraph 79 of the Decision) [13] ie PRC Yunnan Tin’s acquisition of the 18% Shares was financed by an advance/loan by P through HK Parksong (18% Funds) that was regarded to have been paid on behalf of PRC Yunnan Tin into HK Yunnan Tin (Commonality) (irrespective of the 1st Issue) against PRC Yunnan Tin’s promise to reimburse, repay or “pay back” HK Parksong’s advance/loan by the 16.3m Payment to P / HK Parksong from future dividends to be declared by HK Yunnan Tin out of profits to be earned from the 50% stake in the BMTJV (see paragraph 86 of the Decision) [14] ie P’s contention in the New Case that HK Parksong (as vendor) sold the 18% Shares to PRC Yunnan Tin (as purchaser) against PRC Yunnan Tin’s promise to pay the price being the 16.3m Payment in the sum of AUD16,300,000 (which payment would be settled from future dividends to be declared by HK Yunnan Tin in favour of PRC Yunnan Tin) such that the 18% Funds were neither PRC Yunnan Tin’s share capital nor its shareholder loan in HK Yunnan Tin (see paragraph 91 of the Decision) [15] ie RMB106,440,000.00 (principal) + RMB16,175,184.17 (interest) + RMB536,441.23 (interest on delayed payment) + RMB190,551.63 (costs for enforcement) [16] see para 7(a) and (d) of the 2nd RAR&RRADAC [17] see para 7(b) of the 2nd RAR&RRADAC [18] see paras 7(g) and 34A(a) of the 2nd RAR&RRADAC [19] see paras 7(h) and 34A(a) of the 2nd RAR&RRADAC (P contended it was never agreed/intended that HK Parksong had advanced any sum to HK Yunnan Tin on behalf of PRC Yunnan Tin (see para 54C(b)(aa) of the 2nd RAR&RRADAC) or that any sum P / HK Parksong previously advanced to HK Yunnan Tin would be treated as having been advanced by PRC Yunnan Tin to HK Yunnan Tin (see para 54C(b)(aa) of the 2nd RAR&RRADAC)) [20] see para 7(k) of the 2nd RAR&RRADAC [21] see para 21 of the 2nd RAR&RRADAC [22] see para 21 of the 2nd RAR&RRADAC [23] see para 19(b)(iii)(aa) of the 2nd RAR&RRADAC [24] see paras 19(b)(iii)(cc) and 23(c) of the 2nd RAR&RRADAC [25] see para 24(z) of the 2nd RAR&RRADAC [26] on 24 July 2015, PRC Yunnan Tin wrote to HK Yunnan Tin and HK Parksong to set forth its case that PRC Yunnan Tin and HK Parksong each had interest in and vis‑à‑vis HK Yunnan Tin on the same parity (see para 120(c) below) [27] which P said was reflected in his pleadings and/or in paras 47-76 of his witness statement filed on 15 November 2012 and paras 8-15 of Zhou’s supplemental witness statement filed on 5 June 2013 (with various exhibits) [28] ie 16/7/10 Minutes, 18/7/10 Agreement, 19/7/10 Resolution, 19/7/10 Assignment, 1st/2nd Notices and Receipts, D2’s announcement dated 16 August 2010, and 4/3/11 Assignments [29] which matters P claimed Ds knew or acknowledged (or partially acknowledged) by D2’s announcement dated 16 August 2010 and/or para 3.4(1) of Cheung Wai Biu’s witness statement [30] in this respect P confirmed he personally had no claim or cause of action against PRC Yunnan Tin, and P alleged neither D1 nor D2 could have any live claim and/or substantive cause of action against PRC Yunnan Tin owing to separate legal personalities [31] which proceedings P claimed were largely based on the 18/7/10 Agreement that was apparently governed by PRC law and were tried under the procedures of the PRC court(s) [32] see Hong Kong Civil Procedure 2018 Vol 1 para 15/6/7 at p 345 (see also Gurtner v Circuit & anor [1968] QB 587, 595) [33] HCCT40/2001, Ma J (as he then was) (unreported, 20 June 2002) para 15(1) [34] Vol 1 para 15/6/1 at pp 338-340 [35] HCA1086/2013, DHCJ Kent Yee (unreported, 28 January 2015) paras 31-33 [36] [1988] HKC 588 [37] [1969] 2 MLJ 52, 56 [38] [1991] 1 HKC 86, 94-95 (see also Idmiston Ltd at p 594) [39] [2003] 1 HKC 549, 554-555 [40] see Hong Kong Civil Procedure 2018 Vol 1 para 15/6/7 at p 345 [41] see Hong Kong Civil Procedure 2018 Vol 1 para 15/6/6 at p 344 and T.S.B. Private Bank International SA v Chabra & anor [1992] 1 WLR 231, 238 (see also Wing Mou Construction Co Ltd (in liquidation) at para 15(2)) [42] at para 15(2) and (4)-(6) [43] Vol 1 para 15/6/1 at p 339 [44] Vol 1 para 62/3/3B at p 1214 (see also Waxman & anor v Li Fei Yu & anor [2013] 6 HKC 424, 430) [45] see Apple Daily Limited v Oriental Press Group Limited & ors HCA1396/2009, Chu J (as she then was) (unreported, 3 January 2011) para 12, Velatel Global Communications Inc v Chinacomm Limited & ors HCA1978/2011, Au-Yeung J (unreported, 8 March 2013) para 2, and Diagcor Bioscience Incorporated Limited v Chan Wai Hon Billy & ors HCA2107/2012, Au-Yeung J (unreported, 27 October 2015) para 4 [46] [2013] 6 HKC 424 [47] HCA4089/1994, Lisa Wong J (unreported, 20 February 2018) – handed down after the 3rd Hearing on 19 December 2017 [48] see Kwok Chin Wing v GFT Holdings Ltd (formerly known as Capital Prosper Limited and Rockapetta Holdings Limited) HCA2332/2004, Burrell J (unreported, 19 April 2007) para 30, Jose Miranda da Costa Junior Miranda Gems E Mine Ltda v Lorenzo Yih also known as Yu Chuan Yih & ors HCA156/2010, G Lam J (unreported, 13 May 2013) para 54, Wong To Yick Wood Lock Ointment Limited v Merika Medicine Factory Limited & anor HCA562/2014, HCA2589/2014 and HCMP1550/2014, DHCJ Lee (unreported, 10 March 2017) para 31, Jessop & Baird (Hong Kong) Ltd v The Hongkong and Shanghai Banking Corp Ltd [2016] 5 HKLRD 521, 529, and Shek O Development Co Ltd v Chan Kwok Tung [2017] 2 HKLRD 374, 386 [49] see Hau Sing Tso & ors v Secretary for Justice HCMP1431/2014, DHCJ To (unreported, 11 October 2017) para 22, and Skyrun Light Industry (Hong Kong) Company Limited & anor v Swift Resources Limited & ors HCA1278/2014, L Chan J (unreported, 1 March 2017) para 61 [50] [2013] 3 HKLRD 550, 556 - 557 [51] eg there was nothing to suggest Ds’ joinder application was mere delaying tactic, especially when P took his time to pursue the Amendment Summons to introduce the New Case which application eventually failed (see paragraph 107 below) [52] Mr Chan SC submitted the Joinder Summons was occasioned by the accounts/ledgers that P produced for specific discovery, which included the 3 Sets produced by or on behalf of P that showed a conflicting picture as to who was the owner of the 18% Funds (AUD16,300,000) (see paragraph 60 above) [53] Mr Chan SC submitted Ds took out the Amended Joinder Summons to ensure the status of the 18% Funds (AUD16,300,000) and the issue of whether HK Yunnan Tin owed shareholder’s loan of AUD16,300,000 to PRC Yunnan Tin could be determined among all relevant parties, ie P, Ds, PRC Yunnan Tin and HK Yunnan Tin [54] see Boyle & Birds’ Company Law 8th ed (2011) para 7.2 at pp 193-194 [55] see indorsement of claim in the Writ of Summons in the PRCYT Action [56] eg a finding that the 18% Funds were shareholder’s loan from PRC Yunnan Tin to HK Yunnan Tin would arguably suggest it was an item of the Payables that P had to repay to Ds, and that P would be in breach of warranty under the SPA (see paragraph 60 above) [57] see Fortis Bank Asia HK v Sino Global International Ltd & ors [2004] 2 HKLRD 1062, 1067 [58] ie that the injection of AUD16,300,000 into HK Yunnan Tin was said to be the price that PRC Yunnan Tin paid for the purchase of the 18% Shares, which sum should not be treated as share capital in the accounts of HK Yunnan Tin [59] which Mr Li SC submitted was the usual practice (see Jose Miranda da Costa Junior Miranda Gems E Mine Ltda at paras 29 - 30) [60] see paras 134-162 of Mr Li SC’s written submissions dated 16 December 2014 and paras 2-20 of Mr Li SC’s Points of Reply dated 18 December 2014 [61] Mr Wong SC submitted that Ds were merely parroting inaccurately the alleged stance of PRC Yunnan Tin as to the proper state of HK Yunnan Tin’s accounts as at 4 March 2011 in their attempt to resist the claim of P, which (unless PRC Yunnan Tin were able to participate as a party in the present action) would result in failure to identify and crystallise the real issues and also result in inaccuracies [62] see Fortis Bank Asia HK & ors at p 1067 [63] in my view, this had no impact on costs in respect of Ds’ Joinder and Amended Joinder Summonses since Ds (not having direct claims against PRC Yunnan Tin and/or HK Yunnan Yin) were unconcerned as to the mode of the joinder so long as there was joinder of such parties, and Ds merely agreed to the Proposed Directions (put forward by PRC Yunnan Tin) to have the joinder issue move forward (see paragraph 137 above) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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