Take Point Investment Holdings Ltd and Other v. Ngai Lok Kei and Others
Read the full judgment text of HCA 1289/2015 on BabelCite. This High Court CFI judgment was delivered on 31 July 2020.
1. In each of these cases, heard together, the 2 nd plaintiff (“Madam Tam”) and the 3 rd plaintiff (“Mr Ho”) – a wife and husband – are the owners of their respective 1 st plaintiff corporate vehicles Take Point Investment Holdings Ltd (“Take Point”) and Blissful Voice Ltd (“Blissful Voice”). The two Actions can respectively be called:
Cited by 5 cases · Cites 5 cases
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HCA 1289/2015 [2020] HKCFI 1709 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1289 OF 2015 ________________________
________________ AND HCA 2759/2015 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 2759 OF 2015 ________________
___________________ J U D G M E N T ___________________ A. Introduction 1.In each of these cases, heard together, the 2nd plaintiff (“Madam Tam”) and the 3rd plaintiff (“Mr Ho”) – a wife and husband – are the owners of their respective 1st plaintiff corporate vehicles Take Point Investment Holdings Ltd (“Take Point”) and Blissful Voice Ltd (“Blissful Voice”). The two Actions can respectively be called:
2.The Actions relate to, and arise out of, the manner in which the plaintiffs were misled by the 1st defendant (“Mr Ngai”) into acquiring, or making payments with the intention to acquire, two sets of commercial properties (together “Properties”), being:
3.Mr Ngai is an estate agent and the owner and director of the estate agency Wealth Trustful Property Agency Ltd (“WT Agency”), the 2nd defendant in both actions, as well as another estate agency Grand Vision Property Ltd (“Grand Vision”), the 3rd defendant in the Take Point Action and 4th defendant in the Blissful Voice Action. He is also the owner and director of Wealth Trustful Secretaries & Nominees Ltd (“WT Nominees”), the 6th defendant in the Take Point Action and 3rd defendant in the Blissful Voice Action. 4.In this Judgment, all references to dollar sums are denominated in Hong Kong dollars. 5.In each action, the thrust of the allegations is as follows:
6.It is because of the similarity in the misconduct alleged by the plaintiffs against Mr Ngai and Madam Poon and their corporate vehicles – and the similarity of the defences raised on the pleadings – that the two actions have been ordered to be heard together. 7.Mr Jacky Lam, Counsel for the plaintiffs in both Actions, suggested that the parties to the actions can be divided into three ‘camps’:
8.Until around the start of this year, all three camps were separately legally represented. In both actions, the matters were fully pleaded (where the Ngai Camp and the Poon Camp not only put in defences, but also made counterclaims), there was discovery, interrogatories were answered, and there was the exchange of witness statements as to fact from all camps. Various case management orders were made, including relating to specific discovery, and broadly as to the conduct of the trial. 9.However, from around the start of this year, the Ngai Camp and the Poon Camp ceased active involvement and activity in the proceedings, and their former solicitors came off the record. Despite attempts made by the plaintiffs’ solicitors, the Ngai Camp and the Poon Camp refused any further engagement in the proceedings. 10.Neither the Ngai Camp nor the Poon Camp was represented at the Pre-Trial Review hearing. In the circumstances that they failed to appear to prosecute their counterclaims in the actions, I ordered those counterclaims to stand as dismissed, unless the Ngai Camp and the Poon Camp were to participate at trial and asked to prosecute the counterclaims. 11.Neither the Ngai Camp nor the Poon Camp appeared at or was represented at the trial. In the circumstances, the counterclaims stand dismissed and the trial proceeded by way of the plaintiffs seeking to prove their case in each of the Take Point Action and the Blissful Voice Action. Madam Tam and Mr Ho gave live evidence and, with minor clarification, adopted as their evidence-in-chief the witness statements of fact previously filed by them. Though there was no cross-examination, it remained necessary for me to consider and weigh Madam Tam’s and Mr Ho’s evidence, including by testing it against the various contemporaneous documentation. In so far as I make factual findings below, it is on that basis. 12.Mr Lam had previously filed detailed written opening submissions – in greater detail than he might otherwise have done, in anticipation of the non-appearance of any of the defendants at trial. After conclusion of the oral evidence, Mr Lam relied on those submissions as constituting also his closing submissions at trial. He also provided a short written closing submission which identified the specific orders he invited the Court to make. 13.With the benefit of those submissions and evidence, this is my Judgment. B. Impact of the Non-Appearance of the Defendants 14.As already indicated, none of the defendants appeared at or was represented at trial. The question, therefore, arises as to the impact of that non-appearance. 15.Previously, directions have been given in both Actions that the witness statements of fact filed by the parties should stand as the evidence-in-chief of the respective witnesses at trial, unless the trial judge should otherwise direct. Obviously, the primary purpose of such a direction is to enable a witness efficiently to adopt as his or her evidence those matters previously identified in the exchanged witness statement. In the absence of the now typical direction for witness statements to stand as evidence-in-chief, the party calling the witness must elicit his or her evidence by way of oral examination in the ordinary way. But, even when such a direction is made, a witness statement is not itself evidence in the case. 16.In short, a witness statement cannot stand as the evidence-in-chief of a witness who fails to come to court to adopt it under oath or affirmation. In the circumstances, and in any event in the exercise of my case management discretion, the witness statements filed by the Ngai Camp and the Poon Camp will not be treated as admissible evidence for this trial. 17.There were, however, certain affirmations made in answer to interrogatories. Because those answers were provided on affirmation, they are evidence to which reference can be made. 18.Mr Lam also invited me to draw an adverse inference against the parties who failed to call witnesses to deal with certain evidence. It is now well settled that in certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action. If the court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness. 19.But, as Mr Lam also recognised, those principles ordinarily address the situation where a party does call some evidence, rather than the situation where parties fail to appear at all or to adduce any evidence as a result. For present purposes, it should simply suffice for me to note that the defendants previously indicated that they would appear at trial to give evidence in accordance with their witness statements, but have failed to attend trial to have that evidence tested. They have also failed to adduce evidence in support of their pleaded cases. C. The Take Point Transaction 20.The evidence demonstrates the following facts, which I find proved. 21.Mr Ho was introduced to Mr Ngai by Thompson in around 2011. Mr Ngai introduced himself to Mr Ho as an employee of WT Agency. Madam Tam came to know Mr Ngai and Thompson through Mr Ho. 22.Before the dealings related to the Properties, Mr Ngai had assisted Madam Tam and Mr Ho since around April 2011 to purchase and make investments in 8 other properties. On each occasion, commission was paid to WT Agency as the estate agent. Mr Ngai thereby became a trusted estate agent of Madam Tam and Mr Ho. 23.In his dealings with them, Mr Ngai would contact either Madam Tam or Mr Ho, and each of them would keep the other informed of their dealings with Mr Ngai. Sometimes, things which were said by Mr Ngai to either of Madam Tam or Mr Ho would be repeated by him to the other as well. But I accept that Mr Ngai was aware of, and would operate on the basis that, Madam Tam and Mr Ho generally kept each other fully informed. 24.In mid-October 2014, Mr Ngai telephoned Mr Ho to introduce the KV Property to him. In doing so, Mr Ngai made various representations. Mr Ngai told Mr Ho that he had heard about the KV Property from a friend, and that the asking price was $32 million. He also told him about the property’s size, that it consisted of two shops (converted into one shop area), and that both shops were leased to a cosmetic retailer with monthly rent of $90,000 for both shops. Mr Ngai said that one shop could be sold independently for profit, and the other shop could be leased to a noodle shop (“Tam Zhai”), which had already set up a shop next to the KV Property. Mr Ngai said that if the two shops were leased separately, the total expected rental would be from $120,000-$130,000 per month. Mr Ngai also told Mr Ho that Tam Zhai wanted to acquire the two shops of the KV Property to expand its business at the price of $14 million per shop, therefore a total of $28 million. 25.Mr Ngai told the same things to Madam Tam, but additionally told her that if the KV Property was purchased at a price below $30 million, it would be a bargain as the price would be between $20,000 and $25,000 per square foot, whereas the property above the KV Property, with less customer flow, was sold for over $30,000 per square foot. 26.On the basis of the representations, upon which Madam Tam and Mr Ho relied, they agreed to Mr Ngai’s suggestion to let him negotiate on their behalf for a price that was slightly higher than $28 million. 27.On about 21 October 2014, at the specific request of Mr Ngai, Madam Tam gave him two cheques each for $500,000, so that Mr Ngai could negotiate with the vendor. Asking for and the provision of two separate cheques demonstrate that Mr Ngai had represented that there were two shops (as opposed to one only). Later, Madam Tam and Mr Ho agreed to the purchase of the KV Property at the price of $28,560,000. On the basis of Mr Ngai’s advice that it would be preferable from a tax point of view to use a BVI company to make the acquisition, Mr Ngai was entrusted to choose a BVI company and to sign the provisional agreement for sale and purchase (“PSPA”) for and on behalf of the BVI company. Neither Madam Tam nor Mr Ho viewed the KV Property before agreeing on its purchase, because of their trust in and reliance upon the advice and representations of Mr Ngai. 28.In early November 2014, Mr Ngai informed Mr Ho and then Madam Tam that he had signed the PSPA dated 29 October 2014. But they were not at that point informed that it was by way of a sub-sale. Madam Tam also complains about the 4- or 5-day delay in being informed that the PSPA had been signed. At Madam Tam’s request, Mr Ngai sent via WhatsApp some photos of the KV Property and the neighbouring shop run by Tam Zhai, as well as a floor plan. It was then that Madam Tam discovered that the KV Property comprised only one shop instead of two. When asked about that, Mr Ngai could give no sensible explanation, and suggested that it was a matter of oversight because he had not paid enough attention to the transaction details. But, when pressed, he agreed to bear the cost of sub-dividing the KV Property into two. 29.On 4 November 2014, Take Point agreed to pay the sum of $199,920 to WT agency as commission for the purchase of the KV Property. Take Point issued a post-dated cheque dated 1 April 2015 for the commission (though, in the circumstances explained below, that cheque was later stopped). 30.Mr Ngai then introduced a firm of solicitors (“WP”) to be used for this transaction. At the request of a clerk of the firm, Mr Lee Fun Lung (“Terry”), Madam Tam paid a further deposit of $4,712,000 on behalf of Take Point by a cheque dated 11 November 2014 payable to Cheerful Joy. Therefore, the total deposits paid by Take Point to Cheerful Joy in relation to the KV Property amounted to $5,712,000 (“KV Deposits”). 31.Later, Terry assisted with the signing of the formal sale and purchase agreement for the KV Property. But, Terry did not explain to Madam Tam or Mr Ho any details of that formal agreement, nor did he draw her attention to the fact that it was a sub-sale agreement. No copy of the agreement was left with Madam Tam. The completion date for the purchase of the KV Property was 31 March 2015. 32.However, on around 2 February 2015, Madam Tam received a telephone cold-call from a Mr Cheung of another estate agency. Mr Cheung said he had a client interested in purchasing the KV Property, but during the conversation also revealed that the KV Property had been listed on the market for sale at the asking price of $19 million for a considerable period of time. A possible previous sale had not gone through as the KV Property could not be used as a restaurant. 33.From that point of time, in light of the suspicions raised, Madam Tam began recording her telephone conversations. There have been produced in evidence the transcripts of the various audio recordings of the telephone conversations (together with English translations). I accept those transcripts as accurately recording the telephone conversations which had taken place. 34.Later the same day, 2 February 2015, Mr Cheung told Madam Tam in a telephone conversation that he had noted that Cheerful Joy had purchased the KV Property for $19 million in early November 2014, and that Cheerful Joy had sub-sold it to Take Point on 21 November 2014 at a significantly higher price of $28,560,000. As Mr Cheung pointed out, someone had made an immediate profit of almost $10 million. Only then, did Madam Tam learn of the sub-sale and the profit made from her. Mr Cheung later sent various screen captures of the details of the KV Property stored in his company’s computer, which confirmed the details of what he had said. 35.Also on the same day, 2 February 2015, Madam Tam had four telephone conversations with Mr Ngai. In gist:
36.On 4 February 2015, Madam Tam had two telephone conversations and exchanged various WhatsApp messages with Mr Ngai. In gist:
37.In Mr Ho’s telephone conversation with Mr Ngai on 4 February 2015, Mr Ngai had admitted he had obtained a payment of $680,000 from the vendor of the KV Property. He said he was desperate for money at the time, and Cheerful Joy’s owner gave him $680,000 as a reward for arranging the sale of KV Property to them at the over-valued price. 38.Between 4 and 10 February 2015, when Madam Tam received a copy of the formal agreement, she noted that Cheerful Joy bore the BVI company number 1839300. But on doing a company search, she discovered that that number actually belonged to another BVI company called Jumbo Shiny Investment Holdings Ltd, which was the purchaser in two previous property transactions in which Mr Ngai acted as estate agent. 39.On 9 and 10 February 2015, Madam Tam had telephone conversations with Terry. In gist:
40.Madam Tam terminated the services of WP. Her new solicitors (“LCK”) asked WP if its staff had interpreted the contents of the formal agreement to Madam Tam, and WP later responded merely that it had relied on the presumption that Madam Tam was an experienced real property investor. LCK also wrote to Mr Ngai, who never replied. 41.LCK were replaced by the plaintiffs’ current solicitors (“KH”), who wrote to HN on 26 March 2015 pointing out Mr Ngai’s misrepresentations and requesting copies of agreements relating to the principal sale. On 27 March 2015, HN responded, but refused to address the allegations and did not provide the requested copies. KH then wrote to demand return of the KV Deposits, and to communicate that the commission cheque in the sum of $199,920 would be stopped. 42.On around 30 March 2015, KH obtained the principal sale agreement from a search at the Land Registry. At around the same time, HN provided a certificate of incumbency for Cheerful Joy dated 13 November 2014, which identified that Cheerful Joy’s sole director was Madam Poon. But it also showed that the company was incorporated on 18 September 2014 and that the sole shareholder was Lucky Paradise Investments Ltd (“Lucky Paradise”). Incidentally, a later certificate of incumbency dated 16 February 2015 shows that Madam Poon had replaced Lucky Paradise as the sole shareholder. 43.At around the same time, Madam Tam also discovered that Madam Poon was Thompson’s mistress, with whom she had a son together. 44.On 31 March 2015, KH sent a letter to HN putting on record that the sub-sale agreement had been rescinded and again requested return of the KV Deposits. Cheerful Joy did not return the KV Deposits. 45.It has subsequently been learned through disclosure and interrogatories in the Take Point Action that Cheerful Joy did not have a Hong Kong bank account, and that instead (a) the initial $1 million of the KV Deposits was given to the registered owners on 7 November 2014 (as part of a payment of $1,400,000); (b) $1,425,000 was used to pay stamp duty on 12 November 2014; and (c) $3,287,000 was transferred to WT Nominees on 17 November 2014. 46.After Take Point failed to complete the purchase of the KV Property from Cheerful Joy, Cheerful Joy also failed to complete the purchase from the registered owners. The inference to be drawn from that fact, and the chronology of payments made to and from Cheerful Joy, is that Cheerful Joy was reliant on receiving money from the sub-sale to be able to complete on the primary sale. Cheerful Joy forfeited the deposit of $1,900,000 paid to the registered owners, which was part of the sum counterclaimed by it against the plaintiffs. 47.The registered owners later sold the KV Property to a company called Profit Trillion Ltd (“Profit Trillion”) at the price of $18,970,000. The provisional agreement for sale and purchase is dated 8 April 2015 and identifies that sale was arranged through another company bearing the Wealth Trustful name, namely Wealth Trustful Property Co Ltd (“WT Property”). 48.From a formal agreement for the sale of the KV Property dated 1 April 2016, registered at the Land Registry, it also appears that Profit Trillion acted as confirmor in selling the property to a company called Goldtech International Investment Limited (“Goldtech”). It can be seen from the document that the signature of the sole director of Goldtech was that of Terry. 49.A company search identifies that the company named WT Property had been changed to the name of WT Property on 15 May 2014. In its company return dated 23 June 2014, Mr Ngai is shown as WT Property’s sole director, appointed on 23 June 2014. The company secretary is shown as WT Nominees. The company search of WT Property under its previous name, King Power Group Resource Management Limited, shows in the company return dated 10 December 2013 that its then sole shareholder and company secretary was Lucky Paradise – the same company which had originally been the sole shareholder of Cheerful Joy. 50.On 10 March 2015, the complaint about Mr Ngai’s conduct was made to the EAA. Though it is primarily a matter of background only, the EAA later – by a decision issued on 9 November 2016 – found certain misconduct allegations proved against Mr Ngai and WT Agency. Those allegations are similar to those made in the Take Point Action. Mr Ngai’s licence was suspended for six months (with a requirement that he attend relevant training courses) and WT Agency was fined $25,000. 51.Further, it is now a matter of public record that complaints were made to the ICAC relating to Mr Ngai, WT Agency and Grand Vision. On 19 December 2018, the ICAC issued a press release describing how those three parties face two charges of fraud. Mr Lam has been instructed that the trial is expected to commence in April 2021. D. The Blissful Voice Transaction 52.The evidence demonstrates the following facts, which I find proved. 53.Some of the misconduct alleged against the defendants in the Blissful Voice action ran chronologically in parallel to, and was in many respects similar to, the misconduct alleged in the Take Point Action. 54.Soon after Mr Ngai’s introduction of the KV Property to Madam Tam and Mr Ho, and after they signed the KV PSPA, he introduced them to the KM Property. Unlike with regards to the KV Property, for the KM Property most of the pre-acquisition representations were made more directly by Mr Ngai to Madam Tam (though this made little difference because of the communications between Madam Tam and Mr Ho). Also, the KM Property was purchased by buying the shares and owed loans of two companies (Manysense and Uniline) which together held the KM Property as their sole asset. 55.Mr Ngai advised Madam Tam that it had become popular to partition units (especially in factories) and to rent them out, suggesting to her that she and Mr Ho should consider investing in a factory in such a way. He sent them some partition plans. 56.In early December 2014, Mr Ngai specifically introduced the KM Property and advised them that it could be partitioned into a large number of smaller units to be sold at a profit. Sometime before 19 December 2014, Mr Ngai further represented to them that properties in the area were being sold for higher prices at over $4,000 per square foot, so that investing in the KM Property at around that price was a good bargain. On 19 December 2014, Mr Ngai further sought to convince Madam Tam and Mr Ho that the KM Property was a sound investment by proposing that it could be a joint investment through a BVI company, with Mr Ngai holding 15% and Madam Tam and Mr Ho holding 85%. Indeed, on 22 December 2014, Mr Ngai and Madam Tam became the 15% and 85% shareholders of Blissful Voice. 57.In reliance on those representations and advice, Madam Tam and Mr Ho decided to acquire the KM Property from Hailey Ventures through Blissful Voice. On the basis that Mr Ngai was a co-investor, he was permitted to sign the KM PSPA on their joint behalf. Under the terms of the PSPA, both Hailey Ventures and Blissful Voice were to pay commission to WT Agency. The total amount payable by Blissful Voice (albeit split between the transactions relating to Manysense and Uniline) was $314,280. 58.Upon signing the PSPA, Blissful Voice paid the sum of $1,746,000 to Hailey Ventures in respect of Manysense and $1,396,800 in respect of Uniline, totalling $3,142,800. On 6 January 2015, further deposits were paid in the sums of $3,492,000 in respect of Manysense and $2,793,600 in respect of Uniline, totalling $6,285,600. The sums were paid to HN, as solicitors for Hailey Ventures. 59.On about 17 March 2015, Blissful Ventures paid the further sums of $12,222,000 in respect of Manysense and $9,777,600 in respect of Uniline, totalling $21,999,600. Again, the sums were paid to HN, as solicitors for Hailey Ventures. Those sums were paid in order to achieve completion by 1pm on the following day, 18 March 2015. Blissful Voice also subsequently paid stamp duty in the sums of $34,925 and $27,941. 60.All sums emanating from Blissful Voice were in fact funded only by Madam Tam and Mr Ho. Essentially, that was because in early March 2015, Mr Ngai had informed them that he simply could not come up with his 15% share of the remaining purchase price. In fact, earlier on 12 February 2015, Madam Tam had telephoned Mr Ngai to confront him as to whether the purchase of the KM Property was also by way of a sub-sale. Mr Ngai admitted that it was, but did not respond to the query concerning potential price difference between the principal sale and the sub-sale. 61.Nevertheless, it became clear that Madam Tam and Mr Ho could not continue to invest in the KM Property together with Mr Ngai as a 15% shareholder. But, by then significant deposits had been paid, and the matter needed resolution. The resolution was for Mr Ngai to sell his 15% shareholding in Blissful Voice. So an agreement was reached under which Mr Ngai was paid $1,582,260 comprising: (1) $1,414,260, as the share of the deposit monies paid by Mr Ngai; (2) $147,300, being the architect’s fees for partitioning of the KM Property advanced by Mr Ngai; (3) $7,200, being the incorporation fee for Blissful Voice; and (4) $13,500, being Mr Ngai’s share of the legal costs in respect of Blissful Voice’s acquisition of the KM Property. In return, Mr Ngai transferred his 15% shareholding to Madam Tam. It was also agreed that Mr Ngai or WT Agency would be paid the two commissions for the KV Property and KM Property transactions. 62.Those matters were reduced into a written agreement on 17 March 2015 (“17 March 2015 Agreement”). Another aspect of that agreement will be considered later, in the context of the suggestion that it achieved settlement of all disputes between the parties. But, for present purposes, it is sufficient to accept that there was real commercial pressure in obtaining Mr Ngai’s 15% shareholding, which he was apparently threatening to withhold, which would have scuppered the KM Property purchase and would have risked significant loss of the deposits already paid. 63.This is clear from the transcript of telephone conversations between Madam Tam and Thompson on 17 March 2015. In fact, there had been an earlier telephone conversation between them on 14 March 2015, during which Madam Tam was trying to find out the extent of the involvement of Madam Poon. Thompson said that Madam Poon allowed Mr Ngai to use her name, but otherwise was not involved. But in various calls on 17 March 2015, and because Mr Ngai was apparently refusing to deal with Madam Tam directly, she dealt on an urgent basis through Thompson. The transcripts reveal that Mr Ngai was apparently threatening to withhold transfer of his shares, and instead to seek to wind up Blissful Voice. He was also demanding payment of commissions. The urgency was against the looming deadline for completion, where the documentation had to be signed by close of business on 17 March 2015. 64.As stated, completion was on 18 March 2015. That completion took place within a matter of hours of the completion of the principal sale. What was not known at the time was that the principal sale had been the purchase of the KM Property by Hailey Ventures for the price of $25,920,000, before it was almost immediately sub-sold to Blissful Voice for $31,428,000. The price difference was $5,508,000. 65.In the course of later correspondence between solicitors after 21 May 2015, Madam Tam and Mr Ho discovered that fact and how the purchase deposits had been dealt with. $4,543,600 was actually paid, not to Hailey Ventures, which had no Hong Kong bank account, but to WT Nominees. A further $90,000 (which had been intended to be applied towards legal costs) was also in fact transferred to WT Nominees. But HN suggested in correspondence that the receipt of the payments by WT Nominees “for and on behalf of” Hayley Ventures did not necessarily mean that WT Nominees benefited from such sums. (This is to be contrasted with what Mr Ngai said in his own affirmation evidence in answer to interrogatories – see below.) 66.There is a written resolution of Madam Poon as sole director of Hailey Ventures and dated 9 January 2015 by which it was resolved that WT Nominees was appointed and authorised to receive deposit payments and the balance of the purchase price relating to the sale and purchase of the KM Property. 67.There is also a certificate of incumbency for Hailey Ventures dated 18 December 2014 which identifies that its then sole director was Madam Poon and the then sole shareholder was Lucky Paradise – the same company behind WT Property and which had originally been the sole shareholder of Cheerful Joy. 68.Finally, upon a closer review of the deed of covenant relating to the KM Property, it was discovered that there was a strict prohibition against structural alterations, contrary to the representations made by Mr Ngai. E. Mr Ngai’s and Madam Poon’s Affirmations 69.As previously indicated, though Mr Ngai and Madam Poon filed witness statements, they did not come to the trial to give evidence or to adopt those witness statements. I have, therefore, excluded those statements from the trial. I have also excluded the other witness statement filed for the defendants, being the one from Thompson. 70.However, as also previously indicated, Mr Ngai and Madam Poon did file affirmations in response to requests for interrogatories. It is not necessary to set out the entirety of the evidence given in those affirmations, but some of the points can be rehearsed below. I have taken this evidence into account when making my factual finings above. 71.Mr Ngai confirmed that he is the beneficial owner of WT Agency, WT Nominees and Grand Vision, and that they are all related in the sense that they are beneficially owned and controlled by him. However, he asserted that Cheerful Joy and Hailey Ventures are not related to any of those three companies. 72.Mr Ngai’s assertion as to why Madam Poon was involved was that he would sometimes ask her to help sign some documents for the purpose of, and to facilitate, his businesses and/or business undertakings. He said he asked her to procure a company under her sole control to execute the documents in order to facilitate the relevant transactions, but the companies would not be affected because he would cover all the payments needed to be made. He asserted Madam Poon was merely doing him a favour out of their friendship. As to the monies received by WT Nominees, Mr Ngai said he asked Madam Poon to procure Hailey Ventures to give instructions to HN to transfer the sums of $3,287,000 and $4,534,600 to WT Nominees, which he had already spent as the beneficial owner of WT Nominees. He said he thought he was “entitled” to the money. He said he had also spent the $90,000, which the HN Blissful Voice ledger records as a payment being made to WT Nominees on 21 January 2015. 73.These matters on affirmation are contrary to the pleaded position of the Ngai Camp that he did not gain any personal benefit from the sub-sales, except for legitimate commissions earned by WT Agency. The admission that he spent the money received by WT Nominees is an admission that he pocketed and benefited from a secret profit arising from the transactions. 74.In her affirmation, Madam Poon said she trusted Mr Ngai, who was her neighbour and who had been helpful to her when she needed help during her pregnancy. As a result, she trusted him. From time to time, Mr Ngai would ask her to help him sign some documents for the purpose of and to facilitate his businesses, and those were the circumstances under which she signed the Blissful Voice Transaction documents. At the time they were signed, she considered whether the transactions would be detrimental to the interests of Hailey Ventures and herself, but her assessment was that the undertakings of the transactions would not be harmful. She asserted that she is not a nominee of Mr Ngai. 75.As Mr Lam submits, even if Madam Poon’s evidence on affirmation is accepted at face value, she was in effect saying that she knew, but consciously turned a blind eye to, the risk associated with allowing Mr Ngai to use Cheerful Joy and Hailey Ventures in the confirmor sales of the Properties. Further, despite the description of those two companies as the confirmors in the sub-sales, they did not actually have any direct interest in these transactions, and apparently never pocketed any of the payments. Those facts are, of course, directly contradictory to the pleaded case of the Poon Camp, which even made counterclaims. F. The Issues 76.In his opening submissions for trial, Mr Lam suggested that on the pleadings and the above evidence, and in light of any relevant factual findings, the case might be approached by reference to the following issues:
77.These issues can be considered each in turn, except that it seems to me to be logical to re-number the last two issues and to deal with the 17 March 2015 Agreement prior to the consideration of any appropriate or available remedy. G. Issue 1: WT Agency’s Breach of Duties 78.In each of the Take Point Action and the Blissful Voice Action, the plaintiffs have pleaded that, as their agent, and as it assumed an advisory and negotiating role in respect of the acquisition of the Properties, WT Agency at all material times owed to the plaintiffs various fiduciary duties and duties of care, including: (1) a duty to act in good faith and in the plaintiffs’ best interests; (2) a duty to disclose its own misconduct or information of relevance and concern to its principal; (3) a duty to act for proper purposes; (4) a duty not to place itself in a position of conflict with the interests of the plaintiffs; and (5) a duty not to obtain or receive any unauthorised benefit or gain by reason of or by use of its fiduciary position, or of opportunity or knowledge resulting from it. 79.I accept that these duties are capable of arising from the relationship: see, for example, Kao Lee & Yip v Koo Hoi Yan [2003] 3 HKLRD 296, at §§46-47, 50-59, 60-76. Of course, whether the relationship between the client and the estate agent was one of a fiduciary nature depends on the facts. A person becomes a fiduciary, not because of his status, but because of what he assumes or is taken as having assumed to do in a particular relationship: see, for example, Allied Success Creation Ltd v Cheung Hon Kuen (unreported, CACV 77, 81 & 213/2015, 12 April 2016). 80.In general terms, a fiduciary who has taken advantage of an opportunity made available to him in the course of a fiduciary relationship to secure for himself a business opportunity will be in breach of fiduciary duty, for which he will be liable to account for any profits he has made. But, not every breach of duty by a person in a fiduciary position amounts to a breach of fiduciary duty. It depends on whether the duty breached is a fiduciary obligation, such as not to profit from his office, as opposed to the breach of the skill and care expected of such fiduciary (which is not itself a fiduciary duty). In the former case, the remedy may include a constructive trust and an account of profits. In the latter case, a failure to discharge the estate agent’s duties of skill and care will result only in an award of damages. 81.Where an agent is in serious breach of his duty to his principal, the principal can refuse to pay commission in respect of the transaction as to which the agent is in breach. An agency contract is built on good faith and fidelity. Dishonesty, taking secret profit, improper disclosure, or a failure to disclose material facts are all examples of the repudiation by the agent of his contract of agency, entitling the principal to be discharged from the obligation to pay commission. 82.I also accept that WT Agency owed an implied contractual duty of reasonable care and skill towards the plaintiffs in respect of its provision of services as an estate agent, by virtue of section 5 of the Supply of Services (Implied Terms) Ordinance Cap 457. 83.The Ngai Camp pleadings admit that WT Agency owed the duties to the plaintiffs as alleged, including the fiduciary duties. In any event, I find on the facts the duties were owed. 84.Further, on the facts I have found and set out above, the breaches of those duties by WT Agency are clearly demonstrated. There were undisclosed sub-sales at undisclosed significant over-values, which matters were within the knowledge of Mr Ngai, WT Agency and Grand Vision. As to Grand Vision, the actual estate agent in the primary sale of the KV Property, Mr Ngai is its sole director and shareholder and there is no suggestion that he answered to anyone else, or that his knowledge was not attributable to the company. Mr Ngai was the sole nexus between Grand Vision and WT Agency. Clearly, Mr Ngai ought to have disclosed his connection, and to have identified that he would gain from the sub-sale of the KV Property. 85.Mr Ngai has (contrary to his pleaded case) also admitted on affirmation that he pocketed monies transferred to WT Nominees, making a personal benefit of approximately $7.8 million. As Mr Lam submits, it would be wholly artificial for any argument that Mr Ngai’s knowledge as WT Nominees’ sole director could not be attributed to him when performing his duties towards the plaintiffs as WT Agency’s sole director. 86.Separate to the Blissful Voice Action, there is an additional pleaded particular of breach, namely the failure properly to have informed the plaintiffs that the KM Property was subject to a Court judgment in HCA 514/2010. Though I do not think it makes any great difference, I do not find that there was that additional breach. 87.I conclude that WT Agency did breach its statutory, common law, and/or implied contractual duties towards the plaintiffs. H. Issue 2: Dishonest Assistance 88.In order to establish dishonest assistance, the plaintiffs need to establish a breach of trust by WT Agency, which was induced by or assisted by Mr Ngai and the Ngai Camp and the Poon Camp: see Lewin on Trusts20th Ed at §§43-014 to 43-015. 89.There is no need for a formal trust, for example property vested in one person held on trust for another. Rather, it suffices that there is a fiduciary relationship (with or without trust property). Similarly, there is no requirement that a breach of ‘trust’ must relate to the misapplication of trust property; a breach of fiduciary obligations, such as duties of good faith and loyalty, would be sufficient: see Lewin at §§43-026 to 43-027, and 43-030. 90.As to whether there has been assistance by the defendants, that is a question of fact. All that is required is to prove the conduct actually assisted the commission of the breach of trust. The assistance must be more than of minimal importance, but there does not have to be any mental element in addition to the separate requirement of dishonesty: see Lewin at §43-032. 91.An objective test is to be applied in discerning the dishonesty of the defendants, and is for the most part to be equated with conscious impropriety: see Lewin at §43-035, citing Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 at 389B-G, 390F-391A. Essentially, if by ordinary standards a defendant’s mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards. In most cases, an honest person should have little difficulty in knowing whether a proposed transaction, or his participation in it, would offend the normally accepted standards of honest conduct. 92.An honest person would not deliberately close his eyes and ears, or deliberately not ask questions, lest he learn something he would rather not know, and then proceed regardless. The imputation of ‘blind eye’ knowledge requires satisfaction of two conditions, namely (1) the defendant’s suspicion that certain facts may exist, and (2) the defendant’s conscious decision to refrain from taking any step to confirm their existence. The existence of suspicion is to be judged subjectively by reference to the beliefs of the defendant, and the decision to avoid obtaining confirmation must be deliberate: see Galleria (Hong Kong) Ltd (in compulsory liquidation) v DBS Bank Ltd, Hong Kong Branch [2019] HKCFI 1877 at §§51-53. 93.I accept that given Mr Ngai’s sole directorship over the corporate defendants in the Ngai Camp, it is evident that Grand Vision and WT Nominees and Mr Ngai had actual knowledge of and directly assisted in WT Agency’s breaches of duties as found under Issue 1. 94.As to Madam Poon, Cheerful Joy and Hailey Ventures, they were the only parties other than the Ngai Camp who must have known about the arrangement immediately to buy and sub-sell the Properties in quick succession at a significant over-value or profit. Madam Poon, Cheerful Joy and Hailey Ventures all participated as purchaser and confirmor in the transactions respectively. 95.No evidence has been called by Madam Poon that anyone signed any of the property transaction documents on her behalf, or that she was induced by any fraud into signing the documents. As a result, where she has not sought to prove otherwise, it is to be taken that she knew the meaning of the contents of what she signed: see, for example, Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334 at §86. 96.Looking at the extent of the price differences between purchase and sub-sale, it seems to me that Madam Poon must have known that the sub-sales were likely at an unreasonable overvalue to the detriment of the sub-purchasers, with whom she had no direct contact. Madam Poon therefore had the choice of relying solely on Mr Ngai to ensure the sub-purchasers had the relevant information, or directly negotiating the transactions with the Tam Camp (which would inevitably have revealed the true nature and value of the Properties, unless Madam Poon were to have played along with the representations made by Mr Ngai). Any honest person would understand the transactions to have offended normally acceptable standards of honest conduct. 97.As to the affirmation evidence given by Madam Poon, this also tends to support the claim of dishonest assistance. She claims that deposit monies which would otherwise have gone to Cheerful Joy and Hailey Ventures have instead gone to WT Nominees. Yet she knew Mr Ngai was the estate agent, not the seller of the Properties, and did nothing to stop that obvious misconduct. Rather, she in fact assisted Mr Ngai by instructing the companies to sign transactional documents, and presumably to direct transfer of funds to Mr Ngai’s corporate vehicle. Further, her suggestion that she thought it would be in the interests of the plaintiffs to enter into the agreements defies common sense, as it is objectively clear that there was no benefit in entering into these agreements in the circumstances of the sub-sales and over-values. This was, at an absolute minimum, blind eye knowledge consistent with dishonest conduct. 98.As to Mr Ngai and Madam Poon as individuals, I accept the submission that they interposed their corporate entities for the purposes of concealing (a) their friendship and connection, (b) Mr Ngai’s personal involvement as the estate agent in both the primary sales and confirmor transactions, and (c) Madam Poon’s involvement as the common party in the transactions, with full knowledge of the true value of the Properties. The plaintiffs would not have purchased the Properties had they known of the various personal and corporate relationships before they entered the PSPA for each of the KV Property and the KM Property. In the circumstances, I also accept that the corporate veil can and should be pierced to prevent the abuse of corporate legal personality in evading the law or frustrating its enforcement: see Prest v Petrodel Resources Ltd [2013] 2 AC 415 at 487, §§34-35. I. Issue 3: Deception and/or Misrepresentation 99.In order to prove fraudulent misrepresentation, the plaintiffs (here Madam Tam and Mr Ho) need to demonstrate that: (1) there was a statement made, and that the statement was false; (2) that the plaintiffs as representees were entitled to and did actually rely on the false statement before entering the relevant transactions; (3) the plaintiffs did trust what they were told, and acted on it, which is sufficient to constitute reliance even though they had at their disposal the means of knowledge to discover the truth. As to the last point, it is not open to the person making the misrepresentation to say the person to whom the representation was made chose to believe him when they might have doubted him and gone further. The Ngai Camp’s pleaded case that Madam Tam and Mr Ho were seasoned property investors and could have searched the Land Registry to discover the original sale and price, therefore, does not assist. 100.I keep in mind a distinction that is sometimes drawn between “sales talk” (which is generally not sufficiently clear and precise to constitute actionable misrepresentations), statements of opinions and belief (again not generally actionable) and statements of fact (which may be or are actionable). The distinction between them is not always straightforward at first sight, and it will be necessary to look closely at what was said and the circumstances. 101.I have accepted that the various representations alleged to have been made by Mr Ngai were in fact made by him. It is also evident that he knew they were false at the time he made them. He knew the confirmor sales were not a good bargain, and clearly were not sold at market value or the value which might have been paid. He knew that the KV Property was not actually two shops, or that it was being rented out for $90,000 per month. He knew that purchasing the KM Property at $4,000 per square foot could not have been a good bargain when he knew that Hailey Ventures purchased it for a much lower sum. 102.Where Mr Ngai was Madam Tam’s and Mr Ho’s trusted estate agent, and where price was a major consideration for investment properties, they had reason to rely on – and I accept that they did in fact rely on – Mr Ngai’s representations. This is also demonstrated by the nature of the enquiries raised by Madam Tam with Mr Ngai from early February 2015 onwards. 103.In the circumstances, I accept that the plaintiffs were deceived and misled, by virtue of the false representations made by Mr Ngai, into entering into the confirmor transactions relating to both the KV Property and the KM Property. J. Issue 4: Conspiracy 104.It is settled that to establish a claim of conspiracy to defraud by unlawful means, the plaintiffs need to demonstrate an agreement between two or more persons who subjectively intend to injure the plaintiffs resulting in (usually) pecuniary damage. In the case of an unlawful means conspiracy, the defendants’ intention to injure the plaintiffs need not be the predominant intention. Mere negligence or carelessness by the defendants would be insufficient to sustain a conspiracy to injure, and allegations of fraud must always be pleaded with the utmost particularity. The plaintiffs must prove that the defendants had actual or ‘blind eye’ knowledge. 105.Mr Lam relies on the analysis in his submissions relating to Issues 1 to 3 as being equally apposite to a claim in conspiracy. I accept the evidence, which I have canvassed above, demonstrates that there was an agreement between Mr Ngai (who clearly had actual knowledge) and Madam Poon (who had either actual knowledge or ‘blind eye’ knowledge) to use Cheerful Joy and Hailey Ventures to defraud the plaintiffs leading to inevitable monetary harm to Take Point and Blissful Voice. 106.The alleged conspiracy has been established. K. Issue 5: 17 March 2015 Agreement 107.The 17 March 2015 Agreement was relied upon by the Ngai Camp in its counterclaim, which has been struck out. But it also features as part of the defence of both the Ngai Camp and the Poon Camp. 108.I have already set out above some of the matters giving rise to the 17 March 2015 Agreement. Madam Tam had been advised by Terry of HN that for completion of the KM Property it would be necessary to get Mr Ngai’s signature on the completion documents. This was in the context that Mr Ngai had previously indicated he had no money to complete the purchase, and wanted to have his contribution already made to Blissful Voice to be returned, failing which he would petition to wind up the company. 109.In the conversations with Thompson, he informed Madam Tam that Mr Ngai was only willing to transfer his shares if he was paid back the money he had contributed to Blissful Voice and also paid his commission in respect of the KV Property and the KM Property. Madam Tam said she felt she had no choice but to agree. 110.Thompson came to see Madam Tam at about 4pm on 17 March 2015, bringing the 17 March 2015 Agreement which Mr Ngai had already signed. Madam Tam understood the agreement to have been prepared by Mr Ngai, and that Thompson was simply the middleman. The signing of the 17 March 2015 Agreement took place very quickly, as Thompson urged it to be signed to ensure completion of the KM Property could take place. Madam Tam was never given any previous draft version, and all previous conversations with Thompson related solely to buying out Mr Ngai’s shares and for the commission payments to be settled. In no previous conversation with Thompson was there any discussion about an overall settlement. 111.It is fair to point out that in a subsequent telephone conversation with Thompson in the late evening of 17 March 2015, Thompson told Madam Tam that Mr Ngai was worried about being sued or disqualified which is why he “put everything in”. When asked what “everything” was, Thompson said he had no idea, as he did not know about the transactions, but Mr Ngai had said Madam Tam would know. Madam Tam emphasised that she had no choice and had to sign whatever she was given, to which Thompson replied that what he saw was about settlement suggesting both parties agreed not to claim against each other. Madam Tam said that if what Mr Ngai had done was legitimate and reasonable, there is no way that she could sue him. That seems to me to indicate that she did not think – at least, not subjectively – that she had resolved all matters with Mr Ngai for all purposes. 112.Mr Ngai said in his affirmations that, as to the 17 March 2015 Agreement, he drafted the agreement at his home, on his own with no other person assisting. He did so following Thompson’s liaising with Mr Ho and himself for the purpose of negotiation, for which there were several telephone calls on the morning of 17 March 2015. As Mr Ngai put it, Thompson was acting as a “middleman” to facilitate the negotiation. He said that at around 12 noon, agreement was reached as to “the framework of the details of the Settlement Agreement, which covered all the matters in relation to [the KV Property], [the KM Property], commissions, and the share transfer in Blissful Voice”. He said he went home to prepare the draft according to the terms agreed. 113.Under the 17 March 2015 Agreement, “Party A” was defined as comprising Madam Tam, Take Point and Blissful Voice, and “Party B” was defined as comprising Mr Ngai, WT Agency and Grand Vision. In translation from the original, the material terms of the agreement were as follows:
114.Clauses 1, 2, and 3 have been performed (subject to the point on commission – see below). Focus for present purposes is on clause 4. In his submissions, Mr Lam identified three main reasons why that clause should be held to be of no effect, or should be construed against the parties relying on it, primarily the Ngai Camp. 115.First, Mr Lam submitted that it is trite that any exemption language in a contract must be clear and unambiguous, or risk being ineffective. Where there is ambiguity, the words of the document ought to be construed more strongly against the party who made the document, here Mr Ngai. In this case, Mr Lam says:
116.It seems to me that this point is really about the proper construction of clause 4 of the 17 March 2015 Agreement. The main focus of the agreement as a whole was in relation to the transfer of the 15% shareholding in Blissful Voice. But, the fact that Take Point was made a party to the agreement as one of those comprising “Party A” might suggest that the clause 4 settlement was intended to resolve matters relating to both the KV Property transaction and the KM Property transaction. Of course, that simply begs the question as to what matters were intended to be resolved. Looking at the matter overall and in context, and applying the principles relevant to construing exemption clauses, I tend to the proper construction of clause 4 as being one settling matters only as regards the payment of commission under clauses 2 and 3 (and as regards the transfer of the 15% shareholding under clause 1). One of the purposes of the 17 March 2015 Agreement was to meet Mr Ngai’s demand that he be paid commission on both transactions, in circumstances where Madam Tam, Take Point and Blissful Voice might have raised complaints of disputes as a means of avoiding such payments, but by clause 4 agreed not to do so. 117.Secondly, Mr Lam relies upon section 4 of the Misrepresentation Ordinance, which provides that:
118.Mr Lam submits that, given the ambiguous language of the clause, it is unclear whether it is intended to refer to any misrepresentation claim. But because the Ngai Camp’s pleaded case is in reliance on the clause, it is presumed their intention is that it does. Therefore, it can be pointed out that (1) the misrepresentations were made before the 17 March 2015 Agreement, and the falsity was not discovered until after the agreement, (2) if the clause were to be held enforceable, then the plaintiffs would be barred from claiming in misrepresentation against Mr Ngai and WT Agency, which would be contrary to the protection granted under section 4, (3) there has been no attempt by the Ngai Camp to prove that the term was reasonable, so that (4) clause 4 of the 17 March 2015 Agreement ought to be ruled to be of no effect. I agree. So, if my above construction of clause 4 is incorrect, I would rule it of no effect. 119.Thirdly, Mr Lam points to the pleading that Madam Tam, Take Point and Blissful Voice were induced to enter into the 17 March 2015 Agreement by duress on the part of Mr Ngai. By reference to the facts I have already set out above, Mr Lam says the focus was on the urgent need to achieve transfer of Mr Ngai’s 15% share in Blissful Voice, there was an absence of any discussion regarding settlement of any claims, and further where the only alternative would have led to Mr Ngai seeking to wind up the company which was due to complete the purchase of the KM Property the next day, Madam Tam had no choice but to sign the 17 March 2015 Agreement. The economic duress faced by her was either forfeiting deposits (by then approximately $9.4 million) or proceeding with completing the confirmor transaction by firstly paying for Mr Ngai’s 15% shareholding, and agreeing to pay commission. 120.The law on economic duress was reviewed by G Lam J in Zebra Industries (Orogenesis Nova) Ltd v Wah Tong Paper Products Group Limited (unreported, HCMP 436/2013, 31 August 2015) at §§78-87. As he pointed out, economic duress is an area of law shaped by relatively high-level principles rather than readily applicable tests. There are few hard and fast rules. Each case has to be decided on its own facts based on the guidance provided by the cases. 121.If I might offer a summary of those high-level principles based on the guidance provided by the cases, it would be:
122.In the Zebra Industries case, G Lam J was also dealing with an alleged settlement agreement. Whilst acknowledging that settlement agreements, just like other contracts, can be vitiated by economic duress, he thought two particular matters needed to be borne in mind when examining a plea of economic duress raised to impugn a settlement agreement. With my own slight restatement of them, I agree with those two matters, as follows:
123.Keeping these various principles in mind, it seems to me that there was economic duress in this case, vitiating any true consent to a broad settlement of any dispute as might arise, as suggested by the Ngai Camp. Mr Ngai had originally agreed to be a co-investor, but had subsequently made clear that he could not afford to complete the investment. Nevertheless, on the very eve of completion, and in breach of his own previous agreements, Mr Ngai threatened to significantly hinder, if not scupper, the completion if his demands were not met. He did so through a third party, Thompson, as he refused direct contact with Madam Tam. That at least increased the pressure of time, but also disabled or prevented direct face-to-face discussion. Nothing in the transcripts of the conversation between Madam Tam and Thompson revealed that she had been asked to, let alone agreed to, any broad settlement of all or any matters of dispute as might arise between her and Mr Ngai. Unless there was a serious misrepresentation of what Madam Tam had said, when Thompson liaised with Mr Ngai, there was no basis upon which Mr Ngai could properly have understood that Madam Tam had agreed or would agree to a broad settlement of all possible disputes between them. Against the timing and the apparent threat, there was little if any practical alternative open to Madam Tam. She did not have access to, nor realistically have time to obtain, independent advice. Whilst it is correct that Madam Tam has affirmed certain aspects of the 17 March 2015 Agreement, relating to those aspects of it which have been performed, I think there was illegitimate pressure if the agreement is said to have led also to an overall settlement of all disputes as might arise. 124.Put another way, if the proper construction of clause 4 of the 17 March 2015 Agreement is that it was intended to achieve a settlement of any dispute as might have arisen or might yet arise (though I have held otherwise above), the Court would have no interest in this case on its particular facts in upholding such an agreement. To do so would seem to me to be entirely contrary to the proper interests of the administration of justice. 125.I also take into account that Mr Ngai knew that Madam Tam and Mr Ho acted as joint owners of the investment corporate vehicles, and that some of the representations leading to the transactions had been made directly to Mr Ho, but there was no attempt to make Mr Ho a direct party to the 17 March 2015 Agreement. Nor were any of the Poon Camp parties to that agreement. Indeed, at the time, Mr Ngai was still pretending that he had no connection to those parties. 126.In the circumstances of these various reasons, perhaps subject only to the claims relating to commission, the 17 March 2015 Agreement is no bar to the plaintiffs obtaining appropriate remedies. L. Issue 6: Remedies 127.As Mr Lam identifies, some of the relief sought in the prayers in claims in the Take Point Action and the Blissful Voice Action are similar to those sought by the plaintiff in the case of Allied Success Creation Ltd (see above). On that basis, Mr Lam submits that the plaintiffs are entitled to: (1) damages and equitable compensation for WT Agency’s breach of common law, implied contractual, statutory and fiduciary duties; (2) equitable compensation and/or an account of secret profits made in relation to the confirmor transactions by all defendants except WT Agency, the constructive trust being purely the formula for equitable relief against those who dishonestly assisted the breach of trust by WT Agency; (3) damages for Mr Ngai’s and WT agency’s fraudulent misrepresentations; and (4) damages against all defendants for their conspiracy to defraud. 128.I accept that those are the appropriate remedies on the findings I have made on each of the relevant causes of action in each of the Take Point Action and the Blissful Voice Action. 129.As to the specific orders proposed by Mr Lam, he submits that with respect to the Take Point Action there should be orders that:
130.I accept that the proposed orders are appropriate and should be granted, with the exception for sub-paragraph (4), because that relates to the commission payment which on my above reasoning might properly be regarded as subject to the settlement arrangements under the 17 March 2015 Agreement. 131.With respect to the Blissful Voice Action, Mr Lam submits that there should be orders that:
132.I accept that the proposed orders are appropriate and should be granted, except for sub-paragraph 1(b) relating to the commission payment which can be regarded as subject to the settlement arrangements under the 17 March 2015 Agreement. 133.With respect to both actions, Mr Lam submits that there should be a declaration that the 17 March 2015 Agreement is not enforceable at law to prevent the plaintiffs in both Actions from pursuing their present claims against the defendants, and it does not have the effect of settling the disputes in both Actions. I agree, except as to the commission payments. M. Result 134.In the circumstances, I make orders in the terms of paragraphs 129 and 131 (albeit with the exceptions mentioned in paragraphs 130 and 132) and 133 above. N. Costs 135.Mr Lam submits that there should be a costs order nisi that the plaintiffs should have the costs against the defendants, including the costs of defending the dismissed counterclaims, to be taxed on the indemnity basis, if not agreed. In the absence of application in 14 days to vary, the costs order should become absolute. 136.In this regard, Mr Lam invites consideration of the relevant inter-solicitor correspondence between 2016 and 2018, which was annexed to the written closing submission. Mr Lam draws particular attention to the correspondence about mediation. After several rounds of exchanging mediation notices, certificates and responses in 2016 and in 2017, the parties eventually agreed to appoint as mediator for both Actions the person proposed by the Ngai Camp. However, after supposedly confirming her appointment as mediator, none of the defendants proceeded to engage the mediator. When in September and October 2018, solicitors for the plaintiffs wrote again to the defendants about the objective of proceeding expeditiously with mediation, no response was received. The plaintiffs’ solicitors reserved the right to produce the correspondence to the court when the issue of costs arises. 137.Mr Lam reminds me of the matters to be taken into consideration by the court in exercising its discretion as to costs under Order 62 rule 5, including in particular the conduct of the parties. He submits that the defendants have conducted themselves poorly. In the face of serious allegations relating to fraudulent activity, the defendants have met those allegations with poor, ambiguous and/or contradictory pleadings and evidence, and have failed to attend trial at all. By late 2017, the defendants adopted an entirely unresponsive attitude to mediation, notwithstanding frequent reminders from the plaintiffs. Even when the defendant ceased to be represented by solicitors, they failed to give proper service addresses, requiring time and expense on the part of the plaintiffs. Overall, the conduct of the defendants towards both actions has been unreasonable and unhelpful, creating unnecessary expense of time and costs. 138.I agree that the circumstances are such as entitle the court in the exercise of its discretion to order costs to be paid on a higher than party and party basis. Leaving aside my findings as to the fraudulent conduct of the defendants on the substance of the matters of complaint, the defendants have engaged in litigation conduct of an unattractive kind. After first apparently engaging with the allegations made against them, albeit in a rather vague or ambiguous and inconsistent manner, they have in effect ceased to participate actively in these proceedings. They have not sought to engage in any meaningful mediation, and they have effectively just ‘walked away’ from the proceedings after ceasing to be legally represented in the months running up to the trial. There was no attempt to participate in the trial, or to make good any part of their pleaded cases. No explanation whatsoever has been offered to the plaintiffs or to the court for this behaviour. 139.Despite the apparent presentation of the Ngai Camp and the Poon Camp as being two separate bodies of persons and corporations, my findings identify that they are in fact clearly closely connected. Looking at the underlying ownership, including the involvement of Lucky Paradise (see above), it is at least realistically likely that Mr Ngai was the controlling mind behind all of the defendants, and all of their approaches to this litigation. The unattractive conduct is properly visited by the award of costs to the plaintiffs on the indemnity basis. 140.It is only in the absence of the defendants that I make that part of the order first on a nisi basis, which will become absolute in the absence of any application within 14 days to vary the basis of taxation. 141.For the avoidance of doubt, the order that the defendants are jointly and severally liable for the costs of the plaintiffs in both Actions is made because I think the costs should follow the event. It is not made on a nisi basis, which basis is limited to the issue of indemnity costs.
Mr Jacky Lam, instructed by Kok & Ha, for all the plaintiffs in both cases All defendants in both cases were not represented and did not appear | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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