Ding Shu Ju v. Chu Sai Keung
Read the full judgment text of CACV 185/2016 on BabelCite. This Court of Appeal judgment was delivered on 4 May 2021.
1. I agree with the judgment of Yuen JA.
Cited by 3 cases · Cites 2 cases
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CACV 185/2016 [2021] HKCA 626 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 185 OF 2016 (ON APPEAL FROM HCA NO 835 OF 2013) ________________________ BETWEEN
________________________ (By Original Action) AND BETWEEN
________________________ (By Counterclaim) Before: Hon Kwan VP, Cheung and Yuen JJA in Court Date of Hearing: 27 July 2018 Dates of Written Submissions: 20 March 2021, 25 March 2021, 9 April 2021 and 23 April 2021 Date of Judgment: 4 May 2021 ________________________ J U D G M E N T ________________________ Hon Kwan VP: 1.I agree with the judgment of Yuen JA. Hon Cheung JA: 2.I agree with the judgment of Yuen JA. Hon Yuen JA: 3.This is the appeal of Chu Sai Keung (“Mr Chu”)[1] from a Judgment of DHCJ Manzoni SC (“the judge”) given on 11 August 2016 (“the Judgment”) determining the disputes between Mr Chu, Wong Shiu Tong (“Mr Wong”)[2] and Mr Wong’s wife Ding Shu Ju (“Madam Ding”). 4.Madam Ding had first started proceedings against Mr Chu for repayment of an alleged loan of $1.5m[3]. 5.Mr Chu denied Madam Ding’s claim, and counterclaimed against:
6.Mr Wong then filed a counterclaim against Mr Chu, in which he alleged:
After giving credit for various payments made by Mr Chu, Mr Wong counterclaimed against Mr Chu for the balance of $1,535,662.66[13] and RMB251,849.41[14]. 7.After a 6-day trial, the judge ordered:
8.Mr Chu appealed. There was no respondent’s notice from either Mr Wong or Madam Ding. 9.Although Mr Chu was legally represented before the judge, and the Judgment was written in English, he appeared at the appeal without legal representation, his submissions were written in Chinese, and he has challenged the Judgment on a number of grounds but in various degrees of specificity. This has made the preparation of this judgment more difficult than usual. (As the Judgment was written in English, this judgment will also be written in English but Mr Chu may ask for interpretation from a court interpreter if he needs it). Background 10.As the facts are complex, it is necessary to set out the background first in some detail. The HK Ltd Co 11.1.In or prior to 2007, Advance Coating Tapes & Products Co Ltd (“the HK Ltd Co”), a company incorporated in Hong Kong, was established by Mr Chu, Mr Ho and Mr Wong (“the 3 persons”). According to the Annual Return made up to 3 July 2008[15], their shareholdings were as follows:
11.2.The HK Ltd Co was de-registered in January 2009[16]. There is no evidence before the court that the above shareholding proportion had changed before de-registration. The Partnership 12.1.In the meantime, the 3 persons also set up a partnership in Hong Kong called Advance Coating Tape & Product Company (“the Partnership”) on 28 July 2008. The BR form was received by the Inland Revenue Department on 30 July 2008[17]. 12.2.It would be noted that unlike the name of the HK Ltd Co, which refers to “tapes” and “products” in the plural, the name of the Partnership refers to “tape” and “product” in the singular. Of course, for the Partnership, the word “limited” did not appear. 12.3.Pausing here, no written partnership agreement relating to the 3 persons’ respective “shares” in the Partnership was produced. Generally, in a partnership, as distinct from a limited company, a “share” means a partner’s entitlement to a proportion of the net proceeds of sale of the assets [18]. In the absence of agreement, all partners have identical and equal interests in the assets[19], and equal rights to manage the business[20]. There are no “shareholders” or “directors” as such. 13.1.However, in Chu’s AD&CC, it was pleaded (§3) that the 3 persons
This was repeated in §6 of Mr Chu’s Witness Statement. 13.2.It can be seen from the name of the company referred to in §13.1. above (with “tape” and “product” in the singular) and the reference to the date (being that of the receipt of the BR form by the Inland Revenue Department), that what was being referred to in Mr Chu’s pleading and Witness Statement was the Partnership, and not the HK Ltd Co. That is confirmed in his Reply and Defence to Counterclaim (in §4). 13.3.Moreover, in Mr Chu’s AD&CC (in §4), it was pleaded:
Since this “shareholding” proportion is different from that in the HK Ltd Co, clearly this is a reference to the Partnership, and not the HK Ltd Co. 13.4.The use of words like “shareholders” and “directors” when referring to a partnership such as this, which is comprised of only individuals, is confusing and misleading and appears to betray an ignorance of the law. Although the pleadings were initially drafted by solicitors, it is the duty of counsel, as soon as they are instructed, to correct such errors. Unfortunately, this was not done. [14.However, what is important for the purposes of this appeal is the common ground between the parties on the shareholding of the PRC company DG Ltd Co. DG Ltd Co 15.1.DG Ltd Co was incorporated on 4 January 2009[21]. 15.2.The “Enterprise Legal Representative Business Licence”[22] of DG Ltd Co showed that its sole shareholder was the Partnership. If one were to look at this document only, then under Hong Kong partnership law[23], the entire shareholding of DG Ltd Co fell within partnership assets. 15.3.Under partnership law, “as between themselves, partners are not entitled individually to exercise proprietary rights over any of the partnership assets”[24]. On dissolution of the partnership, all the assets would be realised, and it would only be then that the surplus would then be distributed according to their “shares”. 16.1.In the present case however, it is significant that it was common ground between Mr Chu and Mr Wong that, right from the start of DG Ltd Co in 2008/9 (well before the dissolution of the Partnership in 2012[25]), the 3 persons treated themselves individually as severally[26] entitled to aliquot shares in DG Ltd Co. This common ground is shown by the following. 16.2.In §5 of Chu’s AD&CC, he pleaded the following:
16.3.In Mr Chu’s Witness Statement, he said the following in §8:
16.4.This was also stated in the Revised Opening Submissions of Mr Chu’s counsel[27]:
17.This was also Mr Wong’s case, as he also pleaded the following in §3(d) of Wong’s D&CC:
18.Thus, it was common ground between Mr Chu and Mr Wong at trial that the 3 persons treated themselves individually as separately owning aliquot shares in DG Ltd Co. This is material to one of the issues (the “liability as a partner issue”[28]) which will be discussed later in this Judgment[29]. 19.1.Coming back to the facts, the paid-up capital of DG Ltd Co on incorporation was RMB5 million, with Mr Chu having paid RMB3.25 million for his (65%) share, Mr Ho RMB1 million for his (20%) share, and Mr Wong RMB750,000 for his (15%) share. 19.2.Mr Chu was DG Ltd Co’s legal representative[30] and ran the company’s day to day operations. He also controlled companies called Ever Well Industrial Ltd and Ever Bright (HK) Development Ltd (which were collectively referred to in the Judgment as “Everwell”). Restructuring Agreement of DG Ltd Co 20.1.By 30 June 2010, DG Ltd Co’s assets were only worth RMB1,173,824.12[31]. It was decided that what was needed was an increase in share capital of RMB4 million. 20.2.Unlike Mr Chu and Mr Wong, Mr Ho (whose equity was now worth only RMB234,764.82[32]) did not intend to invest any more funds. 20.3.The restructuring exercise was set out in a Chinese document called “[DG Ltd Co] Instructions of Alteration of Equities” dated 30 June 2010 and signed by the 3 persons (this document is referred to in the Judgment as “the Restructuring Agreement”)[33]. 20.4.Two documents were appended to the Restructuring Agreement:
20.5.These three documents are significant in respect of two important issues in this case:
20.6.The Restructuring Agreement was in these terms:
21.1.Pausing here, in relation to the issue at §20.5(a) above, it can be seen that:
21.2.Thus, the contemporaneous documentary evidence of the Restructuring Agreement and its appendix are consistent with Mr Chu’s and Mr Wong’s common ground, acknowledged and accepted by the judge in §9 of the Judgment, that the 3 persons treated themselves as “direct shareholders” of DG Ltd Co. 22.Further, in relation to the issue set out at §20.5(b) above, it can be seen that:
but importantly,
23.In this litigation,
24.1.Both before and after the Restructuring Agreement, there were many monetary transactions between Mr Chu and Mr Wong within a 45-month period from 29 September 2008 to 7 June 2012 (listed in a schedule prepared by Mr Chu’s counsel and referred to in the Judgment). 24.2.The judge had to decide on the nature of these monetary transactions (ie whether, as Mr Chu alleged, he paid on Mr Wong’s behalf Wong’s Contribution for Increase in Share Capital and Wong’s Contribution for Liabilities; if so, the quantum of those sums and how much Mr Wong repaid; if not, what was the nature of the monetary transactions between them; and what was the purpose of Madam Ding’s payments to Mr Chu) and the result of these decisions in terms of money. Monetary transactions and other events 25.1.The monetary transactions and other events that the judge had to consider may be listed as follows:
25.2.As the judge noted, “the parties each allege that a different interpretation should be put upon each transaction”[50], and “the real difficulty which exists in relation to this action is that the parties have transferred money as between each other without any accurate records of what was transferred or any record of the purpose of that transfer”[51]. Legal proceedings 26.On 14 May 2013, Madam Ding started proceedings against Mr Chu. Trial 27.1.As recorded by the judge, there were 60 individual transactions between the various parties between 29 September 2008 and 7 June 2012, and the situation was further complicated by the imposition of DG Ltd Co and Everwell. 27.2.Madam Ding and Mr Wong gave evidence at trial. Mr Chu gave evidence and also called as a witness Madam Ren Lai, who was the financial supervisor of DG Ltd Co. However, she accepted she did not know anything about any personal loans between Mr Chu and Mr Wong[52] and she had recorded transactions as per Mr Chu’s instructions without confirming them with Mr Wong. The judge’s Judgment 28.1.In the Judgment, the judge noted that not only did the case suffer from lack of proper records relating to both what was transferred and the purpose of each transfer, discovery was not complete[53], and what documents that were produced were discredited to various extents by the parties[54]. 28.2.The upshot of this unsatisfactory situation as stated by the judge was as follows:
28.3.Doing his best given the incomplete and unsatisfactory state of the evidence before him, the judge first analysed the evidence concerning the disputed “overarching agreements”. These were the disputes over what was agreed:
29.The judge found the following facts: 29.1. Madam Ding’s transfer exceeded Wong’s Contribution for Increase in Share Capital -
29.2.Mr Wong had no continuing obligation beyond the capital injection -
29.3.Auditor’s Report of DG Ltd Co -
29.4.General Ledger attached to 21.8.2012 email -
The judge’s conclusion on the extent of Mr Wong’s obligations 30.1.The judge found that Mr Chu had failed to show that the 3 persons “took on an unlimited liability to pay for [DG Ltd Co’s] expenses”, in other words, that there had been no agreement on Wong’s Contribution for Liabilities. He found that the 3 persons’ total liability was only limited to the figures set out in the Restructuring Agreement for increase in share capital. “Any further money which they contributed to [DG Ltd Co] was a voluntary contribution made on an ad hoc basis”[68]. 30.2.The judge found that Mr Chu did pay DG Ltd Co RMB1,400,000 (or to be precise, RMB1,400,390.59) being Wong’s Contribution for Increase in Share Capital, and thus Mr Wong had a personal obligation to repay that specific sum to Mr Chu, which the judge took into account in assessing the money owed by either party[69]. 30.3.As for the rest of the monetary transactions, the judge found:
The judge’s conclusion on Madam Ding’s transfer of money to Mr Chu 31.1.It followed from the judge’s finding above that as Mr Chu only paid for Wong’s Contribution for Increase in Share Capital (RMB1,400,000), which balance was only RMB476,470 at the date of Madam Ding’s transfer of $1,500,000, this latter sum could not have been intended by Madam Ding as a repayment to Mr Chu. Accordingly, the judge found that this latter sum was intended as a personal loan from Madam Ding to Mr Chu, for which he found Mr Chu to have agreed to repay the principal and interest[70]. 31.2.However, the judge found that Madam Ding did not have to sell the property as a result of Mr Chu’s failure to repay the principal on time, and rejected her claim for legal expenses for the sale in the sum of $2,800[71]. The judge therefore gave judgment to Madam Ding in the sum of $1,488,940 only, taking into account her liability to the mortgagee for interest, and Mr Chu’s payments to her, as per the calculations set out in the Judgment[72]. 32.1.Having made those findings of facts on the limited extent of Mr Wong’s contribution obligations, and its impact on the character of the transfer of funds from Madam Ding to Mr Chu, the judge then carved out the Lohas Park account between the parties, and then proceeded to examine each of the monetary transactions between the parties in what was referred to as the “running account”. 32.2.The end result, after taking the running account, was that Mr Chu was ordered to pay Mr Wong $1,593,472.66 and RMB160,039.95 with interest at judgment rate from the date of the Judgment until payment, and that Mr Chu’s counterclaim be dismissed. Appeal 33.Mr Chu appealed. Applications to adduce fresh evidence 34.1.Mr Chu first applied for leave to adduce fresh evidence. The new documents consisted of the following:
34.2. Mr Wong and Madam Ding did not object to (2) - (4) being adduced at the hearing of the appeal. 34.3. As for (1), as the judgment of the DG 3rd Ct had been placed before the judge, and as the judgment of the DG Intermediate Ct came after the date of the Judgment in this action (HCA835/2013), we considered it de bene esse, although the issue of its relevance will be discussed below[73]. Grounds of Appeal 35.1.Mr Chu’s Notice of Appeal contained 8 grounds, which may be summarized as follows:
35.2.Mr Chu and counsel for Madam Ding and Mr Wong respectively made oral submissions at the hearing of the appeal. Pursuant to directions from the court, all parties also provided further written submissions on the construction issue referred to in §45.4 below. Discussion 36.1.As noted above, the grounds of appeal were in varying degrees of specificity, to which were added further materials in the written submissions. 36.2.As for the first ground of appeal, it is clear from the Judgment and transcript that there is absolutely nothing in the suggestions that the judge was subjective, or had a preconceived approach, or applied double standards. The judge had to struggle with a case which was poorly pleaded and prepared, for which all parties must be held responsible. 36.3.The remaining grounds and submissions may be encapsulated as follows:
(1) Liability as a partner issue 37.1.Mr Chu submitted that because all the shares of DG Ltd Co were owned by the Partnership (as per the Enterprise Legal Representative Business Licence), Mr Wong had an obligation to contribute to its liabilities. 37.2.Although Mr Chu did not refer to any legal materials, it is presumed that his submission is based on partnership law. Section 11 Partnership Ordinance Cap. 38 provides that every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm, and s.26(b) provides that subject to any express or implied agreement, the firm must indemnify every partner in respect of payments made by him in the ordinary and proper conduct of the business of the firm, or in or about anything necessarily done for the preservation of the business or property of the firm. 37.3.In other words, applying Hong Kong partnership law to DG Ltd Co, Mr Wong (and Mr Ho) would be jointly liable with Mr Chu; and if Mr Chu paid third party creditors of the partnership, then (subject to any express or implied agreement), the firm would have to indemnify him. 38.However, this submission should be rejected for the following reasons. 38.1.First, this submission had not been advanced by Mr Chu’s counsel in either her opening or closing submissions at trial. The relationship of the parties as shown by their conduct is a matter of fact and law, and it is too late to advance it now, as it fails the well-established Flywin test[74]:
38.2.More importantly, DG Ltd Co was not treated as a partnership asset (with all the partners’ interests as per §12.3 above). On the contrary, it was common ground that Mr Chu and Mr Wong had treated themselves as being direct shareholders of aliquot shares of DG Ltd Co:see (a) the pleadings; (b) Mr Chu’s witness statement; and (c) Mr Chu’s counsel’s opening submissions, discussed above[75] and (d) Mr Chu’s counsel’s closing submissions[76]. 38.3.Although the judge unfortunately fell into error when he referred to DG Ltd Co as a 100% subsidiary of HK Ltd Co (rather than the Partnership as per the “Enterprise Legal Representative Business Licence”), the passage (emphasized in italics below) in §9 of the Judgment was correct:
38.4.The best proof of this convention[78] whereby the 3 persons treated themselves individually as direct shareholders of DG Ltd Co was the Restructuring Agreement itself, the important contemporaneous document signed by all 3 persons who referred to themselves as “shareholders”, not as partners in the Partnership as the sole shareholder of DG Ltd Co. 38.5.Further, Mr Chu’s evidence in his Witness Statement quoted above[79] was that the Partnership had no business dealings. No accounts of the Partnership were produced at trial. Indeed, the Partnership ceased or dissolved on 1 July 2012[80], but DG Ltd Co carried on in the same way (until it too ceased business on 31 December 2012). 39.From the above discussion, the judge was entitled to conclude that the 3 persons’ real relationship in respect of DG Ltd Co was as individual direct shareholders,and that in any event, they did not conduct themselves as partners (with ramifications such as those under general partnership law as discussed above). Mr Chu therefore fails on the “liability as a partner” issue. (2) PRC Judgment issue 40.This leads to the PRC Judgment issue. Mr Chu sought to argue that the judge should have been bound by the judgment of the DG 3rd Ct (as upheld by the DG Intermediate Ct) to hold that the Restructuring Agreement was an agreement of the Partnership, and not of the 3 persons as individual direct shareholders of DG Ltd Co. 41.1.Briefly, the background to the litigation in Dongguan is as follows. 41.2.On 7 July 2014, Mr Wong issued proceedings in Dongguan against DG Ltd Co and Mr Chu. Mr Wong alleged in his pleadings[81] that since he was not a shareholder of DG Ltd Co (the sole shareholder of which was the Partnership), and since the Partnership had not been a party to the Restructuring Agreement, under certain provisions of PRC law, he was under no obligation to contribute to the increase in share capital, and he therefore claimed against DG Ltd Co and Mr Chu for the return of RMB1,415,500[82]. 41.3.On 2 December 2015, the DG 3rd Ct rejected Mr Wong’s claim for reasons set out in the PRC Judgment[83]. In summary, it held that the Restructuring Agreement should be deemed as an agreement among the 3 persons to increase share capital in the Partnership, which in turn increased the share capital in DG Ltd Co. Hence, the DG Court considered that Mr Wong had not made any contribution for increase in share capital in DG Ltd Co, and rejected his claim. 41.4.On 23 December 2015, Mr Wong appealed[84]. 41.5.On 6 December 2017, the DG Intermediate Ct gave judgment[85] upholding the PRC Judgment. In summary, it held that although the Restructuring Agreement was expressed as an increase in share capital of DG Ltd Co, in substance it was an increase in the share capital of the Partnership. 41.6.Mr Chu submitted that the PRC Judgment was binding on the judge by way of res judicata and/or issue estoppel. 42.That submission should also be rejected for the following reasons. 42.1.First, it was not pleaded by Mr Chu that the PRC Judgment was binding on the Hong Kong court by way of res judicata and/or issue estoppel. If it had been so pleaded, directions would have to be given for expert evidence on PRC law. This is because the PRC and Hong Kong have different legal systems, and as such, PRC law is regarded as foreign law which has to be proved by expert evidence[86]. 42.2.Second, the application of res judicata and/or issue estoppel was not raised before the judge at trial, and it cannot be raised for the first time on appeal. The Flywin principle referred to above applies similarly to the attempt to raise this new point on appeal. 42.3.Third, whilst it may be said that Mr Wong’s position in the DG 3rd Ct was inconsistent with his position as pleaded in this case[87], it would appear from the transcript that he was not cross-examined on it in the trial of the present case. That is not surprising, as it had also been Mr Chu’s case that the 3 persons treated themselves as direct shareholders of DG Ltd Co[88]. 42.4.Fourth, in any event, the judge would not have been bound under res judicata and/or issue estoppel because the PRC Judgment was not conclusive (which is one of the prerequisites for res judicata and/or issue estoppel to apply[89]) for even on Mr Chu’s own case, under the PRC legal system, the hearing before the Intermediate court is by way of a complete re-hearing[90]. (3) Wong’s Contribution for Liabilities issue 43.1.On a fair and objective reading of Mr Chu’s pleadings (see §§10-13 of Chu’s AD&CC), the impression given was that Mr Wong was obliged to contribute to the increase in share capital and this was what Mr Chu had done on his behalf. It was not pleaded that Mr Wong also had an obligation to contribute to DG Ltd Co’s liabilities, and that Mr Chu had also done so on his behalf. 43.2.The same can be seen in §§17- 18 of Mr Chu’s witness statement. 43.3.Accordingly, the judge would have been entitled during the trial to hold Mr Chu to his case as formulated in his pleadings and verified in his witness statement. In other words, the judge would have been entitled to disallow Mr Chu from advancing a case based on Wong’s Contribution for Liabilities (in addition to Wong’s Contribution for Increase in Share Capital). 44.1.However, the judge permitted Mr Chu to do so. Thus, at §12 of the Judgment, the judge set out Mr Chu’s evidence that “there was an agreement between him and Mr Wong (and Mr Ho) that they would pay for all the expenses incurred by [DG Ltd Co]”. The judge also examined Mr Wong’s evidence in opposition[91]. 44.2.More significantly, the judge said this (§26):
44.3.The judge discussed overarching agreement (2) above in §37 which is crucial:
45.1.Unfortunately, it would appear that clause III of the same document (the Restructuring Agreement) was not drawn to the judge’s attention. To repeat, this clause read as follows:
45.2.Had this clause been drawn to the judge’s attention, it would clearly have affected his decision on overarching agreement (2) above, for it was a contemporaneous record of an agreement which (at least arguably) gives rise to an obligation on Mr Wong’s part to pay Wong’s Contribution for Liabilities, which the judge thought did not exist. 45.3.Put another way, the judge’s construction of the Restructuring Agreement as “indicating a limited liability to contribute an additional investment of RMB4 million in total” would appear to be erroneous, as he had failed to consider clause III of that document. 45.4.In relation to the judge’s construction of the Restructuring Agreement omitting clause III (“the construction issue”), the court invited further written submissions from the parties which were received and considered. 45.5.The following submissions were made on behalf of Madam Ding.
45.6.The following submissions were made on behalf of Mr Wong.
45.7.As for Mr Chu, some of his submissions strayed far beyond the construction issue, and accordingly have not been taken into account. He indicated his “agreement that the Restructuring Agreement did not clearly indicate that the 3 of them had a continuing obligation to contribute to [DG Ltd Co]”. 46.1.It is noted that Mr Chu’s counsel had not referred to clause III in either her opening or closing submissions, or in her cross-examination of Mr Wong. However, there was no express or implicit disavowal of that clause. Similarly, Mr Chu’s view of the sufficiency or otherwise of the clarity of that clause is neither here nor there in this Court’s examination of the Judgment on the construction issue. 46.2.It is well-established law that the court’s task is to ascertain the objective meaning of the words in a written agreement according to their ordinary and natural meaning, and to ascertain what a reasonable person, with the background knowledge reasonably available to the parties at the time of the agreement, would have understood the parties to have meant. The court is not concerned to identify the subjective understandings of the parties. 46.3.It is of course the duty of counsel to assist the court by pointing out material evidence, not the other way round, and we sympathize with the judge for not noticing evidence to which counsel had not drawn to his attention in the course of this complicated and ill-prepared case. But it has to be pointed out that clause III was crucial to the construction issue. This clause was not buried somewhere in another document within the bundles. It was in the same document which the judge described as one which “represented the total liability of the shareholders to make a contribution to [DG Ltd Co]”[92], a document the construction of which was significant to his finding on the main issue. The findings in §37 of the Judgment were pivotal in the judge’s decision to reject Mr Chu’s case of Wong’s Contribution for Liabilities, once he allowed him to run it. 47.Further, it is difficult to reconcile the judge’s finding that the 3 persons would not have been prepared to assume unlimited liability “to contribute to a company in the PRC that they were not in fact shareholders of” with his finding at §9 of the Judgment that they “were indeed shareholders of [DG Ltd Co], and that anything which they have purported to do as shareholders was indeed legitimately done as shareholders”. 48.1.Moreover, the judge had also expressly stated that his decision on the issue of Wong’s Contribution for Liabilities impacted his decision on overarching agreement (1) as well, i.e. the nature of Madam Ding’s transfer of $1.5 million to Mr Chu[93]. 48.2.The judge’s conclusion on the overarching agreements also expressly impacted his analysis of the many other monetary transactions between Mr Chu and Mr Wong[94], as shown in the list in §25.1 above. In this connection, there is also the issue of the accuracy of the General Ledger. 49.Given the significance of clause III to the construction issue, with the impacts set out above, and albeit with great reluctance given the time and costs ramifications, there is no alternative open to this court but to order a re-trial, not only of the issue of Wong’s Contributions for Liabilities, but also of Madam Ding’s claim and the result of the running account between Mr Chu and Mr Wong. (4) The credibility issue 50.Finally, Mr Chu submitted that the judge was wrong in his findings of fact, and wrong to have accepted Mr Wong and Madam Ding’s evidence when they had been shown to have given incorrect evidence and had provided incorrect translations to the court. In particular, Mr Chu criticized the judge for accepting Mr Wong’s evidence explaining why he had written three emails[95] to Mr Ho asking for the latter’s contribution to DG Ltd Co, when on Mr Wong’s own case, the 3 persons had no obligation to contribute to that company’s liabilities, and Mr Ho had no obligation to contribute to increase in share capital. 51.Given the order for a re-trial, it would not be appropriate to discuss this ground. However, it must be pointed out that while the translations provided in the bundles (which were apparently not certified) were inaccurate in some respects, it was the duty of the legal representatives of all the parties (which included Mr Chu’s legal representatives) to ensure that translations were accurate. Order 52.For the reasons set out in §§ 43 -49 above, the appeal is allowed and the judge’s order set aside, with an order for re-trial before another judge, and directions for a pre-trial review to ensure that the case is properly prepared for the re-trial. 53.The parties have agreed that costs should follow the event of the appeal and that there should be a summary assessment of costs. Having in mind the unsatisfactory manner in which Mr Chu’s case was pleaded and run below, we consider that he should only be allowed half of the costs he has claimed on appeal, i.e. $16,000.
Mr Billy N P Ma and Mr Fung Pak Kay, instructed by Tung & Associates, for the plaintiff (by original action) and the 2nd defendant (by counterclaim) Mr Billy Poon, instructed by Choi, Leung & Associates, for the 1st defendant (by counterclaim) The defendant (by original action) and the plaintiff (by counterclaim) appeared in person [1] Also referred to as “Morris” in the documents. [2] Also referred to as “Clarence” in the documents. [3] Plus $2,800 as expenses, Amended Statement of Claim §3F. [4] Chu’s Amended Defence and Counterclaim (“Chu’s AD&CC”) §33, and Relief §3. [5] Chu’s AD&CC §§20, 34, and Relief §1 and 2. [6] Chu’s AD&CC §15, and Relief §2. [7] Also referred to as “Len” in the documents. [8] Wong’s Defence and Counterclaim of the 1st Defendant (by Counterclaim) (“Wong’s D&CC”) §7. [9] Wong’s D&CC §9. [10] Wong’s D&CC §15. [11] Wong’s D&CC §15. [12] Wong’s D&CC §16. [13] Wong’s D&CC §23. [14] Wong’s D&CC §23. [15] (A/198). [16] (A/218). [17] (A/210). [18] Lindley & Banks on Partnership 20th ed §19-05. [19] Lindley §19-04; Partnership Ordinance Cap.38, s26(a). [20] Lindley §10-116; Partnership Ordinance, s.26(e). [21] (B/315). [22] (A/214). [23] No expert evidence was adduced on PRC law, which is a foreign law for the purpose of Hong Kong conflicts of law (The Conflict of Laws in Hong Kong 3rd ed §2.086). In the absence of proof of foreign law, the default rule is that the Hong Kong courts will apply Hong Kong law (The Conflict of Laws in Hong Kong, §2.075). [24] IRC v Gray [1994] STC 360, 377 quoted in Lindley §19-03. [25] On 1 July 2012 (B/310). [26] Meaning separately. [27] Exh “Chu-2”, Chu’s affirmation 19.6.2019, Supplemental Documents Bundle p.119. [28] See §36.3(1) below. [29] See §§37 - 39 below. [30] Under PRC law. [31] DG Ltd Co’s Balance Sheet as at 30 June 2010 (A/227, B/445). [32] RMB1,173,824.12 x 20%. [33] (A/225, B/444). [34] (A/226, B/446). [35] (A/227, B/445). [36] See §§37 - 39 below. [37] Mr Ho was also a signatory to the Restructuring Agreement but he is not a party in these proceedings. [38] This would be better translated as “Explanatory Statement”. The translations in the bundles do not bear any indications of certification. In this judgment, more accurate translations have been set out, indicated by [“...”]. [39] 分担 This literally means “share responsibility for” but was translated as “distributed to” at (B/444). [40] The relevance of this clause will be discussed in §§43 - 46 below. [41] Statement of Assets and Liabilities (A/227). [42] Statement of Assets and Liabilities (A/227). [43] See §50 below. [44] Starting on 5.2.2010 and ending on 29.9.2011: Wong’s D&CC §6. [45] According to Mr Wong, the first 5 payments were made before the Restructuring Agreement dated 30.6.2010 (Wong’s Witness Statement, §7). [46] Chu’s AD&CC, §15. [47] Starting on 16.8.2011 and ending on 7.6.2012, Chu’s AD&CC §33. [48] Starting on 11.11.2011 and ending on 16.1.2012, Wong’s D&CC §15. [49] Chu’s AD&CC §20. [50] Judgment, §4. [51] Judgment, §11. [52] Judgment, §17. [53] Judgment, §21. [54] Judgment, §18. [55] Judgment, §24. [56] Chu’s AD&CC, §14; Chu’s Witness Statement, §23. [57] RMB1,400,390.59 - RMB923,921: Judgment §35. [58] Judgment, §36. [59] Judgment, §37, see discussion in §§44 - 46 of this court’s judgment. [60] Judgment, §37. [61] Judgment, §37, see discussion in §§44 - 45 of this court’s judgment. [62] By a firm of certified public accountants in the PRC dated 7 June 2013 (B/334). [63] Judgment, §38. [64] (A/239). [65] (A/243) - (A/248). [66] Judgment, §44. [67] Judgment, §48. [68] Judgment, §49. [69] Judgment, §50. [70] Judgment, §53. [71] Judgment, §§145 - 146. [72] Judgment, §135. [73] See §§40 - 42 below. [74] Flywin Co Ltd v Strong & Associates Ltd [2002] 2 HKLRD 485, §38. [75] See §§16 - 18 above. [76] §§32 - 33. [77] Defined in §6, Judgment. [78] A general consent to an arrangement, whether express or implicit. [79] See §16.3 above. [80] (B/310 - 314). [81] (B/401 - 403). [82] See item (2) in §25.1 above. [83] (B/357 - 373, B/374 - 396). [84] (C/686 - 689, C/690, C/699 - 701). [85] “CSKC-1", Chu’s affirmation 26.3.2018. [86] The Conflict of Laws in Hong Kong, §2.086. [87] §3(d), Wong’s D&CC. [88] See §§16 - 18 above. [89] Halsbury’s Laws of Hong Kong 2nd ed. Vol.26, §170.079, §170.084. [90] §6, Chu’s affirmation 16.4.2018. [91] Judgment, §13. [92] Judgment, §49. [93] Judgment, §52. [94] Judgment, §54. [95] (B/410, B/413, B/415). |
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