Kwok Tak Wai t/a Prime Solution Consulting Co v. Wong Ka Sek

HCA 1254/2020

[2021] HKCFI 2529

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1254 OF 2020

____________________

____________________

Before:  Hon B Chu J in Chambers (Open to Public)

Date of Hearing:  30 July 2021

Date of Judgment:  1 September 2021

__________________

JUDGMENT

__________________

Introduction

1.This action concerns the alleged breach of a consultancy service agreement.  Presently before the Court is a summons issued by the plaintiff (“P”) under Order 14 rule 1 of RHC (“O14 Summons”) against the defendant (“D”), for summary judgment for (a) outstanding service fees of HKD 8,885,000 for the period of November 2018 up till December 2019 (“Disputed Period”) and (b) loss of future income for the period from January 2020 to December 2026 (“Future Period”).

2.P filed his affirmation in support of his O14 Summons and an affirmation in reply to D’s opposing affirmation.  In his affirmations, P has produced various instant messages (“SMS Messages”) and emails to support his case. 

3.The O14 Summons was initially fixed for a substantive hearing before this Court on 29 June 2021.  Shortly before that hearing, on 25 June 2021, D sought an adjournment and leave to take out an application to file a supplemental affirmation in light of the SMS Messages produced by P in his affirmation in reply.  This Court granted an adjournment for a month and allowed D to file a further affirmation and P to file a reply, with costs ordered against D to be summarily assessed. 

4.D’s 2^nd affirmation was filed on 12 July 2021, and as seen later in this judgment, D has now made new allegations and has put forward a new case which will be set out later.  Presently before the Court are 3 affirmations filed by P, which I shall refer to respectively as P’s 1^st, 2^nd and 3^rd affirmations, and 2 affirmations filed by D which I shall refer to respectively as D’s 1^st and 2^nd affirmation. 

5.Counsel Mr Adrian Lai and Mr Nyon Tsang appeared for P at the hearings before this Court and Ms Queenie WS Ng appeared for D.

Brief Background

6.According to P, ie Mr Kwok Tak Wai, he was engaged in the banking industry between 1986 and 1996 and since his retirement in 1996, he started to provide banking and finance related consultancy service to his clients and is said to be a person with substantial experience and business connections in the banking sector.

7.D was a practicing solicitor in Hong Kong and the founder of Messrs Jimmie KS Wong & Partners (“JWP”), a law firm founded in 2001 and registered in Hong Kong.  According to D, starting from 1 January 2016, he ceased to be a consultant of JWP and also ceased his practice as a solicitor in Hong Kong.  At present, D is, and has since 2018 been, the CEO, Managing Director and majority shareholder of Credit Intelligence Limited (“CI1”), a company listed on the Australia Stock Exchange and the parent company of Hong Kong Debt Management Services Limited (“HKDM”).

8.P and D became acquainted in about mid-August 2004 and that there were several meetings and discussions between them.  It is P’s case that D had told him that the bankruptcy business was not profitable for JWP and P therefore introduced D to a bankruptcy related practice, namely being an “outside trustee” (“OT”), that is a trustee in bankruptcy other than the Official Receiver. 

9.However, it is D’s case that in 2004, JWP was one of the leading and reputable firms practising primarily in the areas of bankruptcy and “Individual Voluntary Arrangement” and that given JWP’s solid background and speciality in such areas, D had always wanted to develop in the area of “outside trustee business” (“Outside Trustee Business”).  D denies that it was P who introduced him to the Outside Trustee Business.

10.P has alleged that after he and D met, P introduced a key contact person from a tier one reputable bank to D for an agreed fee for a sum of HKD 500,000.  D admits that P did introduce him to a Mr Jammy Chen of the Standard Chartered Bank in about mid-2004, but denies that there was any agreement for payment of HKD 500,000 for the introduction, or that D had paid P such an amount for the introduction. 

11.What is not disputed is that thereafter it was agreed between the parties that P was to act as adviser in D’s Outside Trustee Business.  It is P’s case in his statement of claim (“SoC”) that D incorporated HKDM as the company carrying out D’s Outside Trustee Business, and that on 10 August 2004, P also registered a business known as Prime Solution Consulting Company (“Prime Solution”) for the purpose of providing consultancy service[1].

12.In the defence filed on 12 November 2020 (“Defence”), D admits incorporating HKDM as the company carrying out the Outside Trustee Business[2].  Later in his 1^st affirmation, D explained that between 2004 to 2009, he used JWP to carry out his Outside Trustee Business and that HKDM was a company founded by him in 2003 to provide secretarial services and was formerly known as Jimmie Wong Secretarial Services Limited (from 28 April 2003 to 13 April 2004).  Later the company changed its name to JW Secretarial Services Limited (from 14 April 2004 to 30 April 2010) and thereafter changed then its name to HKDM.  D’s evidence in his 1^st affirmation was that before 2010, the business activity of HKDM was secretarial services and then it shifted to providing bankruptcy administrative service and exclusively Outside Trustee Business since 2010[3].

13.In short, it was D’s evidence that he used JWP to carry out his Outside Trustee Business between 2004 to 2009 and that he used HKDM for this purpose since 2010.

14.What is not disputed is that on 13 August 2004, D in his personal name signed an engagement agreement addressed to Prime Solution and P, and the engagement agreement was signed by P for and on behalf of Prime Solution (“1^st Agreement”)[4].

15.The purpose of the 1^st Agreement was stated to set out the basis on which D agreed to appoint Prime Solution as his adviser to act as OT under the Bankruptcy Ordinance of Hong Kong SAR and D’s responsibilities included (1) to advise D from time to time all matters relating to D’s duties in acting as OT and (2) to hold meetings with P at a time convenient to both parties to discuss and advise D on all matters relating to D’s duties in acting as OT. 

16.The fee which D agreed to pay to Prime Solution was 40% of the actual remuneration received by D and his joint OT (“Remuneration”) in acting as OT for each and every case (“Service Fee”) and D further agreed to pay for Prime Solution all the profits tax payable under the laws of Hong Kong for the Service Fee (“Profits Tax”).  The Service Fee was to be paid on a monthly basis within 15 days of each calendar month.  D also agreed to pay Prime Solution within 15 days of each calendar month an additional sum as security deposit representing 5% of the Remuneration received during the preceding month (“Security Deposit”).

17.It was stated in the 1^st Agreement that the terms therein were to remain effective unless and until either party had served a 6 months’ prior notice in writing on the other party to terminate the engagement (“Termination Notice”) provided always that such termination notice was not to be given prior to the expiration of the first 6 years of the engagement.  Thus, the term of the 1^st Agreement would be no less than 6 ½ years.

18.According to P, pursuant to the 1^st Agreement and in practice, he would advise D with the initial setup and all aspects of standards and procedures that should be deployed and that D would send him various reports from the Outside Trustee Business (“Reports”) on regular basis, in order for him to give advice.  The Reports referred to by P in his 1^st affirmation were (i) OT Master List; (ii) OT Income Report; (iii) OT Weekly Report (iv) OT Property Status; and (v) OT Interview Schedules, of which (i) and (ii) were said by P to be the most crucial for him to provide advise on. 

19.According to P, the Reports would be prepared by the staff of the Outside Trustee Business and D would then forward to P the Reports for checking and advice, and due to the extensive details in the Reports, P would need to explain them to D in person each month. Therefore, D would set up a meeting each month and P would explain to D the problems that P had found in the Reports and would then advise D what solutions would be required to rectify the problems.  P had produced in his 1^st affirmation a record of the monthly meetings conducted between 2016 and 2018 (“Monthly Meeting Summary”)[5].

20.However, it is D’s pleaded case that in the first 2 years subsequent to the execution of the 1^st Agreement (“1^st Period”)[6], P provided barely acceptable “advisory and consultation service” to him[7].  D had however paid P the full amount pursuant to the 1^st Agreement.

21.D then said in his 1^st affirmation that as time went on and during the period of approximately 2006 to October 2018 (“2^nd Period”), less and less support and service was being provided by P and that the “advisory and consultation services” from P were disappointing and inadequate and during his meetings with P, D made repeated complaints about P’s performance under the 1^st Agreement but to no avail[8].

22.According to D, in about late December 2007, upon his request/s and in light of the increasingly poor and inadequate service provided by P, the parties agreed to adjust the Service Fee payable by D to P under the 1^st Agreement, namely the Service Fee was reduced from 40% to 20% of the Remuneration, with effect from January 2008 onwards[9].  However, according to P, he had agreed to the reduction in the Service Fee because the Outside Trustee Business had matured and therefore the time required for him to discharge his duties was less[10].

23.Although they each gave a different version as to what led to a reduction of the Service Fee in 2007, what is not disputed is that the parties did agree in about December 2007 to the Service Fee to be reduced from 40% to 20% of the Remuneration with effect from January 2008 onward (“2007 Amendment”).

24.According to P, in or around late 2015, it came to his attention that D spent a lot of effort attempting to list his Outside Trustee Business on the GEM Board in Hong Kong and that P did not support this and had advised D accordingly.  P said in or around 2016, D had notified P that he would cease to be a practising solicitor in Hong Kong as part of his business listing strategy.  According to P, D’s attempt to list his Outside Trustee Business on GEM Board failed and soon later, D acquired an Australian shell company and listed his Outside Trustee Business on the Australia Stock Exchange through backdoor listing.

25.It is not disputed that the listed company is CI1, the parent company of HKDM, although it is not clear when exactly was the company listed on the Australia Stock Exchange.

26.What is also not disputed is that on 16 December 2016 the parties signed another agreement, that D was to continue to appoint Prime Solution as D’s adviser to act as OT with the same calculation method for the Service Fee pursuant to the 2007 Amendment, namely 20% of the Remuneration(“2^nd Agreement”)[11].

27.The 2^nd Agreement was again signed by D in his personal name and by P for and on behalf of Prime Solution.  In the 2^nd Agreement, the requirement of the payment of the Security Deposit was removed.  The Termination Notice was stated to be 9 months and not to be given prior to the expiration of the first 10 years of the engagement.  Thus, the duration of the 2^nd Agreement would be 10 years and 9 months.

28.It is P’s pleaded case in the SoC that in about November 2018, D had requested to defer the payment of the Service Fees for a period of 2 years due to D’s personal financial problems, but this was rejected by P and that out of goodwill, P had continued to provide consultancy service to D for 13 months from November 2018 to December 2019[12].

29.In P’s 1^st affirmation, he did not appear to have mentioned D’s request for deferring payment for 2 years.  In any event, P’s evidence was that D had told him in around November 2018 that D had personal financial problems and it was D who told P to continue providing consultancy services for the Outside Trustee Business and that D promised to pay P when his financial conditions had improved[13]. It was also P’s evidence that between November 2018 to December 2019, despite he had made numerous demands to D for payment, D failed to settle the same[14]

30.However there were no emails or SMS Messages to show that P demanded payment of the outstanding Service Fees during the Disputed Period.  It is P’s case in the SoC that he only started to demand payment in November 2019[15].

31.It is P’s case that for the Disputed Period, D owed him HKD 8,885,000 for the Service Fees and that further due to D’s repudiatory breach of the 1^st and 2^nd Agreements (collectively “Service Agreements”) which was accepted by P, P suffers further loss and damage representing amongst others Service Fees for the Future Period had the Service Agreements been duly performed.

32.On the other hand, in D’s 1^st affirmation, he complained that a few months after the execution of the 2^nd Agreement, the service and support provided by P was unsatisfactory and inadequate and that in about mid-2018, a material change occurred and that about that time, P went from poor performance to no performance under the 2^nd Agreement and failed to even attend any meeting in relation to the Outside Trustee Business with P, notwithstanding that D tried on multiple times to convene such meetings with P[16].

33.D has denied that he had requested P for him to defer payment of the Service Fees and D denies that he was encountering any personal financial problems at the time saying his business was sound[17].  It is D’s case in his 1^st affirmation that it is P’s repudiatory breach in his failure of performance of his contractual obligations under the 2^nd Agreement since November 2018 which rendered D be discharged from his obligation to pay P the Service Fees under the Service Agreements.  As such, D did not pay P pursuant to the 2^nd Agreement during November 2018 to December 2019 (“3^rd Period”) and further after December 2019 (“4^th Period”)[18]. 

34.D admitted that during the 3^rd Period D and/or his staff had continued to send P the Reports but said this was only because P promised him on numerous occasions that he would provide services to D pursuant to the 2^nd Agreement, but P never fulfilled such promise.

35.Anyway, P issued the writ herein with the SoC on 28 July 2020 and on 25 March 2021, P issued the O14 Summons.

36.As said earlier, D has now changed his case in his 2^nd affirmation.  There are in particular 3 new allegations on the part of D, namely (i) P’s core duty under the Service Agreements was a “middleman” in the way described by D in his 2^nd affirmation; (ii) P’s engagement was terminated by D during the last meeting they had on 19 November 2018 (“Last Meeting”) when D accepted P’s poor performance of his service; (i) during the Last Meeting, the parties had agreed to a transitional arrangement for those ongoing cases (“Transitional Agreement”) and it was pursuant to the Transitional Agreement, D and/or his staff had continued to send to P the Reports.

The legal principles

37.The applicable principles in relation to the grant or refusal of summary judgment under Order 14 of RHC are well settled and summarised by Mr Lai as follows[19]:

(1)  Summary judgment should only be granted in clear cases.

(2)  If the defendant shows that he has a “real or bona fide defence” or there exists a “triable issue” or that, for some other reason, there ought to be a trial, summary judgment ought not be entered.

(3)  In deciding whether a “real or bona fide defence”/a “triable issue” exists, the court would not accept the assertions of the defendant at face value.  Bare assertion is insufficient and the defendant must condescend upon particulars.

(4)  The court must not embark on a mini trial on affidavits.

(5)  Leave to defend ought to be given unless there is clearly no defence in law and no possibility of a real defence on any question of fact.

(6)  On the other hand, regardless of hefty affidavits and voluminous exhibits, where the point at issue is at heart a short one, the court will recognise the fact and act accordingly.

(7)  Leave to defend conditional on the full amount claimed being paid into court may be ordered where the defence is shadowy, or where the court is prepared very nearly to give judgment.

Factual disputes and triable issues

38.P’s case is that this is a straightforward breach of contract case and that D has no defence and further D’s case is unbelievable and practically moonshine.

39.On the other hand, Ms Ng submits on behalf of D that there are the following factual disputes and triable issues between the parties:

(1)  The duties of the P under the Service Agreements;

(2)  The assessment of the quality of the P’s performance;

(3)  The poor performance under the 1^st Agreement;

(4)  The P’s repudiatory breach of the 2^nd Agreement;

(5)  The monthly meeting on 19^th November 2018; and

(6)  The parties’ relationship during the Disputed Period.

Discussion  

40.Ms Ng has submitted that in order to assess whether there was any poor and/or inadequate performance on the part of P, it is important to know what the main duties of P were under the Service Agreements.  I accept that this should be the starting point.

41.As set out earlier, the Service Agreements were entered into by D in his personal capacity, despite D’s evidence is that he used JWP to carry out his Outside Trustee Business between 2004 to 2009 and thereafter, he used HKDM.  Further, although the calculation of the Service Fee was based on the actual remuneration received by D and his joint OT in acting as OT for each and every case, there was no evidence that D’s joint OT was to bear any part of the payment of the Service Fee which seemed to be paid by only P personally.  I also note that although D agreed to personally pay the Profits Tax on the Service Fees for P and/or Prime Solution, there was no evidence from either party as to how the Profits Taxes were paid over the years.  Under the Service Agreements, it was Prime Solution which was appointed as “D’s adviser”.  However, the present available evidence appears to show that the Service Fees were paid monthly by D from his personal bank account into P’s personal bank account.

42.As pointed out by Ms Ng, the amount of monthly Service Fee was sizeable.  According to P, it was due to D’s lack of experience in operating the new Outside Trustee Business that D engaged P as his adviser.  According to D, he was familiar with and interested in developing in the area of Outside Trustee Business.  On either case, it was a new or a developing business.  Yet, not only the monthly Service Fee is sizeable, in addition to the monthly Service Fee of 40% of the Remuneration, there was also the 5% Security Deposit payable by D under the 1^st Agreement and that the Security Deposit was stated to be used to pay the balance of the Service Fee to make it a complete sum of HKD 10,000,000 as soon as possible. Bearing in mind this was in 2004, when there was a financial crisis and even though P had said there was a surge in the number of bankruptcy petitions[20], for a new or developing business, the amount of the payments to P was certainly contemplated to be quite substantial. 

43.Further, as pointed out by Ms Ng, although the amount of the monthly Service Fee was sizeable, P’s responsibilities were drafted in “broad and vague terms” under the Service Agreements.   

44.The Service Agreements merely state that P’s responsibilities thereunder include (1) to advise D from time to time all matters relating to D’s duties in acting as OT and (2) to hold meetings with D to discuss and advise D on D’s said duties. 

45.There was no information/evidence as to who drafted the Service Agreements.  Notwithstanding the substantial payments payable thereunder, there were no particulars or scope of P’s duties set out in the Service Agreements, only P’s responsibilities, and yet such responsibilities as seen above were broad and vague, namely only to discuss and advise D on his duties as OT.

46.In their respective affirmation, the parties had referred to P’s service under the Service Agreements as “advisory and consultancy service”. 

47.As mentioned earlier, according to P, pursuant to the 1^st Agreement and in practice, he would advise D with the initial setup and all aspects of standards and procedures that should be deployed and that D would also send him the Reports from the Outside Trustee Business on regular basis in order for him to give advice.  P had said to perform the 1^st Agreement and to safeguard his interest in the success of the Outside Trustee Business, he would check diligently each detail and sum in all the Reports, and as mentioned earlier, the two most crucial of the Reports in providing advice were the OT Master Report and the Trustee Income Report.

48.In D’s 1^st affirmation, he only made complaints on the quality of the “advisory and consultation service” provided by P and P’s performance under the Service Agreements.  It was only in his 2^nd affirmation that D then alleged that the purposes of circulating the Reports to P were (i) for P’s own record when calculating the Service Fees payable to P under the Service Agreements; and (ii) to seek comments from the creditors which would be subsequently report to D during the monthly meetings[21].

49.D has specifically denied that a considerable part of P’s duties was to find problems after the examination of the Reports by reasons that (i) the Reports contained mainly factual information and record where P could hardly approve the same nor was P in a position to check its accuracy; (ii) given the substantial amount of Service Fees, it would be disproportionate that the core duties of P were primarily for P to review the Reports which served no particular purpose to the Outside Trustee Business; and in D’s perspective, P’s core duties were to act as a “middlemen” for the purpose of getting the feedback from the creditors in order to assist D with operating the Outside Trustee Business in a more efficient manner[22].

50.D has also explained that given that it is crucial for an OT to acquire information from the creditors and that P was having good connection with the creditors, especially with the banks, D would rely on P, amongst other things, to (i) communicate with and request the creditors to comment on the creditors-related matters in the Reports such as the time to pay the dividends, the way to speed up the procedures and whether or not [D’s] performance index met the banks’ internal policies etc; and (ii) acquire the latest information in respect of the banks’ internal policies which could not be obtained by [D][23].

51.As pointed out by Mr Lai, that P’s core duty of being a “middleman” has never been pleaded in the Defence, nor was it mentioned in D’s 1^st Affirmation, and such allegation was raised for the very first time in D’s 2^nd Affirmation.  Mr Lai further pointed out that there was no supporting documentary evidence produced by D in support of his bare allegation, which seems to defy logic and that if P were only to act as a “middleman”, there would be no need for D to pay P such substantial fees and also any failure of communication from P could have been easily rectified by D communicating with the creditors directly.

52.D’s allegation that P was to act as a “middleman” appeared to be based on P’s good connections with the banks.  As Mr Lai has pointed out, if D was relying on P’s good connection with the banks and P’s services were to act a “middleman” to communicate with the creditors who were banks and to request for comments as set out by D, this would seem to indicate that D was showing favouritism to the banks.  As pointed out by Mr Lai, this would be a breach of D’s duties as an OT to the Court and to all the creditors.

53.On the other hand, on P’s own case, he had provided services as D’s adviser and for at least some 15 years, from 13 August 2004 until December 2019 (even though he had not been paid the monthly Service Fees since November 2019).  Although P has produced emails to show that D would forward to him the Reports prepared by D’s staff, there were very few emails containing P’s written advice/comments on the Reports.  In his 1^st affirmation, P has set out 6 incidents to illustrate how he had assisted D on regular basis[24], 1^st incident being in around 2006, 2^nd in late 2008, 3^rd in 2010, 4^th in around August 2010, 5^th between late 2015 and mid 2016 and the 6^th being in June 2017.  In so far as I can see, the 1^st, 3^rd, 4^th, 5^th incidents were not in connection with the Reports.  

54.Neither party has produced any attendance notes of their monthly meetings, which may shed light on what advice or discussion was provided by P to D during those meetings.  According to the Monthly Meeting Summary, those meetings were called by D and usually took place around the middle of each calendar month and mostly in a cigar club/restaurant/ hotel bar or lobby[25].

55.From the present available evidence before the Court, notwithstanding that D being a solicitor, and P having worked in the banking industry, very little contemporaneous written records/documents have been provided by them to shed light on their relationship and/or P’s services. Their mode of communications appeared to be by brief SMS Messages.  

56.Although Mr Lai has submitted that D’s allegations are bare allegations and not supported by any contemporaneous documents, I am of the view that D’s allegation of P’s core duties of being a “middleman” between D and the creditors in particular the banks in the manner described by D does call into question the true or real nature of the Service Agreements and the services which were rendered by P, bearing in mind the substantial amounts of Service Fees. 

57.My view is further supported by certain SMS Messages which seemed to show that the parties were concerned over the true nature of the payments from D to P being disclosed to HSBC as follows:

(1)  The SMS Messages on 16 July 2018 13:20 from D to P indicated that D told P that he needed to talk to P for a long meeting for one hour, and that HSBC had recently questioned D for an hour about his bank account transactions.  D had stated “Might affect our business cooperation.  Need to handle carefully”[26].  Then the SMS Messages on 18 July 2018 indicated that D had opened an account at Chong Hing Bank that day and D was waiting for his cheque book.  On 25 July 2018, P was asking D as to whether there was still an issue with D’s new bank account, and D replied to state that he was waiting for cheque book from Chong Hing Bank and then on 28 July 2018, D stated that he would deposit the cheque to P the following Tuesday.

(2)  Thereafter the SMS Messages on 10 August 2018 (“10.08.18 Messages”) were[27]:

“D: Lion Bank called again to ask transactions. Two cheques to u May and June

P:   I assumed that as you told me you have only one oversea remittance from Australia right?  And this clean money?  If not, don’t get me involved ok.

If that’s the case, I don’t think you have anything to worry about.  The HSBC must hv the record that you have been issuing cheques to me every month for years and this time they may just ask for May and June to see what you going to give the explanation.  So just tell them it’s just repayments for entertainment of friends.  Remember we have these kind of cheques settlement for years and far earlier than your overseas remittances.  We’ve been friends for more than a decade right?

P:   And these kind of cheques transaction within our friends groups are common.

D:  Thanks”

58.Neither party has referred to the above SMS Messages.  However, I find it rather odd that first, D had referred to “business cooperation” between the parties rather than P’s services to him; second, D would open a new bank account for payments to P in light of queries raised by HSBC; and third, P would advise D to inform HSBC that the monthly payments from D to P (which I assume to be the monthly Service Fees since there is no evidence otherwise) were “repayments for entertainment of friends”, rather than advising D to disclose to HSBC the Service Agreements or that the payments were for P’s Service Fees.

59.In any event, what is clear is that there is a factual dispute between the parties as to P’s main or core duties under the Service Agreements and even though the allegation of P being a “middleman” is not pleaded and is a completely new allegation in D’s 2^nd Affirmation, I am satisfied that having considered the present evidence, D has raised a triable issue as to what P’s main/core duties were under the Service Agreements. 

60.Further, the assessment of the quality of P’s performance and/or whether there was poor performance or lack of performance on P’s part would depend on what P’s duties were under the Service Agreements in the first place.

61.There is no dispute that notwithstanding D’s complaints of P’s performance of his duties being unsatisfactory and/or inadequate 2 years after the 1^st Agreement, and notwithstanding the reduction of the Service Fees, the parties did sign the 2^nd Agreement.  Notwithstanding D’s complaints, and P’s evidence at one stage, it would appear from the SMS Messages that P was in fact paid the monthly Service Fees in October 2018. 

62.As mentioned earlier, D is now alleging that P’s services were terminated by D during the Last Meeting when D accepted P’s lack of performance as P’s repudiatory breach of the Service Agreements and that there was a Transitional Agreement between them during the Last Meeting for ongoing cases.  As pointed out by Mr Lai, the Reports which were sent to P during the 3^rd Period also contained “new cases” in which D was appointed as OT after the Last Meeting.  Mr Lai has submitted that D’s new allegations in relation to the termination during the Last Meeting and also the Transitional Agreement are all bare allegations and unsupported by any evidence.

63.On the other hand, as pointed out by Ms Ng, the Last Meeting, or what happened during the Last Meeting, is the crux of the parties’ respective case.

64.Even though D’s allegations about what happened during the Last Meeting were not supported by any documentary evidence, P’s allegation that D had told P that D was in serious financial difficulties and had requested to defer the payments to P for a period of 2 years was also not supported by any documentary evidence.

65.As set out earlier, the SMS Messages on 16 July 2018 showed that D was questioned for an hour by HSBC and that D had told P that this might affect their business cooperation and that they needed to handle carefully.  Then D then opened a new bank account at the Chong Hing Bank and this was followed by the 10.08.18 Messages.

66.Thereafter, on 24 August 2018, D then sent the following SMS Message to P :

“Sorry to inform u that my friend failed to deposit Cheque for me to Chong Hing Bank today. Please do not bank in your Cheque tomorrow. I will try to sort it out next week and inform you as soon as possible”.

67.Following the above message, D also sent to P a notification in Chinese in relation CIL’s announcement of results and payment of dividends calculated to 28 September 2018 (“Chinese Notification”), and the website of the Australia Stock Exchange of “Share Price Information” (“Share Price Information”).  The Chinese Notification announced dividends of almost HKD 6m to be paid by CI1, a return of 6% on the price at which CI1 was listed but it was stated there were listing expenses which needed to be deducted. 

68.On 8 September 2018, D sent a SMS Message to P that funds would arrive in HK soon and that he would be in Singapore 11-13 September 2018.  On 13 September 2018, P had sent a message to say he was still waiting for the monthly reports.  Then on 14 September 2018, D sent a message to say “U can present 420k” and suggested a meeting that day.  On 27 September 2018, D sent a credit advice of an amount credited into P’s bank account Nanyang Commercial Bank.

69.On 16 October 2018, D sent a SMS Message to suggest a meeting time and place.  P replied:

“Apologise for my late reply. I won’t be free on Thursday. It’s so sorry that I am rather occupied these days and also I have to go for a few trips in the coming weeks. Would you do me a favour? Could you credit the amount to my Nanyang Comm Bank account which I used last month. I guess I would be in hk by the mid of Nov. Sorry again for any inconvenience may caused”^[28].

70.D responded “ok” and asked P to provide him with the account information again.  On 18 October 2018, D sent a message regarding the Share Price Information, and that he would deposit cheque the following day. The following day, on 19 October 2018, he sent a credit advice of HKD 430,000 into D’s Nanyang Commercial Bank account.

71.Two days prior to the Last Meeting, on 17 November 2018, D sent the following message:

“See if we can meet 3 pm coming Monday. Need one hour talk. Be in private place. Try to come 5 F of 22 Stanley street”

72.P responded “OK” and said he was still waiting for the monthly reports.

73.The SMS Messages on 19 November 2018, the day of the Last Meeting, (“19.11.18 Messages”) showed that at 9:17:16, D sent to P the Share Price Information, and also the room number of the meeting place, to which P responded “Got it”.  Later that day, at 19:38:26, D sent the following^[29]:

“D: Sorry for my temper Today. I just need a solution

P: It’s ok, understandable but I prefer work it out with you man to man.

D: Ok

P: Thanks”

74.The Last Meeting took place at 3 pm, and the OT Weekly Report as at 19 November 2018 and OT Property Status file were forwarded by D to P by email at 7:58 pm that day and also the OT Master List later by email at 9:26 pm that day.

75.There was no sufficient evidence in the SMS Messages preceding the Last Meeting to support P’s allegation that D was in serious financial difficulties.  There was also no sufficient evidence to support D’s allegation of his termination of P’s services at the Last Meeting or the alleged Transitional Agreement and in fact, the forwarding by D of the Reports to P after the Last Meeting seemed to indicate otherwise.

76.What is apparent from the 19.11.18 SMS Messages is that D lost his temper during the Last Meeting and he told P he needed a solution and P responded that it was understandable.

77.Having considered the SMS Messages, I am of the view that what happened at the Last Meeting is relevant to who was in breach of the Service Agreements and this is a seriously disputed matter.

78.The present evidence shows that there was a breakdown of the parties’ relationship at or after the Last Meeting, even though D had apologized for his loss of temper and P seemed to have accepted it.  It is P’s case that D did not invite P to attend any more monthly meetings while D was still operating the Outside Trustee Business.  Even though the Monthly Meeting Summary and the SMS Messages showed that in the past, it was D who was the one who initiated a meeting including the time and venue, there was nothing to stop P in initiating a meeting.  

79.P’s evidence in his 2^nd affirmation was that after waiting for two months for D to contact him in vain, P had tried to contact D numerous times by calling the Outside Trustee Department of JWP and also the general line of JWP on 6 March 2019 but P said astonishingly the lady answering the call said that D no longer worked in the law firm and refused to take any messages for D.  In short, P seemed to be surprised that by 6 March 2019 D was no longer working at JWP.  However, it was also P’s own evidence that in or around 2016, D had notified him that D would cease to be a practicing solicitor in Hong Kong as part of his business listing strategy[30].

80.In any event, it was P’s evidence that he could not contact or locate D and D had failed to respond to his voice messages or his calls, but as seen earlier, the usual method of communications between the parties appeared to have been by SMS Messages or by their mobile phones and also emails.  There was no evidence that P had sent D any emails or SMS Messages.

81.Anyway, the relationship between P and D seems to have taken a change after the Last Meeting and as said earlier, what happened during the Last Meeting is a seriously disputed issue.

Conclusion

82.In light of all above said, I am of the view that there are serious disputes in facts and triable issues in particular in relation to (i) P’s main or core duties under the Service Agreements; (ii) what happened during the Last Meeting; (iii) whether it was P or D who had breached the Service Agreements.  These factual disputes should be properly investigated at a trial when the parties can be cross examined and their credibility tested in court.

83.In the circumstances, I dismiss P’s O14 Summons.  D is given unconditional leave to defend.  I order costs to be paid by P to D, to be summarily assessed and to be paid within 14 days of summary assessment. D is to lodge a statement of costs within 7 days and P his list of objections within 7 days thereafter. This is a costs order nisi.

Mr Adrian Lai and Mr Nyon Tsang, instructed by Chak & Associates LLP, for the Plaintiff

Ms Queenie WS Ng, instructed by Lim & Lok, for the Defendant