Demy Engineering Ltd v. Sau San Tong Management Ltd

DCCJ 4094/2018

[2022] HKDC 31

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4094 OF 2018

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Before: His Honour Judge Andrew Li in Chambers (Open to Public)

Date of Hearing: 6 May 2021

Date of Decision: 12 January 2022

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DECISION

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A.   INTRODUCTION

1.By an amended summons filed on 18 February 2021, the plaintiff seeks a stay of proceedings in this action save for the purpose of enforcing the terms of a settlement agreement purportedly reached between the parties on 2 November 2020 (“the Summons”).

B.   BACKGROUND

Underlying action

2.The underlying action arose out of a contract for renovation entered between the plaintiff and the defendant on 14 May 2018 in respect of the defendant’s office situated at Unit 2303, 23/F, China Insurance Building, 141 Des Voeux Road Central Hong Kong for a sum of HK$1,498,505 (“the Contract”). The plaintiff was the company which provided the renovation works and services to the defendant.

3.The plaintiff commenced this action against the defendant on 12 September 2018.

4.On pleadings, the parties’ respective position can be briefly summarized as follows:-

(1)  The plaintiff says that the defendant has wrongfully terminated the Contract and therefore it claims against the defendant a sum of HK$525,850 being the unpaid balance: See §8 of the statement of claim (“SOC”);

(2)  In turn, the defendant:-

(a)  denies any such liability on the grounds that (i) “many work items allegedly completed were defective, damaged or not up to a reasonable workmanship standard”; and (ii) the plaintiff showed “no intention to complete the entire works or request the (D)efendant for an extension of time, or make good any of (those) listed defects”: See §§2.7 & 2.8 of the defence and counterclaim (“D&CC”); and

(b)  counterclaims against the plaintiff for a total sum of HK$654,666.82, which includes the following items:-

(i)  an overpaid sum of HK$334,026.82 on the ground that the value of works rendered by the plaintiff was only at $726,874.18;

(ii)  The extra costs of HK$190,841 which were incurred when engaging another contractor to make good the defective and incomplete works done by the plaintiff; and

(iii)  Rental fees paid to the defendant’s previous landlord at HK$129,799.

(See §7 (a) to (c) of D&CC)

Facts surrounding the present dispute

5.The facts surrounding the present dispute between the parties can be summarized as follows:-

(1)  On Thursday, 29 October 2020 at 2:23 pm, the defendant’s solicitors Messrs Chak & Associates (“C&A”) faxed an open letter to the plaintiff’s solicitors Messrs S.W. Wong & Associates (“SWW”) which, inter alia, stated that “(G)iven that your client has also shown an intention to settle the case, our client would put forward a final settlement offer of HK$150,000 (all inclusive)” (emphasis as appeared in the original text). The “offer” was opened for 7 days from the date of that letter for the plaintiff to accept (“the 29.10.2020 Letter”);[1]

(2)  On the same day at 2:53 pm, Ms Lee Wing Yan Lesley (“Lesley Lee”), a secretary at C&A, called the general line of SWW which was picked up by one Madam Li Sin Ting (“ST Li”), a clerk at SWW;

(3)  In essence, Lesley Lee stated in the telephone conversation to ST Li the following:-[2]

(a)  the fax was wrongly sent;

(b)  it was not meant for Mr Wu (“Terry Wu”), a paralegal at SWW, the main contact person for the case in SWW who worked under the supervision of its assistant solicitor Mr Chu Hei Chun (“Chu”)[3]; and

(c)  asked ST Li to “delete” it. 

(“the Telephone Conversation”)

(4)  Still on the same day at 3:19 pm, the 29.10.2020 Letter was allegedly forwarded to one Mr Dennis Chow of the plaintiff by email by Terry Wu;[4]

(5)  4 days later on Monday, 2 November 2020 at 9:21 am, the plaintiff informed Terry Wu that it has decided to accept the offer.  On the same day, the plaintiff also allegedly passed a board resolution and signed a statement to SWW putting on record that it has decided to accept the offer;[5] and

(6)  On 2 November 2020 at 1:58 pm, SWW replied by an open letter by fax accepting the “offer of HK$150,000 (all inclusive) in full and final settlement of case” and asked C&A to present a “draft settlement agreement and consent summons” for their consideration: (“the 2.11.2020 Letter”).[6]

6.Further correspondences were exchanged between the parties disputing over whether the Telephone Conversation had actually taken place or not.

7.On 2 November 2020, after C&A received the 2.11.2020 Letter, Ms Li Shing Yan Alison (“Alison Li”), an assistant solicitor at C&A, immediately wrote to SWW and put on record that the 29.10.2020 Letter was sent by mistake.  Further, she specifically stated in the letter that “(A)s soon as we realize that the fax was sent by mistake, our Ms. Lesley Lee has called upon your firm at 2:53 p.m. at 2523 8983.  Your receptionist answered and acknowledged that a fax was received from us and acknowledged that the fax was sent wrongly by accident and agreed that the letter should be destroyed as soon as possible.”  In the circumstances, C&A stated that “our client has not offered any settlement offer in relation to the captioned case.”: See fax letter from C&A to SWW dated 2 November 2020 (with time unspecified)[7].

8.Initially, SWW adamantly refused to accept the fact that any of its staff had ever “acknowledged that the fax was sent wrongly by accident and agreed that the letter should be destroyed as soon as possible” as alleged by C&A in its letter dated 2 November 2020 (italics as appeared in original text).  SWW insisted that since their client (ie the plaintiff) had “unequivocally accepted” the defendant’s settlement offer by SWW’s earlier letter on that day, “a binding agreement has clearly been reached between our and your client”.  This can be found in SWW’s letter by fax to C&A dated 4 November 2020 at 10:50 pm[8].

9.On 5 November 2020, C&A sent a letter by fax to SWW recording that they were “shocked beyond belief” that SWW claimed that “none of our firm’s staff has ever acknowledged that the fax (ie 29.10.2020 Letter) was sent wrongly by accident and agreed that the letter should be destroyed as soon as possible.”  C&A managed to retrieve and produced the full transcript of the Telephone Conversation from their computerized recording system which was set out in full in that letter[9].

10.As the Telephone Conversation is of vital importance to the current issues in dispute between the parties under the Summons, I would set out the transcript as contained in the above letter in full below:-

“Staff: S.W. Wong.

Lesley: 喂你好丫唔好意思丫我係Chak & Associate call黎架我姓李架。啱啱呢我呢fax咗封信過黎俾你地架,咁但係呢因為呢我封信係fax錯咗架唔好意思丫，　我請問你收唔收到丫？我fax number係2121 1449嗰個number 。

Staff: 啱啱先send架?

Lesley: er, 大概幾分鐘前。

Staff: er, 暫時未收到。

Lesley: sorry, 係14點23分, 搭半到。

Staff: 哦你等陣先吓

Lesley: 唔好意思麻煩你呀

Staff: 係個內容錯咗定係唔係俾我哋丫?

Lesley: 成封信係俾錯咗

Staff: 唔係俾我哋嘅

Lesley: 係啊俾錯咗, 但係就fax咗俾你哋, 我寫埋你哋嗰個地址

Staff: 啊, 邊間架係?

Lesley: 我係Chak & Associates

Staff: 哦! 收到丫收到丫, 即係唔係俾丫胡生嘅

Lesley: 唔係㗎, 麻煩你幫我delete咗佢

Staff: 啊, okay, 好啊好啊好啊

Lesley: 唔好意思啊麻煩你

Staff: 好, 唔使, okay, bye bye

Lesley: Bye bye”

11.Despite disclosing the full transcript of the Telephone Conversation and the offer to provide copy of the recording by C&A, SWW still refused to accept the fact that the Telephone Conversation had actually taken place as they wrote back on the same day to C&A and stated that they were surprised to the stance taken by C&A.  They alleged that “for a start”, C&A had failed to even provide with “the name of the alleged staff” for them to verify.  In any event, they claimed that they have “verified and confirmed that no staff has acknowledged and agreed the matters as claimed by C&A on 29 October 2020.  They also alleged that even if what C&A said was true, C&A had failed to put anything in writing before SWW accepted their offer.  They threatened the issue of proceedings with a draft statement of claim attached to the letter: See letter dated 5 November 2020 from SWW to C&A[10].

12.On 6 November 2020, Alison Li of C&A sent an email to SWW putting on record that the principal of her firm Mr Raymond Chak had tried to contact the handling solicitor of the case at SWW for a total of 3 times but in vain.  While they considered their earlier letter dated 5 November 2020 was clear enough, they enclosed the audio recording of the Telephone Conversation between Lesley Lee and SWW’s (then unidentified) staff for its reference.  They believed that the recording was “self-explanatory and should resolve all misunderstanding between the parties.”: See email from C&A to SWW sent at 5:14 pm on 6 November 2020[11].

13.Lastly, SWW replied to C&A on 8 November 2020 stating that “(W)ithout commenting further on the alleged audio recording and the shocking manner in which your firm (ie C&A) has handled this matter and made baseless accusations against our firm (ie SWW), we hereby reserve all rights as to the authenticity of the alleged audio recording”: See SWW letter to C&A dated 8 November 2020[12].

Procedural history

14.At the direction hearing of the Summons before me on 11 February 2021, where both counsel attended, I gave directions for the parties to file affidavit/affirmation evidence and to lodge written submissions in preparation of the full arguments in court.  I further adjourned the Summons for arguments before me on 6 May 2021 (with one day reserved).

15.Given the plaintiff’s then hotly disputed stance as to whether the Telephone Conversation had actually taken place or not, and if taken place, whether it constituted to a binding agreement, I ordered the deponents of the affidavits/affirmations in this case to be made available on the day of the hearing for the purpose of being cross-examined on the contents of their affidavits/affirmations.  Counsel on both sides agreed to the above directions at the hearing.

16.However, on 29 April 2021, the parties jointly wrote to the court and informed the court that, given the parties’ subsequent agreement on the existence and contents of the Telephone Conversation on 29 October 2020 “in the light of the affidavit evidence filed, and in order to save time and costs”, they requested the court to dispense with attendance of all deponents of the affidavits/affirmations for the purpose of cross-examination at the hearing. The parties however have made it clear in their joint letter that the request was made on the express understanding that “notwithstanding the rule in Brown v Dunn, parties are entitled to invite the court to draws inferences (including adverse inferences where appropriate) even though the relevant deponents have not been cross-examined on the matter, including but not limited to the Telephone Conversation.”

17.On 30 April 2021, I gave leave to the parties to dispense with the attendance of the deponents of the affidavits/affirmations at the hearing for cross-examination based on the above agreement.

C.      ISSUES TO BE DECIDED & LEGAL PRINCIPLES

C.1    Issues for the court’s determination

18.Mr Joseph Wong, counsel for the plaintiff, submits that the issues for the court to determine in this application are as follows:-

(1)  Whether the 29.10.2020 Letter constitutes a valid offer for settlement;

(2)  If so, whether the offer was validly withdrawn or revoked by the Telephone Conversation on 29 October 2020:

(a)  Whether the contents of the Telephone Conversation were actually communicated to the plaintiff before it accepted the offer;

(b)  If (a) is no, whether ST Li had authority to receive notice of the alleged revocation of the offer on behalf of the plaintiff; and

(c)  Whether the contents of the Telephone Conversation amount to an effective revocation of the offer in any event.

(3)  Whether the 2.11.2020 Letter constitutes a valid acceptance of the offer; and

(4)  Whether all the material terms of the settlement had been agreed upon so as to constitute a valid and binding settlement agreement.

19.Mr Jeff Yau for the defendant on the other hand has defined the issues as follows:-

(1)  Whether there was any consensus ad idem between the plaintiff and the defendant and/or there was an unilateral mistake on the part of the defendant through C&A;

(2)  Whether any mistaken offer by the defendant through C&A was effectively revoked:-

(a)  whether SWW had the requisite authority to receive the notice of revocation on behalf of the plaintiff, ie the Telephone Conversation;

(b)  whether the Telephone Conversation was effectively communicated to SWW (and thus the plaintiff) via ST Li as an authorized channel of communication; and

(c)  whether the contents of the Telephone Conversation validly constituted a revocation of the mistaken offer mistakenly made by the defendant/C&A under the 29.10.2020 Letter.

(3)  Whether there was any concluded compromise on the ground of uncertainty and/or absence of parties’ agreement on a material term, namely, who is the paying party under the mistaken offer mistakenly made by the defendant/C&A under the 29.10.2020 Letter; and

(4)  Whether any such agreement is unenforceable by way of specific performance on the ground of mistake.

20.In my view, counsel’s definitions of the issues are very similar. They are really two sides of the same coin, just slightly different ways of looking at the same issues which need to be decided by the court.

21.I would try to define the issues in this case as follows:-

(1)  Whether the 29.10.2020 Letter constituted a valid offer, including whether there was a unilateral mistake made by the defendant (“Issue 1”);

(2)  Whether the offer, if valid, was effectively revoked by the Telephone Conversation on the same day (“Issue 2”);

(3)  Whether the 2.11.2020 Letter constituted a valid acceptance of the offer (“Issue 3”); and

(4)  Whether there was any agreement reached which is enforceable as a matter of law including by way of specific performance (“Issue 4”).

C.2    Relevant legal principle

C.2.1 Court’s power to stay proceedings

22.As Mr Wong for the plaintiff submits, it is well established that where the parties have concluded an agreement for the compromise or settlement of a pending action, the court has power to stay proceedings: King Prosper Trading Limited v Tenbase Trading Limited (unrep, HCA 263/1996, 25 Feb 1997) (“King Prosper (CFI)”) per Le Pichon J (as she then was) at p 6.

23.If the existence of a compromise is being disputed, the court may order a stay if it is satisfied beyond reasonable doubt that the compromise exists (King Prosper, supra at pp 4 & 7).  Otherwise the matter would be directed to be tried as a preliminary issue: King Prosper Trading Limited v Tenbase Trading Limited (unrep, CACV 48 & 244/1996, 28 February 1997) (“King Propsoer (CA)”) per Godfrey JA at p 2.

24.Mr Yau for the defendant submits that as the plaintiff is seeking a stay on a permanent (as contrast to a temporary) basis, the following principles apply:-

(1)  To seek an order to stay an action permanently on the ground that there is a settlement agreement is tantamount to seeking specific performance of such an agreement: Wong Tak Sing v Amertex International Ltd [1988] 1 HKLR 98 at p. 101B per Penlington J;

(2)  There is a distinction between a permanent and a temporary stay.  A permanent stay is concerned with a question of deprivation of the right of a litigant to proceed altogether instead of a question of case management.  Hence, it is only if it is plain beyond argument that parties did arrive at a concluded compromise, the court may stay an action: King Prosper (CA);

(3)  If the court comes to the view that there is doubt as to the existence of a settlement offer, there is authority to the effect that there shall be a trial of it as a preliminary issue if (i) “it was clear that there was no concluded agreement” or (ii) “there may not have been a concluded agreement”: King Prosper (CA) at p 2 per Godfrey JA; and

(4)  It is further observed that, if the court comes to the conclusion that it is clear that there is no concluded compromise, the plaintiff shall be barred by the doctrine of res judicata from commencing a fresh action.

C.2.2 Revocation of offer

C.2.2.1   Notice of withdrawal/renovation must be communicated to offeree

25.Mr Wong for the plaintiff submits that it is well-established that in order for a revocation to be effective in law, it must be communicated to the offeree at any time before it is accepted.  Notice of the withdrawal must actually reach the offeree: Chitty on Contracts (33^rd ed) Vol l: [2-094] [2-097], esp [2-095]; Contract Formation: Law and Practice (2^nd ed) OUP: [3.26] — [3.30], esp [3.27]; applied in Prism Technology Limited v Topwin & Companies Limited (unrep, HCA 1190/2011) per Hon Ng J at § 126).

26.Notice of the withdrawal must actually be “brought to the mind of the offeree”: Henthorn v Fraser [1892] 2 Ch 27.

C.2.2.2   If it was not directly communicated to the offeree, the person receiving the notice of revocation must be someone with actual or at least ostensible authority to do so

27.Mr Wong for the plaintiff referred to the following authority in his submission for the court’s reference on this issue.

28.Mr Wong submits that the leading case is Financings Ltd v Stimson [1962] 1 WLR 1184.  That case involved a hire-purchase agreement.  The hirer made an offer to the finance company to purchase a car on hire-purchase terms.  Before it was accepted by the finance company, the motor company premises were broken into and the car was badly damaged in the process.  The hirer then returned the car to the dealer and made it clear that he did not want it any more before the hire-purchase was subsequently accepted by the finance company.

29.One of the questions was whether the dealer could be considered the agent of the finance company and had authority to receive the revocation on behalf of the finance company.  The majority of the English Court of Appeal held that he had such authority.

30.Hence the question of whether one has at least ostensible authority depends on a number of factors including:-

(a)  To what extent he was actually authorized to act on behalf of the principal on the matter in question;

(b)  Whether he had actual authority to receive an offer on behalf of his principal;

(c)  Whether he had actual authority to pass on any acceptance of offer by the principal; and

(d)  Whether he had actual authority to reject an offer on behalf of the principal.

31.Mr Wong submits that a realistic view of the position should be taken to examine whether the factual circumstances were such that the person was at least ostensibly authorized to notice of the revocation of the offer.

32.Mr Wong says that Financings v Stimson was followed in a more recent English Court of Appeal case in CF Asset Finance Ltd v Okonii [2014] ECC 23 which involved another hire-purchase where the salesman Mr Ojo was held to have at least ostensible authority to receive revocation of any offer by the hirer given that he had actual authority to forward such offers to the finance company in the first place.  It was held that there was no distinction between the two (see Headnote H4; §§17-22).

33.In the Australian appeal case of IVI Pty Ltd v Baycrown Pty Ltd [2005] QCA 205, in analyzing a solicitor's authority to receive revocation of offer, it was held at §2 that:-

“But the mere fact that a solicitor is acting for the offeree does not authorize him or her to receive such notice on behalf of the offeree or make his receipt of it the equivalent of communication of a notice of withdrawal or revocation to the offeree himself. It all depends on what the solicitor has been authorize to do on behalf of the offeree.”

34.It was held in that case that a solicitor has no general authority to make contracts on behalf of a client, and that a communication of revocation to the law firm Cleary Hoare, which was only advising the offeree IVI Pty Ltd on the taxation implications of the deal and did not pass on the notice to the offeree, did not constitute effective revocation as the solicitor did not have ostensible authority to receive revocation of the offer on behalf of the offeree.

C.2.3 Actual/ostensible authority

35.Actual authority is the authority which the principal has given the agent wholly or in part by means of words or writing (express authority) or is regarded by the law as having given the agent because of the interpretation put by the law on the relationship and dealings of the two parties (implied authority).

36.Where a principal represents, or is regarded by the law as manifesting, that a person has authority, the principal may be bound as against a third party by the acts of that other person within the authority which that person appears to have, though the principal had not in fact given that person such authority or had limited the authority by instructions not made known to the third party. Ostensible or apparent authority is the authority of an agent as it appears to others. (See Bowstead & Reynolds on Agency (22^nd edition) [3-001] - [3-004]).

37.I am generally in agreement with the above legal principles cited by counsel.

D.      DISCUSSION

D.1 Issue 1

Whether the 29.10.2020 Letter constituted a valid offer, including the issue of whether there was a unilateral mistake made by the defendant

38.Whilst the defendant contends that the 29.10.2020 Letter[13] was sent by mistake, Mr Wong for the plaintiff submits that the overwhelming evidence suggests otherwise.

39.First, he submits that it is an open letter capable of being accepted and the settlement sum of HK$150,000 is within the reasonable range one would expect based on a claimed sum of HK$525,850.[14]

40.Second, he submits that all the details on the letter are correct, including:-

(1)  the caption with the correct action number (DCCJ 4094/2018);

(2)  the reference numbers of both firms;

(3)  the contact persons of C&A (Mr Raymond Chak / Ms Alison Li); and

(4)  The name, address and fax number of SWW.

41.He further points out that in fact:-

(1)  there was and is no other legal proceedings between the parties; and

(2)  there is no other ongoing litigation between SWW and C&A at the material time.[15]

42.In Alison Li’s 2^nd affidavit at §11, it was asserted that the letter “was intended to be sent to another law firm under another action number”[16]  However, Mr Wong submits that there is no other evidence on that other than a bare assertion.

43.Mr Wong lastly points out that the defendant seeks to rely on a reference to a “letter dated 12 October 2020” which did not exist and an assertion at Alison Li’s 2^nd  affidavit at §9 that “(P)arties did not have any settlement intention and there had not been any prior conducts that reflect any settlement intention from both parties of the present proceeding.”[17]

44.With respect to Mr Wong, the above are the best that the plaintiff can make out of the 29.10.2020 Letter. In other words, they are the highest that the plaintiff can put its case.

D.1.1 The Court’s finding on the issue

45.In my judgment, in determining whether there was a valid offer which was capable of being accepted, I agree with Mr Yau for the defendant that the following principles have to be borne in mind:-

(1)  The starting point is whether, on an objective analysis of the words used, a reasonable offeree would have construed a statement with an apparent intention to be bound.  If the answer is “yes”, then one turns to the subjective beliefs of the offeree.  If there is evidence that offeree did not subjectively believe that offeror was making an offer, then there was no offer: Chitty on Contract (33rd Ed, 2018) at [2-003] and [2-004]; Zhang Qiang v Cisco Systems (HK) Ltd [2021] HKCFI 694 at §77 per K Yeung J; and

(2)  That there was no contract on the ground that there was an absence of consensus may also be occasioned by the offeror’s unilateral mistake.  This is made out if the offeree “knew or ought reasonably to have known that there had been a mistake” and the offeree’s actual knowledge of the mistake is not necessary: Zhang Qiang at §§78-84 per K Yeung J.  In this connection, a mistake as to the identity of the intended offeree may prevent the formation of a contract: Chitty on Contract at [3-045].

46.In my judgment, the 29.10.2020 Letter could not have constituted a valid offer in light of the following features highlighted by Mr Yau in his submissions.  I agree with Mr Yau that such features, whether taken separately or cumulatively, should have led SWW as a “reasonable offeree” to realize that (i) there was no intention of the defendant and/or C&A to be bound by the mistaken offer; and/or (ii) there was a mistake by the defendant / C&A as to the identity of the intended offeree.

47.First, I agree with the defendant that the mistaken offer is inherently ambiguous as to who shall be the paying party in respect of a compromise which relates to both the plaintiff’s claim and the defendant’s counterclaim: §3 of the 29.10.2020 Letter, namely, “Given that your client has also shown an intention to settle the case, our client would put forward a final settlement offer of HK$150,000 (all inclusive)”) (emphasis as appeared in original letter).  

48.In my judgment, no reasonable offeree in the position of SWW could have accepted it without making any inquiries:-

(1)  Both the plaintiff and the defendant are pursuing a monetary claim in the underlying action against each other and contend that they should be the party to be compensated monetarily.  On an objective reading of the words of the 29.10.2020 Letter, I am of the view that the mistaken offer could well have meant both (i) the plaintiff is to pay the defendant or (ii) the defendant is to pay the plaintiff;

(2)  The plaintiff’s conduct is also telling as to the said ambiguity: save and except the draft statement of claim annexed to SWW’s letter dated 5 November 2020 (which was never issued), the plaintiff had not asserted who is to pay the HK$150,000 and to whom.  Indeed, even at this stage, the plaintiff’s position remains ambivalent: see §§23 & 60 of the plaintiff’s submissions; and

(3)  Furthermore, there is no express reference to issues of legal costs.  Given that the case has been commenced in October 2018, I agree with the defendant that it is difficult to conceive that the defendant/C&A would have agreed on a compromise without express reference to the crucial issue of legal costs for the past two years which would easily exceed HK$150,000 on each side.

49.Secondly, I agree that the reference to the purported fact that “[T]his offer comes very close to your client’s (ie the plaintiff’s) previous settlement offer” cannot be read in a vacuum.  It must be read in context: See §3 of the 29.10.2020 Letter:-

(1)  As a result of my directions on 11 February 2021 to ask the parties to file affidavits/ affirmations evidence for the Summons, the correspondences between SWW and C&A are now all before the court. A close examination of those correspondence show that there was neither any “without prejudice” correspondence nor any undated “previous offer” from the plaintiff to the defendant: See Alison Li’s 2^nd affidavit at §7;

(2)  Notwithstanding that Alison Li has drawn the plaintiff’s attention specifically to (i) the non-existence of any such “previous offer” by the plaintiff and (ii) the fact that Terry Wu’s knowledge as the handler of the case is highly relevant in Alison Li’s 2^nd affidavit at §§7 and 20:-

(a)  Chu, the solicitor in charge of the case at SWW, did not suggest in his 2 affirmations that there was any “previous offer” or explain how he/Terry Wu could consider the mistaken offer as one which was intended for the plaintiff;

(b)  The plaintiff has elected not to ask Terry Wu to give any evidence despite the fact that he has been the main point of contact of the case and effectively the person handling the case in SWW: (See Chu’s 2^nd affirmation at §§6 & 17; Alison Li’s 2^nd affidavit at §20) and his first-hand knowledge (or the lack of it) would be crucial to the question of the plaintiff and SWW’s knowledge.  In this connection, I agree with Mr Yau that adverse inference ought to be drawn against the plaintiff: Li Sau Keung v Maxcredit Engineering Ltd [2004] 1 HKC 434 at §28;

(c)  It is further noted that the plaintiff’s director who purportedly directed SWW to “accept” the mistaken offer, namely Mr Chow Kin Man, has not made affirmation to suggest that there was any offer made by the plaintiff despite of the fact that only the plaintiff (but not SWW) had attended the mediation which resulted in no agreement between the parties: draft mediation report^[18]; and

(d)  Indeed, as Mr Yau has rightly pointed out, the plaintiff’s submissions have refrained from addressing the reference to this “previous offer” at all.

(3)  In my view, in light of the complete absence of any “previous offer” as alluded to in the 29.10.2020 Letter, I find SWW (i) could not have considered it to be offer for the plaintiff and/or; (ii) must have realized that the 29.10.2020 Letter was a mistake.

50.Thirdly, I find the reference to “your (ie SWW) letter dated 12 October 2020” in §1 of the 29.10.2020 Letter clearly shows there was a unilateral mistake on the part of C&A:-

(1)  It has now been accepted by Chu (on behalf of the plaintiff) that (i) there was no such letter; and (ii) the latest letter sent to SWW by C&A was dated 23 July 2020: Chu’s 2^nd affirmation at §§39-40;

(2)  The last exchange of correspondence between SWW and C&A took place in July 2020: See 20 July 2020 letter by SWW to C&A. The court’s last letter to the parties was dated 23 July 2020: Chu’s 2^nd affirmation at §40; and

(3)  The plaintiff now seeks to explain that the reference may have been merely a typographical error by C&A.  However, given the significance of a settlement offer, I agree with the defendant that a reasonable offeree should have ascertained what was said by himself in the 12.10.2020 letter and made inquiry after discovering that there was in fact no such letter.  This is particularly so given that the mistaken offer was unclear as to whether the plaintiff or the defendant would be the paying party and the 12.10.2020 letter, if it existed, would likely to shed light on it.

51.Fourthly, the reference to the defendant’s subsisting settlement intention, ie §2 of the 9.10.2020 Letter refers to “our client has showed (sic) genuine sincerity in hope to settle the captioned case from the very beginning”.  I find that this has not been supported by any objective facts or evidence. 

52.The plaintiff’s argument is that the defendant had expressed a settlement intention by virtue of (i) the defendant’s participation in the mediation back in August 2019 and (ii) C&A’s repeated requests for time extension so that SWW as a reasonable offeree would not have realized that there was a mistake on the part of the defendant. Even if taking this argument at its highest, I agree with the defendant that it falls far short of positively establishing a concluded compromise beyond doubt for the following reasons:-

(1)  First, whilst requests for time extension is not inconsistent with the hypothesis that there may be some settlement negotiations, this can be explained by a myriad of factors and does not point unequivocally to the existence of settlement negotiations.  SWW as a solicitor firm would have well known about this reality.  Obviously, if there were any active settlement negotiations took place prior to the 29.10.2020 Letter at all, the plaintiff or its solicitors would have stated this clearly in the application filed and provided documentary evidence including correspondence (with appropriate redactions) in support; and

(2)  Second, the evidence reveals that there was never in fact any settlement negotiations or “without prejudice” communications apart from the mediation which (i) took place in August 2019, ie 14 months before the 29.10.2020 Letter and (ii) came to no agreement: See Alison Li’s 2^nd affidavit at §10; and the draft mediation report.  Thus, I agree with Mr Yau that even if there was any settlement intention, any such intention would have been overtaken by the fact that the defendant/C&A initiated the discussions over the application to set the case down for trial on 8 October 2020 by way of a letter to SWW.  In any event, I find the defendant’s participation in mediation is neutral since all litigants after the CJR are required to take part in mediation in civil cases.

53.In the aforestated premises, I find:-

(1)  Objectively, the 29.10.2020 Letter could not have constituted a valid offer showing that the defendant (through C&A) intended to be bound;

(2)  Alternatively, the circumstances set out above entitle the court to draw an inference that the plaintiff / SWW in fact knew that the defendant / C&A did not intend to make an offer; and

(3)  In the further alternative, given the circumstances set out above, the plaintiff / SWW ought reasonably to have known that there had been a unilateral mistake on the part of the defendant / C&A.  Consequently, no contract could have been formed.

D.2 Issue 2

Whether the offer, if valid, was effectively revoked by the Telephone Conversation

D.2.1 Whether the contents of the Telephone Conversation were actually communicated to the plaintiff before it accepted the offer

54.Mr Wong on behalf of the plaintiff submits it is clear that the contents of the Telephone Conversation were never communicated to the plaintiff (ie the litigant) before it accepted the offer on 2 November 2020.

55.ST Li has claimed on affirmation[19] that she had made a mistake in forgetting to pass on the message to either Chu or Terry Wu on that day.  She also forgot to inform Chu when asked about the matter later on.  It is claimed that she is merely a clerk responsible for filing and chores and does not deal with clients or cases.  And allegedly the 56-second telephone conversation did not appear to make much sense to her.

56.Chu also claimed on affirmation he did not know about the Telephone Conversation when he was preparing his first affirmation (which was filed on 12 November 2020) and it was only upon further checking with the firm’s staff when preparing the second affirmation that the matter was revealed: See Chu 2^nd  affirmation §§13-14[20].

57.Mr Wong further submits that judging from SWW’s email correspondence with its client, namely the litigant,[21] he says it is also clear that the plaintiff was never actually notified of the Telephone Conversation.

58.Hence, based on those “objective facts and evidence”, the plaintiff says that the answer to this sub-issue is: “no”.

59.With respect to Mr Wong, I cannot agree with his submissions on this issue at all.

60.First, I doubt very much if ST Li actually had forgotten about the Telephone Conversation. Given the fact that SWW had vehemently denied that the Telephone Conversation ever taken place at all in its initial correspondence as shown in their letters on 4, 5 and 8 November 2020 to C&A, I find it is most unlikely that SWW as a firm of solicitors would not have made enquiries and to find out from any of its staff that if they had participated in the Telephone Conversation.

61.Second, as Alison Li has deposed in her 2^nd affidavit, SWW is a small firm of solicitors consisted of its principal Ms Wendy Wong and one single assistant solicitor Chu himself at the material time of the dispute.  From the public information that Ms Li was able to get hold of, SWW only had 9 employees as “committed headcount under payroll” under the Government’s special wage subsidy scheme during the pandemic: See §19 of 2^nd affidavit of Alison Li.  Therefore, I am of the view that it would not be difficult at all for SWW to find out whether the Telephone Conversation actually was answered by one of its employees or not if they really wanted to find out about it upon receiving the fax letter from C&A on 2 November 2020 putting on record that the 29.10.2020 Letter was sent by mistake.   At the very latest by 6 November 2020 when SWW had received both the written and audio transcript of the Television Conversation, there is in my view no reason to still deny that one of its staff had received the telephone call from Lesley Lee and that she had agreed to “delete” and/or destroy the 29.10.2020 Letter.

62.Third, I find that even if Chu had not been able to find out on 2 November 2020 about who was the person in his firm who had taken part in the Telephone Conversation, he or his principal must be able to do so by 6 November 2020 at the latest when the audio recording was sent to his firm as an attachment to Alison Li’s email.  Had he or Terry Wu (the case handler) or any responsible person at their firm been bothered to listen to the audio recording, then it would not be difficult at all to identify who was the actual person in that small firm who had answered the telephone call and agreed to “delete” / destroy the 29.10.2020 Letter. Therefore, I find it rather astonishing that by 12 November 2020 when Chu made his first affirmation, he was still trying to deny that someone at his firm had “acknowledged and agreed to the matters as claimed by (C&A).”: See §§12-15 of Chu’s affirmation.

63.Lastly, given the above sequence of events, I find as a fact that at its latest by 6 November 2020 when both the written transcript and audio recording had been provided to SWW, it must have the knowledge of (i) who had answered the call on its behalf; and (ii) the exact contents of the Telephone Conversation. Regrettably, I find SWW was trying to take advantage of a mistake made by C&A and tried to exploit the situation by making C&A or its client to pay for that mistake.    

D.2.2     Whether ST Li had authority to receive notice of the alleged revocation of the offer on behalf of the plaintiff

64.Mr Wong submits that there should be little dispute that, on the facts of the present case, ST Li had no authority, whether actual or ostensible, to receive such notice on behalf of the plaintiff.

65.The thrust of the plaintiff’s argument on this is ST Li is an unqualified staff; she did not deal with the client; she received no instructions from the client; she was not an agent of the client; and thus she had no authority to perform anything on behalf of the client.  Futher, the plaintiff has done nothing towards the defendant or C&A which would be regarded as manifesting that ST Li would have authority to act on its behalf.

66.Mr Wong submits that the facts of this case do not even come remotely close to the factual scenario in Financings Ltd v Stimson or CF Asset Finance Ltd v Okonji.

67.He cites the Australian case of IVI Pty Ltd v Baycrown Pty Ltd [2005] QAC 205 in support of his contention of why ST Li could never possibly have any ostensible authority to receive notice of such revocation on behalf of the plaintiff.  In that case, he submits that, even a solicitor acting on behalf of a client does not have ostensible authority to do so because it depends on the scope of the actual authorization the solicitor was given by the client to do, and in that case, the scope was only limited to advising on the taxation implications of the deal and no more.

68.Again, with respect to Mr Wong, I do not agree with his submission on this issue at all.

69.In my judgment, the question under this head is whether SWW (as agent) has the requisite authority to receive any notice of revocation on behalf of the plaintiff (as principal). In my view, the answer must be in the affirmation.

70.In my view, given the circumstances of the case, SWW clearly had the requisite authority to receive communications from the defendant/C&A, including the mistaken offer and the revocation of the offer, on behalf of the plaintiff:-

(1)  The plaintiff appears to suggest that the plaintiff (as principal) must receive the offer and its revocation for it to be effective and it is insufficient for SWW (as agent) to receive it on its behalf: See §38 of the plaintiff’s submissions. I agree with Mr Yau for the defendant that the premise of the plaintiff’s argument is necessarily that SWW as the plaintiff’s solicitors would not have the authority to accept the notice of revocation on its behalf and is thus not a qualified agent (with at least ostensible authority): CF Asset Finance Ltd v Okonji [2014] E.C.C. 23 at §22;

(2)  The plaintiff places reliance on the judgment of the Queensland Court of Appeal in IVI Pty Ltd, supra for the proposition that “even a solicitor acting on behalf of a client does not have ostensible authority to [receive notice of revocation of an offer] because it depends on the scope of the actual authorization the solicitor was given by the client to do, and in that case, the scope was only limited to advising on the taxation implications of the deal and no more ” (emphasis added): See the plaintiff’s submissions at §47.  I accept that this is inapplicable in the present case for the following reasons:-

(i)  First, any argument that there was a lack of actual authority on the part of SWW is simply not open to the plaintiff. Chu, as the solicitor in charge of the case, has not deposed that SWW’s retainer conferred no actual/ostensible authority to receive any revocation of the offer on behalf of the plaintiff from the defendant/C&A.  Indeed, SWW has in their letter dated 4 November 2020 letter to C&A made it clear that C&A would have binding authority to act on behalf of the defendant to make the mistaken offer, (“No doubt your firm [i.e. C&A] has binding authority to act on behalf of your client”).  I therefore find it difficult to comprehend any basis to justify the plaintiff now blowing hot and cold by stating that C&A had such authority but its counterpart, ie SWW, had not in the same transaction. In my view, “what’s sauce for the goose is sauce for the gander” must apply in this case;

(ii)  Second, I find the plaintiff’s argument is contrary to the trite principle that a solicitor has an implied/ostensible authority to compromise an action on behalf of his client:-

(a)  The cases relied upon by the plaintiff are of no assistance in this context: Financing v Stimson and CF Asset Finance Ltd v Okonji are concerned with hire-purchase and IVI Pty Ltd, supra conveyancing transaction;

(b)  In this regard, I find the following general principles most apply in this case, namely, a solicitor has an implied authority to compromise the action, and that no limitation on such implied authority avails of the client unless such limitation be brought to the notice of the other side: Welsh v Roe (1918) 87 LJKB 520 at p 521 (per McCardie J); Bowstead & Reynolds on Agency (22nd Ed, 2020) at [3-004] (“Where a principal represents, or is regarded by law as manifesting…”), p 126; [3-005(ii)], pp 126-127; [3-033(5)], p 155 (usual authority); and

(c)  The only question an opposing litigant needs to ask is whether the compromise contains matters “collateral to the suit”: Waugh v H B Clifford & Sons Ltd [1982] Ch 374 at pp 387A-C and 388D-F (per Brightman LJ); Foskett on Compromise (9^th Ed, 2019) at [21-10].

(iii)  Third, in my view, the communications between SWW and C&A points strongly to the conclusion that SWW had the requisite authority to receive communications for the plaintiff in relation to this litigation (cf correspondence summarized in Annex 1 of the defendant’s submissions, in particular the letter dated 15 August 2018 from SWW to the plaintiff directly[22] “We act for Demy Engineering Limited (ie the plaintiff)”).  Thus, Jagot J of the Federal Court of Australia distinguished IVI Pty in Kestel v Superannuation Complaints Tribunal (2010) 276 ALR 112 as follows:-

“[18] Accordingly, in IVI Baycrown the Queensland Court of Appeal rejected the proposition that a solicitor nominated as the purchaser’s solicitor in a contract for sale was, for that reason alone, authorised to receive notice of revocation of the offer from the other party without an express conferral of authority on the solicitor to receive such communications. However, and as footnote 8 to the reasons for judgment discloses, the result would have been different had there been ‘a chain of correspondence passing between the solicitors acting upon instructions for each party. In such a case there can be no doubt of the authority of the solicitor who has actually been instructed to conduct the negotiations’…

[19] The difficulty for the applicant in the present case is that the solicitor advised the second respondent that he acted for the applicant ‘in this matter’. The matter was identified as the superannuation funds under which the death benefits were to be paid. Correspondence thereafter was forwarded to (and from) the solicitor in his capacity as such on behalf of the applicant. In these circumstances, I am unable to accept that the solicitor did not have authority from the applicant to receive all communications from the second respondent relating to the matter. Notification of the decision under s 14(3) of the Act was a communication relating to the matter. Accordingly, the solicitor was authorised to be given that notice. By operation of the doctrine of agency the notice was thus given to the applicant within the meaning of s 14(3) when the solicitor received the letter.

[20] Other evidence supports this conclusion about the solicitor’s authority. For example, after receipt of the letter the solicitor communicated with the second respondent but did not suggest that he had no authority to be given the notice under s 14(3). The applicant did not give evidence that she had not given the solicitor such authority. The solicitor did not give evidence that the applicant had not given him such authority, choosing to rely instead on the terms of his communications as identified above. Those communications require the inference of authority to be drawn.” (emphases added)

(3) In the present case, I find that given (i) the course of communications between the plaintiff and defendant through their respective solicitors; and (ii) Chu has not suggested that there was a lack of authority on the part of SWW, there can be no dispute that SWW has always been acting for the plaintiff in this action and SWW had the requisite authority, both actual and ostensible, to receive any notice of revocation such as the Telephone Conversation.

D.3 Whether the notice of revocation was effectively communicated to the plaintiff via ST Li as an authorized channel of communication

71.I agree that the question here is whether the notice of revocation was effectively communicated to SWW by way of the Telephone Conversation.

72.I find that the answer to this question must be in the affirmation also.

73.In this connection, I find the following principles submitted by Mr Yau instructive:-

(1)  Where the offeree is a commercial organisation, it suffices if the organisation receives notice of the revocation when the revocation should have been opened in the ordinary course of business. The notice need not be brought to the actual notice of the officer responsible for the matter: See Pickfords Ltd v Celestica Ltd [2003] EWCA Civ 1741 at §32 (per Arden LJ); Chitty on Contract (33^rd Ed, 2018) at §2-097; and

(2)  A revocation is valid if it has been communicated via an authorized channel of communication: Contract Formation: Law and Practice (2^nd Ed, 2016) at §3.27 (“the revocation must be communicated by words or conduct to the offeree or someone authorized to receive that communication”).

74.In this case, I find as a fact that the Telephone Conversation went through ST Li as an authorized channel of communication:-

(1)  First, it is not the plaintiff’s case that ST Li had no actual or ostensible authority to receive any notice of revocation from C&A on behalf of SWW;

(2)  Second, ST Li is but a nominee of the agent, ie SWW, in performing a ministerial act, namely an act which involves no discretion or confidence: Bowstead & Reynolds on Agency (22^nd Ed, 2020) at [5-001(3)], [5-003] and [5-007]; also [3-005(i)] (usual authority as a type of implied authority); Hemming v Hale (1859) 7 C.B. (N.S.) 487 at pp 497 (per Erle CJ), 498 (per Williams J), 501 (per Byle J); Parkin v Williams [1986] 1 NZLR 294 at p 300, line 5 to 20 per Richardson J;

(a)  For a revocation of an offer to be effective, the only requirement is that it has to be communicated to the offeree or “someone authorized to receive that communication”: Contract Formation: Law and Practice (2^nd Ed, 2016) at [3.27]; Pickfords Ltd v Celestica Ltd at [32] (per Arden LJ) (“it is sufficient if the organisation received the notice of the withdrawal”).  No decision has to be made by an authorized agent for it to be effective;

(b)  It is obvious that, in so discharging such duty, the agent (SWW/Ms Wendy Wong as SWW’s sole proprietor) must act through subordinates so that delegation can be said to have been intended by the principal, ie the plaintiff: Fridman’s Law of Agency (6^th Ed, 1990) at p 149; John Mccann & Co. v Pow [1974] 1 WLR 1643 at pp 1647A-1648A (per Lord Denning MR); Parkin v Williams at p 300, line 20 to 30;

(c)  Further, the role assumed by ST Li was analogous to a fax machine. In this case, if one assumes that the notice of revocation took the form of a faxed letter and reached SWW via 2121 1449 (like the 29.10.2020 Letter), the plaintiff could not have taken any objection: Lord v Hall (1848) 2 Car & K 698, cited in Parkin v Williams at p 300, line 1-5; and

(d)  In the premises, ST Li (and indeed any other SWW’s employees who may be asked to handle phone calls through “2523 8983”) had the implied/usual authority at the time when P engaged SWW as its solicitors: Parkin v Williams at p 300 at line 25-45 (per Richardson J).

(3)  Third and alternatively, by virtue of the following circumstances, I further find that ST Li did have the apparent authority to receive a notice of revocation once she was tasked with answering phone calls which went through SWW’s general line, ie “2523 8983”: Bowstead & Reynolds on Agency (22^nd Ed, 2020) at [5-005]; also [3-005(ii)] (usual authority as a type of apparent authority).  See Legione v Hateley (1983) 152 CLR 406 at pp 421-422 (per Gibbs and Murphy JJ):-

(i)  The Telephone Conversation took place between Lesley Lee (of the defendant) and ST Li (of the plaintiff) via an authorized channel of communication, namely “2523 8983” which was repeatedly specified by SWW to be the number through which SWW may be contacted: See Chu’s 2^nd affirmation at §17[23].  In any event, “2523 8983” (just as SWW’s fax number) was at the material time the general line appearing on the letter head of all letters from SWW: see, eg, the 22 October 2020 letter from SWW to C&A[24];

(ii)  Furthermore, ST Li’s duty is to pass on any message left by callers at the general line.  She has accepted that she had such a duty albeit having failed to discharge it (“我當時忘記了把該電話交談內容抄寫下來” and “後來我忘記了告訴朱律師和胡先生有關該電話交談”): See ST Li’s affirmation at §§5-6[25]. In the circumstance, I find that, if ST Li did have a duty to pass on whatever message that came through “2523 8983”, she must have the authority to receive such message in the first place.  If it were otherwise, there is no way for a small law firm such as SWW to operate properly if all messages would only be deemed as validly communicated after it has been passed on internally at a time unknown to the third party;

(iii)  Also, the Telephone Conversation was not intended for ST Li personally but for SWW as an organisation[26].  ST Li received the notice of revocation, ie the Telephone Conversation, in the course of her duty as the person who answered phone calls at “2523 8983”.  I find the position could not have been different if the person who happened to answer the call from Lesley Lee was, let say, Ms Wendy SWW, the principal of SWW herself; and

(iv)  In the premises, I find that even if ST Li did not have any actual authority to receive any notice of revocation, such limitation could not avail of the plaintiff and/or SWW since C&A as a third party had no notice/knowledge of it: Welsh v Roe at p 521 (per McCardie J); Bowstead & Reynolds on Agency (22^nd Ed, 2020) at [5-005].

Issue 2C

Construction of the Telephone Conversation

75.In my judgment, the Telephone Conversation was unequivocal and constituted a valid revocation of any mistaken offer under the 29.10.2020 Letter:-

(1)  The contents of the Telephone Conversation are clear as fortunately there is a full transcript of the dialogues managed to be retrieved by the IT specialist at C&A which made the contents indisputable[27].  Lesley Lee of C&A made it abundantly clear during the Telephone Conversation that the 29.10.2020 Letter was a mistake and was not intended for the plaintiff/Terry Wu (“咁但係呢因為呢我封信係fax錯咗架唔好意思丫”; “成封信係俾錯咗” and “係呀俾錯咗，但係就fax咗俾你哋，我寫埋你哋嗰個地址”).  To this ST Li confirmed that the letter was not intended for SWW (“唔係俾我哋嘅”; “即係唔係俾丫胡生嘅”). Thus, I agree with the defendant that, regardless of the word “deletion”, it is clear that the 29.10.2020 Letter was a mistake which lies in the identity of the intended offeree.  There is simply no need to refer to any specific mistake in the letter, as the plaintiff now contends, because the only mistake lies in the identity of the intended recipient: See the plaintiff’s submissions at §52;

(2)  By reason of the exchange between Lesley Lee of C&A and ST Li of SWW, it is clear that SWW was asked to disregard the 29.10.2020 Letter. I find this, on any view, clearly indicates the defendant and/or /C&A’s intention to revoke/withdraw the mistaken offer.  Hence, looking at the contents of the Telephone Conversation as a whole, the reference to “deletion” of the 29 October 2020 Letter simply means that SWW should not treat it as an offer for the plaintiff.  In addition, the plaintiff’s reliance on the fact that SWW have been receiving faxes by email at §51 of the plaintiff’s submissions does not assist the plaintiff as neither Chu nor ST Li deposed to this fact being brought to the attention of the defendant/C&A; and

(3)  The plaintiff at §53 of the plaintiff’s submissions refers to [3.28] of Contract Formation: Law and Practice (2^nd Ed, 2016) for the proposition that there must be “external manifestations” which constitute a revocation.  Notably, in the same paragraph of that treatise, the author approved of the notion that doubtful expressions should be resolved in favour of finding revocation.

Issue 3

Whether the 2.11.2022 Letter constituted a valid acceptance of the offer

76.In the aforestated premises, given (i) there was a unilateral mistake made by C&A in the 29.10.2020 Letter; (ii) any offer, if valid, was effectively revoked by the Telephone Conversation, I find that the 2.11.2021 Letter from SWW could not have constituted a valid acceptance of the Offer.

Issue 4

Whether there was any agreement reached which is enforceable as a matter of law including by way of specific performance

77.As I have found there was a mistake on the part of the defendant/ C&A for the reasons set out in §46-53 above, I do not consider it would be right to enforce any such purported settlement agreement for the following reasons:-

(1)  As a matter of law, equity dictates that no specific performance of a settlement agreement should be granted by staying the proceedings as a result of a negligent mistake if it is unjust and the non-mistaken party suffers no prejudice: Wong Tak Sing at pp.101B-E, 102A-C per Penlington J;

(2)  It has always been C&A’s position that the 29.10.2020 Letter was a mistake: See Alison Li’s 1st affidaivit at §3[28]. It is therefore unjust to the defendant to be shut out from its counterclaim for such a mistake: Wong Tak Sing at pp.101E, 102C per Penlington J; and

(3)  On the contrary, any concluded compromise arising out of the mistake embodied in the 29.10.2020 Letter is simply a windfall for the plaintiff. The plaintiff has alluded to no prejudice in the event that no stay is ordered save and except the mere passing of a board resolution which did no more than authorizing Mr. Chow Kin Man to “accept the offer under the 29.10.2020 Letter”: See Chu’s 2nd affirmation at §48; and the plaintiff’s board resolution dated 2 November 2020.

CONCLUSION

78.In the aforestated premises, I would order the Summons to be dismissed with costs in favour of the defendant.

79.In relation to costs, Mr Yau submits that it should be awarded to the defendant on an indemnity basis based on the following grounds:-

(1)  First, by reason of the matters set out in the defendant’s submissions, it should be abundantly clear to the plaintiff/ SWW that the 29.10.2020 Letter was a mistake by the defendant/ C&A upon their receipt of the same. There is no justification at all for the plaintiff to take out the Amended Summons;

(2)  Second, the highly unsatisfactory behaviour of SWW in dealing with the Telephone Conversation gave rise to a clearly avoidable waste of time, costs and efforts of both (i) the court and (ii) the defendant/ C&A:-

(a)  SWW had every opportunity to ascertain the existence and contents of the Telephone Conversation as early as on 6 November 2020 when C&A had sent a soft copy of the audio recording to SWW. However, it is only after C&A wrote to SWW on 22 April 2021 did the plaintiff/ SWW was minded to agree with its existence and contents;

(b)  There is no real explanation as to why Chu did not ask ST Li and other female staff members of SWW to listen to the audio recording and recollect whether there was such a conversation back in early November 2020: See Chu’s 2nd affirmation at §14[29]; and

(c)  Further, the way in which SWW insinuated at the lack of authenticity of the transcripts / audio recording without having undertaken any proper check was most inappropriate: 8 November 2020 letter by SWW to C&A.

80.I agree with Mr Yau’s above submissions. I find SWW’s conduct rather appalling and disingenuous. In my view, it clearly falls below the high standard to be expected from the solicitor branch of the profession. As I have found above, there was absolutely no reason why SWW could not have found out after receiving (i) the full transcript; and (ii) the full audio recording on 5 and 6 November 2020 on (i) who answered the call at the firm on that day; and (ii) whether the contents of the transcript or recording were accurate.

81.Had they done that or at least willing to admit the fact that one of their staff had done so, then there is no reason in my view why this matter could not have been resolved in an amicable, reasonable and sensible manner. In my judgment, it is beyond any doubt that there was a mistake made by C&A in the 29.10.2020 Letter and the Telephone Conversation had revoked whatever offer that the plaintiff thought might have been contained in that letter. The fact that SWW chose to turn a blind eye to those glaring facts and failed to even respond to the phone calls of the principal of C&A Mr Raymond Chak on 6 November 2020 (who had called the handling solicitor at SWW 3 times but with no respond) led me to the inevitable conclusion that the plaintiff (via its solicitor) was clearly trying to take advantage of a mistake made by C&A.

82.In my judgment, the Summons could be avoided had SWW or the plaintiff took a reasonable and pragmatic view of the matter latest on 6 November 2020. In the circumstances, I do not see why the plaintiff should not be ordered to bear the costs of the Summons on an indemnity basis. I so make such an order on costs. I further direct that the costs will be summarily assessed by this court and such costs should be ordered to be paid by the plaintiff forthwith, with certificate for counsel.

83.In this connection, I direct the defendant to lodge with the court a statement of costs within 14 days after handing down of this decision and the plaintiff to lodge a list of objection within 14 days thereafter. The summary assessment on the costs will be dealt with by the court by way of paper disposal.

84.It remains for me to thank counsel on both sides for their very able assistance in this matter.

Mr Joseph Wong, instructed by S.W. Wong & Associates, for the plaintiff

Mr Jeff Yau, instructed by Chak & Associates LLP, for the defendant