Lau Muk Fat (Suing As the Manager of Lau Shau Wo Tso) v. Wong Kwok Wa and Others
Read the full judgment text of HCA 1006/2017 on BabelCite. This High Court CFI judgment was delivered on 18 October 2022.
1. These matters have a long and somewhat tortuous history. At issue before the Court at the present hearing was how to best case manage the 6 sets of proceedings going forward.
Cited by 1 case · Cites 12 cases
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HCA 1006/2017, HCA 1879/2011, HCA 802/2019, [2022] HKCFI 3166 HCA 1006/2017 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1006 OF 2017 ________________________ BETWEEN
________________________ AND HCA 1879/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1879 OF 2011 ________________________ BETWEEN
________________________ AND HCA 802/2019 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 802 OF 2019 ________________________ BETWEEN
________________________ AND HCA 896/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 896 OF 2012 ________________________ BETWEEN
________________________ AND HCA 897/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 897 OF 2012 ________________________ BETWEEN
________________________ AND HCMP 944/2018 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 944 OF 2018 ________________________ BETWEEN
________________________ (Heard Together) Before: Madam Recorder Rachel Lam SC in Chambers Date of Hearing: 15 September 2022 Date of Decision: 18 October 2022 ________________________ DECISION ________________________ A. INTRODUCTION 1.These matters have a long and somewhat tortuous history. At issue before the Court at the present hearing was how to best case manage the 6 sets of proceedings going forward. 2.There are, in essence, three proposals before the Court, which can be summarized as follows:
3.There was also before the Court a strike out application by the 2nd to 12th Defendants in HCA 1006/2017 (“the 1006 Dings”)[3] to strike out the action against them (“the Strike Out Application”). 4.At the hearing, WKW was represented by Counsel Mr Tony H H Chow, Madam Mok was represented by Counsel Mr Raymond Tsang, the Tso was represented by Counsel Mr Billy N P Ma, and the 1006 Dings were represented by Ms Evelyn L C Cheng. B. BACKGROUND 5.Given the various issues that arise for consideration in contemplating which course to adopt, it is necessary to set out the background and procedural history in some detail. What follows is not intended to be an exhaustive summary of the background or all the issues in the cases, but only what is essential for the purposes of the present decision. B1. The Development Agreement 6.By a development agreement originally dated 15 December 1994 between the Tso and WKW, as varied by supplemental agreement dated 31 August 1995, LMF as manager of the Tso was to provide various lands to WKW as developer to coordinate and develop small houses with the involvement of various indigenous villagers (“Dings”) (“the Development Agreement”). In consideration for the provision of the lands, the Tso would obtain a share of the houses to be constructed thereon. 7.Pursuant to the Development Agreement, WKW eventually procured 17 small village houses to be constructed on 17 building lots. The houses were to be split between the Tso and WKW at a ratio of 4 to 6 (the Tso being entitled to 6 houses, WKW being entitled to 9 houses, and the parties to split the interest for the remaining 2 houses at 4:6 interest). 8.There is some dispute as to the precise mechanism for selection and allocation, but what is not disputed is that the Tso had been allocated and conveyed 6 houses/lots in around June 2011 (“the Tso’s 6 Houses / Lots”). There thus remained 11 houses/lots which were unallocated (“the 11 Unallocated Houses / Lots”), and which are the subject of the various actions now before the Court. B2. The Main Actions 9.The first action to be initiated was HCA 1879/2011. In a lengthy Amended Statement of Claim dated 23 March 2012 (“1879 ASOC”), the Tso makes various claims against inter alia that WKW. It is unnecessary to set out each and every aspect of the claim, but for present purposes, the following are most pertinent. In essence, the Tso claims that:
10.The HCA 1879/2011 action also involves the 2nd to 13th Defendants therein (“the 1879 Dings”), who are certain other of the Dings (not the same as the 1006 Dings) whose involvement in the arrangements were necessary in order to render the Development Agreement workable. The Tso seeks inter alia declaratory relief against them that their Lots are held on trust for the Tso, damages for breach of trust, and orders that they do transfer or assign their Lots to the Tso or other persons nominated by the Tso. Save for filing defences wherein they largely indicate that they have “no knowledge” of the various matters in the 1879 ASOC, they have not taken an active part in the proceedings. 11.HCA 896/2012 and HCA 897/2012 were commenced on 28 May 2012 by the Tso. 12.In HCA 896/2012, the Tso alleges again various breaches and/or delay in performance of the Development Agreement and seeks inter alia relief against WKW for:
13.In HCA 897/2012, the Tso alleges various breaches of the Development Agreement, makes an allegation that there had been an express grant of easement whereby the Tso would be afforded access to the Tso’s 6 Houses / Lots, and makes a further claim that there had been misrepresentation in respect of a box sewerage system for the Tso’s 6 Houses / Lots (which was promised, but not built). The Tso seeks relief against WKW for inter alia:
14.WKW filed defences and counterclaims in the respective actions on 15 November 2012[4]. He makes various denials and factual averments regarding the allegations in the various actions. By way of the Counterclaims in each of the actions, WKW seeks inter alia:
15.As can be seen from the above, the Main Actions concern various disputes centering around the performance and alleged breaches of the Development Agreement. The matters pleaded by both sides concern events from the time of the origination of the Development Agreement up to around 2012 at the latest. To state the obvious, Madam Mok is not a party to the Main Actions. 16.As mentioned above, a direction had been given relatively early on in September 2013 that the Main Actions were to be heard together (and quite properly so). I confirmed with the parties at the hearing that essentially all relevant steps had been taken in the Main Actions to bring the matters to trial (viz. discovery, filing of witness statements and expert reports, etc.). The only outstanding question was whether the Main Actions should be somehow consolidated or heard together with the subsequent actions (discussed below). If not, then the Main Actions are ready to be set down for trial. B3. Subsequent Developments 17.Because of subsequent developments, the material particulars of which are outlined below, the Main Actions have been languishing in somewhat of a procedural no-man’s land for a number of years now. 18.The first event of note is the initiation of HCA 1006/2017 by the Tso on 26 April 2017. The action is brought against WKW as 1st Defendant, with the 2nd to 12th Defendants being other Dings involved in the arrangements for the Development Agreement, who had not been made parties in the original HCA 1879/2011. The pleading largely repeats the pleading in HCA 1879/2011, except there is additional relief sought as directed against the 1006 Dings (essentially mirroring the relief sought against the 1879 Dings, see paragraph 10 above). The Tso readily admits that this action has served as a “protective writ” to prevent the 1006 Dings from dissipating the subject Lots or the Unallocated Houses, and thus the sealed copy of the writ had been registered in the Land Registry on 28 April 2017 against the relevant lots / houses. 19.On 12 February 2018, WKW sent a letter to the Tso through his legal representatives (“Selection Letter”) purporting to select 9 Houses / Lots per the selection mechanism in the Development Agreement. 20.Subsequently, on 25 June 2018, Madam Mok initiated HCMP 944/2018 (“the 944 OS”). By the 944 OS and evidence filed in support thereof, she alleges that she is the registered owner of 9 of the 11 Unallocated Houses, having allegedly been assigned the relevant legal titles by various registered owners solicited by WKW under the Development Agreement by way of a sale and purchase agreement dated 21 April 2017 (i.e. allegedly a few days prior to the initiation of HCA 1006/2017) (“the Mok SPA”). By reason thereof, she seeks declaratory and injunctive relief, the effect of which is to inter alia withdraw or vacate the registration of the various instruments in the Land Registry in respect of those 9 houses / lots. 21.The Tso’s case is that the Mok SPA is plainly a sham. There is presently no dispute between the parties that Madam Mok is WKW’s wife, nor is there any dispute that no money actually changed hands pursuant to the Mok SPA. There is also no dispute that the Mok SPA was only registered in the Land Registry on 25 July 2017, some three months after the initiation of HCA 1006/2017. There are various other unusual features of the transaction which need not be fully set out herein. 22.In view of the above, the Tso commenced HCA 802/2019 on 7 May 2019, which names WKW, Madam Mok and 12 of the Dings as Defendants (these Dings overlapping substantially with those in HCA 1006/2017). The Statement of Claim repeats much of what is set out in HCA 1879/2011 and HCA 1006/2017, but then importantly and substantively adds claims and causes of action specifically in relation to Madam Mok and the Mok SPA. In particular, there is a plea of conspiracy to defraud, followed by pleas of dishonest assistance and knowing receipt. To summarise the prayer for relief, it seeks inter alia:
23.HCA 802/2019 and the 944 OS are hereinafter referred to as “the Subsequent Actions”. Neither of the Subsequent Actions has progressed beyond the initial pleadings. This is similarly so for HCA 1006/2017. 24.As is evident from the above summary, a key point of dispute and the main complaints in the Subsequent Actions concern the events surrounding the Mok SPA and the impact thereof on the title to the 9 Houses / Lots. These events occurred well after the events complained of in the Main Actions. 25.Notwithstanding the above, Madam Mok pressed ahead with the hearing of the 944 OS, and was initially successful in obtaining relief thereunder before Recorder Linda Chan SC (as she then was) on 28 June 2019. This was, however, subsequently set aside by the Court of Appeal on 14 May 2021. The full reasoning of the Court can be found at [2021] HKCA 706. Suffice to say for present purposes that the Court of Appeal considered there were triable issues, in view of the various unusual features of the Mok SPA (paragraph 21 above) and other features as discussed more particularly at paragraphs 38 to 50 of the Court of Appeal decision. The Court of Appeal concluded at paragraph 43 that:
26.Directions were then given by the Court of Appeal that the 944 OS was to continue as if begun by writ, and that further directions should be sought from the Court of First Instance on the future conduct of the proceedings, including (a) directions on the filing of pleadings and evidence as appropriate and (b) directions on whether, and if so how, the proceedings should be tried together with HCA 802/2019. 27.The parties then attended before Master Ho on 31 August 2021, who directed that the present summonses be taken out. The applications thus came before this Court, over a year later. C. RELEVANT LEGAL PRINCIPLES - CONSOLIDATION 28.There is no great dispute between the parties as to the principles on consolidation. 29.O.4, r.9(1), Rules of the High Court provides:
30.On the relevant principles, I would gratefully adopt the summary by Deputy High Court Judge MK Liu in China Health Group Ltd (formerly China Healthcare Holdings Ltd) & Ors v Li Zhong Yuan & Ors [2021] HKCFI 3806 at paragraphs 13 to 14:
31.Whilst there were various other cases cited by the parties, those citations largely served to illustrate certain aspects of similarities in the facts. I have borne the above principles in mind when considering the arguments raised by all parties as to the way forward. D. CONSOLIDATION – WKW’S APPLICATION 32.Having considered the parties’ submissions and the relevant papers in the hearing bundles, I would exercise my discretion against WKW’s application and disallow the application to consolidate the Main Actions with the Subsequent Actions. This is the case whether for the application as originally made, or in relation to the fallback argument developed by Mr Chow at the hearing. 33.First, I am conscious of the very different stages where the actions find themselves. Whilst the Main Actions are essentially ready for trial, the Subsequent Actions are very much at a nascent stage, the 944 OS having gone through the process of the appellate procedure and only just having been ordered to continue as if begun by writ (per paragraph 26 above). 34.It is unfortunate that the setting down of the Main Actions had been held up by the appeal process in the 944 OS, and then by the applications presently before the Court. It would be even more unfortunate that they should be further held up or delayed to allow time for the consolidation process to run its course. 35.Second, as mentioned at paragraphs 15 and 24 above, the key complaints or matters raised in the Main Actions and the Subsequent Actions concern different time periods. The options presented to the Court are twofold in this regard. Either those disputes regarding the events earlier in time could be determined first (in the Main Actions), or everything could be determined in the proposed consolidated action:
36.Third, WKW’s proposal for consolidation entails entirely recasting the pleadings and joining together a total of 27 defendants. It does not seem to me that such a course of action would save costs at all when the Main Actions are at such a progressed stage:
37.The above are relatively straightforward and, in the circumstances of this case, what I consider to be rather self-evident points against the proposal for consolidation. 38.There were, however, two issues which have given me some pause, and which I explored at length with parties during the course of the hearing. 39.First, I had some concerns over how the relief sought by the Tso in the Main Actions could be maintained in view of the prima facie transfer of the 9 Houses / Lots to Madam Mok as currently reflected on the register. In essence, I queried whether the specific performance aspects prayed for in the statements of claim in the Main Actions against WKW could be ordered by the Court given the current disputed status of the 9 Houses / Lots. I also queried what impact this potential difficulty would have on the conduct of the Subsequent Actions, particularly since the relief in HCA 802/2019 is partially premised upon WKW being ordered to specifically perform the Development Agreement (paragraph 22 above). 40.Second, and relatedly, I queried with Mr Ma what impact and bearing the findings in the Main Actions might have on the issues raised in the Subsequent Actions, and more particularly, whether Madam Mok would be bound by any of the findings. This query was raised in the context of the argument put forward by the Tso that if the Tso were successful and the Development Agreement were enforceable “it would follow that [Madam] Mok would have no interest in the subject Houses”. This was further developed by Mr Ma during the hearing that Madam Mok might be bound by res judicata and/or some form of estoppel. 41.Both of the above issues arise because of the subsequent involvement of Madam Mok, the fact that she is not party to the Main Actions, and the fact that the Main Actions as currently pleaded do not deal with or mention the Mok SPA events at all. 42.On the first query, Mr Ma impressed upon the Court the submission that the Tso and WKW are the key parties to the dispute surrounding the Development Agreement, and that any orders to be made would be made against WKW personally. That may well be the case. However, there remains a concern that the Court will be hesitant to order specific performance when there is an apparent impediment to it being effectively carried out. The only fallback position for the Tso that I could see from the papers was the fact that the Tso has sought damages in addition to or in lieu of specific performance - an option that is undoubtedly open to the judge if the Tso is in fact successful. 43.As to the second query, despite Mr Ma’s best efforts to persuade me otherwise, I cannot presently see how Madam Mok, not being party to the Main Actions and indeed not even being a witness to be called in the Main Actions, (i) would herself be bound by the result of the Main Actions; and (ii) could be compelled to comply with any order made in the Main Actions. There certainly could not be any res judicata insofar as she is concerned. And indeed, I do not consider from the evidence before me that there would be issue estoppel vis à vis Madam Mok. At best, one might say that WKW would be bound by the findings in the Main Action, and Madam Mok’s case that could be run would necessarily be limited insofar as she relies on WKW as the key protagonist involved in the execution of the Development Agreement. 44.I would note that this is not the occasion to pre-judge or finally determine questions of scope of relief, or res judicata or any form of estoppel, issues that are best fully argued and left to the trial judge(s) who will have full grasp of the facts and evidence. The pertinent question for the Court is whether on the possibility of there being such limitations if the matters are to proceed separately, it is still nonetheless viable and appropriate in the particular circumstances of this case to allow the Main Actions to proceed without consolidating the actions. 45.The above queries would be essentially solved, of course, if the matters were consolidated. The issues surrounding the Mok SPA would be determined in addition to those already set out in the Main Actions. Consequently, the relief to be ordered could be fashioned in a way which takes into account the involvement and position of all actors in this drama. This would also negate the possibility of there being old ground traversed in the Subsequent Actions, and the danger of there being inconsistent findings by a different court if the Subsequent Actions are heard by a different judge. 46.I must confess that this has not been an easy decision to weigh, but on balance, I consider that despite the limitations and possible complications that could arise, they do not render it impossible for the Main Actions to proceed first. Whatever potential concerns there are in the circumstances of this case, I consider that such concerns are outweighed by the factors discussed above at paragraphs 32 to 36. 47.Finally, I note that the Tso had pointed to prior correspondence where WKW himself had suggested that the Main Actions should proceed and HCA 802/2019 should be stayed pending the resolution of the Main Actions. Various other points had also been made concerning WKW’s deployment of delaying tactics, circumvention of procedural rules concerning pleadings and the like. These are peripheral points at best. Certainly, one might observe that WKW has changed his stance and been somewhat intransigent in the case management of the matters thus far. Indeed, the case management steps taken by all parties to date leave much to be desired. However, the more relevant question for this Court remains whether it is proper and expedient on the present set of circumstances to order consolidation. For the reasons above, I consider that it is not. 48.As such, WKW’s Application is dismissed. 49.I would note at this juncture that in the course of submissions, Mr Chow had indicated that if WKW’s Application was unsuccessful, there was a possibility of WKW seeking to amend the defence in the Main Actions in order to bring in the subsequent developments relating to the Selection Letter and the Mok SPA. This Court has not been asked to consider such an application and no draft had been produced at the hearing. As indicated to the parties at the hearing, it would be incumbent upon WKW to apply and justify such a late amendment if he really considers it necessary and appropriate to bring these matters in via such a channel. E. HCA 1006/2017 – STRIKE OUT APPLICATION 50.The background to the Strike Out Application is found in the decision of Hon Keith Yeung J in [2020] HKCFI 2789, where he found against the Tso in its default judgment application against WKW. In essence, the judge found that the Writ had not been served on WKW, which meant that its validity had expired. HCA 1006/2017 is thus an action which no longer concerns WKW. Following Hon Keith Yeung J’s decision, the remaining defendants (the 1006 Dings) have applied to strike out the action against them. 51.There is little dispute on the relevant principles for strike out applications. O.18, r.19, RHC states as follows:
52.I would also gratefully adopt the following trite principles on striking-out as recently summarised by DHCJ Douglas Lam SC in Chan Kai Yan v Leung Chi Kit [2019] HKCFI 1828 at §8 as follows: -
53.The 1006 Dings rely on the limbs in O.18, r.19(1)(b) to (d), RHC. As developed by Ms Cheng at the hearing, the arguments are in essence:
54.In answer, the Tso refers to the following matters:
55.I accept the Tso’s submission that the initiation of HCA 802/2019 was necessary in light of the developments as to the Mok SPA and the events which transpired after HCA 1006/2017 had been initiated. They could not have known or anticipated the subsequent developments as at the date of initiation of HCA 1006/2017. I do note, however, that there is a great degree of overlap in the two actions, and further, it makes much more sense for HCA 802/2019 to proceed given WKW is still a party to the later action. As such, it would be prudent to stay HCA 1006/2017 as there is no purpose in maintaining the actions in tandem. A stay rather than a striking out is more appropriate given the writ has been registered in the Land Registry. 56.There were also two other points made by the Tso:
57.The above are not dispositive points, but will have some bearing on costs. Suffice to say that:
58.In the circumstances, HCA 1006/2017 is ordered to be stayed. F. CONSOLIDATION – MADAM MOK’S APPLICATION 59.This aspect is relatively less controversial. I consider it right and appropriate that the Subsequent Actions should be consolidated. They concern aspects of the same events (mainly centering around the Mok SPA), and involve overlapping parties. Given both actions are at a nascent stage, and the fact that the 944 OS has already been ordered to continue as if begun by writ, it makes sense that the two matters should be consolidated. 60.Accordingly, I give the directions that:
61.As part of the proposals by the parties, it had been suggested that the Subsequent Actions ought to be stayed pending the determination of the Main Actions. (As indicated above, WKW had previously suggested this but resiled from it by the time of the hearing, instead preferring the option of global consolidation; conversely, the Tso had put forward a suggestion for stay at the hearing). 62.Having considered matters in the round, I do not consider it appropriate to stay the Subsequent Actions. This is for the following reasons:
63.In the circumstances, the Subsequent Actions will be consolidated per the directions above, and will not be stayed. G. COSTS 64.As there are quite a few different aspects and considerations to deal with, parties are directed to fix a date (in consultation with counsel’s diaries) for a 1 hour hearing to address the Court on costs. Submissions, no longer than 5 pages, are to be filed 7 days prior to the hearing. 65.I thank counsel for their assistance.
Mr Billy Ma instructed by Messrs Hong Lee & Co for the Plaintiff in HCA 1879/2011, HCA 896/2012, HCA 897/2012, HCA 802/2019 & HCA 1006/2017 and the Defendant in HCMP 944/2018 Mr Ho Hin Chow Tony instructed by Messrs Cheung, Chan & Chung for the 1st Defendant in HCA 1006/2017, HCA 1879/2011, HCA 896/2012, 897/2012 & HCA 802/2019 Ms Evelyn Cheng instructed by Messrs S H Chou & Co for the 2nd - 12th Defendants in HCA 1006/2017, the 2nd Defendant in HCA 896/2012 and the 2nd - 13th Defendants in HCA 802/2019 & HCA 1879/2011 Mr Raymond Tsang instructed by Messrs K B Chau & Co for the 14th Defendant in HCA 802/2019 and the Plaintiff in HCMP 944/2018 [1] Summonses dated 28 September 2021 in HCA 1879/2011, HCA 896/2012, HCA 897/2012 and HCA 802/2019; which were predicated on the Court agreeing to Madam Mok’s Application (FN2). [2] Summonses dated 28 September 2021 in HCA 802/2019 and HCMP 944/2018. [3] Summons dated 28 September 2021 by the 1006 Dings in HCA 1006/2017. [4] WKW’s Defence and Counterclaim in HCA 1879/2011 was amended on 5 May 2014, but for present purposes the amendments do not affect the nature of the discussion. [5] An example of the Court giving leave to amend instead of striking out is found in Wah Nam Group Ltd v Roderick John Sutton, HCA 960/2015, unreported judgment dated 5 September 2017 at §§28, 92-95, & 100. |
Cases cited in this judgment
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Further hearings and rulings under HCA 1006/2017