Koo Ming Kown v. The Baptist Convention of Hong Kong Operating As Pui Ching Primary School and Pui Ching Academy and Others

HCA 1339/2014

[2022] HKCFI 3577

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1339 OF 2014

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Before:  Deputy High Court Judge Winnie Tsui in Chambers

Date of Hearing:  1 November 2021

Dates of Further Written Submissions:  26 November and 10 December 2021

Date of Decision:  30 November 2022

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D E C I S I O N

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INTRODUCTION

1.This is the hearing of the plaintiff’s summons dated 10 May 2021 for amending the order made by Deputy High Court Judge Seagroatt on 9 November 2017, pursuant to the slip rule in Order 20, rule 11 of the Rules of the High Court. The summons concerns the plaintiff and the 1^st defendant only.

2.The order, as sealed, read:

“1. The costs of and incidental to the Summons, including this hearing, be paid by the 1^st Defendant to the Plaintiff forthwith with certificate for one Counsel, the amount to be taxed if not agreed; and

2. The Baptist Convention of Hong Kong (the first defendant) is the entity bearing personal responsibility and being personally liable to pay the costs as referred to in paragraph 1 herein above and the said costs shall not be paid out from the bank accounts in the name of Pui Ching Primary School and/or any source of funds of Pui Ching Primary School.”

3.The order was made on the plaintiff’s summons filed on 14 September 2017. The first return date of that summons was 19 October 2017, also before the same judge. At that hearing, the judge ordered the 1^st defendant to provide certain bank accounts and adjourned the summons to 9 November 2017. At the adjourned hearing, the summons was argued and the order, the subject-matter of the present application, was made. I shall adopt the terms “the 2017 summons”, “the October 2017 order” and “the November 2017 order” or other similar expressions below to refer to the proceedings which took place in 2017.

4.In the present application, the plaintiff seeks to amend the November 2017 order by inserting the following as an additional paragraph:

“There be a direction that The Baptist Convention of Hong Kong (the first defendant) shall be the entity bearing personal responsibility to make repayment of the sum of HK$20,000,000.00 and all the interest thereon as referred to in the Amended Judgment of Deputy High Court Judge Seagroatt entered herein on 13 July 2016, which are not to be paid out of the resources, funds or assets of, or donations to, Pui Ching Primary School or Pui Ching Middle School, whether directly or indirectly.”

5.This paragraph was in fact one of the orders sought in the 2017 summons. It appeared as para (2) of that summons. I shall refer to it as “the para (2) direction”.

6.The plaintiff contends that it was manifest and apparent that at the November 2017 hearing, the judge intended to grant the para (2) direction. The omission of that direction from the sealed order was an inadvertent error on the part of the plaintiff’s solicitors. The error ought to be corrected now to reflect the true intention of the judge. The court should exercise its discretion to accede to the present application as it will not result in any prejudice to the 1^st defendant.

7.The 1^st defendant opposes the application. It argues that there is no manifest mistake in the sealed order and the court has become functus officio. In any event, given the acute delay, the prejudice to the 1^st defendant in having to prove compliance after a long period of time and the strong interest in finality, the application ought to be refused on discretionary grounds.

8.Before the court at the present hearing was the transcript of the November 2017 hearing. At the conclusion of the hearing, I granted leave to parties to obtain a transcript of the October 2017 hearing, as I considered that the latter hearing formed part of the background against which the November 2017 order was made and the transcript might provide the relevant context for ascertaining the intention of the judge. Upon receiving the transcript, parties lodged further written submissions on its relevance.

9.At the conclusion of the November 2017 hearing, the judge did not make a formal order by cross-referencing the 2017 summons paragraph by paragraph. In order to ascertain his intention, the primary task before me has therefore become one of scrutinising the transcript of that hearing, at the same time taking into account the relevant contextual background, including the 2017 summons itself, the October 2017 hearing and the skeleton submissions lodged by the parties for the two hearings.

10.As part of the introduction, I should also spell out the terms which I shall use below to refer to the different parties involved in the action.

(1)  As formulated by the plaintiff in the title of this action, the 1^st defendant is “The Baptist Convention of Hong Kong operating as Pui Ching Primary School and Pui Ching Academy”.

(2)  The Baptist Convention of Hong Kong is a company limited by guarantee and a charitable institution under section 88 of the Inland Revenue Ordinance, Cap 112. I shall use the term “BCHK” to refer to it as an entity.

(3)  Pui Ching Primary School is a well-known school in Hong Kong. It was founded in 1933 and is registered under the Education Ordinance, Cap 279. As pleaded, BCHK is its sponsoring body and exercises overarching management over it. There is a management committee who is responsible for ensuring that the school is managed satisfactorily. The school is itself not an incorporated body and has no separate legal personality from BCHK. I shall adopt the term “the School” below.

(4)  As pleaded, BCHK is also the sponsoring body of Pui Ching Middle School, Pui Ching Education Centre and Pui Ching Academy. Pui Ching Academy is a registered school managed by BCHK but is unrelated to the School.

THE PLAINTIFF’S CLAIM

11.The plaintiff is an alumnus of the School. He was the Honorary School Manager until 31 August 2014.

12.In around September 2006, the School undertook a large-scale project to redevelop its campus. In about November 2007, the plaintiff and the 2^nd and 3^rd defendants met at a restaurant. The 2^nd defendant held various positions in the BCHK organisation. The 3^rd defendant was the principal of the School at the time. The 2^nd and 3^rd defendants made oral representations to the plaintiff about the use of the multi-storey education building to be built for the School, and the insufficiency of financial resources to meet the construction costs due to the limited donations received by the School.

13.In reliance on the representations, the plaintiff made a donation of $20,000,000 as a gift to the School. However, it later transpired that the representations were false, in that (1) the School in fact had sufficient financial resources to fund the construction costs, and (2) the new building would be used and occupied not just by the School, but also by Pui Ching Academy.

14.Based on such facts, the plaintiff claimed against the 2^nd and 3^rd defendants for negligent misrepresentation. As against the 1^st defendant, the plaintiff claimed that it was liable to him for the 2^nd and 3^rd defendants’ misrepresentations as they were its agent. The plaintiff also claimed for restitution of the amount of $20,000,000 on the basis of unjust enrichment based on fundamental mistake.

PROCEDURAL HISTORY

15.The 1^st and 2^nd defendants did not defend the proceedings. Judgment was entered against them on 13 July 2016 (“the 2016 judgment”). Relevantly:

(1)  It was declared that the 1^st defendant held the plaintiff’s donation of $20,000,000 on constructive trust for him.

(2)  The 1^st defendant was ordered to make repayment of that sum to the plaintiff forthwith.

(3)  The 1^st defendant was ordered to pay to the plaintiff interest on the sum.

16.On 20 September 2016, the 1^st defendant paid the sum of $20,000,000 by a cashier’s order to the plaintiff. No interest having been paid, on 4 November 2016, the plaintiff presented a winding-up petition against the 1^st defendant in HCCW 386/2016.

17.On 6 January 2017, the 1^st defendant was ordered in the winding-up proceedings to pay into court the sum of $14,284,627 as security for the outstanding interest.

18.Subsequently, the 2016 judgment was amended and re-filed on 14 June 2017 with changes made to the order on interest.

19.In the meantime, the plaintiff was made aware of a video previously posted on the School’s Facebook. According to the video, the accounts of the 1^st defendant and the School had been maintained separately and independently of each other, and the plaintiff’s claim for interest of around $14,000,000 would be a “very heavy financial burden” for the School. Further, in a pleading filed by the 1^st defendant in another High Court case, it was pleaded that the return of $20,000,000 to the plaintiff had not reasonably been contemplated in the planning of the School’s budget, and had “caused financial hardship to the School”.

20.The plaintiff therefore became concerned that the two substantial sums paid by BCHK in satisfaction of the 2016 judgment, namely (1) the judgment sum of $20,000,000 paid in September 2016, and (2) the judgment interest of about $14,000,000 paid into court in the winding-up proceedings in January 2017, had in fact come from the assets of the School, as opposed to other “non-School” assets of BCHK. He therefore took out the 2017 summons, seeking a number of orders, including:

(1)  a direction that the obligations under the 2016 judgment are “the personal obligations of The Baptist Convention of Hong Kong and not the obligations of” the School or Pui Ching Academy: para (1);

(2)  the para (2) direction; and

(3)  an order that BCHK do file and serve affidavit evidence making full disclosure of the sources of the judgment sum and the judgment interest paid by BCHK and whether the two sums were derived from the funds of, or donations to, the School or Pui Ching Middle School: para (3).

21.In his affirmation in support of that summons, the plaintiff set out his understanding that the bank accounts and accounting records of the School were kept separate and independent from those of BCHK. Hence the payment of the judgment sum and judgment interest should not have come out of the assets of the School. However, based on the Facebook post of the School and the pleading filed by BCHK in another action, the plaintiff became concerned that the School’s assets had been misappropriated by BCHK to the ultimate detriment of the School, its students and their parents. There was therefore an issue of public interest involved.

22.The purpose of the 2017 summons was, in essence, to seek an explicit direction from the court that the judgment sum and judgment interest should not be paid out of the funds of the School.

THE DISPOSAL OF THE 2017 SUMMONS

23.The 2017 summons came before the judge in the October 2017 hearing. Before the hearing, the parties had filed a consent summons seeking to vacate the hearing with directions for the filing of affirmations and the adjourning of the summons for argument. However, the hearing did proceed as the judge “thought that it would be sensible to deal with one or two matters before we launch into affirmations” (page 2A-B).

24.During the hearing, the judge took the initiative to suggest that the 1^st defendant should disclose the bank accounts of the School so that it could be ascertained into which account the gift of $20,000,000 had been paid in the first instance, where the money had gone and, ultimately, the bank account out of which the judgment sum and the judgment interest had been paid (page 2B-M).

25.The judge made the suggestion as he recognised that there was “clearly a division of financial activity” between BCHK, the School and Pui Ching Academy according to the affirmation evidence, and he understood the plaintiff’s perspective that the wrongdoing had been committed by BCHK, but not the School (page 3C, R-T). The judge considered the disclosure of the bank accounts would serve as a “first stage” or “starting point” for the plaintiff to find out where the money had gone (page 3I-K). The judge expected that it would be a straightforward exercise and proposed a timeframe of 14 days for the 1^st defendant to comply (page 2O-Q).

26.It is clear from the transcript that the judge took the view that the 1^st defendant should be open about the source of the money which was used to satisfy the 2016 judgment. He said (page 4H-K, 7B-E, H-I):

“Now, why shouldn’t the defendant be required to disclose on his accounts, maybe already disclosed, or ought to have been disclosed perhaps, in the hearing of the action as part of the discovery so as to show what he did with the money. Now, is there any objection to the defendant being open and disclosing what he did with the money and where the money’s come from to satisfy the judgment and to make the payment into court?

…

So it doesn’t need a specific pleading at that stage. And the interest here is public interest. And the interest is public interest not just in relation to the Primary School, but to find out whether this money has a legitimate source; we don’t know. But it’s the Primary School’s interest, which the plaintiff has at heart.

…

But it’s still the same concern as to whether it comes from the defendant’s funds or whether he’s using the Primary School funds for the satisfaction of an order.”

27.A short while later, the judge reiterated his view that the disclosure was the first step for the proper disposal of the 2017 summons (page 7N-P):

“Well, it won’t necessarily be always coming back. It may be that upon disclosure of these accounts, that’s an end of the plaintiff’s concern; we don’t know. But until we see them, the possible cause remains a live one, doesn’t it?”

28.Upon the consent of the 1^st defendant, the judge ordered that it should provide the bank accounts of BCHK and the School from December 2007 to January 2017 supported by affirmation within 14 days and adjourned the summons to one week after the deadline, ie the November 2017 hearing.

29.The 1^st defendant was late in making the disclosure and only had the documents ready just one day before the hearing.

30.I shall return to look at what was said in the November 2017 hearing in the “Discussion” section below.

THE PRESENT APPLICATION

31.In essence, Ms Sara Tong, appearing with Ms Natalie So for the plaintiff, submits that it is plain from the November 2017 transcript that the judge in fact acceded to the 2017 summons and granted the para (2) direction. She relies on some of the remarks made by the judge in which he confirmed expressly that it was “clear” and “self-evident” that the 1^st defendant had personal responsibility to satisfy the 2016 judgment. She refers me to the following:

(1)  Upon the explanation of the plaintiff’s leading counsel, Mr Johnny Mok, SC, that by the 2017 summons, the plaintiff was seeking “a clarification” of the 2016 judgment, that “the liability to pay the relevant sum should be the personal liability of the convention”, the judge agreed and unequivocally stated that “well, it’s a liability of the 1^st defendant” (page 15L-T).

(2)  When Mr Mok again explained that he wanted to “clarify what [his] lordship had just said, namely that the liability is the liability of the 1^st defendant as opposed to the school itself, in which event, then it would be up to 1^st defendant, then, to decide how to discharge that liability”, the judge stated, “But I mean, it’s self-evident. The judgment is against the 1^st defendant” (page 16F-I; page 17D-E).

(3)  In light of such comments, Mr Mok then commented that “so far as today’s summons are concerned, we have obtained Your Lordship’s order”. The judge did not disagree with such characterisation, or point out that counsel’s understanding about having obtained an order in terms of the 2017 summons was incorrect (page 18G-L).

32.Importantly, towards the end of the hearing, the judge went on to say that he had “made it – item 2. A direction that the Baptist Convention shall be the entity bearing personal responsibility”. The judge again stated, “Well, it’s clear that the defendant, the 1^st defendant, there is the entity bearing responsibility for the payment of the 20 million.” (page 20C-F)

33.Notwithstanding that the judge in fact granted the para (2) direction, the order, as drawn up and sealed, failed to include the paragraph, due to the inadvertent error of the plaintiff’s solicitors. The plaintiff now invites the court to exercise its discretion to correct the omission by allowing the para (2) direction to be inserted into the November 2017 order. Ms Tong highlights that there can be no prejudice suffered by the 1^st defendant as a result. Its legal team was fully aware of the exchanges in that hearing and cannot be said to be taken by surprise in any way by this application. And the correction is to reflect the actual decision of the judge.

34.On the other hand, Mr Abraham Chan, SC, appearing with Mr Richard Yip and Mr Jason Ko for the 1^st defendant, argues that it is plain from the transcript that the judge had fully considered the para (2) direction and taken the view that it did not fall within the ambit of the present litigation and therefore refused to grant the application. He refers me to some other parts of the transcript to make good the point. I shall deal with those extracts below. There is, Mr Chan contends, manifestly no clerical mistake in the sealed order. The slip rule is not engaged.

35.Alternatively, even if the slip rule applies, there are strong grounds to refuse the application as a matter of discretion. The November 2017 order was supposed to put an end to the parties’ dispute in this litigation. If the present application is granted, this would effectively trigger another round of forensic accounting to trace the gift down the years. Inevitably, this would in turn generate further sprawling and protracted disputes which drain costs and resources of BCHK, a charity. Furthermore, BCHK would suffer significant prejudice and difficulty in proving its compliance with the para (2) direction. After such a substantial lapse of time of about four years, some of the bank records may no longer be available. The satisfaction of the judgment in this litigation which has for years been considered to be closed will need to be re-opened and this fact itself should be recognised as prejudice to the 1^st defendant.

36.In sum, Mr Chan submits that the slip rule is wholly inapplicable. The plaintiff now seeks to re-open proceedings which are long closed. The present application is an abuse of the court’s process. Such litigation conduct should not be allowed. The application should be dismissed with indemnity costs.

LEGAL PRINCIPLES

37.The legal principles on the slip rule are well-known.

38.Order 20, rule 11 provides: “Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on summons without an appeal”.

39.The court has an inherent or implied discretionary power to clarify an original order, if the court’s intention appearing from the body of the judgment is manifest, to “vary them in such a way as to carry out its own meaning”: Man Ping Nam v Man Fong Hang (No 2) (2007) 10 HKCFAR 140 at para 10.

40.The error or omission must be an error in expressing the manifest intention of the court: Lo Yuen Chong v IWS Environmental Technologies Ltd [2021] HKCA 89 at para 19.

41.Generally speaking, the discretion conferred under the slip rule should be liberally approached to ensure that the court’s decisions are properly given effect: Man Ping Nam at para 21.

DISCUSSION

42.The starting point of the discussion is the 2017 summons.

The 2017 summons

43.It is apparent from its content and structure what the plaintiff sought to achieve by the summons. In this action, the 1^st defendant is in substance BCHK, a company limited by guarantee, notwithstanding the description in the title that it operates as the School and Pui Ching Academy. It follows that when it comes to satisfying the 2016 judgment, in principle, it was up to BCHK to decide how to do so. The judgment itself did not dictate what specific sources of funds BCHK could (or could not use) for paying the judgment sum and the judgment interest. It is common ground that the assets of the School are segregated from the other assets of BCHK. In this regard, there was nothing on the face of the 2016 judgment which would prohibit BCHK from making use of the School’s assets to satisfy the judgment.

44.By the 2017 summons, the plaintiff sought to obtain an explicit direction from the court that the 2016 judgment must not be satisfied out of the School’s assets. That would be paras (1) and (2). I should note here that I have reservation about the use of the terms “personal obligations” and “personal responsibility”. As between BCHK and the School, there is nothing “personal” to speak of as the two are in fact one same entity. The use of the word “personal” is in my view imprecise. Having said that, the subject-matter of the application has been made clear by the concluding words of para (2), namely that the 2016 judgment should not be satisfied out of “the resources, funds or assets of, or donations to” the School (and Pui Ching Middle School).

45.The 2017 summons further asked for an order compelling BCHK to disclose details of the sources of the funds used to pay the judgment sum and the judgment interest. That would be para (3). The intention was clearly to obtain the necessary records so as to see whether the School’s assets had indeed been used to satisfy the 2016 judgment. If so, no doubt, the plaintiff would likely be taking further step to ensure that the School’s assets would be reimbursed.

46.Analysed this way, the 2017 summons asked for two distinct matters. First, paras (1) and (2) sought effectively a declaration as to how the 2016 judgment ought to be satisfied as a matter of principle. Second, para (3) sought the practical means to verify whether the judgment had indeed been satisfied in the prescribed way.

The October 2017 hearing

47.That was the structure of the 2017 summons. It will be recalled, however, that at the October 2017 hearing, the judge straightaway proposed that a disclosure order be made immediately so that BCHK should disclose bank accounts over a period of just over nine years, covering the time when the gift was initially made in December 2007 and the payment into court of the judgment interest in January 2017.

48.The judge was clearly of the view that the plaintiff’s concern that the assets of the School might have been used to satisfy the 2016 judgment was raised with good reason. Instead of adjourning the summons for further argument in the usual way, the judge adopted a pragmatic approach and ordered BCHK to disclose the relevant bank accounts so as to have an idea of where the money had gone. He considered that there might be a possibility that the bank accounts records, once disclosed, might allay the plaintiff’s concern and thus definitively dispose of the summons, or they might not.

49.While the disclosure order made in the October 2016 hearing did not match the exact wording of para (3) of the 2017 summons, it served substantially the same purpose. The disclosure order should properly be characterised as a substantive order, rather than a procedural one. When analysing the transcripts, it must be borne in mind that a substantive order along the lines of para (3) of the 2017 summons had already been made in the October 2017 hearing.

50.The above is the background against which the November 2017 transcript should be scrutinised. This is the primary document from which I should try to deduce whether there was a manifest intention on the part of the judge to make the para (2) direction.

Summary of my interpretation of the November 2017 transcript

51.Having gone through the transcript against the background as identified above, I am of the view that there was no such manifest intention. I agree with Mr Chan’s submission that the judge in effect refused to grant the direction. I shall first set out a summary of the material points which can be gleaned from the transcript as shedding light on the judge’s intention. I shall then illustrate these points by referring to what the judge and counsel said at the hearing.

(1)  Throughout the November 2017 hearing, the judge was fully aware of the reason why the plaintiff took out the 2017 summons and what he sought to achieve.

(2)  While the judge considered that there was a prima face case that the assets of the School had been used to satisfy the 2016 judgment, he felt that this was not something which could or should be resolved in this action. This was because a lot of work would be required to trace the movements of the money and this would end up spiralling into an unreasonable satellite litigation. If the issue needed to be resolved, there should or might be other institutions or individuals who had an interest in the School in one way or another who could look into it.

(3)  The judge expressed doubt on the description of the 1^st defendant. He nonetheless took note of, and was content with, the fact that the 2016 judgment was made against the 1^st defendant as an entity and left the matter there.

(4)  Lastly, the judge in fact expressed his decision on the para (2) direction on three occasions. It is true that he did not positively say that he refused to grant the direction. However, each time when the judge was prompted by Mr Mok to grant the direction, he did not do so. In my view, one can safely take that as a refusal to grant the para (2) direction.

Illustrations

52.I now set out the relevant extracts to illustrate the above points.

53.The hearing started off with the judge expressing some dissatisfaction with Mr Bosco Cheng, counsel for the 1^st defendant at that hearing, on the late filing of the bank accounts in breach of the disclosure order made at the October 2017 hearing. Mr Cheng explained that the required documents were filed but not on time. He then made the submission that the records showed that when the gift of $20,000,000 was made in December 2007, the money went into a bank account of the School and the money had remained in the bank accounts of the School since then until the two sums were paid out to satisfy the 2016 judgment. They money had never been transferred to any other account which was not in the name of the School.

54.Mr Mok then pointed out that Mr Cheng’s submission was factually incorrect. There was in fact money going out of the School account to the tune of $10,000,000 which was never returned. On that factual premise, Mr Mok reiterated the plaintiff’s concern that he had no way of knowing where the money had gone and whether BCHK had used it for their own purposes, and that the funds of the School, including donations made to it from time to time, might have been used to satisfy the 2016 judgment.

55.The point was made cogently by Mr Mok and the judge fully understood the concern. This is demonstrated by the judge starting to ask questions about school trustees, which was clearly an attempt to see whether there was any other institution who should have supervision over the School and thus should have the responsibility to investigate the money flows (pages 10Q-11I):

“Mr MOK: The way that I have shown to your Lordship is that although it was a running account, there was a very distinct sum which was withdrawn on 29 March 2011, to an unknown destination, which in no way has been explained, and our concern is this. Very simply, that the Convention is running different things. And our concern is of the Pui Ching Primary School, that it should not be -- its funding, which is -- for the school, should not be appropriated for the purposes of repayment to us, when the money actually was never used for the school’s purposes to start with.

…

Mr MOK: And the amount which came out as early on, five years before the repayment in 2011, the whole of the 10 million had gone. And it had gone to the Convention and used for their own purposes. Why should the parents, the students and the other donors be footing the bill to make the repayment to us when they themselves had appropriated that money for other purposes?

COURT: Does the school have its own trustees?” (underline added)

56.In the meantime, the judge expressed concern over the obvious difficulty of undertaking a tracing exercise to find out the whereabouts of the moneys throughout a period of over nine years. While Mr Cheng might not be correct on his description of the fund flow, the judge appeared to take comfort in the fact that when the gift was made in December 2006, it was paid into an account of the School and, later, when the money was paid out to satisfy the judgment sum, it also came from a School account. He said:

“The crucial matter is that the 20 million went in at the time of the gift into the school account, and we’ve seen the school account is pretty healthy all the way through, and the money may have gotten mixed up in the course of the account, but that doesn’t mean that there is any -- or the slightest suggestion or basis for the slightest suggestion that the 20 million are to be going in, went back to the Convention. If you’d shown me that within a short period of time, that there is 20 million going back to the Convention, that would have been another matter. But this is a running account over a period of - where are we - 2007 through to, let’s say, 2016.” (page 10J-N)

“But Mr Mok, in order to do such an exercise, you’ve got to go through these bank accounts, every withdrawal, every deposit, in order to see how the money is going. At the moment, and this picture can’t change unless you want to conduct some further litigation on behalf of the primary school, if that is feasible, but at the moment, the money goes in to that account, that is the gift, it is repaid out of that account, and the -- whatever that sum is, 14 million, 284, is also paid out of that account.

Now, such an exercise is going to be huge. To go back to 2007, in order to see precisely what payments were made in, sources, what payments were made out, reasons, sources, what money went into the Convention, why and wherefore, and the decisions that were made. That is just not feasible.

Nor do I think that it’s justified. On the picture you’ve got, which was your concern, was the money that was the gift paid into the school accounts that it was when the 20 million was repaid, it came out of the school account, the school having had the 20 million. How it was dealt with, it would open up a huge area of financial decisions on the part of the Convention and the school. And the same applies, as far as the 14 million.” (page 12J-T)(underline added)

“As far as I can see, your conscience should be clear, or the plaintiff’s conscience should be clear. That’s where the money went. He’s been repaid out of the funds that received his gift, and the whatever it is, the interest of 14 million has come from the same account. I couldn’t possibly -- I am not saying that Mr Cheng is spot on right with his comment, but it’s a reasonable conclusion, and I think that your argument is rather speculative, in order to see that it has any substance, it’s going to require an enormous amount of work, and I don’t think that’s justified.” (page 13D-H)(underline added)

57.The judge repeatedly and consistently made the point that the huge tracing exercise which would be required in order to follow the money flows did not and could not come within the scope of the present action. If such an exercise indeed needed to be done, it might be that someone else would be better placed to do it. The view was expressed not only in relation to the judgment sum of $20,000,000 but also in relation to the judgment interest of about $14,000,000. (The distinction here is that the former involved a return of money previously received whereas the latter likely involved payment out of the 1^st defendant’s own pocket.)

“Now, it may be that the plaintiff, as the potential donor, is a bit worried about the way the finances of the Primary School are being conducted, but that’s not my concern in the context of this particular litigation. … But I am certainly not prepared to allow further explanation which is an unreasonable extension of almost satellite litigation.” (pages12T-13C)(underline added)

“But to do that, you’ve got to go through seven years’ accounts, tracing all the moneys and the reason for the moneys, and I can’t see that that could be justified under the umbrella of this litigation.” (page 13O-P)(underline added)

“Now, there may be other persons concerned on behalf of the primary school, who may be, I am not saying this is the case, but maybe, who is saying, well, why on Earth with primary school funds, which have a number of different sources, being used to discharge a liability on the part of the Convention for its own misfeasance tort, whatever. But I am not going to extend the ambit of this litigation to deal with that.” (page 15I-L)(underline added)

“Now, I would anticipate that there are some institutions or concerned individuals, who will have, as part of their general remit, if not legal remit, some moral remit to make sure the funds of a school in these circumstances are not used in such a fashion. In saying that, I am not making a finding that they have been used. But on the face of it, in the bank statement, the 1^st defendant’s liability has been mete out of the account of the primary school. Now, that may need quite a lot of explanation. Is it done on a temporary basis, that -- so that it will be repaid into the school funds? I don’t know. But that seems to be the concern or possible concern of other litigation, rather than extension under the umbrella of this.” (pages 15U-16E)(underline added)

“I think that it would probably better if it was put in the hands of either a voluntary body or a school council, or -- I don’t know whether they’ve governors. If the Convention is controlling it, whether it allows governors. I don’t know how they operate. But that’s where it should go for consideration. Not this.” (page 17A-C)(underline added)

58.Again, there can be no doubt that the judge fully grasped the plaintiff’s concern that the funds of the School might have been appropriated to pay off BCHK’s judgment debt and that might not be proper and would require some explanation. At one point, he said there seemed to be a “strong prima facie point”. Notwithstanding that view, he remained of the firm view that someone else might have to investigate the matter somewhere else, but not here in this action:

“On the face of it, here, in the accounts of the school, you have the moneys in the school, the moneys or the funds in the school being used to pay the Convention’s liabilities. Now, that seems to me a good, strong prima facie point. How that is to be dealt with, to my mind, cannot come under the umbrella of this litigation. It may be that those concerned with the school can say, “Wait a minute, you’re using -- if this is the situation, you are using the school account to pay off the Convention’s liability, when that school account, the funds in that school account comes from a variety of sources, donations, fees, whatever, and the school’s financial position should not suffer by being used in order to discharge the liability of the 1^st defendant.” (page14N-T)(underline added)

59.Despite the fact that the judge repeatedly acknowledged the plaintiff’s concern, for the purpose of this action, the judge was content with the fact that judgment had been entered against the 1^st defendant as an entity. He stated that that was as far as he could go in this action.

“MR MOK: … and that’s the reason why we have before your Lordship the summons for a direction that the liability to pay the relevant sum should be the personal liability of the convention. That’s all we are seeking. Basically, it’s a clarification of your Lordship’s order.

COURT: Well, it’s a liability of the 1^st defendant.

MR MOK: All right.

COURT: And that’s as far as I can go.

MR MOK: Yes.” (page 15M-S)(underline added)

“MR MOK: So for present purposes, my Lord, I would be simply asking your Lordship to clarify what your Lordship had just said, namely that the liability is the liability of the 1^st defendant as opposed to the school itself, in which event, then it would be up to 1^st defendant, then, to decide how to discharge that liability. And if they did it in a way which is contrary to what the court expects them to do, then maybe certain consequences may follow.

COURT: The trouble is the wording of the 1^st defendant, the Baptist Convention of Hong Kong operating as Pui Ching Primary School and Pui Ching Academy.

MR MOK: Yes.

COURT: The wording of that, whether it’s equivalent to “trading as”.

MR MOK: Yes.

COURT: I am not at all sure, because we haven’t had to apply out mind to that. But there is no doubt that the defendant, the 1^st defendant, is the Baptist Convention of Hong Kong.

MR MOK: Yes.

…

COURT: But I mean, it’s self-evident. The judgment is against the 1^st defendant.” (page 16F-17E) (underline added)

60.In my view, it is clear from the reasoning articulated by the judge that he had no intention at all to grant the para (2) direction in the hearing.

The judge declined to make the para (2) direction

61.Apart from analysing the judge’s reasoning, I would say that the transcript plainly shows that the judge indeed expressed his decision on the para (2) direction three times in the hearing. The relevant parts start from page 14N to page 18K.

62.The first occasion was around the time when the judge mentioned the “strong prima facie point” (see para 58 above). Then he said:

“Now, that’s as far as I can go. Maybe a matter, not suggesting it should be, but it may be a matter you will want to ventilate when you make the application for the payment out. I don’t know. But at this stage, all I can say openly is it calls for some explanation as to why that account was used to discharge that liability, and if I recollect correctly, the liabilities have not yet been finalised, had they? Organised.” (page 15A-D) (underline added)

63.Mr Mok then immediately followed up and made an explicit reference to the 2017 summons and specifically asked for a “clarification” that “the liability to pay the relevant sum should be the personal liability of the convention”. Once again, the judge replied that the judgment was “a liability of the 1^st defendant” and that was “as far as I can go”. See the exchange at page 15M-S quoted in para 59 above. I would say that was the second time the judge declined to make the para (2) direction. He resorted to the original judgment granted against the 1^st defendant.

64.Still Mr Mok did not give up and tried yet again, emphasising that the plaintiff was merely asking the judge to clarify what he just said, namely that the liability was “the liability of the 1^st defendant as opposed to the school itself”. To this, the judge expressed his doubt about the description of the 1^st defendant and resorted once again to the fact that judgment had already been made against the 1^st defendant. See the exchange at page 16F-17E quoted in para 59 above.

65.It was at this point that Mr Mok finally accepted defeat. I say this because he openly recognised that no “formal direction” was made. He then added that the plaintiff would certainly follow up on the judge’s “comments”. This is what he said:

“So perhaps we can certainly rely on what falls from your Lordship’s comments, even though it doesn’t translate into a formal direction. Perhaps that would be sufficient to put the 1^st defendant on notice of those matters, and perhaps this can be then followed up by our correspondence, as to what should be the appropriate weight.” (page 17F-H)(underline added)

66.After some further exchange, the judge repeated that the plaintiff’s concern could not be explored “within the context of this particular litigation” and that “it’s gone about as far as it can go” (page 18B-F).

67.To this, Mr Mok thanked the judge. It is of note that at that point Mr Mok specifically referred to what the judge had said as “comments”. The use of the word was plainly an acknowledgment on the part of Mr Mok that he did not get the order he wanted but at least he now had some useful “comments’ from the judge which could be followed up on in the future. This is what he said (page 18G-K):

“Yes, so my Lord, thank you so much for all the comments which your Lordship has made, and we certainly would follow up on your Lordship’s comment. So far as today’s summons are concerned, we have obtained your Lordship’s order, that order, as your Lordship has noted, was not strictly complied with. And as a result of that order, it throws to -- it comes to light that, in fact, they had been using the school’s resources to make the payment into court, which, as your Lordship have indicated, may indicate a prima facie case.” (underline added)

68.In the extract above, there was a reference to an order which “was not strictly complied with”. It is plain from the context that the order was the disclosure order which the judge made in the October 2017 hearing. The 1^st defendant did produce documents but only did so after the deadline. Hence the reference to the order not being “strictly complied with”.

69.From then onwards (page 18L to end), the submissions were on costs of the 2017 summons.

The judge said, “I’ve made it – item 2”

70.Ms Tong places significant reliance on the following remark made by the judge in the course of those costs submissions. She relies on the statement “I’ve made it – item 2” to support her case that the judge had in fact made the para (2) direction.

“Well, that can’t be right, can it? Let me just look at the original summons. I can’t recall any objection being raised to that effect. In your speaking note, you were saying can’t do it in time. All this amount of work, which I don’t accept, because it’s a very straightforward exercise. Well, there is only two. I’ve made it -- item 2. A direction that the Baptist Convention shall be the entity bearing personal responsibility. Well, it’s clear that the defendant, the 1^st defendant, there is the entity bearing responsibility for the payment of the 20 million.” (page 20B-F)(underline added)

71.If applying a literal approach, when the judge said, “I’ve made it – item 2”, he should be taken to mean that he had made the para (2) direction.

72.However, having gone through the entire transcript up to this part, it is manifest that the judge did not make that order and did not want to make that order. That intention was manifest, both based on his explicit reasoning and the actual words used by him and counsel in the exchange (eg, “So perhaps we can certainly rely on what falls from your Lordship’s comments, even though it doesn’t translate into a formal direction”). Hence, when interpreted contextually, the “I’ve made it – item 2” remark should not be taken to mean what it appeared to mean.

73.I am of the view that the contextual approach should be adopted. There is no need to speculate what the judge was having in mind when he made the remark. The relevant point here is that the intention behind this remark is simply unclear.

Conclusion

74.To conclude, when the transcript is read as a whole, notwithstanding the “I’ve made it – item 2” remark, the manifest intention of the judge was that he did not grant the para (2) direction and he did not intend to grant it.

75.From my discussion, it should be apparent that the remarks relied on by the plaintiff – see paras 31 and 32 above – are taken out of their proper context, without sufficient regard being paid to what was said before and after those selected remarks. The plaintiff’s submissions, which are based on those remarks, are not valid.

76.In her submissions, Ms Tong draws a distinction between the para (2) direction and the para (3) direction. Her point is that the judge’s remarks that the tracing exercise should not come within this litigation were only relevant to the para (3) direction, but not the para (2) direction. She stresses that the latter was a formal declaration dictating how the 2016 judgment should be satisfied.

77.Ms Tong’s point may be a theoretically correct one. But this does not alter the fact that the judge did not in fact grant the para (2) direction each time when Mr Mok specifically asked him to do so. That was the manifest intention of the judge, as can be gathered from a proper reading of the transcript.

78.It follows from the above that the sealed order contains no error. The slip rule does not apply. The application should be dismissed for that reason. There is therefore no need for me to consider the issue of discretion.

ORDERS

79.I dismiss the plaintiff’s summons.

80.I have heard parties’ submissions on costs. I order that the 1^st defendant should have costs of the summons, including any costs reserved, to be taxed on an indemnity basis if not agreed, with certificate for senior counsel and one junior counsel (Mr Richard Yip). There has been a substantial delay in the taking out of the summons. There is no proper explanation for the delay. This is an instance where a party is trying to re-open an action which has long been concluded. This itself amounts to prejudice suffered by the other side. That is what has taken the application out of the norm, which warrants an indemnity costs order. This is an absolute costs order.

Ms Sara Tong, SC and Ms Natalie So, instructed by Lily Fenn & Partners, for the plaintiff

Mr Abraham Chan, SC, Mr Richard Yip and Mr Jason Ko, instructed by Or & Partners, for the 1^st defendant