Chen Hongqing v. Asia Cement Corporation

HCA 1304/2017

[2023] HKCFI 2769

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1304 OF 2017

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D E C I S I O N

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A. The Summons

1.This is the hearing of the Summons of 20 March 2023 (the “Summons”) taken out by the defendant (“ACC”) against the plaintiff (“P” or “Chen HQ”) for an order that Chen HQ’s Writ of Summons of 5 June 2017 (the “Writ”) and Statement of Claim of 30 August 2018 (the “SoC”) be struck out and his claims against ACC as pleaded therein be dismissed, on the grounds that the claims are frivolous or vexatious, disclose no reasonable cause of action, or are otherwise an abuse of process of the Court.

2.Mr Abraham Chan SC leading Mr Joshua Chan[1] and Mr Alexander Burg for ACC. Mr Law Man-Chung SC leading Mr Danny Tang for Chen HQ.

B.  The affirmations

3.Specifically for the Summons, ACC has caused to be filed in support and in response the 3^rd and 4^th affirmations of Wu Ling-Ling (“Wu”, and “Wu/Aff3” and “Wu/Aff4”), and Chen HQ has filed in opposition his 5^th affirmation (“Chen/Aff5”).

4.Placed before me also are a number of other affirmations that have been filed previously in the present action. They are the 2^nd affirmation of Wu (“Wu/Aff2”) and Chen HQ’s 1^st to 4^th affirmations (“Chen/Aff1” to “Chen/Aff4”).

C.  The Factual background

5.For the background facts and history leading to the present application:

(a)  I refer to without repeating my Decision herein of 16 March 2021[2] (the “16/3 Decision”):

(i)  I adopt in so far as appropriate the same terms used therein;

(ii)  I refer further to the number of other Decisions mentioned in §3 of the 16/3 Decision, namely the Judgment[3] and Decision[4] of G Lam J (as G Lam JA then was) in HCA 1661, 1766, 2191/2014 and HCA 623, 939, 1564/2015 (Consolidated) dated 31 January 2018 (the “Trust Actions”, the “Trust Actions Judgment”, and the “Trust Actions Discharge Decision”), the Decision of Mimmie Chan J of 27 June 2017 in HCMP 962/2017 (the “962 Proceedings”, and the defendants therein “962 Ds” (or the “4 Shareholders” as Mr Chan calls them[5])) acceding to Chen HQ’s application for appointment of interim receivers (the “Interim Receivers”), and the Reasons for Decision of G Lam J of 31 May 2018[6]subsequently discharging the same (the “Lam J 31/5 Reasons”);

(iii)  For the reasons set out in the 16/3 Decision, I inter alia dismissed Chen HQ’s application in the present action for amendment so as to join the 962 Ds as defendants (the “Joinder Application”), and his further application for an injunction to restrain ACC from causing any transfer or registration of 104,908 shares in China Shanshui Investment Company Limited (“CSI”, and the “Subject CSI Shares” or “CSI Shares”), and the 962 Ds from transferring, voting upon or otherwise dealing with the Subject CSI Shares (the “Injunction Application”);

(b)  I refer further to my Decision of 23 September 2021[7] refusing Chen HQ’s application for leave to appeal against my decision dismissing the Joinder Application and the Injunction Application, and the Judgment of the Court of Appeal of 22 July 2022 refusing Chen HQ’s renewed application for leave to appeal[8] (the “CA Refusal”).

D.  Parties’ stances

6.Mr Chan’s submissions, as summarised by him in §§3 and 4 of his written submissions, are that (emphasis added for ease of presentation):

“3. … the Writ and SOC should be entirely struck out because of:

(1) P’s abusive litigation conduct, with P having advanced diametrically contrary cases on oath on whether there is some agreement or understanding between him and (inter alios) the 4 Shareholders entitling him to some right or interest to the Subject [CSI] Shares.[9]

(2) P’s hopeless factual case, which is fatally contrary to (a) the terms of the written agreements between him and the 4 Shareholders, and (b) the evidence which P previously gave on oath.[10]

(3) P’s gross and cynical delay, with the Writ issued in 2017 but matters still languishing at the pleadings stage, causing substantial prejudice to D as legal owner of the Subject [CSI] Shares.[11]

4. Alternatively, P’s inducement of breach claim should be struck out because it discloses no reasonable cause of action. P must show that the alleged tortious acts have caused him to suffer loss, but P has not pleaded (and in fact has not suffered) any loss.[12]”

7.In the course of the hearing, Mr Chan clarified that the Factual Ground and the Delay Ground are supportive of the Abusive Litigation Conduct Ground. He stated that while they are also standalone grounds, that is not a position that he would push.

8.Mr Law’s submissions may be summarised as follows:

(a)  In relation to Abusive Litigation Conduct Ground (which Mr Law calls the Inconsistency Ground):

(i)  Mr Law calls the part of §3(1) of Mr Chan’s written submissions as underlined above the “Impugned Element”, which term I will adopt as appropriate for ease of presentation;

(ii)  Mr Law submits that it is common ground that Chen HQ had entered into the Loan Agreements and 11 Share Pledge Agreements with the 11 Representatives (or the “11 Nominees” as Mr Law calls them);

(iii)  Chen HQ’s case is more sophisticated than what ACC has understood it to be:

“4.4 … [P’s case] consisted of the written contracts and the unwritten Impugned Element. Together, P argued that they gave rise to a legal arrangement which enabled P to acquire interest in the CSI shares held by the 11 Nominees and the Employees.

4.5. Granted, this Court has previously held that the Impugned Element (and hence P’s overall case) has morphed across different proceedings and on that basis rejected it as incredible.

4.6. However, any inconsistency (and accordingly any abuse arising from such inconsistency) only applied to the unwritten Impugned Element. Hence, any abuse would be removed or subverted by preventing P from relying on the Impugned Element.

4.7 This means P must be allowed to pursue a case based on the written agreements alone (“Documents-based Case”). This part of P’s case was never subject to inconsistency, and consequently abuse. It is also not dependent on P’s testimony.

…

4.10 Assuming P is permitted to proceed with the Documents-based Case, there are clearly triable issues arising from this case. First, P will contend that on the true construction of the Loan Agreements and the Share Pledge Agreements, they amount to an agency agreement between P and the 11 Nominees ... This has been confirmed in recent arbitration awards between P and 10 of the 11 Nominees. Alternatively, even if the relationship was only one of a secured loan (as D contends) …, there are disputes as to whether the deposits with the Jinan Quancheng Notary Office amounts to a good discharge under Mainland law.

4.11 If need be, P undertakes to amend the SOC to align the pleadings with the above position …”

(b)  On those same bases, in respect of the Factual Ground, “even if the Impugned Case is thought to be incredible, P may still proceed with the Documents-based Case”[13].

(c)  In relation to the Proof of Loss Ground:

“This is a quia timet action commenced to prevent damage from arising in the first place. Hence, it is nonsensical to require P to show loss. There is no need to prove particular loss where it can be readily inferred. In any case, P only needs to show damages at large.”[14]

(d)  In relation to the Delay Ground:

“There was no undue delay. P (and it can be reasonably inferred that D was of the same view) considered that the issue of joinder should be resolved first before the action should proceed any further. In any case, D has suffered no prejudice from the delay.”[15]

E.  The Abusive Litigation Conduct Ground

9.I consider the Abusive Litigation Conduct Ground first.

10.As noted above, Mr Law gives this ground the label of Inconsistency Ground.

11.I do not want the label to cause any distraction to the true issue involved. Neither side advocates the proposition that mere inconsistency in a party’s case would per se justify striking out[16]. This should be stated so that it does not get in the way of the discussion proper.

12.The scope of ACC’s complaint in the present regard is much more than one on mere inconsistency. The main basis is the abusive conduct on the part of Chen HQ of having put forward “diametrically contrary cases on oath” on a particular issue, namely “whether there is some agreement or understanding between him and (inter alios) the 4 Shareholders entitling him to some right or interest to the Subject [CSI] Shares”.

13.That complaint has been identified and made clearly in Wu/Aff3[17], that:

“… Chen HQ has advanced multiple inconsistent cases as to the nature and scope of his alleged rights over the Subject Shares, and the circumstances in which he allegedly came to acquire such rights.”

14.As submitted by Mr Chan in his written reply[18], which I agree, the cases which Chen HQ has put forward are both factually inconsistent, and legally “mutually exclusive or impossible”[19]. I refer to my discussions in the 16/3 Decision.

15.That issue is also crucial to Chen HQ’s case against ACC because, depending on the answer to the same, the 4 Shareholders might not have acted in breach in the SPGA at all, and if not, there would have been no breach for ACC to have procured, procurement of breach being the cause of action which Chen HQ is suing ACC for[20]. It is also crucial to Chen HQ’s pleaded case that ACC has “otherwise wrongfully interfered with [P’s] contractual rights under the SPGA, with full knowledge of the existence and terms of the SPGA and that [P] held security interests over the SPGA Shares.”[21]

16.In his written submissions, Mr Law says that this Court has previously held that “the Impugned Element (and hence P’s overall case) has morphed across different proceedings” (emphasis added).

17.The word “morphed” was not used by me. My view of Chen HQ’s conduct was worse than that. I observed and found in the 16/3 Decision that he in the 962 Proceedings ran the Loan/Conditional Purchase Case. When sought to be joint in the Trust Actions, he put forward the Purchasing Agent Case. I found that the contradictory versions were both given by way of affirmation, and are irreconcilable. I found further that in the SoC, Chen HQ is no longer alleging that the 11 Representatives were purchasing on his behalf[22]. He claims at §6.5 that he has an option “to choose between repayment of the Loans by cash and by transferring to the Plaintiff all the CSI Shares and interests therein acquired under their respective SPAs with the Employees”. I found that the Option Case is again irreconcilable with the Purchasing Agent Case.

18.The changes did not simply morphed, if that word was used to represent any gradual change of Chen HQ’s cases. Different, contradictory and irreconcilable cases have simply been put forward in different proceedings.

19.I reiterate the fact that the Court of Appeal has refused Chen HQ’s application for leave to appeal against my decision refusing the Joinder Application and the Injunction Application. In particular, in the CA Refusal:

(a)  Chu JA recited my findings that the different cases run by Chen HQ were contradictory and irreconcilable, that the various contradictory and inherent incredible cases run by Chen HQ impacted directly on his case against the 962 Ds and ACC, and that it was plan and obvious that the proposed claim against the 962 Ds was not viable. Her Ladyship concluded that Chen HQ had failed to demonstrate that this Court erred in law or was plainly wrong in refusing the Joinder Application;

(b)  Chu JA further recited my explanation as to why the contradictory and inherently incredible cases put forward by Chen HQ adversely impacted his case against both the 962 Ds and ACC, and that they demonstrated that there was no basis for granting injunctive relief against ACC. Her Ladyship went on to conclude that Chen HQ had also failed to demonstrate that this Court was plainly wrong in refusing the Injunction Application.

20.Chen HQ’s change of cases continues even after my 16/3 Decision and the CA Refusal. In Chen/Aff5, he abandons his pleaded Option Case, and changes it to the Purchasing Agent Case[23].

21.He has failed to tender any explanation for the multiple shifts. In Chen/Aff5, he simply says[24]:

“9. In paragraph 9 [sic.][25] of [Wu/Aff3], Madam Wu alleges that I have advanced multiple inconsistent cases as to the nature and scope of my rights over the Subject Shares, and the circumstances in which I came to acquire such rights. Madam Wu then alleges that the Defendant’s legal representatives will make submissions on such inconsistencies and refuses to elaborate on the ground.

10. Without prejudice to any legal submissions to be advanced on my behalf, there is no dispute that the Loan Agreements and the SPGAs, the two key sets of documents in this action, have been signed and hence irrespective of any inconsistencies in my oral testimony, it is clear that the parties must have entered into some binding rights and obligations and incredibility cannot be a complete answer to this dispute.”

22.He then seeks to rely on the arbitration awards that he has obtained in the arbitrations which he started in the Mainland against 10 of 11 Nominees. His cases were that each of those 10 Nominees was “my purchasing agents to purchase the CSI Shares from the Employee Shareholders”[26]. He says that awards were in February 2022 made in his favour, the effects of which are that “the Loan Agreements were, on true construction or in substance, agency agreements whereby the Nominees were appointed as my purchasing agents.”[27]

23.But if the Nominees were in fact his purchasing agents, Chen HQ would have upon the purchases acquired through them as his agents interest in CSI Shares. He has however on another previous occasion, also on oath, denied that. As observed by G Lam J in Lam J 31/5 Reasons at §20[28]:

“… if Chen HQ had indeed acquired the employee-plaintiffs’ interests in the CSI shares in question from the outset, there might be requirements under securities regulations such as for disclosure of interest, since CSI held a 25.09% interest in the listed company, China Shanshui Cement Group Ltd. In the receivership application before Mimmie Chan J, when faced with the criticism that he had not made any disclosure of interest filings, Chen HQ categorically said he had ‘not yet acquired the Purchased Shares’, which is to be contrasted with his statement in the joinder application in the Trust Actions that he had ‘become the full beneficial owner of the CSI Shares … from around March 2017’. Moreover, the point had been raised by the defendants before Mimmie Chan J that Chen HQ was a front-man for Tianrui. If in fact Chen HQ had already purportedly acquired interests in CSI shares, that would bring into sharp focus whether or not the whole transaction was an attempt by Tianrui to circumvent any obligation to make a mandatory general offer under the Takeover Code, which would be relevant to whether the court’s discretion should be exercised to assist Chen HQ by appointing interim receivers.”

24.Mr Chan submits[29] that the motive behind the numerous changes to Chen HQ’s story is an opportunistic one to gain what Chen HQ or his backers believed to be strategic advantages in the fight for overall control over CSCG and CSI. In my view, Mr Chan is justified in the making of those submissions, which I accept.

25.Mr Law cannot argue against those findings and conclusions. To be fair, he does not seek to. He contends that the “inconsistency”, and accordingly any abusing arising, only applied to the unwritten Impugned Element, so that any abuse would be removed by preventing P from relying on the Impugned Element, and that as the existence of the Loan Agreements and the Share Pledge Agreements is not in dispute, Chen HQ must be allowed to pursue his Documents-based Case, in respect of which there are triable issues.

26.Mr Law hence effectively accepts that there has indeed been abusive conduct on Chen HQ’s part – just that according to Mr Law’s submissions, the abuse can be “removed or subverted”.

27.In the context of a party running inconsistent cases, the rationale behind and scope of the doctrine of abuse of process has been considered in the Canadian decision of Mystar Holdings Ltd v 247037 Alberta Ltd [2009] ABQB 480, which has in turn been considered and applied by Deputy Judge Anson Wong SC in Chan Chun Chuen v Kao, Lee & Yip (HCA 597/2015, 12 October 2017). That doctrine assists inter alia in the promotion of the integrity of the administration of justice. As summarised by the learned Deputy Judge:

“28. In Mystar, the plaintiff sued the defendants for 100% interest in a hotel purchased pursuant to a joint venture agreement. The defendants argued that the plaintiff had abused the legal process by adopting a position that was inconsistent with the position taken by it in a previous action where it asserted that it had lost 50% interest in the hotel.

29. In dealing with the defendants’ objection, Brooker J made the following observations:

"[44] I agree that an applicant who alleges that certain pleadings constitute an abuse of process bears a heavy burden. I also agree with the Court's comments in Brewers Distributors that it must be plain and obvious that the claim amounts to an abuse of process of the court before it can be struck [out].

…

[46] I agree with the Ontario Court of Appeal that ‘abuse of process is essentially a fairness doctrine’. The Court must also ask itself whether, in the circumstances, it would be fair to allow the action in question to proceed.

…

[49] In general, I am persuaded that a party is not free to deliberately argue diametrically inconsistent facts in various actions, thus knowingly advancing irreconcilable positions which are not articulated as alternative claims. Whether this pronouncement has any application to the facts of this case remains to be determined.

…

[53] I am in agreement with the Court's finding in Chevron that in certain circumstances, taking contrary positions on the same issue in separate proceedings may constitute an abuse of process and that ‘what constitutes an abuse of process may vary with the circumstances of each case’.

…

[[61] [30] Finally, I not agree with the Respondent's assertion that the effect of an inconsistent pleading must be somehow ‘discounted’ if the action in which it is plead is not pursued to judgment. The Respondent submits that the loss of the 50% interest claimed in the Bad Faith Claim was not pursued past service of the Notice to Produce and that the claim was subsequently discontinued. The Respondent submits that it therefore made no use of the Court's process to recover this amount. As such, the Respondent submits that it did not obtain any ‘benefit’ on account of these pleadings. In so claiming, it also asserts that it did not use the allegations in the Bad Faith Action to obtain a more favourable settlement in the Coverage Action.]

[62] The doctrine of abuse of process assists in promoting the ‘integrity of the administration of justice’. On the facts before me, [the Respondent], with full knowledge of the facts, should not be able to advance a claim that is diametrically opposed to its earlier position. In these circumstances, the integrity of the justice system would be no less compromised simply because the initial claim was not followed though [sic.] to judgment.

[63] This does not mean, as the Respondent suggests, that a factual pleading will forever and irrevocably bind a party in all subsequent pleadings. Rather, it means that, if a party, with full knowledge of the facts (thus distinguishing itself from a Potter scenario) chooses to argue irreconcilable facts in its pleadings, and where such pleadings are clearly not made in the alternative, allowing such a party to continue pursuing an incompatible claim may constitute an abuse of process." ”

28.In the above regard, I respectfully refer also to Chu Yue Bun v Lai Shiu Woon [2021] HKCA 1929 at §35(2), that:

“It may be an abuse of process for a party, with full knowledge of the facts, to advance a claim that is diametrically opposed to its position taken in an earlier set of proceedings. The abuse lies in its effect on the integrity of the administration of justice, which would be no less compromised even if the previous inconsistent allegation was not followed through to judgment, particularly when such previous allegation was of some significance. (Chan Chun Chuen v Kao, Lee & Yip[31] at §§ 30, 78)”

29.Subject to Mr Law’s submissions on the removal or subversion of the abuse so that he submits Chen HQ should be allowed to run his Document-based Case (which submissions I will consider next), Chen HQ’s conduct falls plainly within the category of abuse such that the SoC is liable to be struck out.

30.In support of his submission, Mr Law relies on the decisions of Chan Chun Chuen v Kao, Lee & Yip before the Court of First Instance[32] and the Court of Appeal[33]:

(a)  In that case, the learned Deputy Judge was concerned with an application by the defendant to strike out the plaintiff’s statement of claim therein. Materially, the plaintiff pleaded in §4 that “By an agreement between the Plaintiff and the Defendant (in particular via Mr Yip Wan Tak) concluded orally in or around mid-1993 and/or to be inferred from conduct between the Plaintiff and the Defendant (in particular via Mr Yip Wan Tak) since around mid-1993, the parties agreed on the following terms …”[34]. The learned Deputy Judge held that whilst the plaintiff’s plea on the conclusion of an oral agreement was diametrically inconsistent with his case and allegations advanced in a previous set of judicial review proceedings (the “JR Application”)[35], his allegation that he placed trust and confidence on the defendant was not. In the end, the learned Deputy Judge ordered only the underlined portion of §4 be struck out;

(b)  The defendant appealed. They contended that the whole of §4 of the statement of claim should be struck out so as to include the further or alternative allegation of an agreement “inferred from conduct between the Plaintiff and the Defendant (in particular via Mr Yip Wan Tak) since around mid-1993”;

(c)  The Court of Appeal refused leave, the main reasons for which were set out by Kwan JA in §§10 to 12, that:

“10. The judge had also said in the Decision (at §43) that ‘Ms Eu[36] is plainly right in not making such suggestion [that the alleged agreement to be inferred from conduct is directly contrary to the plaintiff's case in the JR Application] since … reference was in fact made to the existence of the Informal Arrangement in the JR Application.’

11. In raising this contention in the intended appeal, the defendant is in effect seeking to retract from its previous position.

12. The judge does not think it is open to the defendant to appeal against the Decision so as to strike out an allegation it had chosen not to pursue. We agree entirely with the judge. Where the basis of striking out is that the position adopted in present proceedings is ‘diametrically inconsistent’ with the case adopted in previous proceedings, it is incumbent on the applicant to identify with clarity specifically which parts of the pleading are said to be so inconsistent. It is no answer at all to say that the summons seeks to strike out the entirety of the statement of claim, or that another part of the supporting affidavit mentioned the Informal Arrangement referred to in the JR Application, or that parts of the skeleton submissions of both parties deployed before the judge covered the Informal Arrangement. There is no getting away from §17 of the supporting affidavit and §13 of the defendant's skeleton argument that the defendant had stated clearly that the ‘relevant pleas … which run contrary to the Plaintiff's case in the judicial review proceedings’ are only in respect of the alleged oral agreement made in or around mid-1993, and had deliberately excluded the other allegation concerning the agreement to be inferred from conduct.”

(d)  Hence, the plaintiff’s pleas in that case comprised one based on the existence of an oral agreement, and alternatively one based on an agreement inferred from conduct. They were expressly pleaded to be in the alternative. The defendant did not say that that alterative plea was inconsistent with the plaintiff’s case in the JR Application, was outwith the plaintiff’s application to strike out, and was hence not struck out.

31.The above are to be contrast with Chen HQ’s case as pleaded in the SoC. He has not pleaded any so-called Document-based Case. The “common understanding” and the documents are inextricably linked. The following may specifically be noted:

(a)  In §§4 and 5 of the SoC, Chen HQ pleads certain discussions between him, the Minority Shareholders[37] and the 11 Nominees, whereby he and the Minority Shareholders devised a mechanism such that “whether to acquire the Employees’ CSI Shares acquired via the sale and purchase agreements or to recover the loans would be at the option of [P]”[38];

(b)  In §§6, 9 and 10 of the SoC, Chen HQ then pleads, relevantly:

“6. In or around August 2015, the Minority Shareholders, the 11 Nominees and [P] reached the following common understanding and the mechanism to give effect to such common understanding:-

6.1. It was a common understanding that the 11 Nominees would enter into separate sale and purchase agreements with the Employees (“SPAs”) and, in the event that the Trust Action were successfully determined in favour of the Employees against Zhang, the 11 Nominees would procure the transfer to the Plaintiff of all the CSI Shares and the interests therein acquired via the SPAs.

6.2. Further, it was part of the said common understanding that, for the purpose of paying the consideration for the Employees’ CSI Shares (“Share Consideration”), the Plaintiff would make loans to the 11 Nominees in an aggregate amount equivalent to 70% of the total Share Consideration (“Loans”). This was implemented by means of 11 loan agreements entered into between [P] on the one hand and the 11 Nominees respectively on or about 17 August 2015 (“Loan Agreements”).

…

6.4. The 11 Nominees further entered into 11 Share Pledge Agreements respectively with [P] on or about 17 August 2015 (“Share Pledge Agreements”), whereby the 11 Nominees agreed to mortgage or charge all their respective CSI Shares and interests therein to [P] as security in respect of the Loan Agreements.

6.5. The combined effect of the aforesaid common understanding, the Loan Agreements and the Share Pledge Agreements is that, in the event of the Trust Action being successfully determined in favour of the Employees, [P] would have an option to choose between repayment of the Loans by cash and by transferring to [P] all the CSI Shares and interests therein acquired under their respective SPAs with the Employees (including their respective CSI Shares).

6.6. As an additional security for the 11 Nominees’ obligations under the Loan Agreements, each of the Minority Shareholders entered into and/or agreed to enter into a Share Pledge and Guarantee Agreement dated 17 August 2015 (“SPGA”) with [P], whereby the Minority Shareholders agreed to mortgage and/or charge their respective shares in CSI (“SPGA Shares”) to [P].

6.7. The 11 Nominees, by conduct, assented to the aforesaid common understanding …

…

9. Pursuant to the common understanding and agreements as pleaded in Paragraph 6 above, on or around 17 August 2015 [P] and the Minority Shareholders entered into the SPGA dated 17 August 2015.

…

10. By reason of the SPGA, [P] has by or around 17 August 2015 acquired a security interest in and/or in respect of the SPGA Shares (including the Subject Shares), in the form of an equitable mortgage and/or charge …”

(c)  As can be seen from the above, at various places, the documents are pleaded to be entered into to give effect to the common understanding, or to implement it;

(d)  When looking at the documents, and when considering Chen HQ’s case arising, one simply cannot ignore any unwritten common understanding, and the factual background which he says led to them;

(e)  The documents cannot be looked at in isolation, as Mr Law is seeking to ask the Court to do;

(f)  Further, I have set out ACC’s basis of the present application as stated in Wu/Aff3. This is not like the position in Chan Chun Chuen wherein the plea of agreement by conduct had become, as a result of the affirmatory evidence before and submissions made to the Court, outwith the application;

(g)  Mr Chan submits that P’s attempt to confine his abuse to what he (P) calls the “unwritten” aspects of the contractual relationship is wholly artificial and unsustainable. In my view, Mr Chan’s submissions are justified, which I accept.

32.Related to the above is Mr Law’s submissions that Chen HQ should be afforded the opportunity to amend, even though the formulation of the amendment is not at this stage before the Court:

(a)  Mr Law relies on Total Lubricants Hong Kong Ltd v Christophe de la Cropte de Chanterac (HCA 1694/2008, 15 December 2009) §14. That paragraph should however be read in conjunction with §15, which 2 paragraphs read as follows:

“14. First, if a pleading is capable of being cured by amendments, it should not be struck out. An opportunity to amend should be given instead. However, if the pleading is so defective that no amendment can cure it or if the proposed amendment is incapable of improving the defects, the pleading is liable to be struck out and the proposed amendment should be refused.

15. Second, when a party seeking to amend his pleadings in order to save it from being struck out, the proposed amendment should be properly and exactly formulated, includes all necessary averments or mandatory particulars and constitutes a full and complete plea of a reasonable cause of action.”

(b)  No proposed amendments are before this Court;

(c)  No reason has been put forward to explain the absence of any proposed amendments. I can hardly see any. The Summons was taken out more than 6 months ago. As mentioned above, Mr Law effectively accepts that there has been abusive conduct on the part of Chen HQ. He seeks to avert striking out by asking the Court to consider a case different from what he has pleaded. According to his pleaded case, the common understanding and the documents are intertwined and inextricably linked. If there is any case in which the production of a proposed amended statement of claim is vital, this would be the one;

(d)  The failure to produce any draft amendment renders any request for a chance to amend a hollow one;

(e)  Mr Law further submits that if Chen HQ is to be allowed to run his Document-based Case, there would have been triable issues. But with respect, that is putting the cart before the horse. Issues are to be identified and framed by pleadings. No Document-based Case has been formulated by any draft pleadings. One simply cannot even start to consider what the issues are, or whether they are triable ones;

(f)  For the above reasons, on the facts before this Court, I have been shown no justification or utility in affording Chen HQ any opportunity to put forward any proposed amendments.

33.There is a further point as to whether any abuse on the part of Chen HQ can in any event be cured by amending his case[39]. In my view, this is again not a point which can be considered and decided in vacuum without the formulation of the proposed amendment before the Court. The consideration of the issue may include balancing the harm to the integrity of the administration of justice by allowing the culpable party to continue, and the possible injustice of shutting him out, particularly if a viable amended case has been demonstrated. But in the present case, no proposed amendment has been placed before the Court. The previous abusive conduct on the part of Chen HQ has been significant. As has been pointed out above, he continues to shift his case even after the 16/3 Decision and the CA Refusal. Doing so is abusive. On the state of the case before this Court, the mere putting forward of a (at best) theoretic Document-based Case without any precise formulation does not negate or diminish Chen HQ’s previous abusive conduct. Acceding to any request for a chance to attempt to run an unformulated and hitherto unpleaded case through simply overlooking the previous significant abuse in the name of removing or subverting them is no less abusive, and the integrity of the administration of justice no less compromised (see by way of illustration [61]-[62] of Mystar).

34.For the above reasons, on the Abusive Litigation Conduct Ground alone, even in the absence of any support by the other grounds, I am of the view that the SoC ought to be struck out and the claims made therein dismissed.

F.  The Factual Ground, the Delay Ground and the Proof of Loss Ground

35.The discussions and reasoning above equally apply to the Factual Ground. It clearly supports the Abusive Litigation Conduct Ground.

36.However, if the Factual Ground is to be looked at in isolation, the disputes could become facts-sensitive, and the case may not be a clear and obvious only for striking out.

37.As I have recorded above, Mr Chan is not pushing the position that the Factual Ground, Delay Ground and Proof of Loss Ground may each by itself support an order of striking out.

38.Specifically in relation to the Delay Ground, given the procedural history of the case, I do not find the delay to be of an extent which whether by itself or when considered together with the other grounds renders the case a clear and obvious one for striking out.

39.Equally, in respect of the Proof of Loss Ground, given the involvement of Mainland law, the issue of “double actionability”[40], and the quia timet nature of the action, I do not find it to be of sufficient clarity whether by itself or when considered together with the other grounds renders the case a clear and obvious one for striking out.

G.  Overall disposition

40.For the above reasons, I order that the Writ and SoC be struck out and Chen HQ’s claims against ACC as set out therein be dismissed.

41.On costs, I make a costs order nisi that the costs of the entire action, including those of and occasioned by the Summons (with certificate for 2 counsel in that regard) be to ACC, to be taxed if not agreed (which counsel agreed, if the Summons is to be allowed, should be the better course compared with summary assessment given the involvement of the costs of the entire action).

42.Any application for variation should be made by letter to this Court within 7 days from the date of the handing down of this Decision, upon receipt further directions would be handed down with the view of dealing with the application on the papers.

Mr Law Man-Chung SC leading Mr Danny Tang, instructed by Gallant,
    for the Plaintiff

Mr Abraham Chan SC leading Mr Alexander Burg, instructed by Dechert,
    for the Defendant