Wang Yuexian v. Xinyang Maojian Group Ltd Formerly Known As China Zenith Chemical Group Ltd

HCA 231/2022

[2023] HKCFI 3236

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 231 OF 2022

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BETWEEN

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DECISION

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THE APPEAL

1.This is the defendant’s appeal against the summary judgment granted by Master Elizabeth Cheung on 13 April 2023, under which the defendant had been ordered to pay the plaintiff the sum of $5,500,000 (“the Decision”).

BACKGROUND OF THIS ACTION

2.The procedural background of the present appeal is quite peculiar, and I will summarise the same as follows.

3.The plaintiff commenced this action on 22 February 2022.  Her claim is straight-forward.  She alleged that:

(1)  By a written agreement entered into between her and the defendant on 4 December 2013 (“the Purchase Agreement”), it was agreed that she shall purchase a bond issued by the defendant in the principal sum of $10,000,000;

(2)  Pursuant to the Purchase Agreement, she had paid a sum of $10,000,000 in total, and the defendant had issued a bond in the name of the plaintiff in the principal sum of $10,000,000 (“the Bond”);

(3)  Pursuant to the terms of the Bond, the date of redemption of the Bond shall be 96 months after the date of issuance of the Bond, which should be on 6 December 2021 (“the Redemption Date”).  The defendant shall automatically redeem the Bond by paying the principal sum of $10,000,000 together with interest at 4% per annum;

(4)  In breach of the terms under the Bond and/or the Purchase Agreement, no payment of the said principal of the Bond nor interest has been received by the plaintiff;

(5)  The plaintiff has suffered damages and/or loss as a result of the defendant’s aforesaid breach in the total sum of $13,200,000;

(6)  The plaintiff therefore claims for $13,200,000 against the defendant.

4.The defendant then filed its Defence on 19 May 2022.  Although the defendant admitted that it had received the said $10,000,000 as payment for the principal of the Bond, it denied that the plaintiff is entitled to the relief claimed.  It was pleaded therein that:

(1)  Pursuant to an agreement between the plaintiff and the defendant which was entered into on around 4 December 2013 (“the Waiver Agreement”), the parties agreed that the plaintiff shall waive payment of an amount of $4,500,000 from the principal sum of the Bond payable by the defendant, and the defendant shall only be required to pay the balance of the principal sum of the Bond (i.e. $5,500,000) on the Redemption Date on the conditions that:

(a)  The defendant prepays the interest for the Bond in the sum of $3,200,000;

(b)  The defendant pays the sum of $2,600,000 to a Praetor Capital (HK) Limited as consultancy fees;

(2)  Pursuant to the Waiver Agreement:

(a)  the plaintiff executed a Deed of Waiver (“the Deed of Waiver”) and an Interest Prepayment Instructions;

(b)  the defendant prepaid the interest for the Bond to the bank account designated by the plaintiff, namely, a bank account held by IMAGINDUSTRIES Limited and consultancy fees on 18 December 2013;

(3)  Although the defendant had repeatedly indicated (including by way of its then solicitors’ letter dated 20 December 2021) to the plaintiff that, pursuant to the Waiver Agreement, the amount due and payable upon the redemption of the Bond should be $5,500,000 only, the plaintiff commenced these proceedings.  

5.In her Reply, the plaintiff denied that she had ever entered into the Waiver Agreement nor did she execute the Deed of Waiver. She also averred that she “does not own, control or have any knowledge of or involvement with IMAGINDUSTRIES Limited”[1] or its bank account directly or indirectly.

6.On 30 November 2022, the plaintiff took out a summons under which she applied for partial summary judgment in the sum of $5,500,000.[2]

7.The defendant resisted the plaintiff’s summary judgment application before Master on two main grounds:

(1)  As the defendant’s obligation to pay under the Bond is indivisible, the plaintiff is not entitled to sever her cause of action and make a claim for $5,500,000 only;

(2)  The plaintiff’s application for summary judgment was premised upon the defendant’s alleged admission of its liability to pay $5,500,000, which was in turn based upon the existence of the Waiver Agreement.  It is impermissible for the plaintiff to rely on the defendant’s version of facts, which she denies, as the basis for summary judgment.

8.These arguments were rejected by the learned Master who granted summary judgment accordingly on 13 April 2023.

9.The defendant then filed its Notice of Appeal to Judge in Chambers on 18 April 2023.

10.By consent, this Court ordered on 23 June 2023 (“the Directions”) that the appeal be dealt with on papers, and devised a timetable for the lodging of written submissions by the parties (“the Timetable”), pursuant to which the defendant was to lodge and serve its written submissions by 14 July 2023.

11.After the Directions were given, the defendant took out a summons on 10 July 2023 for leave to amend the Defence (“the Amendment Summons”), which was returnable before a Master on 17 July 2023 (“the Call-Over Hearing”). The amendment mainly sought to introduce a new line of defence in relying on Clause 5.2 of the Bond which provided that “未收到贖回債券的債券憑證，發行人毋須承擔贖回任何債券之責任”.  It was alleged that the defendant has no obligation to redeem the Bond and/or the Bond Certificate until and unless the plaintiff presents the Bond Certificate to the defendant for redemption.  As the plaintiff has never done so, the defendant alleged that it had no duty to pay any sum under the Bond (“the Clause 5.2 Defence”).

12.The Amendment Summons was supported by the 3^rd Affirmation of Ma Kin Ling, in which it was said, among other things, that:

(1)  The plaintiff has not presented the Bond Certificate to the defendant at all[3];

(2)  By reason of the execution of the Deed of Waiver in accordance with the Waiver Agreement, the defendant’s obligation under the Bond to redeem it at $10,000,000 has been discharged and substituted by an obligation to redeem it at the principal sum of $5,500,000 instead[4];

(3)  There was a good rationale for the requirement of the plaintiff’s presentation of the Bond Certificate under Clause 5.2 of the Bond[5].

13.As the Call-Over Hearing was imminent, this Court, upon being notified by the defendant’s solicitors about the Amendment Summons, directed on 12 July 2023 that the Amendment Summons should be heard by Master as scheduled, and that the Timetable should be revised if necessary.

14.However, at the Call-Over Hearing, the learned Master accepted the submission of the plaintiff’s counsel and directed that the Amendment Summons be adjourned sine die with liberty to restore pending the determination of this appeal. 

15.In the meantime, the defendant had already lodged and served its written submissions pursuant to the Timetable on 14 July 2023, in which the defendant’s counsel relied heavily on the Clause 5.2 Defence.

16.The plaintiff therefore took the point that the defendant could not rely on the Clause 5.2 Defence as it was not part of the defendant’s pleaded case.  In view of such an argument, the plaintiff has not made submissions on the merits of such a defence.

17.Since the way by which the present appeal has been conducted and the procedural development of the case have led to various issues which this Court has not been sufficiently assisted on by counsel, further directions have been given to fix an oral hearing.  Parties had been directed to address the Court on various matters/concerns, including the Amendment Summons, at the oral hearing.  I am grateful for counsel’s further assistance, and on the basis of which I have made this Decision.

SUMMONS TO FILE SUPPLEMENTAL AFFIRMATION

18.On 15 November 2023, the defendant filed a summons (“the Further Evidence Summons”) and asked for leave to file and serve the 4^th Affirmation of Ma Kin Ling in support of the defendant’s appeal.  This is a short affirmation, in which he deposed that during his review of the file on 13 November 2023 for the purpose of the hearing of the appeal, he discovered that the copy of the Bond exhibited by the plaintiff (“WYX-3”) is different from the Bond that the defendant had in its records.  He stated that the interest rates appearing in the two copies of the Bond are different.  He therefore sought to exhibit the copy of the Bond which he found. 

19.This application had been dismissed in the appeal hearing.  For record, I include the reasons of dismissal below.

20.Order 58 rule 1(5) of the Rules of the High Court (Cap.4A, Laws of Hong Kong) (“RHC”) provides that:

“No further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under this rule except on special grounds.”

21.Given the same words “special grounds” are used in both Order 58 rule 1(5) and Order 59 rule 10(2) of the RHC, it is now well-established that the same test should be applicable to the aforesaid rules.  In other words, before new evidence can be admitted in an appeal against Master’s decision, the conditions laid down in Ladd v Marshall [1954] 1 WLR 1489 have to be satisfied.  Under those conditions, further evidence is admissible on appeal only when such evidence:

(1)  could not have been obtained with reasonable diligence for use at the hearing below;

(2)  would or might, if believed, have an important influence on the result of the case, though it need not be decisive; and

(3)  is apparently credible though it need not be incontrovertible.

22.In Hong Kong Civil Procedure 2024, Volume 1, it is stated in Commentary §58/1/3 (page 1234) that:

“The conditions will require some modification in the situation arising on an appeal from a summary judgment, adopting what Lord Bridge said in Langdale v Danby [1982] 1 W.L.R. 1123 (at 1133B – F) about the proper approach to be adopted in the context of O.14 proceedings:

‘In the situation arising on an appeal to the Court of Appeal from a summary judgment, the application of these conditions and perhaps the conditions themselves will require some modification. It may well be that the standard of diligence required of a defendant preparing his case in opposition to a summons for summary judgment, especially if under pressure of time, will not be so high as that required in preparing for trial. The second and third conditions will no doubt be satisfied if the further evidence tendered is sufficient, according to the ordinary principles applied on applications for summary judgment, to raise a triable issue. But I can see no injustice at all in requiring a defendant to use such diligence as is reasonable in the circumstances to put before the judge on the hearing of the summons, albeit in summary form, all the evidence he relies on in defence, whereas it would be a great injustice to the plaintiff to allow the defendant to introduce for the first time on appeal evidence which was readily available at the hearing of the summons but was not produced.’ ” (emphasis added)

23.In my view, the above part of the commentary has to be read cautiously because the culture of the Hong Kong courts has changed since the Civil Justice Reform in 2009.  It may well be going too far to say that the Ladd v Marshall conditions “will” require some modification as if this modification is applicable to every case.

24.In Bank of New York Mellon v Sun Jiangrong [2016] 1 HKC 137, Poon JA (as Poon CJHC then was), having considered Langdale v Danby [1982] 1 W.L.R. 1123, Fortis Insurance Company (Asia) Limited v Lam Hau Wah Inneo (CACV 86/2010, unreported, 28 October 2010) and Halifax Plc v Gould & Swayne & Others [1999] PNLR 184, explained that:

“25. In our view, when considering the first condition of the Ladd v Marshall test, the context in which the application for leave to adduce fresh evidence arose is crucial. For the degree of reasonable diligence which the court expects the defendant to have exercised in his effort to obtain the evidence in question must be assessed against the overall circumstances of the case. The court will take into account all relevant factors, such as the time available to the defendant to gather the evidence, the nature of the evidence, the difficulty encountered in obtaining the evidence, the effort that the defendant had used in gathering the evidence. (The list is of course not exhaustive.)

26.  We do not think that merely because it is an appeal from a summary judgment or proceedings not amounting to a trial, the requirement of reasonable diligence will be automatically relaxed. It is only one of the factors that the court will bear in mind.  If, for example, in an application for summary judgment where the defendant is time-pressed to obtain the evidence in support of his defence and was unable to do so because of the shortage of time, the appellate court might be more inclined to grant him the indulgence to adduce fresh evidence on appeal.  (But even then, as Lord Bridge made it explicitly clear, that does not relieve him from his duty to use such diligence as is reasonable in the circumstances to put before the judge below all the evidence that he seeks to rely on, albeit in a summary form.)  However, if the defendant has been given ample time to gather all the evidence in opposition but has unreasonably failed to do so, we doubt very much if an appellate court would be prepared to relax the reasonable diligence requirement on his application to adduce fresh evidence on appeal simply because it is an appeal from summary judgment.”

25.The exhibit “WYX-3” was produced by the plaintiff by virtue of his 2^nd Affirmation which was filed on 30 November 2022 together with her Order 14 summons.  In other words, the exhibit had been there for a long time.  On the other hand, Mr Ma said he had discovered something useful from his file when he was preparing for the appeal hearing. It is difficult to understand (and Mr Ma had failed to explain by way of affirmation) why this “new” evidence could not have been obtained with reasonable diligence for use at the hearing before Master.  It is undisputable that the Bond is the most important document in the present case.  By any standard, Mr Ma was obliged to go through his file at an early stage, rather than leaving it until 13 November 2023 (i.e. 4 days before the appeal hearing).  If he had done it earlier, he would have been able to rely on the “new” evidence at the Order 14 hearing before Master.

26.Furthermore, after the plaintiff’s Affirmation in support of the Order 14 application was filed on 30 November 2022, the defendant had obtained various extensions of time to file its affirmation in opposition, and at the end of the day it was only obliged to file and serve its affirmation by 6 March 2023.  Taking into account the nature of the “new” evidence which the defendant was seeking to introduce, I did not agree that the time available to Mr Ma was so tight that the Court should relax the requirement of reasonable diligence.

27.Hence, the Ladd v Marshall first condition could not be satisfied herein.

28.For the above reasons, the defendant’s application made under the Further Evidence Summons had been dismissed with costs at the hearing.

THE AMENDMENT SUMMONS

29.Ms Queenie Lau (together with Ms Tina Mok) informed this Court at the hearing that, as far as the defendant’s application for amendment of the Defence is concerned, the plaintiff would take the following stance:

Amended Defence	plaintiff’s stance
First part of §2	Not object
Second part of §2	Object
§4	Not object
§6.1	Object
§6.2	Not object
§7	Object
§7.2	Not object
§7.3	Not object
§7.6	Object
§9.4	Object
§10	Object
§11	Object

30.With the consent of the parties, this Court would consider the objected parts of the draft Amended Defence on de bene esse basis.

31.In respect of those parts of the proposed amendments which the plaintiff had raised no objection, leave will be granted for those amendments to be made at the end of this Decision.

32.In support of the Amendment Summons, the defendant had filed Ma Kin Ling’s 3^rd Affirmation on 10 July 2023. It is apparent that paragraphs 5.5, 6 and 8.2 thereof (see [12] above) are evidence which the defendant has relied on in support of this appeal.  However, the defendant had never sought leave to adduce such evidence in the appeal.

33.Even if the defendant has made any application as such, the application is bound to be refused anyway, because it is plain that the Ladd v Marshall 1^st condition could not be satisfied.

34.Hence, it had been made clear to the parties during the hearing that Ma Kin Ling’s 3^rd Affirmation would not be considered for the purpose of this appeal.

THE DEFENCE

35.In their skeleton submissions, Mr Kwan and Mr Nip for the defendant had put forward 5 “grounds of appeal”, which are summarised as follows:

(1)  Pursuant to the Clause 5.2 Defence (see [11] above), the defendant has no duty/liability to redeem the Bond yet;

(2)  It is not permissible for the plaintiff to seek summary judgment on the basis of the defendant’s case rather than the plaintiff’s own pleaded case;

(3)  In the event judgment is granted, it would be inconsistent with the plaintiff’s pursuit of the remainder of her claim ((2) and (3) collectively, “the Inconsistent Case Argument”);

(4)  The plaintiff asked for “damages” in the prayer of her Statement of Claim, which is defective (“the Defective Claim Argument”);

(5)  The plaintiff’s allegations that the Waiver Agreement is a fabrication and that the Deed of Waiver is forged are serious allegations of fraud, hence the present case is unsuitable for summary determination (“the Fraud Argument”);

(6)  It would be unfair if the plaintiff could obtain $5.5 million as partial judgment and at the same time continues to be in possession of the Bond Certificate (“the Unfairness Argument”).

36.With respect, it is conceptually incorrect for counsel to describe the above as “grounds of appeal” as such, because this appeal is dealt with by way of an actual rehearing of the Order 14 application, and I should treat the matter as though it came before me for the first time: Hong Kong Civil Procedure 2024, Volume 1, paragraph 58/1/2.

37.Be that as it may, I will deal with the above grounds in turn below.  Before I do so, I shall set out the principles applicable to Order 14 applications.

LEGAL PRINCIPLES

38.The principles are trite.

39.In Li Chuen Kwai v. Po Lam Construction Development Limited (HCA 2376/2013, unreported, 24 September 2014), it was held that:-

“11. As far as the plaintiff’s claim is concerned:

(1) An application for summary judgment must be supported by an affidavit verifying the facts on which the claim is based [Order 14, rule 2(1), Rules of the High Court].

(2) The Statement of Claim must be good and complete in itself; any defect or omission in the Statement of Claim cannot be corrected or supplemented by the plaintiff’s affidavit. If the defect is one of substance, the application for summary judgment will be dismissed [see: Hong Kong Civil Procedure 2014 at Practice Note 14/1/5].

(3) This means that an Order 14 application has to proceed on the case as pleaded, and it is those facts (as pleaded) which have to be verified on affidavit.

(4) Where the assertions in the plaintiff’s affirmation constitute a material deviation from the plaintiff’s pleaded case, the plaintiff will have failed to verify his claim as pleaded, and summary judgment should not be granted [Lin Jan v Long Xiaobo, HCA 1516/2012 (Judgment dated 4/09/2013)].

(5) Equally, summary judgment will not be granted where the plaintiff’s affidavit evidence is materially different from and inherently inconsistent with his/her case in the Statement of Claim [see: Sin Yuk Hung v Sin Tung San, HCA 474/2013 (Judgment dated 18/12/2013)].

12. As far as the defendant’s defence is concerned:

(1) The defendant shoulders the burden to satisfy the court that he has a real or bona fide defence (ie that there are triable issues), or that there ought for some reason to be a trial of the plaintiff’s claim.

(2) However, a complete defence need not be shown. The defence set up need only show that there is a triable issue or question or that for some other reason there ought to be a trial; and leave to defend ought to be given unless there is clearly no defence in law and no possibility of a real defence on the question of fact.

(3) Although the mere assertion in an affidavit does not, ipso facto, provide leave to defend, the court will not embark upon a mini-trial of the action on paper and leave to defend will be granted unless the defence raised is so incredible or so contradicted by contemporaneous documents or circumstances that it becomes clear that the defence is a sham.

(4) The test is not whether the defendant’s assertions are to be believed, rather it is whether those assertions are believable, ie capable of being believed. If so, the defendant must have leave to defend.

(5)  Whether the defendant’s assertions are believable is a question that should be answered not by taking those assertions in isolation bur rather by taking them in the context of so much of the background as either undisputed or beyond reasonable dispute.”

40.In Time Rich 08 Limited v DBE (HK) Limited & Others [2018] HKCA 404, it was held by the Court of Appeal that:

“…in deciding whether a plaintiff is entitled to summary judgment the relevant test is whether the defendant has raised credible triable issues. If there are, the matter should go to trial. If not, judgment should be entered against the defendants. In considering whether there are triable issues, the Court will not take the defence on its face value but test it against the evidence disclosed in the affidavit including matters such as contemporaneous documents, whether the alleged defence is inconsistent with the defence previously put forward or whether the defence is only recently raised despite opportunity being given to the defendant to respond earlier. The Court will also consider the inherent probability of the defence but what the Court should not do is to conduct a mini-trial on complicated factual issues : Paul Y Management Ltd v Eternal Unity Development Ltd (CACV 16/2008)” (at paragraph 5.2) (emphasis added)

41.To raise a triable issue or arguable defence, the defendant cannot be sparing of the particulars of his defence, and then claim, as a result of his own parsimony in details, that there is an obscurity which must await trial for illumination.^[6]

DISCUSSION

The Clause 5.2 Defence

42.Clause 5.2 of the Bond provided that:

“發行人須於支付日下午4:00（香港時間）或以前，將其應支付的所有款項匯入債券持有人不時通知發行人之銀行賬戶或債券持有人登記冊於支付日前一個營業日上午11:00（香港時間）所示之債券持有人銀行賬戶，但對於發行人於支付前收到贖回通知之任何債券，發行人毋須予以支付。未收到贖回債券的債券憑證，發行人毋須承擔贖回任何債券之責任。” (emphasis added)

43.Relying on the last sentence of Clause 5.2 as highlighted above, the defendant argued that there was a condition precedent for the redemption of the Bond which had not been satisfied, and therefore there was no duty on the part of the defendant to redeem the Bond.

44.It is trite that in order to arrive at the true interpretation of a document, a clause must not be considered in isolation, but must be considered in the context of the whole of the document: Lewison on The Interpretation of Contracts (7^th edition (2020)) at §7.07.

45.In this regard, this Court’s attention has been drawn by the plaintiff’s counsel to Clause 6.3 of the Bond which provided that:

“贖回須於第8條規定之發行人地址進行。在其規定的時間和地址，進行贖回的登記債券持有人須向發行人交付相關債券憑證以供其取消，發行人須向債券持有人交付香港持牌銀行開出金額相當於應付贖回款項之銀行本票，或（按持有人要求）向該等持有人（或債券持有人提前三個營業日向發行人發出書面通知之其他人）支付該等債券的應付贖回款項。” (emphasis added)

46.I agree with the plaintiff that Clause 5.2 should not be construed in isolation but should be read together with Clause 6.3, and the combined effect of these clauses is that:

(1)  The redemption shall take place at the time specified by the defendant;

(2)  At the time of the redemption, the plaintiff and the defendant shall exchange (1) the Bond Certificate (held by the plaintiff) and (2) a cashier order for the amount to be redeemed;

(3)  If the plaintiff fails to produce the Bond Certificate at the time specified, then the defendant would not be under any obligation to redeem the Bond.

47.There is no evidence that the defendant had ever stipulated a time at which the redemption of the Bond should take place.  That is not surprising, because there had been disputes between the parties even before the Redemption Date arrived as to whether the defendant had to pay the plaintiff anything more than $5.5 million under the Bond.  According to Mr Ma Kin Ling’s evidence, their discussions started in around October 2021 and continued until around August/September 2022, when the plaintiff agreed to accept $5.5 million for the redemption of the Bond.  However, despite the plaintiff’s agreement, Mr Ma told the plaintiff that, because of ongoing legal proceedings (i.e. this action), he had to discuss the matter with the defendant’s legal representatives who would be asked to respond to the plaintiff directly. The defendant had adduced no evidence as to what happened afterwards.

48.Hence, it is a non-starter for the defendant to say that the plaintiff has failed to deliver up her Bond Certificate or that any condition precedent for repayment has not been satisfied.

49.This argument is therefore rejected.

The Inconsistent Case Argument

50.The defendant then argued that Order 14 is not the proper procedure to be used in the present case because the plaintiff is now seeking partial judgment not on the basis of the facts as pleaded in the Statement of Claim but on the facts which she had unequivocally denied in her pleadings and her affidavits, namely, that the parties had entered into the Waiver Agreement and the Deed of Waiver. 

51.It was also alleged that the grant of partial judgment on the above basis cannot be right, because the plaintiff is going to pursue for the remainder of the claim on the basis that the Waiver Agreement and the Deed of Waiver are not enforceable against her.

52.It was also submitted that the Bond is a single document which cannot be separated into two different contracts.  Hence, it was argued that it is not open for the plaintiff to seek summary judgment on one hand on the basis of the varied Bond (i.e. the Bond as affected by the Waiver Agreement), but on the other hand seek judgment for the remainder of the claim based on the unvaried Bond.

53.With respect, the defendant’s arguments must be rejected.

54.First, the defendant’s argument that judgment cannot be granted on the basis of the defendant’s case is clearly wrong in the light of the Court of Final Appeal’s Judgment in Poon Hau Kei v Hsin Chong Construction Company Limited, Taylor Woodrow International Limited Joint Venture [2004] 2 HKLRD 442 (see particularly [2], [6], [7], [11], [12], [19], [20] and [21] thereof).

55.Second, it should be borne in mind that it is all along the plaintiff’s case that the defendant is liable to pay the plaintiff the total principal amount of $10 million with interest under the Bond.  The partial Judgment of $5.5 million, if granted, is still given under the Bond according to the plaintiff’s case.

56.The Inconsistent Case Argument is therefore rejected.

The Defective Claim Argument

57.Under this head, the defendant submitted that the relief sought in the Statement of Claim is damages, but not a liquidated sum.  Since “damages” is derived from a secondary obligation, it was said that the plaintiff was obliged to plead when the Bond had been terminated so as to trigger such secondary obligation on the part of the defendant to redeem the Bond. 

58.I agree with Ms Lau and Ms Mok that the plaintiff had clearly pleaded the redemption date of the Bond, and that in breach of the Bond, the defendant had failed to make any repayment of the principal amount or interest of the Bond to the plaintiff. 

59.This argument is therefore rejected.

The Fraud Argument

60.The defendant then argued that an additional reason why Judgment should not be granted is that the plaintiff’s pleaded case which consists of serious allegations of fraud against the defendant (the plaintiff disputed the authenticity of the Deed of Waiver) should be further investigated at the trial. 

61.Moreover, it was said that, as the matter now stands, the public may have an impression that the plaintiff’s pleaded case, which consists of allegations of fraud against the defendant, has been established upon summary determination.  Therefore, it was said, fairness requires the Court to give the defendant a chance to rebut such allegations at the trial.

62.These arguments are totally without merit and can be dealt with quickly:

(1)  The plaintiff’s case is that no matter whether the Deed of Waiver is authentic or not, the defendant is liable to pay $5.5 million. In other words, the findings of the Court on such authenticity would not have any bearing on the defendant’s liability to pay $5.5 million in any event;

(2)  The possibility of misconception on the part of the public at large (even if relevant) is eliminated by the handing down of this written Decision, which should be clear that this Court has not made any finding against the defendant on the plaintiff’s allegations of fraud;

(3)  Even if partial judgment is granted herein, the defendant would still have the opportunity to rebut the plaintiff’s serious allegations of fraud.

The Unfairness Argument

63.Finally, it was submitted on behalf of the defendant that, if the plaintiff is allowed to keep the Bond Certificate in her possession even though payment of $5.5 million has been paid by the defendant pursuant to the partial judgment herein, it would be very unfair to the defendant, and it would be contrary to the rationale of the last sentence of Clause 5.2.  It appears that the defendant is suggesting that a third party may present the Bond Certificate for full payment of $10 million and under such circumstances the defendant is prone to “double jeopardy”.

64.First of all, there is simply no evidence in support of the alleged “rationale”, as the relevant evidence (paragraph 8.2 of Ma Kin Ling’s 3^rd Affirmation) has been held to be inadmissible for the purpose of this appeal.

65.In any event. I do not accept there is any “unfairness” or possibility of any “double jeopardy” as alleged even if partial judgment is entered, because:

(1)  The Bond Certificate expressly provides that:

“債券須按文據條款規定方可進行轉讓。轉讓時，必須將債券交付給發行人，由其取消並重新簽發正確的債券憑證。”

(2)  Clause 3.3 of the Bond also provides that:

“債券之任何轉讓須為債券未清償本金之全部。除經取消現有債券憑證並依照3.4條規定頒發新債券憑證外，債券持有人不得以任何形式把債券所有權的任何部分轉讓予第三者 […]”

(3)  Clause 3.4 of the Bond further stipulates that:

“債券的轉讓可通過向發行人交付正式簽署之轉讓表格以及轉讓債券憑證進行。發行人須於從債券持有人並收到該等文件後五個營業日內，取消相關現有債券，並簽發新債券憑證，以受讓人為受款人加蓋公司印章，依照3.5條規定在發行人債券持有人登記冊上將受讓人登記為轉讓後的債券持有人，並（若適用）在轉讓人憑證上背書轉讓額度。”

66.The above provisions show that the defendant’s concern does not exist at all, because the defendant would have been alerted before any transfer of the Bond to a third party could be completed.

DISPOSITION

67.To conclude, I am of the view that the defendant has raised no arguable defence to the plaintiff’s claim of $5.5 million. Hence, the appeal is hereby dismissed.

68.As far as the Amendment Summons is concerned:

(1)  I grant leave to the defendant to amend the first part of paragraph 2 and paragraphs 4, 6.2, 7.2 and 7.3 of the draft Amended Defence as there is no objection raised by the plaintiff;

(2)  I also grant leave to the defendant to add paragraph 7.6 of the draft Amended Defence, as it is a plea of legal consequence which follows from what had already been pleaded, namely, parties having entered into the Waiver Agreement and the Deed of Waiver;

(3)  Further, I grant leave to the defendant to amend paragraph 10 of the Defence by adding “(i.e. the Deed of Waiver)” as proposed;

(4)  I refuse to grant the defendant leave to amend the second part of paragraph 2 and paragraphs 6.1, 7, 9.4, 10 (first sentence only) of the draft Amended Defence because of my view that the Clause 5.2 Defence is not arguable at all;

(5)  The two proposed amendments which sought to replace “8” by “9.4” in paragraphs 10 and 11 respectively of the Defence are not necessary as the proposed new paragraph 9.4 is not allowed to be added.  Leave is therefore refused.

69.The defendant is granted leave to file and serve its Amended Defence accordingly within 14 days hereof.

70.The plaintiff is granted leave to make consequential amendment to her Reply, and shall file and serve her Amended Reply within 28 days thereafter.

COSTS

Costs of the appeal and of the Further Evidence Summons

71.I make a costs order nisi that the defendant shall bear the plaintiff’s costs of the appeal.

72.The plaintiff’s costs of the appeal and of the Further Evidence Summons shall be summarily assessed in lieu of taxation. Unless any application for variation of the aforesaid costs order nisi is made within time, the plaintiff shall lodge and serve her statement of costs within 7 days after the expiry of the said 14-day period.  The defendant shall lodge and serve its statement of objection within 7 days thereafter.  Summary assessment of the said costs will be conducted on paper (no matter whether any statement of objection is lodged by the defendant within time) thereafter.  The costs assessed shall be payable by the defendant within 14 days after assessment.

Costs of the Amendment Summons

73.I make a costs order nisi that the costs of (including the costs of the hearings) and occasioned by the amendment shall be to the plaintiff in any event, to be taxed if not agreed.

Ms Queenie Lau and Ms Tina Mok, instructed by T C Wong & Co, for the plaintiff

Mr Jonathan Kwan and Mr Thomas Nip, instructed by Wellington Legal, for the defendant