Xu Qiangli and Another v. Elabs Company Ltd

DCCJ 4489/2020

[2024] HKDC 1230

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4489 OF 2020

------------------------------------

------------------------------------

---------------------------------------

REASONS FOR DECISION

---------------------------------------

Introduction

1.At the commencement of the trial of this action, I indicated to the parties that given what was submitted in the Opening Submissions lodged by Mr Fan, Counsel for the Defendant (“D”), I would entertain any application for striking out the Statement of Claim (“SOC”) notwithstanding that no application had been made prior to trial.

2.Following a short adjournment to allow the parties to take instructions and consider their position, Mr Fan ultimately confirmed that D would take out a strike-out application. Ms Bu, Counsel for the 1^st Plaintiff (“P1”) and the 2^nd Plaintiff (“P2”) (collectively, “Ps”), indicated that if such application was made, she would seek to apply to amend the SOC. I then adjourned the trial and the hearing of the intended applications to the afternoon of the following day.

3.The applications for strike-out and amendment of the SOC were formally taken out by way of Summonses filed that same afternoon by D and the following morning by Ps respectively. Skeleton submissions were also lodged by Mr Fan and Ms Bu before the resumed hearing.

4.After having heard the submissions from Mr Fan and Ms Bu in the afternoon of the second day, I allowed (in part) D’s application to strike out the SOC and allowed (in part) Ps’ proposed amendments to the SOC. I vacated the remaining scheduled trial dates and adjourned the trial of this action to a date to be fixed in consultation with counsel’s diaries. I also made consequential directions for the further conduct of this action and for summary assessment of costs on paper.

5.I now give my brief reasons for the decision on the applications for strike-out and amendment of the SOC as well as for the costs order made by me.

Background Facts and the Parties’ Respective Case

6.On 16 December 2019, P1 was approached by email by a male alleged to be Martin Monson (“the Car Seller”) offering to sell to him a white BMW X5 3.0D X-Drive (“the Car”) for HK$300,000.00.

7.On 20 December 2019, P1 agreed with the Car Seller that after registering himself as a buyer, P1 would receive and inspect the Car and that there would not be any extra costs should, after inspection, P1 decide not to purchase the Car and return it for any reason.

8.On 24 December 2019, the Car Seller agreed to sell the Car to P1 at the reduced price of HK$250,000.00 (“the Price”).

9.In order to register as a buyer, P1 was instructed by the Car Seller to deposit the Price to a designated bank account.

10.On 27 December 2019, P2, on behalf of P1, transferred HK$249,999.52 (“the Sum”) to the bank account of the Defendant (“D”) maintained with Industrial and Commercial Bank of China (“ICBC”) (“D’s Account”) in accordance to an invoice received from a shipping company, allegedly acting for the Car Seller, as confirmed by the Car Seller.

11.Notwithstanding the transfer of the Sum, the Car was never delivered to P1.

12.On 3 January 2020, P1 was informed by email from the Car Seller that he was a scam and the Car would not be shipped to him.

13.By Writ of Summons endorsed with the SOC dated 26 August 2020, Ps commenced these proceedings against D. The only substantive relief sought is a declaration that the Sum, along with any and all interest accrued thereon since its transfer on 27 December 2019 to D’s Account, are funds held on trust for Ps and that the same should be returned by ICBC to P1 or P2 (“the Declaration”).

14.In the SOC, it is pleaded that as neither P1 nor P2 had done any business with D before, and as D had not performed any service or sold any goods to either P1 or P2, there was no justification for D to receive the Sum. Apart from this, there is no other ascertainable basis or cause of action pleaded for seeking the Declaration.

15.D’s case is that it is a company incorporated in Hong Kong carrying on the business of cryptocurrency trading. Essentially, D’s case is that it did not know of the dealings between the Car Seller and Ps. It had conducted the sale of 4.3347 Bitcoin (“the Bitcoin”) with a man named Mr Sung Tsz Hin (“Sung”). Having received the Sum being the consideration for the Bitcoin, D released the Bitcoin to Sung. According to D:

(1)  On 24 December 2019, Sung registered for an individual customer account with D on its website and had provided his Hong Kong Identity Card and bank account statement as proof of residential address;

(2)  By email dated 24 December 2019 to D, Sung indicated that he wished to trade HK$300,000.00 worth of cryptocurrencies in one day;

(3)  This was followed by D’s email requesting Sung to return a signed source of fund declaration which Sung did on the same date;

(4)  By email dated 27 December 2019, Sung informed D that he had mistakenly rendered a deposit to D’s Account in the amount of the Sum from his company, P2;

(5)  D replied on the same date requesting Sung to provide copies of the Certificate of Incorporation, Business Registration Certificate and latest Annual Return of P2 (“the Documents”), which Sung did;

(6)  Upon perusing the Documents, D was made aware that a Ms Chu Xinjing is the sole shareholder and director of P2, whom Sung claimed to be his wife and provided to D her Hong Kong Identity Card by email dated 28 December 2019, and that Sung was the Company Secretary of P2;

(7)  D being satisfied that Sung was the representative of P2, credited the Sum to Sung’s individual customer account (“the Deposit”); and

(8)  On 28 December 2020, Sung purchased the Bitcoin using the Deposit and withdrew the Bitcoin to three different Bitcoin wallet addresses.

16.In the Amended Defence, D has specifically denied that a constructive trust arose. It was averred that alternatively, any constructive trust has been extinguished by reason of D having bona fide changed its position by having sold the Bitcoin in exchange for the Sum, or further or alternatively, being a bona fide purchaser for value without notice of the alleged fraud (namely, that the Sum was not deposited by Sung or any person on behalf of Sung, but by the Car Seller purporting to be Sung).

17.In Mr Fan’s Opening Submissions, he made a number of submissions to the effect that Ps’ claim based on constructive trust to seek the Declaration could not succeed. Essentially, he submitted that:

(1)  It is well established that there is no constructive and/or resulting trust for failure of consideration. He referred to Remx Limited v Lae Technologies Hong Kong Limited [2024] HKCFI 572 at §§27-28 which cited Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 689H and Angove Pty Ltd v Bailey [2016] 1 WLR 3179 at §30. This alone is sufficient to deal with the constructive trust claim;

(2)  Whilst equity would impose a constructive trust on the fraudulent recipient when the property is obtained by fraud, it has never been pleaded that D was a fraudulent recipient of the Sum: see eg Zief Incorporated v Tekchandani Ajai Mohan [2021] HKCFI 38, §45; JSP International SRO v Alacrity Limited & Ors [2022] HKCFI 977, §§26 and 43; and RPB SA v Xinwangyi Trade Ltd [2022] HKCFI 2541, §12;

(3)  It is also well established that fraud must be distinctly alleged and sufficiently particularized; it is not sufficiently particularized if the facts pleaded are consistent with innocence: see Three Rivers District Council & others v Bank of England (No 3) [2003] 2 AC 1 at §§184-186 applied in JSP International SRO at §§28-30. At most, it has been pleaded that the Car Seller has practised a scam on Ps. The lack of any plea that D was a fraudulent recipient is fatal to the constructive trust claim; and

(4)  In any event, there not being any plea that the Sum or any traceable substitute of the Sum remains in D’s Account, this is fatal to the grant of the Declaration. Where a plaintiff seeks a proprietary remedy, it is necessary to show that the defendant has retained property in which the plaintiff can identify his or her proprietary interest: see JSP International SRO, §§31-41 and Milestone Electric, Inc v Meihoukang Trading Co Limited [2020] HKCFI 2542, §§14-15.

Whether the application for strike-out should be acceded to at this stage

18.Whilst an application for strike-out should be made promptly and as a rule before the pleadings are closed, because O 18, r 19(1) of the Rules of the District Court, Cap 336H (“RDC”) permit an application to be made “at any stage of the proceedings”, there appears to be no absolute rule against an application for strike-out at the commencement of trial. See Hong Kong Civil Procedure 2024, Vol 1, §18/19/3.

19.In Tang Woung Shiu v Tang Kun Yeung & Anor [2002] 3 HKLRD 627, at the adjourned trial of that action, during the course of the plaintiff’s opening, counsel for the defendants applied to strike out the plaintiff’s re-amended statement of claim. Recorder Kwok SC struck out the re-amended statement of claim, dismissed the application by the plaintiff to further amend the re-amended statement of claim and dismissed the action. In the learned Recorder’s reasons, he said that he declined to follow the approach in Halliday v Shoesmith [1993] 1 WLR 1 (namely that save in exceptional circumstances an application for strike-out should not be heard at the opening of the trial) and any suggestion that a line is drawn at the commencement of trial (see §§31-32). At §32, he made the pertinent comment that:

“… the duty must lie fairly and squarely on a party not to put in, and persist on the basis of, a pleading which offends against O.18, r.19. The recipient of an offending pleading cannot be under a greater duty to enforce the rule before the commencement of the trial.”

20.Moreover, the learned recorder at §35 also referred to the case of Johnson v Gore Wood & Co (unrep English Court of Appeal, 12 November 1998). In that case, whilst Ward LJ accepted that there was great force to both approaches (ie that taken in Halliday v Shoesmith and the other approach in Goodwill v British Pregnancy Advisory Service [1996] 1 WLR 1397 at 1402 that the court should not feel precluded from exercising its power to strike out on the ground that trial is imminent) and drawing the line between the two approaches is difficult, he held that the following factors weighed heavily with the Court of Appeal:

“(1) The fact that costs may have been wasted through not taking the point earlier is a matter which the court can address when deciding what costs to order on the disposal of the late application to strike-out;

(2) In Hunter [v Chief Constable of the West Midlands Police and others [1982] AC 529], at p.536, Lord Diplock spoke of the court having a duty to exercise this salutary power (to prevent misuse of its procedures). He disavowed the word discretion. We understand him to have been saying that because it is the court’s own process which is being abused the court has the duty, in the interests of the administration of justice generally, to control the abuse. It does so, of course, by exercising judicially the undoubted discretion it has whether or not to strike-out the claim. It is a question of gauging where the greater public interest lies. Will the court’s refusal to allow another eight weeks of its time to be taken up litigating issues which could and should have been litigated earlier outweigh the hardship to the plaintiff who has got so far but is now not allowed to proceed further? The whole emphasis of the current reforms of Civil Justice is upon saving precious court time. The submissions of Counsel have moved us one way and then the other. In the end, having weighed all the competing considerations in the balance, we have come to a firm conclusion that the plaintiff’s claim must be struck-out as an abuse of process.”

21.I am of the view that those observations of the English Court of Appeal are apposite to Hong Kong and our civil justice reforms (“the CJR”). Whilst in the present case, it may be unfair to Ps for costs having been incurred prior to D’s application for strike-out and having prepared for trial on the issues joined on the pleadings, it seems to me to be a waste of the Court’s time and resources to proceed with the trial of an action which, if D is correct, discloses no reasonable cause of action or the Court would not and could not grant the relief sought.

22.That said, I accept that late applications for strike-out should only be acceded to in the clearest circumstances: see eg: Poon Lai Bing v Gold Dragon Ltd (unrep) CACV 136/2007 and Tang Wai Cho v Tang Wai Leung [2011] 1 HKLRD 1. I was of the view that this is a clear case for striking out.

Whether the SOC (considered with its proposed amendment) can survive a strike-out

23.The parties have not disputed the following applicable principles for striking out:

(1)  It is only in plain and obvious cases that the court should exercise its summary power to strike out;

(2)  Disputed facts are taken in favour of the party sought to be struck out;

(3)  The burden is on the applicant for striking out to establish it is plain and obvious the claim is bound to fail;

(4)  Plain is not the same as simple and obvious is not the same as short. If on a careful reading of the Statement of Claim however complicated, it can be seen that there is no cause of action, a court can, and probably will, order it to be struck out;

(5)  Where the court comes to the conclusion after full argument that the case is plainly and obviously one for striking out it should not decline to do so on the ground that the issues are difficult or complicated;

(6)  The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable for the claim to succeed before the court will strike it out; and

(7)  A reasonable cause of action means a cause of action with some chance of success when only the allegation in the pleadings are considered. The mere fact the case is weak, and not likely to succeed, is not ground for striking out.

See Hong Kong Civil Procedure 2024, Vol 1, §§18/19/4 and 18/19/5.

24.Where an application to amend a pleading which is sought to be struck out had been made, it would be more expedient and convenient to deal with the striking out application on the facts as pleaded in the proposed amended pleading. If on that basis, the amended pleading should not be struck out, the application to amend should be allowed and the application for strike-out dismissed: see Hong Kong Civil Procedure 2024, Vol 1, §18/19/4.

25.The parties were agreed that I should adopt that approach and first consider whether Ms Bu’s proposed amendments as contained in the draft Amended Statement of Claim (“draft ASOC”) can survive D’s strike-out. If the draft ASOC can survive the strike-out, I should then consider the question of delay and prejudice caused by the late application for amendment.

26.Mr Fan summarized and categorized the proposed amendments by Ps as follows:

(1)  Background matters, ie the amendments to paragraph 1, paragraph 11 (in part) and paragraph 12 of the draft ASOC, which are not objected to by D;

(2)  Averments of the Car Seller’s or unknown fraudster(s)’ fraud which does not implicate D, i.e. amendments to paragraphs 3, 4, 8, 11 (in part) of the draft ASOC, which are not objected to but which it was submitted that based on the submissions made in D’s Opening Submissions cannot survive a strike-out;

(3)  Allegations that D was involved in and/or knew or ought to have known of the alleged fraud, ie paragraphs 13, 14, 15, 19 of the draft ASOC, which are objected to as they do not amount to a sufficient plea that D was a fraudulent recipient and the pleaded matters are not matters from which this Court can infer dishonesty and should be struck out; and

(4)  A new claim based on unjust enrichment and/or money had and received on the grounds of mistake of facts and/or mistake of identity in paragraphs 17, 18, 20 and relief (2) claiming “the liquidated sum of HK$249,999.52 as reversal of unjust enrichment of and/or money had and received” by D, which was accepted to be a viable cause of action.

27.I agree with Mr Fan that that proposed amendments cannot salvage Ps’ claim based on constructive trust and should be struck out.

28.Firstly, there still is no sufficient plea that D was a fraudulent recipient of the Sum. At most, the following matters were pleaded as the basis from which it can be inferred that D was involved or knew/ought to have known of the fraud:

(1)  D’s Account was the bank account designated by the Unknown Fraudster(s);

(2)  D was the direct recipient of the Sum;

(3)  On receiving the Sum, on the same day D dissipated and/or transferred away HK$250,000.00 by making 3 cash withdrawals and/or FPS transfer;

(4)  From 27 to 31 December 2019 and from 3 to 20 January 2020, the deposits into D’s Account were all specific to two decimal places in ascending order which is extremely uncommon for normal business transactions; and

(5)  Ps and D did not have prior business dealings.

29.In JSP International SRO, the plaintiff also pleaded matters similar to (1), (2), (3) and (5) above which the learned judge held were not sufficient pleas that the first tier defendants were fraudulent recipients. It was held (applying Peconic Industrial Development Ltd & anor v Yu Ka Hong Paul & anor [2006] 4 HKC 406 at §33 and Three Rivers District Council & others, §§184-186 and 189) that the court cannot infer honesty from facts which are equally consistent with honest (see §§27-30).

30.I also find that all the matters now pleaded may equally be consistent with honesty and D being an innocent recipient.

31.Secondly, even if I was wrong on the sufficiency of the plea of fraudulent receipt of the Sum, there is still no plea that D has retained identifiable property of Ps’ over which a declaration of constructive trust can take effect. Whilst it is now averred that it is unconscionable for D to retain the Sum, there is no plea that the Sum has been retained by D. On the contrary, as already mentioned, it is pleaded that on the same day the Sum was received by D, the Sum was dissipated and transferred away. See Milestone Electric, Inc, at §§14-15:

“14. Constructive trusts provide proprietary relief. To obtain proprietary relief in relation to the US$850,000 transferred to the defendant or assets derived from it, the plaintiff must establish that the assets claimed can be identified by the tracing process as representing the original trust property. …

15. For the reasons given below, I am not satisfied that the plaintiff can now seek proprietary relief in relation to the US$850,000.

(1) It is well-established that a plaintiff who seeks a proprietary remedy must usually prove that the property to which he lays claim is still in the ownership of the defendant (Boscawen v Bajwa [1996] 1 WLR 328 at 334H (Millett LJ)).

(2) Given that over US$600,000 of the US$850,000 had already been withdrawn from D’s Account as at July 2020, it is no longer possible for the plaintiff to assert its rights in the US$850,000. The statement in P’s Statement of Claim that D retains the benefit of the US$850,000 therefore appears to be incorrect.

(3) Whether or not the plaintiff can assert its rights in the remaining credit balance in D’s Account is not something that the Court is currently in a position to determine. The question depends on a number of considerations including (but not limited to) whether or not there has been any mixing of money in D’s Account, and whether the intermediate balance has fallen to or below zero, since the deposits of the three sums of money transferred from the plaintiff in May 2020, none of which has been pleaded by P in its Statement of Claim.”

32.In JSP International SRO, after referring to the above paragraphs of Milestone Electric, Inc, whilst noting there was a plea that the defendants held and still held funds from the plaintiff, the learned judge also noted there was also a plea that the plaintiff discovered from the discovery made by the banks that the funds were transferred from the first tier accounts to the second tier accounts. It was therefore held that there is no sufficiently pleaded case that the first tier defendants have retained property in which the plaintiff can identify its proprietary interest, such as to justify the grant of a declaration of constructive trust over such property in the hands of the first tier defendants. (See §§33-41.)

33.Accordingly, I am of the clear view that Ps’ claim based on constructive trust and the relief for the Declaration, even as pleaded in the draft ASOC, are obviously unsustainable and ought to be struck out as disclosing no reasonable cause of action.

34.As for the claim based on unjust enrichment on the basis of mistake of facts and/or identity and the new relief under paragraph 22(2) of the draft ASOC, Mr Fan accepted that Ps may have a legally viable claim and it is a matter for trial whether it is made out. However, his objection is the extreme lateness in raising a new claim seeking a new relief and the prejudice to D.

35.In respect of the lateness of the application, Mr Fan referred me to the case of Tao, Soh Ngun v HSBC International Trustee Limited [2018] HKCFI 2543 at §5 where in refusing the plaintiff’s late application for leave to adduce expert evidence, the learned judge held that the following general principles regarding late applications applied:

“(1) Since the Civil Justice Reform, late applications are frowned upon and have a high threshold to pass. They can be dismissed on the basis of lateness alone: Wise Union Industries Ltd v Hong Kong Science and Technology Park Corporation (HCAL 12 & 13/2009, A Cheung (as he then was), 21.09.09), paragraph 2; Practice Direction 5.2, paragraph 34;

(2) A late application should be accompanied by a full and frank account for its lateness, as the court would not grant any indulgence (even on terms as to costs) without a satisfactory explanation from the applicant: Allan Chan v Susana Ho (CACV 393/2004, Ma CJHC (as he then was), 10.01.05), paragraph 9(4), Chok Yick Interior Design & Engineering Co Ltd v Lau Chi Lun (HCA 1480/2008, Lam J (as he then was), 5.05.10), paragraph 28; Wise Union, supra, paragraphs 4 & 5; DBS Bank v Sit Pan Jit (HCA 382/2009, DHCJ Marlene Ng, 6.02.14), paragraph 19.

(3) A trial date is a milestone date which, pursuant to Order 25, rule 1B of the Rules of the High Court, cannot be varied unless there are exceptional circumstances to justify the variation. If an application raised shortly before trial will jeopardise the scheduled trial dates, it is most unlikely that it will be allowed: DBS v Sit, supra, paragraph 26;

(4) The court in assessing late applications should take into account the fact that such applications disrupt the innocent party’s trial preparation by diverting away attention and requiring expenditure of time and costs on the applications and the new matters arising therefrom, which is in itself a form of prejudice: Star Industrial Co Ltd v Japan Home Centre (HK) Ltd (HCA 2294/2008, DHCJ Carlson, 21.12.10), paragraph 2; Li Xiao Yun v China Gas Holdings Ltd (CACV 38/2013, Lam JA (as he then was), 11.03.13), paragraph 18; Chun Wo Building Construction Ltd v Metta Resources Ltd (HCCT 29/2013, Anthony Chan J, 22.03.16, paragraphs 2, 49.”

36.As for prejudice, Mr Fan submitted there is significant prejudice to be presented with an entirely different unjust factor as the basis of the claim for restitution (as opposed to that based on constructive trust) including:

(1)  The change in the “unjust factor” from failure of consideration to one of mistake would affect how the defence of change of position (although admittedly pleaded) is run, in particular the requirement of good faith, for which additional evidence may be required and/or further legal submissions prepared but which D would have insufficient time to do so in the remaining time scheduled for the trial of this action;

(2)  The trial dates would be jeopardized and D will be vexed twice; and

(3)  Costs would be thrown away and given the additional issues, further costs incurred, which would be disproportionate to Ps’ relatively small claim.

37.As for explanation for the delay, Ms Bu frankly admitted that prior to this court’s indication on the viability of the Ps’ claim, she did not take the view that it was necessary to amend the SOC as it was pleaded that there was no justification for D to receive the Sum. She seemed to take the view that this was sufficient to run the case on unjust enrichment. Whilst she referred me to the witness statement of P1 which mentioned she believed D was unjustly enriched at her or her employer’s loss, it is trite that it is the pleadings that define the issues in a trial and not the evidence: see Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663, §21.

38.On the other hand, notwithstanding D’s solicitors, in a letter dated 16 October 2020, requested Ps’ solicitor to amend the Reply to remove the new causes of action that D either conspired with the Car Seller to deceive or negligently assisted the Car Seller to deceive P(s) of the Sum and the SOC be amended to include these new cause of actions, otherwise they had standing instructions to strike out the Reply, no application for striking out Ps’ pleadings was taken out.

39.To a great extent, the application to amend was made only because of the late application by D for strike-out upon indication by this court on the first day of trial. That is a matter which would account for the lateness of the application to amend.

40.Moreover, whilst after the CJR the court will be very reluctant to allow any application with the effect that the trial date has to be adjourned, and it is an underlying objective in O 1A, r 1 of RDC that a case is dealt with as expeditiously as is reasonably practicable, that proceedings are dealt with cost-effectively and the parties are dealt with fairly are also underlying objectives.

41.More importantly, under O 1A, r 2(2) of RDC, in giving effect to the underlying objectives, the court shall always recognize the primary aim in exercising the powers of the court is to ensure the just resolution of disputes in accordance with the substantive rights of the parties.

42.Balancing the underlying objectives and weighing where justice between the parties lies, I reluctantly and with some hesitation allowed Ps’ application to amend, limited to amending the SOC to include the claim based on unjust enrichment on the basis of mistake of fact and/or identity and the new relief.

43.Firstly, having acceded to the late application to strike out the SOC, which necessarily would have the dire consequence of the dismissal of the action if the application to amend a claim, which was conceded to be viable and could survive a strike-out, was disallowed on delay alone, would be immensely unfair to Ps and not be costs-effective. This is particularly so when it is now made clear the real basis of Ps’ claim and the amendments would enable the just resolution of disputes according to the substantive rights of the parties. There may ultimately be saving of the court’s time and costs once the pleadings are put in order and the real battle line is drawn.

44.Secondly, whilst Mr Fan has raised as prejudice the additional costs incurred by the addition of the new claim based on unjust enrichment, as pointed out by Ms Bu, the claim based on unjust enrichment arose from facts which have already been pleaded. Ms Bu also pointed out that in the Amended Defence, D had pleaded that a case of change of position and that D was a bona fide purchaser for value without notice of the alleged fraud. She could not see how D would need to put in further evidence when D has already put in evidence in support of their defence on change of position and bona fide purchaser for value without notice of the alleged fraud.

45.Indeed Ms Bu was prepared to continue with the trial in the time remaining but it was Mr Fan, understandably acting cautiously, who required time to take instructions from his client on the need to adduce further evidence and prepare further legal submissions in relation to their defence. Any prejudice to D caused by the adjournment of the trial should be properly viewed in that context. Furthermore, any strain or anxiety caused by the adjournment to D, a corporation rather than a personal litigant, should not be overstated. In all, I do not accept that there is significant prejudice to D.

46.Thirdly, given that Ps were prepared to pay the costs of and occasioned by the application to amend the SOC, any prejudice to D by way of additional costs incurred and costs thrown away can be compensated by appropriate orders as to costs.

Costs

47.In respect of D’s Summons for strike-out, given that D was by and large successful in its application, I ordered that costs of and occasioned by D’s Summons be to D, to be summarily assessed on paper.

48.In respect of Ps’ Summons to amend the SOC, given that Ps are seeking an indulgence of the court to amend the SOC which otherwise is liable to be struck out and this action dismissed, I ordered that D’s costs of and occasioned by Ps’ Summons be paid by Ps to D, and D’s costs thrown away by the adjournment of this trial be paid by Ps to be summarily assessed on paper. However, as pointed out by Mr Fan which I accept, it would not be appropriate to summarily assess at this stage the costs occasioned by the amendments to the SOC, so for the avoidance of doubt, I clarify herein that these costs should be taxed if not agreed. I further give liberty to D to re-lodge its Statements of Costs within 3 days hereof, if necessary, upon this clarification and direct that Ps lodge their objections to the Statements of Costs lodged by D within 7 days thereafter.

49.Whilst Mr Fan had sought costs against Ps on an indemnity basis by reason of the lateness of the application to amend, I do not think that would be just. As mentioned, to some extent, the lateness of Ps’ application was due to this court’s indication to the parties on the first day of trial which then led to the late application by D for strike-out. Moreover, some responsibility for the adjournment of the trial should be borne by D.

Ms Yanan Bu, instructed by M M Wong & Co, for the 1^st and 2^nd plaintiffs

Mr Brian Fan, instructed by TITUS, for the defendant