Hang Heung Cake Shop Company Ltd v. Tsoi Chik Sang Lawrence and Another
Read the full judgment text of HCA 988/2004 on BabelCite. This High Court CFI judgment was delivered on 20 June 2025.
1. On 6 May 2025, Tsoi Chik Sang Lawrence (“ Lawrence Tsoi ”) filed a Summons issued in HCA 988/2004, HCA 989/2004, HCA 1075/2004 and HCA 1327/2013 (the “ Consolidated Action ”) (where Lawrence Tsoi is the 1 st and 2 nd Defendants in his personal capacity and in his capacity of the Administrator of the estate of Choi Chong Ip, deceased) and a Summons in HCA 2061/2018 (“ HCA 2061 ”) (where Lawrence Tsoi is the Plaintiff), for, in essence an Order that the Consolidated Action and HCA 2061 shall be
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HCA 988/2004, HCA 989/2004, [2025] HKCFI 2634 HCA 988/2004, HCA 989/2004, (Consolidated) IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NOS 988 OF 2004, 989 OF 2004, 1075 OF 2004 AND 1327 OF 2013 __________________
__________________ (Consolidated pursuant to the Order of AND HCA 2061/2018 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2061 OF 2018 __________________
__________________ (Heard Together)
__________________ D E C I S I O N __________________ I. INTRODUCTION 1.On 6 May 2025, Tsoi Chik Sang Lawrence (“Lawrence Tsoi”) filed a Summons issued in HCA 988/2004, HCA 989/2004, HCA 1075/2004 and HCA 1327/2013 (the “Consolidated Action”) (where Lawrence Tsoi is the 1st and 2nd Defendants in his personal capacity and in his capacity of the Administrator of the estate of Choi Chong Ip, deceased) and a Summons in HCA 2061/2018 (“HCA 2061”) (where Lawrence Tsoi is the Plaintiff), for, in essence an Order that the Consolidated Action and HCA 2061 shall be consolidated or heard together. 2.At the second hearing of these Summonses on 22 May 2025, I dismissed the two summonses (the “Summonses”) in the absence of Lawrence Tsoi. Ms Joyce Leung (leading Ms Kelly Cheng), counsel for the Plaintiff in the Consolidated Action (“HHCS”) and the Defendant in HCA 2061 (“Tardi”), sought costs at the end of the hearing. Therefore, I directed the parties to file and serve affirmation evidence in relation to costs. This is my Decision on costs having considered the evidence and the submissions of Ms Leung and the submissions of Mr Kwok Kam Kwan, counsel for Lawrence Tsoi. II. BACKGROUND 3.The trial of the Consolidated Action was originally scheduled to commence on 2 June 2025. 4.By letter dated 23 April 2025, the Solicitors of the Plaintiff in the Consolidated Action (“HHCS”) made a sanctioned offer (the “Sanctioned Offer”) under Order 22 rule 5 of the Rules of the High Court (Cap.4A) in the following terms:-
5.On 5 May 2025 (just 28 days before the commencement of the trial), Lawrence Tsoi signed the following letter to the Plaintiff (“Lawrence Tsoi’s 5 May 2025 Letter”):-
6.Lawrence Tsoi was acting in person in the Consolidated Action at that time. He did not file the notice of acceptance. Instead, by letter dated 7 May 2025, the Plaintiff’s Solicitors wrote to the Court, enclosing therewith Lawrence Tsoi’s 5 May 2025 Letter and informing the Court that Lawrence Tsoi had accepted the Plaintiff’s Sanctioned Offer. Further, by letter dated 8 May 2025, the Plaintiff’s Solicitors sent to the Court a copy of the Sanctioned Offer. 7.Meanwhile, on 6 May 2025, in the Consolidated Action and HCA 2061, Lawrence Tsoi, acting in person, filed the Summonses in typed English, supported by his typed English Affirmation dated 3 May 2025 without any interpretation clause, affirmed before a Solicitor (“Lawrence Tsoi’s 3 May 2025 Affirmation”). This Affirmation contains a few paragraphs only, mainly exhibiting a draft Amended Writ of Summons and a draft Amended Statement of Claim in HCA 2061 and then seeking an order that “all these actions be tried or heard together”. 8.The essence of the amendments proposed to the Statement of Claim in HCA 2061, insofar as relevant for the present purposes, were:-
9.There has never been any application for leave to amend the Statement of Claim in HCA 2061 as per the draft Amended Statement of Claim. 10.Pending the first directions hearing of the Summonses to take place on 12 May 2025, Lawrence Tsoi sent to the Court a handwritten Chinese letter dated 8 May 2025 explaining why he issued the Summonses and seeking an Order to vacate the trial dates of the Consolidated Action so that the authority of Desmond Wong raised in the draft Amended Statement of Claim in HCA 2601 could be resolved first. 11.On 9 May 2025, Messrs Krishnan & Tsang filed a Notice to Act in HCA 2061. 12.Despite his Solicitors on record, there was yet another handwritten Chinese letter before the first directions hearing. By letter dated 10 May 2025 to the Court (“Lawrence Tsoi’s 10 May 2025 Letter”), Lawrence Tsoi wrote, among others:-
13.On 12 May 2025, in HCA 2061, Lawrence Tsoi was legally represented, but in the Consolidated Action, he still acted in person. During the hearing, the first issue I raised with the parties was whether the Consolidated Action had been settled by the 5 May 2025 Letter purporting to accept the Sanctioned Offer. I raised this because if the Consolidated Action had been settled, then the Summonses should be dismissed in limine because HCA 2061 simply could not be heard together with the Consolidated Action. Lawrence Tsoi was present at the hearing as the litigant-in-person in the Consolidated Action. I asked him directly, in Cantonese, whether he had accepted the Sanctioned Offer. His answer was “yes”. But then a person sitting next to him, purporting to be his friend, pulled his sleeve and told him to say “no”, and then Lawrence Tsoi changed his answer to “no”. I asked Lawrence Tsoi again, and he answered “no” again. 14.On that basis, I asked Lawrence Tsoi’s then counsel in HCA 2061 what was the basis for saying that, despite the 5 May 2025 Letter, there was no acceptance of the Sanctioned Offer. Lawrence Tsoi’s counsel answered that he did not have instructions on that. Therefore, I directed Lawrence Tsoi to file affirmation to explain the basis, and adjourned the matter for another directions hearing on 22 May 2025. 15.Pending the second directions hearing to take place on 22 May 2025, two affirmations were filed: (1) Lawrence Tsoi’s Chinese Affirmation dated 16 May 2025 affirmed in the Home Affairs Department in Kowloon City (“Lawrence Tsoi’s 16 May 2025 Affirmation”); and (2) Maggie Lee’s affirmation of even dated also affirmed in the Home Affairs Department in Kowloon City (“Maggie Lee’s Affirmation”). 16.In Lawrence Tsoi’s 16 May 2025 Affirmation, there is one line in Chinese: “附屬證物編號（甲）之內容乃是真實及正確的”. The exhibit mentioned in a one-page Chinese typed as follows:-
17.Maggie Lee’s Affirmation stated that she witnessed Lawrence Tsoi’s signing of the 5 May 2025 Letter. She also stated that as to Lawrence Tsoi’s request for payments by instalment during a 10-year period, this would later be arranged by lawyers. 18.On 19 May 2025, an unsigned affirmation was sent to the Court without service on the Plaintiff. The unsigned affirmation was in English, purported to be “Affirmation of Tsoi Chik Sang Lawrence” and dated 19 May 2025. It was sent under a cover letter purportedly signed by Lawrence Tsoi himself stating that Maggie Lee prevented him from filing the affirmation and so he requested his friend’s assistance in sending the affirmation to the Court. 19.Also on 19 May 2025, Lawrence Tsoi issued a Notice to Act in Person in HCA 2061. 20.I cannot but pause here to note the obvious – Lawrence Tsoi could issue a Notice to Act on 19 May 2025, the very date of the cover letter for the unsigned affirmation sent to the Court alleging that Lawrence Tsoi had been prevented from filing the affirmation. 21.The second directions hearing of 22 May 2025 came. However, at 4:49pm on 21 May 2025, Lawrence Tsoi’s son sent a letter to the Registry claiming that Lawrence Tsoi was ill and could not attend the hearing. Enclosed with that letter were an image of a referral letter issued by a doctor for Lawrence Tsoi addressed to hospital dated 21 May 2025, an image of a receipt issued by Pok Oi Hospital dated 21 May 2025 for Lawrence Tsoi and an image of a wristband apparently of a hospital showing that Lawrence Tsoi had been admitted to hospital. 22.Lawrence Tsoi did not attend the hearing. I proceeded with the hearing under Order 32 rule 5. I dismissed the Summons with extempore reasons given, in essence:-
23.At the end of that hearing, Ms Leung, for HHCS and Tardi, sought costs of the two Summonses. Given the circumstances of Lawrence Tsoi’s changing position, I expressed my concern that Lawrence Tsoi may have been improperly influenced by other people and if appropriate, costs order against third party may be considered. Thus, to be fair to Lawrence Tsoi, I granted leave for him to file and serve affirmation to explain his position on costs. I adjourned costs for argument on 10 June 2025, thus this hearing. 24.On 30 May 2025, Lawrence Tsoi, still acting in person, filed, without service, a Chinese affirmation (“Lawrence Tsoi’s 30 May 2025 Affirmation”). In essence, he reiterated the contents of Lawrence Tsoi’s 10 May 2025 Letter, and again explained his absence of the hearing on 22 May 2025 with reference to his medical records as explained earlier on. In §21, he said that my decision on 22 May 2025 that there was a valid settlement agreement deprived his right to dispute the validity of Lawrence Tsoi’s 5 May 2025 Letter, and asked the Court to vary the decision and re-fix the trial of the Consolidated Action. 25.On 9 June 2025 (just one day before the hearing), Lawrence Tsoi’s current Solicitors filed a Notice to Act. Mr Kwok also filed Skeleton Submissions on the same day. III. LAWRENCE TSOI’S GROUNDS 26.With the untraversed medical evidence, I have to accept that there was a good reason for Lawrence Tsoi’s absence from the hearing of 22 May 2025. Be that as it may, there is no formal application to vary my order of 22 May 2025. At first glance, Order 32 rule 5(4) may be applicable because I dismissed the Summonses in Lawrence Tsoi’s absence. However, per my extempore reasons for the dismissal summarised above, I dismissed the Summonses not “by reason of the failure of [Lawrence Tsoi] who took out the summons to attend the hearing”: seeOrder 32 rule 5(4). Therefore, Order 32 rule 5(4) is apparently not applicable. In any event, there is no application before me to vary my Order. 27.That said, Mr Kwok’s submissions on liability on costs almost amounted to submissions that the decision should be set aside and the matter should be considered afresh. The following submissions are worth quoting:-
28.Therefore, the main plank for Mr Kwok’s submissions is that there is no settlement agreement in the Consolidated Action, and therefore, the dismissal of the Summonses was not warranted (put mildly) or wrong. 29.Given the way the written submissions were put, at the start of this hearing, I gave time for Mr Kwok to take instructions on whether Lawrence Tsoi would like to make any application under Order 32 rule 5(4), without ruling whether this rule is applicable. Having taken instructions, Mr Kwok told me that Lawrence Tsoi would like to apply for an adjournment so that he would have need more time to decide. I refused to adjourn and decided to proceed with the hearing as it had been scheduled for costs. 30.In Mr Kwok’s submissions, the main basis for his stance that Lawrence Tsoi should not be ordered to pay costs is that there was no valid acceptance of the Sanctioned Offer, and therefore, there is no settlement agreement. I have serious doubt whether this matter, having been ruled upon during the hearing of 22 May 2025, could be re-argued as if this matter could be considered afresh when deciding on costs. Be that as it may, given the chequered procedural history and various changes of Lawrence Tsoi’s position, I am prepared to deal with these submissions first – if these submissions cannot get off the ground, then I would determine costs on that basis. Difficulty may arise only if I would find these submissions valid, and there and then I would have to determine whether I could re-open the matter. 31.From Lawrence Tsoi’s various affirmations and Mr Kwok’s submissions, I ascertain the following grounds raised in support of Lawrence Tsoi’s stance that there was no valid settlement agreement:-
IV. NO INTENTION? 32.To understand whether Lawrence Tsoi had any intention to accept the Sanctioned Offer, one must understand that Order 22 is a set of self-contained statutory code which is not affected by the general law of contract and which, in order to achieve certainty, “must be understood and followed by ordinary citizens who wish to conduct their own litigation”: see Asahi Iwasawa & Associates Management Consultants Ltd v Shibakawa (Hong Kong) Ltd, HCA 969/2014, 12 September 2023 at §§17-19 per DHCJ Le Pichon, and therefore, “the parties’ contractual intention (an exercise that necessarily creates uncertainty) is irrelevant” and the Court is not required to ascertain the parties’ intention: see Asahi Iwasawa & Associates Management Consultants Ltd v Shibakawa (Hong Kong) Ltd, supra at §§29-30. 33.In this regard, Order 22 rule 12 provides:-
34.It is convenient here to refer to the terms of Lawrence Tsoi’s 5 May 2025 Letter again:-
35.Was this a notice of acceptance of the Sanctioned Offer? It referred to the Consolidated Action. Lawrence Tsoi then said that he “agreed” (同意) to the Sanctioned Offer. It is clear to me that this agreement was acceptance of the Sanctioned Offer. It was still so despite the last sentence. Because all the terms of the Sanctioned Offer had been accepted, there was nothing further to agree upon or vary. The last sentence, properly understood in context, just means that the parties would “further”, “again” or “repeatedly” (再) sign a settlement agreement for the accepted terms. The “further”, “again” or “repeatedly” means what it means – there had already been an agreement, and any agreement to be signed would be a “further”, “again” or “repeated” agreement. Why would there still be a “further”, “again” or “repeated” agreement? This may well be because the parties would like to work out the details of payment, for example, how to pay, who would be the recipient, and so on. However, one cannot say that without such details, there was no acceptance of the Sanctioned Offer – the Sanctioned Offer in the first place did not contain such details. 36.There is no dispute that Lawrence Tsoi’s 5 May 2025 Letter was served to HHCS on 5 May 2025 because even according to Lawrence Tsoi (consistent with Desmond Wong’s and Maggie Lee’s evidence), he signed it in front of Desmond Wong of HHCS (whose authority to represent HHCS I shall deal with below) who then got the signed copy. 37.One may argue that to accept a sanctioned offer, Order 22 rule 16 requires filing of the notice of acceptance as well. It provides that:-
38.However, read together with Order 22 rule 12, the heading of Order 22 rule 16 and the contents of Order 22 rule 16, in my view, Order 22 rule 16(1) is concerned with the time when a defendant may accept a sanctioned offer without the leave of the Court, and the consequence of accepting a sanctioned offer within the prescribed time is not that there is no acceptance of the sanctioned offer in question, but that in general the Court should decide on the liability of costs (if not agreed) first. This, in my view, is not a rule prescribing that an offer can only be accepted by filing and service of the notice of acceptance. Such cumulative requirements would not sit well with Order 22 rule 12, which is the rule prescribing how a sanctioned offer can be accepted. 39.Since Lawrence Tsoi’s 5 May 2025 Letter was, as I have found, a notice of acceptance, and since the notice of acceptance was served on 5 May 2025, the Sanctioned Offer was accepted on 5 May 2025. 40.For the sake of completeness, insofar as any contention that contractual intention would still be relevant, I would reject any contention that the last sentence would mean that Lawrence Tsoi’s 5 May 2025 Letter was just an agreement to agree, which would constitute no binding agreement at all. I would so reject for the following reasons:-
V. INVALIDATION BY MAGGIE LEE’S MISREPRESENTATION? 41.For the present purpose, I assume, without finding, that Maggie Lee did make representation to Lawrence Tsoi to the effect that Lawrence Tsoi’s 5 May 2025 Letter would have no legal effect. Even so, I would still uphold the validity of the acceptance of the Sanctioned Offer. 42.First, as mentioned above, Order 22 is a self-contained rule for achieving certainty, not affected by the substantive contractual law. Therefore, misrepresentation should in general have no effect. 43.Second, I can see injustice of strict application of the rules in situations where for example, the plaintiff deliberately misleads the defendant to accept a sanctioned offer. In such situations, the Court may have jurisdiction, implied or inherent, in setting aside the notice of acceptance. However, I do not need to express any definitive view on this because the present case is not such a situation. The misrepresentation was made by Maggie Lee, a third party, whom Lawrence Tsoi came to know in a social event. Mr Kwok, for Lawrence Tsoi, also fairly conceded during hearing that Maggie Lee was not HHCS’s employee. Further, Lawrence Tsoi makes no allegation that Maggie Lee, in making the misrepresentation, represented HHCS (actually, impliedly, apparently or ostensibly), or that HHCS had knowledge that Lawrence Tsoi, in signing Lawrence Tsoi 5 May Letter, had been misled to its binding effect. The only allegation which Lawrence Tsoi made about Maggie Lee helping Desmond Wong is found at §19 of Lawrence Tsoi 30 May 2025 Affirmation, where he said that Maggie Lee refused to help him but helped Desmond Wong to prevent him from filing any affirmation for the hearing of 22 May 2025. 44.Third and in any event, even if contract law would apply, a misrepresentation by a third party would not lead to rescission, unless that third party represents the contractual party at the time of the contract or the contractual party has knowledge of the misrepresentation at the time of the contract: see Misrepresentation, Mistake and Non-Disclosure (7th ed) §§4-78 – 4-82; Chitty on Contracts (35th ed) Vol 1 §10-132 and Northern Bank Finance Corp Ltd Charlton [1979] IR 149. 45.Therefore, given that the assumed misrepresentation was made by a third party, the acceptance of the Sanctioned Offer would not be invalidated. 46.The above analysis is made on the assumption that there was the misrepresentation as Lawrence Tsoi alleges. However, in my view, on the evidence available before me, I would in any event conclude that the allegation of Maggie Lee’s misrepresentation is inherently unbelievable because:-
VI. HHCS’S AUTHORITY IN THE CONSOILDATED ACTION 47.Lastly, insofar as Lawrence Tsoi challenges HHCS’s authority on the ground of lack of properly constituted board, the answer is that:-
48.Insofar as Lawrence Tsoi’s challenge to the validity of Desmond Wong’s appointment, such challenge is, in my view, barking at the wrong tree. As Ms Leung points out, the authority to commence and continue the Consolidated Action came and comes not from Desmond Wong, but from the board. Even assuming that Desmond Wong was invalidly appointed, so long as the board, properly constituted, authorized and authorizes Desmond Wong to give instructions to HHCS’s solicitors and to commence and continue the Consolidated Action, the validity of his appointment is irrelevant. In any event, absent any injunction or interlocutory injunction restraining Desmond Wong from acting as an Acting General Manager under the appointment, one cannot simply raise that there is dispute over his authority and based on this dispute, seeks a stay of the Consolidated Action: see Hang Heung Cake Shop Company Ltd v Cheng Hung Kit [2024] HKCFI 1982 at §25 per Lok J. This proposition is consistent with the general principle that as against outsiders, the company’s act is valid and binding despite any internal management dispute or dispute over validity of appointment of directors. 49.It remains for me to add that Desmond Wong is effectively interested, directly and indirectly, in HHCS as to more than 75%. This means that whatever the challenge there would be, the irregularity principle would likely apply to cure any procedural defect, and that any challenge would not make any real difference. 50.Further and in any event, I do not see how the Share Transfer Agreement constituted any illegal champerty. Tardi, purchasing the interests in Fonduet, which in turn is interested in HHCS, of course would have an interest in the litigation. Similarly, Desmond Wong is interested in Tardi, and thus is also interested in HHCS. There is no champerty by them funding litigation in which Tardi is interested. There is also no champerty or illegality in Tardi and Desmond Wong gaining benefits to enable his appointment in HHCS, in which he is interested. 51.Still further and in any event, under the trilogy approach of the Court of Appeal towards illegality under Monat Investment Ltd v All Person(s) in Occupation of Part of the Remaining Portion of Lot No 591 in Mui Wo DD 4 No 16 Ma Po Tsuen [2023] 2 HKLRD 1311, I do not see how the (assumed) champerty agreement would invalidate the appointment of Desmond Wong when taking into account that there is no evidence to suggest that HHCS’s board has actually disapproving the Consolidated Action. Invalidating Desmond Wong’s appointment and the authority to conduct the Consolidated Action would in the circumstances not achieve the objective of the rule against champerty (to avoid a disinterested person encouraging litigation or funding litigation for the purpose of winning the litigation so that the funder may get some benefit) and if necessary, would be out of proportion or “overkill”. 52.Therefore, there is no merit in this authority ground. VII. MAGGIE LEE’S UNDUE INFLUENCE AND/OR UNLAWFUL INTERFERENCE? 53.At one point during the oral submissions, Mr Kwok, for Lawrence Tsoi, submitted that Lawrence Tsoi was subject to Maggie Lee’s undue influence in the acceptance of the Sanctioned Offer. 54.There is no evidence of undue influence. In any event, assuming that general contract law applies to Order 22, to avoid a contract on the ground of undue influence by a third party like Maggie Lee, Lawrence Tsoi would have to prove that Maggie Lee was HHCS’s agent or HHCS had actual or constructive knowledge of the undue influence: see Chitty on Contract, supra §11-148. There is no such evidence at all. Mr Kwok, rightly, abandoned undue influence in the course of the submissions. 55.As regards Mr Kwok’s submissions that Lawrence Tsoi was subjected to unlawful interference, the only evidence he relies upon is what happened on 12 May 2025, namely, (1) Maggie Lee refused Lawrence Tsoi’s request that she should make an affirmation that there was no acceptance of the Sanctioned Offer, and (2) Maggie Lee prevented him from preparing and filing affirmation. However, as pointed out by Ms Leung, this alleged event took place after the acceptance of the Sanctioned Offer, and in any event, if there were any unlawful interference, it would be a matter as between Lawrence Tsoi and Maggie Lee, which would not affect the settlement agreement. 56.There is nothing in this last ground. VIII. CONCLUSION 57.In the circumstances, I do not accept Lawrence Tsoi’s stance that there was no valid settlement agreement as a result of the acceptance of the Sanctioned Offer. The above analysis only reinforces my view, as I took during the 22 May 2025 hearing, that there was a valid settlement agreement as a result of the valid acceptance of the Sanctioned Offer. IX. COSTS 58.While I have doubt whether Lawrence Tsoi has been under improper influence from third party, I should not allow my doubt to enter my judgment and decision. There is no sufficient evidence to sustain my doubt. As I have found that there was a valid settlement agreement, I see no reason to depart from the general rule that costs should follow the event. 59.Ms Leung seeks for indemnity costs. As I have no evidence to sustain my doubt that Lawrence Tsoi has been under improper influence from third parties, logically, his conduct of the proceedings must be taken as his own. Having considered the following conduct of his own, I agree with Ms Leung that Lawrence Tsoi had been abusive of the court process in conducting the Summonses:-
60.In the circumstances, it is an appropriate case to order indemnity costs. 61.Having considered the statement of costs and Mr Kwok’s objections, I order that (1) Lawrence Tsoi as the 1st Defendant and he as the 2nd Defendant do jointly and severally pay HHCS costs of the Summons in the Consolidated Action summarily assessed at HK$190,000, payable forthwith, and (2) Lawrence Tsoi do pay Tardi costs of the Summons in HCA 2061 summarily assessed at HK$190,000, payable forthwith. I make it clear that I grant certificate for one counsel only. 62.I thank counsel for their assistance.
Ms Joyce Leung and Ms Kelly Cheng, instructed by Johnny K.K. Leung & Co., for the Plaintiff in HCA 988/2004, HCA 989/2004, HCA 1075/2004 and HCA 1327/2013 (Consolidated) and for the Defendant in HCA 2061/2018 Mr Kwok Kam Kwan, instructed by Bill Tong & Co., for the 1st and 2nd Defendants in HCA 988/2004, HCA 989/2004, HCA 1075/2004 and HCA 1327/2013 (Consolidated) and for the Plaintiff in HCA 2061/2018 | |||||||||||||||||||||||||||||||||||||||||||
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