Zhang Jingyuan v. Wong Yuk Kwan and Others

HCA 1475/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1475 OF 2008

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BETWEEN

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Before: Deputy High Court Judge L. Chan in Chambers

Date of Hearing:   14 January 2010

Date of Decision:  15 January 2010

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D E C I S I O N

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1.There are three summonses. The first one is by the 2nd defendant for summary judgment of his counterclaim against the plaintiff; the second is by the 1st to 4th defendants to strike out the allegations of three representations and a collateral warranty or collateral contract pleaded in the statement of claim; the third is by the 5th and 6th defendants to strike out the second and third of the representations.

The Claim

2.The plaintiff is and was the chairman of one Taiyuan Sanxing Coal-gasification Co. Ltd (“Tai Yuen Sanxing”). It is a company incorporated in the Mainland and engages in the exploitation and production of coke and coal gasification in Shan Xi Province of the Mainland. The plaintiff used to be the controlling shareholder of Taiyuan Sanxing until its shares were transferred to a company incorporated in Hong Kong called China Coal Energy Holdings Limited (the “JV Co”) sometime in October 2006.

3.The 1st defendant is and was the controlling shareholder, chairman and chief executive of the 2nd defendant, a company listed in the Hong Kong Stock Exchange (“HKEx”). The 3rd defendant is the holding company of the 2nd defendant and the 4th defendant is a nominee/subsidiary of the 2nd defendant.

4.In early 2006, the plaintiff was looking for capital for the continuation and expansion of the business of Taiyuan Sanxing. In about April 2006, he was introduced to the 1st defendant. In about mid-June 2006, the 1st defendant visited the plaintiff and inspected the operation of Taiyuan Sanxing with a view to a joint venture.

5.The statement of claim pleaded that the 1st defendant during the visit and with a view to induce the plaintiff to form a joint venture with him or his companies made an oral representation (“the 1st Representation”) that:

“1.  the 1st defendant is a successful entrepreneur and is very experienced in procuring companies to be listed on (the HKEx) or stock exchanges of other well developed financial centres (“Other Stock Exchanges”);

2.  if the plaintiff agreed to form a joint venture with the 1st defendant or his company, the 1st defendant could and/or was in a position to:

(a)  procure Taiyuan Sanxing to be successfully listed on the HKEx or the Other Stock Exchanges within 18 months from the date they began their joint venture;

(b)  arrange injection of capital in the sum of RMB 200 million to 500 million into the joint venture and/or Taiyuan Sanxing by financial institutions or strategic investors.

3.  In order to facilitate the intended listing:

(a)  the plaintiff and  the 1st defendant should form a joint venture company to take over Taiyuan Sanxing, so that the shares of this joint venture company could be listed on the HKEx or the Other Stock Exchanges;

(b)  the plaintiff should charge 60% of the shares in this joint venture company in favour of the 1st defendant or his nominee(s);

(c)  the plaintiff should also provide a guarantee of profit and dividends, i.e. a guaranteed profit of RMB 600 million in 3 years and guaranteed dividends of RMB 40 million per year.

4.  The arrangement referred to in sub-paragraph 3 above:

(a)  was to enable the 1st defendant to persuade the board of the 2nd and/or 3rd defendants and other potential investors that the listing of the intended joint venture was a good business deal;

(b)  would be wholly cancelled if the intended joint venture company could not be listed on the HKEx or the Other Stock Exchanges within 18 months from the date of the commencement of the joint venture;

(c)  need not be reflected in their written joint venture agreement.”

In reliance on the 1st Representation, the plaintiff then entered into a joint venture agreement with the 2nd defendant dated 15 July 2006 (“the JV Agreement”) and a co-operation agreement with the 3rd defendant dated 25 July 2006 (“the D3 Agreement”).

6.The certified translation of the relevant terms of the JV Agreement are:

“5.  Both parties agree to run the joint venture company according to the following terms and conditions:

A.  The joint venture company shall have a registered and paid up capital of HK$100,000,000 by issuing 100,000,000 shares with a par value of HK$1 per share.  The paid up capital of HK$100,000,000 shall be fully contributed by (the plaintiff ).

B.  The joint venture company shall acquire 100% shareholdings in Taiyuan Sanxing from (the plaintiff) at a consideration of RMB100,000,000 and Taiyuan Sanxing shall become a Wholly Foreign Owned Enterprise (“WFOE”).  (The plaintiff) shall in the name of the joint venture company inject the afore-mentioned RMB100,000,000 into Taiyuan Sanxing, thereby increasing the registered and paid up capital of Taiyuan Sanxing from RMB100,000,000 to RMB200,000,000.  After the full compliance with all the legally required procedures of change of registration, the joint venture company shall own 100% shareholding of Taiyuan Sanxing.

…

E.  (The 2nd defendant) shall purchase from (the plaintiff) 40,000,000 shares, i.e. 40% shareholding of the joint venture company at a consideration of HK$395,620,000.  (The plaintiff) shall own the remaining 60,000,000 shares, i.e. 60% shareholding (in the joint venture company).  The payment methods are as follows:

i.  HK$100,000,000 to be paid in cash.

ii.  The balance of HK$295,620,000 shall be paid by the allotment of 75,800,000 new shares (at HK$3.90 each share) in (the 2nd defendant) of which 40,980,000 shares shall be allotted to (the plaintiff) or its nominee, and 34,820,000 shares shall be allotted to Get Wealthy Investments Limited (the 6th defendant) or its nominee.

F.  Upon the completion of the transactions in this agreement, the joint venture company or Taiyuan Sanxing shall proceed to raise funds to the amount of HK$200 million from foreign financial institutions, such funds raising plan shall be co-ordinated and arranged by (the 2nd defendant) together with other financial consultants.

G.  At least 50% of the consolidated after tax profit of the joint venture company shall be distributed to both parties in proportion to their respective shareholdings (in the joint venture company).

H.  The joint venture company shall be independently listed in the Stock Exchange(s) of Hong Kong or overseas as soon as possible.  (The 2nd defendant) shall be responsible to co-ordinate and plan all the matters concerning the listing of the joint venture company.

7.  Guarantees:

A. (The plaintiff) guarantees the total consolidated after tax profit of the joint venture company for the 3 fiscal years, being from 1st January 2007 to 31st December 2009, will not be less than HK$600,000,000, and (the plaintiff) shall make up and compensate any sums short of HK$600,000,000. The joint venture company shall adopt the international accounting standards in terms of financial auditing and the audited financial statement of the preceding year shall be announced before the end of April of each year.

B. If the consolidated after tax profit of the 1st or 2nd fiscal years (i.e., from 1 January 2007 to 31 December 2008) is each less than HK$200,000,000 per year, (the 2nd defendant) shall have the preferential right to payment of dividend pursuant to clause 5G of this Agreement at the sum of HK$40,000,000 per year. Any sums short of HK$40,000,000 shall be made up and compensated by (the plaintiff). For the 3rd fiscal year (i.e., from 1st January 2009 to 31st December 2009), the situation will be handled pursuant to item A in this clause.

C. (The plaintiff) agrees to mortgage his 60% shareholdings in the joint venture company to (the 2nd defendant) until the joint venture company is successfully and independently listed or the full performance of the guarantees hereunder, whichever is the sooner.”

7.The D3 Agreement contains terms some of which are similar to those in the JV Agreement.  Clause 7 of the D3 Agreement also provided that the co-operation parties (the plaintiff and the 3rd defendant) shall co-operate in good faith and they are confident to procure the successful listing of the JV Co in Hong Kong or other overseas international stock market within 18 months.

8.The plaintiff pleaded further or in the alternative to the 1st Representation a collateral warranty or collateral contract as follows:

“1.  In consideration of the plaintiff agreeing to form a joint venture with the 2nd defendant and enter into the JV Agreement as well as (the D3 Agreement), the 1st defendant agreed to and did give an oral collateral warranty to the plaintiff (“Collateral Warranty”), and/or entered into an oral collateral contract with the plaintiff (collateral to the JV Agreement, (the D3 Agreement) and the Deed of Charge referred to below) (“Collateral Contract”) whereby the 1st defendant undertook and warranted that:

‘he could and/or was in a position to:

(a)  procure Taiyuan Sanxing to be successfully listed on the HKEx or Other Stock Exchanges within 18 months from the day they began their joint venture;

(b)  arrange injection of capital in the sum of RMB 200 million to 500 million into the joint venture and/or Taiyuan Sanxing by financial institutions or strategic investors; and

(c)  the arrangement in the JV Agreement would be wholly cancelled if the intended joint venture company could not be listed on the HKEx or Other Stock Exchanges within 18 months from the date of the commencement of their joint venture.’”

9.The plaintiff further pleaded that he, in reliance on and/or in consideration of the 1st Representation and/or the Collateral Warranty and/or the Collateral Contract, agreed to and,

(a)  formed the JV Co;

(b)  entered into the JV Agreement, the D3 Agreement and the Deed of Charge referred to in clause 8C of the JV Agreement;

(c)  took various steps as stipulated in the JV Agreement.

The 40% shares of the JV Co are now held by the 4th defendant as nominee of the 2nd defendant.

10.The plaintiff further pleaded that, despite the 1st Representation and/or the Collateral Warranty and/or the Collateral Contract and/or the JV Agreement, the 1st and/or 2nd defendants failed to arrange capital injection for the JV Co or Taiyuan Sanxing. Taiyuan Sanxing thus faced cash flow problems which got worse towards the end of 2007.

11.The 1st defendant then introduced to the plaintiff an independent investor, the 5th defendant, for a loan of US$3 million to the JV Co in return for 110,760 shares and 73,840 shares of the JV Co to be transferred to it by the plaintiff and the 2^nd defendant respectively.

12.Relying on the 1st defendant’s oral representation that the 5th defendant was an independent investor (“the 2nd Representation”), the plaintiff accepted this loan arrangement and transferred 110,760 shares of the JV Co to the 5th defendant.

13.The plaintiff then pleaded that in about January 2008 the 1st defendant orally represented to him that the JV Co would be listed in the HKEx in June 2008. However, due to the provisions in the Listing Rules of the HKEx, the plaintiff, as a Mainland citizen, could not be registered as the majority or controlling shareholder of the JV Co (“the 3rd Representation”). The 1st defendant further said that in order to comply with the said requirement in the Listing Rules, the plaintiff should transfer 15% of the shares in the JV Co to the 6th defendant so that the 6th defendant could hold the said 15% shares in trust for him. The 1st defendant also represented to the plaintiff that he had a close connection with the 6th defendant and it was safe to have the said 15% shares of the JV Co to be transferred to the 6th defendant to be held in trust for the plaintiff.

14.The plaintiff further pleaded that he, believed in and relied on the 3rd Representation and at the request of the 1st defendant, entered into a co-operation agreement with the 6th defendant (“the D6 Co-operation Agreement”) in February 2008 (agreeing to transfer 15% shares of the JV Co to the 6th defendant). This agreement was then backdated to 6 October 2006.

15.The plaintiff also pleaded that contrary to the 1st Representation, neither of the 1st, 2nd or 3rd defendant had procured the listing of the JV Co within the said 18 months from the beginning of the joint venture and the 1st defendant had failed to procure the injection of capital at RMB200 million to RMB500 million.

16.He further pleaded that the 1st defendant made the 1st Representation recklessly or negligently and therefore he rescinded the JV Agreement, the D3 Agreement and the Deed of Charge.

17.He relied on the same grounds and pleaded that the 1st defendant had also breached the Collateral Warranty and/or Collateral Contract and he seeks damages for the breach.

18.He further pleaded that at a meeting on 29 April 2009, the 1st defendant admitted that the US$3 million loan from the 5th defendant was in fact provided by the 1st defendant himself. The plaintiff therefore pleaded that the 2nd Representation was also false and was made by the 1st defendant to dilute his holding in the JV Co. He therefore seeks to rescind the loan contract with the 5th defendant as well.

19.He also pleaded that the 3rd Representation was false as there was no prohibition in the Listing Rules of the HKEx for a Mainland citizen to be the controlling shareholder of a listed company. He therefore also seeks to rescind the D6 Co-operation Agreement.

20.He also pleaded total failure of consideration as a further or alternative ground for rescinding the D6 Co-operation Agreement. This ground is not subject to any striking out application.

21.The defendants deny the entire 1st, 2nd and 3rd Representations and the Collateral Warranty and Collateral Contract.

The summonses

22.The 2nd defendant has a counterclaim for two sums, each of HK$40,000, pursuant to clause 8B of the JV Agreement referred to above and the fact that the JV Co did not make any profit in the fiscal years ending 31 December 2007 and 31 December 2008, as the plaintiff had guaranteed in clause 8A.

23.The 2nd defendant is seeking summary judgment for these two sums. However, if the 1st to 4th defendants should fail to strike out the 1st Representation and the Collateral Warranty or the Collateral Contract, then the plaintiff’s claim of rescission of the JV Agreement, the D3 Agreement and the Deed of Charge on the ground of falsity of the 1st Representation and/or breach of the Collateral Warranty and/or Collateral Contract would amount to a defence to the counterclaim.

24.The striking out summons by the 1st to 4th defendants says that the 1st, 2nd and 3rd Representations should be struck out as they comprise opinion and/or intention of the 1st defendant. The summons further says that the three Representations and the Collateral Warranty and Collateral Contract should be struck out as each of them is frivolous, vexatious and an abuse of the process of the court.

25.The summons of the 5th and 6th defendants says that the 2nd and 3rd Representations should be struck out as they comprise opinion and/or intention of the 1st defendant and each of them is frivolous, vexatious and an abuse of the process of the court.

No adjournment

26.No letter containing the broad grounds for the striking out applications has been served by the defendants or sought by the plaintiff. The written submissions by the defendants seem to have gone beyond the grounds in the summonses. The plaintiff asked for an adjournment to put in further evidence to deal with the so-called new ground of the 5th defendant, but I declined the application as I would deal with the 5th defendant’s application on the grounds stated in the summons, which should have been covered by the several rounds of affirmations exchanged between the parties.

The practice

27.Paragraph 18/19/4 of the Hong Kong Civil Procedure 2010 says that it is only in plain and obvious cases that the court should exercise its summary powers to strike out the endorsement on any writ or any pleading under the rule in Order 18 rule 19 of the Rules of the High Court. 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. If any defect in the pleadings can be cured by amendment, the pleadings should also not be struck out.

The 1st Representation

28.The first ground by the 1st to 4th defendants is that the 1st Representation can only be said to be an opinion or intention of the 1st defendant, hence it should be struck out.

29.However, I agree with the plaintiff’s submission that the 1st Representation was on the 1st defendant’s ability to procure a listing of the JV Co within 18 months and to procure investment capital. The plaintiff alleged that the 1st defendant said he “could and/or was in a position to”, not what he “thought or intended to”. The representation of one’s ability is certainly a statement of fact. This ground therefore fails.

30.The second ground is that the plaintiff has not pleaded that the 1st Representation was made by the 1st defendant for the 2nd defendant. Hence, the 1st to 4th defendants say that the plaintiff cannot rescind his JV Agreement made with the 2nd defendant on the alleged falsity of the 1st Representation by the 1st defendant.

31.I disagree. The plaintiff has clearly pleaded that the 1st defendant was a controlling shareholder, chairman and chief executive of the 2nd defendant. It was on this basis that he was able to procure the 2nd defendant to enter into the JV Agreement with the plaintiff.

32.The plaintiff also pleaded that the 1st Representation was made by the 1st defendant for the purpose of inducing the plaintiff to enter into a joint venture with either the 1st defendant or his companies. The 1st defendant therefore made the 1st Representation also on behalf of his companies.

33.The fact that the 2nd defendant is a listed company with a board of directors is neither here nor there. If the 1st defendant should have made the 1st Representation as alleged, he would have intended to convey the idea that the 2nd defendant was under his control.

34.Even if the 1st to 4th defendants are correct on this point, it is just a pleading point that can be cured by an amendment. It does not justify a striking out.

35.The third ground is that the 1st Representation is contradicted by the JV Agreement. Counsel for the 1st to 4th defendants explained that the JV Agreement already provided that the 2nd defendant had the responsibility to plan the listing of the JV Co and to raise funds for the joint venture. These terms therefore contradict the 1st Representation under which the 1st defendant had allegedly undertaken the same obligations.

36.However, I do not see any problem for both the 1st and 2nd defendants to have undertaken the same obligations. It is also the defendants’ case that both the 2nd and 6th defendants have the same obligations to raise funds for the joint venture and they have been doing the same together. The 1st to 4th defendants therefore fail on this ground too.

The Collateral Warranty and Collateral Contract

37.The first ground for striking out this plea is that the raising of capital has been exclusively dealt with in clause 5F of the JV Agreement between the plaintiff and the 2nd defendant. This ground is the same as the last ground used against the 1st Representation. In any case, I do not see how clause 5F can exclude the possibility of the 1st defendant having undertaken the same responsibility.

38.The 1st to 4th defendants further said that apart from the alleged failure to raise funds, the plaintiff has not pleaded anything to support his contention that the 1st defendant was not in a position to do what it had warranted or contracted to do. There was therefore no breach of the Collateral Warranty or Collateral Contract.

39.I also do not agree. Whether the 1st defendant has the ability to raise funds for the joint venture is not a matter for contract. He can only contract “to do so”, (not to contract that “he can do so”). This ground therefore fails.

40.The next ground is that the Collateral Warranty or Collateral Contract is alleged to be between the plaintiff and 1st defendant, but the JV Agreement is between the plaintiff and the 2nd defendant, therefore the 1st to 4th defendants submitted that the breach of the Collateral Warranty or Collateral Contract by the 1^st defendant cannot be a ground for the plaintiff to claim relief in respect of the JV Agreement he made with the 2nd defendant.

41.I have already dealt with the control of the 2nd defendant by the 1st defendant above. For the same reasons I have given, this ground also fails.

The 2nd Representation

42.The defendants submitted that the plea of the 2nd Representation is just a bare assertion not supported by documents. Regarding the alleged admission by the 1st defendant that the US$3 million was provided by him, the defendants pointed out that the minutes of that meeting and the correspondence following the meeting made no mention of the alleged admission.

43.The defendants further submitted that the amount of shares involved was only 0.18% of the issued and allotted shares of the JV Co and was far too small to be meaningful for a misrepresentation to be made.

44.I recognise the strength of these arguments, but I also note that the sole shareholder and director of the 5th defendant, one Mr Leung, has not in his affirmation disclosed the source of this US$3 million. He merely produced a pay-in slip, which is obviously inadequate. No copy of bank statement, savings account passbook or loan document has been produced to show how this substantial sum of US$3 million was sourced. I therefore would not strike out the 2nd Representation and would leave it to be investigated through discovery and inspection and canvassed at the trial.

The 3rd Representation

45.The first ground of attack is that whatever allegedly said by the 1st defendant about the requirement of the Listing Rules could only be a matter of opinion and therefore not actionable.

46.This submission is clearly wrong. The provisions in the Listing Rules are clearly matters of fact.

47.There is also the criticism of absence of a plea that the 1st defendant was the agent of the 6th defendant or the corporate veil of the 6th defendant should be lifted. I disagree. The plaintiff’s case is that the 6th defendant is a nominee of or controlled by the 1st defendant. In any case, it is only a pleading point which can be cured. This ground therefore fails.

48.The last ground is that the plea of the 3rd Representation is inconsistent with all the contemporaneous documents. The defendants further submitted that the JV Agreement contemplated the 6th defendant as one of its shareholders and there are documents that militate against the suggestion of backdating.

49.Regarding backdating, both sides have produced documents to support their respective arguments and it is a matter for trial.

50.On the question of inconsistency, I have doubts about it. The JV Agreement no doubt contemplated the 6th defendant to be one of the parties that may have an interest in its shares indirectly through the 2nd defendant. The reason being that part of the consideration given by the 2nd defendant to the plaintiff for acquiring 40% of the shares of the JV Co were 75,800,000 shares of the 2nd defendant valued at HK$3.90 per share. The JV Agreement further provided that 34,820,000 of these shares of the 2nd defendant were to be given to the 6th defendant. Hence, the 6th defendant, by virtue of its ownership of these 34,820,000 shares of the 2nd defendant, had an indirect interest in the 40% shares of the JV Co as held by the 2nd defendant.

51.There was in fact a separate agreement between the plaintiff and the 6th defendant dated 11 July 2006 (“the First D6 agreement”), whereby the plaintiff agreed to give the 6th defendant the said 34,820,000 shares of the 2nd defendant. The consideration from the 6th defendant under this agreement is:

“to provide (the plaintiff) with the following consulting and technical assisting services:

(a) Promoting the business affairs of (the JV Co) to investment funds in overseas;

(b) To arrange for (the JV Co) or (Taiyuan Sanxing) loans of HK$200,000,000 from overseas;

(c) Providing professional advice to (the JV Co) which will be independently listed in the Stock Exchanges overseas in future, in the matter of restructuring, financing, merger and acquisition and/or procuring strategic shareholder(s).”

52.It is of interest to note that the 34,820,000 shares valued at HK$3.90 per share had a worth more than HK$135 million. It is a substantial sum. These shares were given to the 6th defendant before it had discharged any of its obligations. They were given to the 6th defendant in full without knowing how much work needed to be or would actually be done by the 6th defendant. They were also given in full regardless of whether the contemplated listing of the JV Co would or would not succeed.

53.There is also nothing known about the expertise or credential of those who purportedly worked for or in the 6th defendant, save some general and bare assertions of experience.

54.This arrangement certainly appears to be strange, although the plaintiff has not particularly referred to it, save by saying that the 6th defendant was not the financial adviser of the joint venture and had not provided any financial advice or service.

55.Regarding the 15% shares of the JV Co which was allegedly given under the D6 Co-operation Agreement, the plaintiff said that these shares were in fact given pursuant to the 3rd Representation, which is false. The 1st and 6th defendants however said that these shares were in truth and in fact given under the D6 Co-operation Agreement.

56.One Mr Wong, the sole shareholder and director of the 6th defendant, said that the plaintiff wanted the loans to be raised to be increased from HK$200 million to HK$500 million. He further said that the shape of the finance of the JV Co was poor. The 6th defendant therefore asked for more consideration at 15% of the issued and allotted shares of the JV Co in consideration of the much increased difficulty of the loan-raising task. The 2nd defendant declined the request for additional consideration but the plaintiff agreed. Hence, the plaintiff and the 6th defendant entered into the D6 Co-operation Agreement and the plaintiff gave the 6th defendant the 15% shares of the JV Co as additional consideration.

57.However, if one should look at the terms of the D6 Co-operation Agreement, one would note that what is said by Mr Wong is not free of problem. This agreement states that the consideration from D6 is:

“To provide (the plaintiff) the following consulting and technical assisting services:

(a)  Promoting the business affairs of (the JV Co) to investment funds overseas;

(b)  Providing professional advice to (the JV Co) which will be independently listed in the Stock Exchanges overseas in future, in the matter of restructuring, financing, merger and acquisition and/or procuring strategic shareholder(s).”

They are the same as paragraphs (a) and (c) of the First D6 agreement quoted above.  There is not only the lack of any additional consideration moving from the 6th defendant to support the additional 15% shares in the JV Co given to the 6th defendant, there is also no mention of increasing the amount of loans to be raised from HK$200 million to HK$500 million or any figure of the loans to be raised.

58.This D6 Co-operation Agreement again has the peculiar feature of giving the 6th defendant the whole of the 15% shares of the JV Co before anything was done by the 6th defendant or whether the listing of the JV Co would succeed. This giving away of 15% shares of the JV Co by the plaintiff also reduced his shareholding to below that of a controlling shareholder of the JV Co. These matters obviously need to be canvassed at the trial.

Summary judgment

59.Since the 2nd defendant has failed to strike out the 1st Representation, the Collateral Warranty or the Collateral Contract, the plaintiff surely has a defence to the 2nd defendant’s counterclaim.

60.I also note the plaintiff’s argument that but for the 1st Representation and/or the Collateral Warranty or Collateral Contract he would not have given the guarantee of profit in the JV Agreement. The reason being that the business of Taiyuan Sanxing then could not have generated so much profits. This again is a matter for trial.

Decision

61.In the premises, I dismiss the two summonses to strike out. I also dismiss the 2nd defendant’s summons for summary judgment as this summons was issued after the close of pleadings and the plaintiff’s grounds for opposing the counterclaim were known.

Costs

62.I order the defendants to pay the plaintiff the costs of all three summonses.

Gross Sum Assessment

63.I direct the parties to fix a 9.30 am hearing for the purpose of gross sum assessment of costs. The plaintiff should serve his bills of cost for gross sum assessment purpose - that is not the usual detailed bill - on the defendants no less than 14 days before the hearing for gross sum assessment.

64.(Discussion re matter of counsel)

65.Mr Yip for the 1st to 4th defendants submitted that this is not a complicated matter and need not have been attended to by two counsel. However, bearing in mind the huge sums involved and the striking out applications will be determinative of the rights of the plaintiff, which will have a very drastic consequence on the action and on his ownership in the JV Co, I think it is important enough to warrant the attention of two counsel.

66.I also hear a submission by the 5th defendant that there is no need for counsel of high seniority as engaged in the plaintiff’s camp to appear. Again, for the same reasons I have given, I do not agree. This is a very important matter insofar as the plaintiff’s interests in the action are concerned and it affects his control of his empire of mining in Taiyuan Sanxing.

67.I certify the matter fit for two counsel.

Mr Rimsky Yuen, SC and Mr Raymond Lau, instructed by Messrs Foo, Leung & Yeung, for the Plaintiff

Mr Simon S M Yip, instructed by Messrs Lau, Kwong & Hung, for the 1st, 2nd, 3rd, 4th and 6th Defendants

Mr Jonathan Wong and Mr Ian Yip, instructed by Hastings & Co., for the 5th Defendant