Full Pacific Development Ltd v. Wong See Yin and Others

HCA 1801/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1801 OF 2010

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AND

HCA 167/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 167 OF 2011

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(Heard Together)

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D E C I S I O N

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1.There are two actions. The different plaintiffs are suing the same defendants. The plaintiffs are represented by the same solicitors. The statements of claim are almost the same. So are the re-amended defence and counterclaim in HCA 1801/2010 (“the first action”) and the amended defence and counterclaim in HCA 167/2011 (“the second action”). The amended reply and re-amended defence to counterclaim in the first action and the amended reply and defence to counterclaim in the second action are almost the same as well.

2.The plaintiffs have in their respective actions applied for further and better particulars of the statements of claim.  The terms of the requests for particulars are almost the same.  They have also applied for parts of the re-amended defence and counterclaim in the first action and the amended defence and counterclaim in the second action to be struck out.  The parts sought to be struck out are also very similar.

3.The defendants have also applied for further and better particulars of the statements of claim and the amended replies.  The terms of the requests for particulars by the defendants are also very similar.

The agreed requests and the outstanding requests

4.Mr Lee, counsel for the plaintiff in the first action, has stated in his written submissions that he has abandoned a number of requests for particulars of the amended defence and counterclaim in the first action.  The numbers of the requests that he is still pursuing are 1(1), 1(2), 2(1), 2(2), 3(1), 3(2), 4(3), 6(6), 11(1) and 18(1).

5.Mr Liu, counsel for the plaintiff in the second action, has likewise reduced the number of requests and is pursuing the same outstanding requests.  However, requests 1(1) and 2(1) in both actions have already been answered by the defendants by a letter from their previous solicitors dated 30 March 2012.

6.At the start of the hearing yesterday, the parties made fresh efforts to reconsider the defendants’ requests for particulars of the statements of claim and the amended replies.  As a result, Mr Lee for the plaintiff in the first action agreed to provide further and better particulars of the statement of claim as sought under requests numbers 3.1, 3.2, 3.4, 4.1, 4.2, 4.3, 5.1, 5.2, 5.3, 8.1 and 8.2. 

7.The defendants are still pursuing the requests for particulars in the statement of claim in the first action numbered 2.1, 2.2, 2.3, 6.6, 7.1, 8.4, 9.1, 9.2, 9.3, 9.4, 10.1, 10.5, 12.1, 12.2, 12.3, 13.1 and 13.7.  In addition, they are also pursuing the requests for particulars of the amended reply in the first action numbered 1.2, 1.3, 1.7, 2.1, 3.1, 3.2, 3.3, 3.7, 3.11 and 3.13.

8.Mr Liu for the plaintiff in the second action also agreed to provide particulars of the statement of claim in the second action as sought in requests numbered 2.1, 2.2, 2.4, 3.1, 3.2, 3.3, 4.1, 4.2, 4.3, 7.1 and 7.2.

9.The defendants are still pursuing the requests numbered 1.1, 1.2, 1.3, 5.6, 6.1, 7.4, 7.5, 8.1, 8.3, 8.4, 8.5, 9.1, 9.2, 9.3, 10.1, 10.4, 12.1, 12.2, 12.3, 13.1 and 13.5.  They are also pursuing the requests made to the amended reply in the second action and numbered 1.2, 1.3, 1.7, 2.1, 2.2, 2.6, 2.7(a), 2.7(b), 2.8, 2.9, 2.10, 2.11, 2.12, 3.1, 4.1, 4.2, 4.3, 4.7, 4.11, 4.13, 5.1 and 5.2.

10.The outstanding requests in respect of the statements of claim are almost identical save that request number 9.3 in the first action is unique, whilst requests numbers 7.5, 8.1, 8.3, 8.4 and 8.5 in the second action have no corresponding requests in the first action.

11.The outstanding requests in respect of the amended replies in the two actions are again the same save that requests numbers 2.1, 2.2, 2.6, 2.7(a), 2.7(b), 2.8, 2.9, 2.10, 2.11, 2.12, 5.1 and 5.2 are unique in the second action and not repeated in the first.

12.These different requests arose out of the slight differences in the pleadings of the two actions.  All other requests made in respect of the statements of claim and the amended replies and defence to counterclaims but not mentioned herein have been dropped by the defendants.

The Plaintiffs’ case

13.The plaintiff in the first action, Full Pacific Development Limited (“Full Pacific”) is owned and controlled by the Pong family.  The plaintiff’s shares are owned by Mrs Pong and the daughter, Miss Pong. Mrs Pong is the plaintiff’s shareholder and director, whilst Mr Pong is its shadow director.  Full Pacific used to own Flat 17 on 4th Floor of Kwun Tong Mansion in Kowloon (“the Pongs’ flat”) which was and still is occupied by the Pongs.

14.The plaintiff in the second action, Mr Tin, used to be the owner of Flat 27 on 10th Floor of Kwun Tong Mansion (“Tin’s flat”).  Tin was and still is the occupier of Tin’s flat.

15.Tin came to know the 1st defendant, Wong, in about 2003.  He introduced Wong to Pong in 2007.  Wong is an accountant.  There is no dispute that Tin had previously sought advice from Wong on financial matters. 

16.The plaintiffs pleaded in their statements of claim that in about the end of December 2007 Wong, Tin and Pong met at an Italian restaurant in Sai Kung.  Wong at the meeting proposed to Tin and Pong that Wong would set up an asset management company with net asset value of HK$10 million.  This company would be listed in the Stock Exchange in Singapore.  Tin and Pong could invest in this company.  After listing, the company could also assist Tin and Pong to raise finance for their constructions projects.  If Tin and Pong did not have sufficient money to invest in the company, they could inject the Pongs’ flat and Tin’s flat into the company each for a nominal value of HK$800,000 and in exchange of 8 per cent of the shares of the company.  They could, however, continue to reside in the flats rent free.

17.Wong further represented to Tin and Pong that injecting their flats into the company would facilitate the company in raising funds and to obtain listing in Singapore.  Wong also asked Tin and Pong to obtain credit reports for themselves from a credit data company.  The proposal and representations are referred to as “the December 2007 representations”. 

18.There was then another meeting of Tin, Pong, Mrs Pong and Wong on 9 January 2008 at a Japanese restaurant in Tsim Sha Tsui.  Wong at the meeting asked each of Tin and Mrs Pong to sign a Chinese document.  Wong represented to them that the two documents only set out the December 2007 representations. 

19.Pong, however, noticed that the documents did not set out the rights of Tin and the Pongs to continue residing in their respective flats rent free.  Wong then further represented and assured them that these two documents were mere formalities and the December 2007 representations were still valid.  On the strength of the “9 January 2008 representations”, Mrs Pong, on behalf of Full Pacific, and Tin signed the two documents respectively which are referred to as “the 9 January 2008 Chinese documents”.

20.On 24 January 2008, Tin, Pong, Mrs Pong and Wong met again.  Wong advised them that their names should not appear as shareholders of the asset management company so as to reduce the company’s liability for tax.  Tin and Full Pacific should take up shares in the 2nd defendant, but their rights would remain as represented to them in the December 2007 representations.  Tin and Mrs Pong were told to execute a new Chinese document respectively to replace the ones they had signed on 9 January 2008.

21.In reliance on these “24 January 2008 representations”, Mrs Pong, on behalf of Full Pacific, and Tin signed the new documents respectively on 24 January 2008.  On 15 March 2008, Tin and Pong attended the office of a firm of solicitors as arranged by Wong with a view to execute documents to transfer the two flats to the 2nd defendant pursuant to the December 2007, 9 January 2008 and 24 January 2008 representations.  However, Mrs Pong did not turn up on that day.

22.Tin, Pong, Mrs Pong and Wong attended the solicitors’ office again on 17 March 2008.  Mrs Pong, on behalf of Full Pacific, and Tin executed certain documents respectively and transferred their flats to the 2nd defendant.  They just executed the documents as they were told and without any explanation having been made to them.  There was also no payment of any purchase price to Tin or Full Pacific in consideration of the transfers of the flats.

23.Tin and the Pongs later and with the help of their solicitors found out that Mrs Pong, on behalf of Full Pacific, and Tin had on 17 March 2008 executed a sale and purchase agreement dated 7 March 2008 and an assignment dated 17 March 2008 respectively in respect of their flats.  By the sale and purchase agreements, Full Pacific and Tin had agreed to sell their flats to the 2nd defendant.  By the assignments, Full Pacific and Tin had assigned their flats to the 3rd defendant, with the 2nd defendant acting as the confirmor.  Tin had, in addition, signed a declaration declaring to his loss of certain title documents of his flat.

24.The 3rd defendant then without the knowledge of Tin and the Pongs mortgaged the flats to three different banks successively for banking facilities on 13 June 2008, 9 November 2009 and 2 August 2010.  Tin and the Pongs say that the mortgages were to their prejudice as their interests in the flats were jeopardised by the successive mortgages. 

25.Wong also without the knowledge of Tin and the Pongs purportedly transferred from his own name 8 per cent of the shares of the 2nd defendant to each of Tin and Full Pacific on about 15 July 2008.

26.Wong, on about 20 August 2009, retransferred those shares of the 2nd defendant from Tin and Full Pacific back to himself.  He, on about the same day, transferred 8 per cent shares of one Mega City Limited (“Mega City”) to each of Tin and Full Pacific.  The retransfers and fresh transfers were again without the knowledge or consent of Tin or the Pongs.

27.On about 3 September 2008, Wong asked Tin and Pong to sign tenancy agreements in respect of their flats respectively.  They at first refused, as to enter into tenancies in respect of their flats would be contrary to their rights to live there rent free.  But they were told by Wong that if they did not enter into the tenancies, it would be difficult to obtain bank financing for their construction projects.  As a result of this representation, Tin and Pong then went to Wong’s office on 4 September 2008 and signed tenancies in respect of their flats respectively.

28.Despite all the representations, transfers of flats and signing of tenancies, Wong had declined the requests by Tin and Pong to arrange finance for no less than 10 construction projects on the ground that the time was not good for making investment and they should wait.  Wong also did not set up any asset management company as he had represented in the December 2007 representations.  There was thus no listing in the Singaporean Stock Exchange of any asset management company.  Tin and the Pongs had also not received any financial statement or notice of members’ meeting of the 2nd defendant or Mega City.

29.Tin and Full Pacific therefore sue Wong and the 2nd and 3rd defendants for return of the two flats and damages on the ground that the December 2007, 9 January 2008 and 24 January 2008 representations were all false and were made by Wong fraudulently, recklessly or negligently.

The defendants’ case

30.The defendants deny the claims.  Wong denies that he had made any of the said representations.  He also refuses to admit the alleged representation made on about 3 September 2008 which allegedly led to the signing by Tin and Pong of the tenancies. 

31.The defendants pleaded in the re-amended defence and counterclaim in the first action and the amended defence and counterclaim in the second action (both are hereinafter referred to as “the defences”) that Wong had entered into a dialogue with Tin and Pong in relation to business and financial opportunities.  Tin in about the second quarter of 2007 represented to Wong that he was a person of means and had substantial working experience and good qualifications.  He, together with partners in Hong Kong and the mainland, had construction projects in the mainland of over RMB100 million worth.  He was also the chairman of the Owners’ Committee of Kwun Tong Mansion with authority to discuss with others and to approve the estate redevelopment project of Kwun Tong Mansion and other projects.

32.Pong also represented to Wong that he was a rich man with wealth and working experience and also a member of the Owners’ Committee of Kwun Tong Mansion. 

33.Wong then drafted the two Chinese documents which were signed by Mrs Pong on behalf of Full Pacific and by Tin on 9 January 2008.  Wong had sent the drafts of the documents to Tin and the Pong family several weeks before 9 January 2008 for them to consider, amend and seek legal advice thereon.  Despite the drafts having been finalised, Wong was reluctant to sign them as Tin and Pong had not provided him with their credit reports and their flats were well over 40 years old and with charging order registered against them for repair of the slope within the lot on which Kwun Tong Mansion stands.  There would thus be difficulties to obtain mortgage finance.

34.However, Tin and Pong urged Wong to sign the documents by representing to him that there would be good business opportunities for him, Tin, Pong and a company called E-Pacific Technologies Limited (“E‑Pacific”) in which Tin and Pong had shares.  They further represented to Wong that they would pay the rent, rates and management fees for their flats but would allow Wong and his related companies to use the flats to obtain financial benefits.  They also represented to Wong that they would be responsible for the mortgage payments of their flats (save the first 12 months, which would be borne by an unnamed related company).

35.For the shares to be owned by Tin and Full Pacific in the investment company, Tin and Pong would allow Wong to replace them by the shares of another company.  Tin and Pong would also allow Wong to use the shares, funds and assets (possibly mean the investment company) for the purpose of investment, disposal, transfer or pledge.  Tin and Pong would also inject cash into the business (possibly mean the investment company).

36.Before the documents were executed on 9 January 2008 at the Japanese restaurant in Tsim Sha Tsui, Tin and Pong also provided Wong with the credit reports on them and a bank statement of E-Pacific dated 31 December 2007 showing transactions of more than HK$1 million. The two Chinese documents were then signed as deeds by Mrs Pong, on behalf of Full Pacific, and by Tin and Wong.  These two deeds were then replaced and superseded by two other Chinese deeds dated 24 January 2008 and signed by the same parties.  The later deeds were also drafted by Wong and the drafts had been sent to Tin and the Pong family for more than a week for their consideration, amendment and seeking legal advice before they were signed by Mrs Pong and Tin.

37.The transfers of the flats each at a nominal price of HK$800,000 and the allotment of 8 per cent shares of the 2nd defendant to each of Tin and Full Pacific were provided in these two deeds.  The deeds also provided that Wong had the right to use, sell, transfer and pledge the assets, funds and shares (possibly mean the investment company) for investment in different projects and companies and to obtain financial benefits.

38.Tin, Pong, Mrs Pong and Wong then attended the solicitors’ office.  Mrs Pong, on behalf of Full Pacific, and Tin then executed the sale and purchase agreements dated 7 March 2008 and the assignments dated 17 March 2008 in respect of their flats respectively.  Each of them also executed a confirmation dated 10 March 2008 providing that the parties would settle the purchase price without going through the solicitors.

39.The relevant amount of the shares of the 2nd defendant were then transferred to Tin and Full Pacific on 15 July 2008. 

40.The defendants also pleaded that the 3rd defendant was entitled to mortgage the flats as it was the owner of the flats. Tin and Pong also signed tenancies with the 3rd defendant over the flats. 

41.Regarding the refusal to arrange finance for the construction projects introduced by Tin and Pong, the defendants pleaded that Wong had full discretion to decide what project to finance.  Furthermore, each of the projects proposed or introduced by Tin and Pong involved over RMB100 million and were with high risk and uncertain return, but without major cash investment by either of Tin and Pong rendering the feasibility unlikely.  There were also poor assessments of the projects by bankers, and the land title documents and figures given to Wong were inaccurate and incorrect.  It was for these reasons and some other pleaded reasons that Wong declined the requests for finance.

42.The 3rd defendant also counterclaims for orders for possession against Tin and the Pongs and payments by them of rental deposits and overdue rentals.  It also counterclaims against Tin and Full Pacific for overdue mortgage payments.

43.The grounds of defence and counterclaim are thus strictly based on the terms of the two Chinese deeds dated 24 January 2008, the sale and purchase agreements, the assignments and the tenancies.

Legal principle for striking out pleadings

44.The plaintiffs want to strike out parts of the defences.  The applications are made under Order 18 Rule 19 of the Rules of the High Court and the inherent jurisdiction of the court.  The grounds are that they are scandalous, frivolous and/or vexatious and/or they may prejudice, embarrass or delay the fair trial of the actions and/or they are otherwise an abuse of the process of the court. 

45.I remind myself of the principles governing striking-out applications.  I have also consulted paragraph 18/19/4, 18/19/6-18/19/10 and 18/19/13-18/19/21 of the Hong Kong Civil Procedure 2013 (“HKCP 2013”).  It is only in plain and obvious cases that the court should exercise its summary powers to strike out any pleading under Order 18 Rule 19 of the Rules of the High Court.  Disputed facts are to be taken in favour of the party sought to be struck out.  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 striking out of parts of the defences

46.The first attack in the striking out exercise is sub-paragraph 5(f)(iii) of the defences, which is the same in both actions.  This sub-paragraph is part of an answer to paragraphs 7 and 8 of the statements of claim.

47.Paragraphs 7 and 8 of the statements of claim pleaded that Tin came to know Wong in 2003 and introduced him to Pong in 2007, and that Wong was a professional accountant from whom Tin had obtained professional advice on occasions in relation to financial construction projects.

48.Paragraph 5 of the defences admitted that Wong was a professional accountant and had given Tin professional advice on financial matters.  It further pleaded in sub-paragraph 5(c) that Tin had in the second quarter of 2007 sought advice from Wong on financial matters and told Wong of his intention to borrow money from Wong’s finance company, Wealth Credit Limited.  Sub-paragraph 5(d) then pleaded that Tin and Pong later approached Wong with Tin claiming to be the chairman of E‑Pacific and Pong the chairman of the Owners’ Committee of Kwun Tong Management and a director of E‑Pacific. They expressed an intention to borrow funds to finance their projects. Paragraph 5(e) then pleaded that Pong, on behalf of Full Pacific, and Tin had invited Wong to inspect sites in the mainland for the proposed projects that they required financing. 

49.Paragraph 5(f)(i) and (ii) pleaded Wong’s requests by emails on various dates in July and August 2007 to Tin for proofs of finance and assets of Tin’s companies.  Tin and Pong then replied that they, together with partners, had been running a business with asset worth of over RMB100 million.  They showed a number of documents to Wong to persuade him to provide them with loans.  The documents included an email dated 20 August 2007 from Tin which represented to Wong that Tin had a partner who held assets of several hundred millions of RMB, a banking facility at HK$40 million, and a business registration certificate of E-Pacific dated 15 September 2007.

50.However, the defendants in paragraph 5(f)(iii) suddenly pleaded to the backgrounds and qualifications of Tin, Pong and Mrs Pong.  It pleaded to the credentials of Tin and Pong, the positions held by them and Mrs Pong in various companies, and the litigations that they had been and were involved in.

51.Regarding Tin, it pleaded to 10 litigations in various courts and tribunals in which either Tin or a company of his was involved.  Regarding Pong, it pleaded a litigation in which a company owned by him and his wife were involved.  It also pleaded to the fact that Tin and Pong were shareholders and directors of a company called Kwun Tong Mansion (Owners’ Committee) Redevelopment Limited (“OC Redevelopment Limited”) which they used to imitate the Owners’ Committee of Kwun Tong Mansion, and that the defendants believed that that was to mislead or deceive outsiders.  There is, however, no particulars pleaded on the alleged imitation and deception.

52.Regarding Mrs Pong, it pleaded the litigation in which the company owned by her and Pong was involved.  The sub-paragraph then concluded from these matters that there was great doubt on whether Tin, Pong and Mrs Pong were responsible persons. 

53.Despite the length of the sub-paragraph, which covered about six pages, there is no indication of what the defendants are driving at by pleading to all these matters.  This sub-paragraph is wholly unnecessary in advancing the defendants’ case.  They are irrelevant to the grounds of defence as pleaded.  It is only for making imputations on the characters of Tin, Pong and Mrs Pong (see para 18/19/7 of HKCP 2013).

54.Wong, in an affidavit, said that these matters were relevant to whether Tin and Full Pacific could satisfy the prerequisites of the Securities and Futures Commission as laid down in section 129 of the Securities and Futures Ordinance which was the reason why Wong was hesitant in setting up the asset management company.  However, the satisfaction or otherwise of section 129 and its relevance to the setting-up of the asset management company has not been pleaded as a ground of defence.  I therefore find this sub-paragraph scandalous. 

55.Furthermore, if these matters are to remain in the pleading and tried as part of the action, the trial will be unnecessarily lengthened, as Tin has already pleaded to the 10 litigations in his reply. 

56.For these reasons, I strike out paragraph 5(f)(iii) from the defences.

57.The next attack is on sub-para 6(g)(iii).  It is materially the same in both actions. 

58.Para 6 is titled “Representations and proposals between Tin, Full Pacific and Wong”.  It is supposed to be the answer to para 9 in the two statements of claim which pleaded the December 2007 representations.  Para 6 denied these representations.  It further alleged the Tin’s representations that he was a rich man and was connected with E‑Pacific. It also alleged that Tin had represented that he was the chairman of the Owners’ Committee of Kwun Tong Mansion and had been authorised to discuss and approve the estate redevelopment project of Kwun Tong Mansion and other projects.

59.Paragraph 6(g) then pleaded that Tin had made the following representations on his background and financial situation. Sub-para 6(g)(i) then pleaded that since Tin was a director and shareholder of a number of companies, it was doubtful if Tin was entitled to receive legal aid in the first action and also Comprehensive Social Security Assurance (“CSSA”), which Tin was receiving from the Social Welfare Department. Sub-paragraph 6(g)(ii) in the first action then pleaded that Tin was unable to pay rent, rates and management fees for Tin’s flat as per the tenancy that Tin had signed with the 3rd defendant.  The same sub-paragraph in the second action made the same allegation against Full Pacific. 

60.However, sub-paragraph 6(g)(iii) suddenly pleaded that Tin was not the authorised person or chairman of the Owners’ Committee of Kwun Tong Mansion or its authorised person.  It further pleaded that the defendants believed that OC Redevelopment Limited was set up by Tin, Pong and their friend Chan to imitate the Owners’ Committee of Kwun Tong Mansion for misleading or deceiving outsiders to obtain illegal referral fees. It also pleaded that the Incorporated Owners of Kwun Tong Mansion in fact had no relationship with OC Redevelopment Limited.

61.The pleading in sub-paragraph 6(g)(iii) in both actions has nothing to do with the grounds of defence.  There are no particulars to support the defendants’ belief that Tin had committed the alleged fraudulent conduct.  There is also no pleading of any loss suffered by any of the defendants by reason of the alleged fraud.

62.I find that this is mere smearing and scandalous.  I therefore strike sub-para 6(g)(iii) out from both actions.

63.The third attack is on sub-paras 6(i)(i) and (iii).  However, Mr Liu for the plaintiff in the second action invited me to include sub-para 6(i)(ii) as well. 

64.Sub-para 6(i)(i) pleaded that Pong had on 4 September 2008 signed a debt restructuring agreement with one Matrix Accounting Service Company, a business owned by the 2nd defendant, but did not pay the basic fees as he was a gambling addict and was accumulating his debts.  Sub-para 6(i)(ii) pleaded the Pongs’ failure to pay rent under the tenancy that Pong had signed with the 3rd defendant.  Sub-paragraph 6(i)(iii) is a repetition of sub-para 6(g)(iii), but in relation to Pong.

65.Mr Liu for the plaintiff in the second action pleaded that sub-para 6(i) as a whole only concerned fraudulent representations made by Pong on his background and financial situation and had nothing to do with Tin.  Hence this sub-paragraph in the second action should be struck out.

66.However, in light of the fact that Tin and Pong had been acting together in their dealings with Wong and the whole dispute involved the alleged conduct of both Tin and Pong as a whole vis-à-vis that of Wong, I would not adopt this divisible approach.  I would not strike out sub-para 6(i) in the second action on the grounds submitted by Mr Liu.  I would also not strike out sub-paragraph 6(i)(i) in both actions as this is an averment to the falsity of Pong’s representation that he was a rich man as pleaded in sub-para 6(h).  However, I would strike out sub-para 6(i)(iii) on the same grounds for my striking out of sub-para 6(g)(iii).

67.The fourth attack is on sub-para 6(j)(iii).  It pleaded the defendant’s belief that OC Redevelopment Limited was set up to imitate the Owners’ Committee of Kwun Tong Mansion to deceive others.  This part should be struck out on the same grounds for striking out sub-para 6(g)(iii). 

68.This sub-paragraph further pleads that OC Redevelopment Limited had not filed any annual return since 2007 and was unable to pay the business registration fee, being sued for the same, and was in the process of being struck off, save that the process was withheld by Wong.  I cannot see the relevance between these pleaded matters and the grounds of defence.  It is just a smearing of Tin and Pong as they are the shareholders and directors of OC Redevelopment Limited.  I therefore strike out sub-para 6(j)(iii) as a whole.

69.The fifth attack is on sub-paragraphs 6(k) to 6(r). 

70.Sub-paragraph 6(k) referred to a number of companies owned by Tin, the Pongs, or their friends, and that these companies were in the process of being struck out or dissolved and they had failed to file annual returns or pay business registration fees. 

71.I cannot see the relevance between these matters and the grounds of defence.  Even if they may remotely be relevant to whether the alleged claims of wealth by Tin and Pong were true or not, they are still irrelevant to the grounds of defence.  The defendants are not saying that any one of them had suffered anything by reason of the alleged claims of wealth being false.  The defendants seek to hold Full Pacific and Tin to the bargains that they had entered into by the various documents that they had signed.  I therefore strike out sub-para 6(k).

72.Sub-paras 6(l), (m) and (n) pleaded that Tin and Pong intended to deceive Wong of referral fees for construction projects that they introduced to Wong, and the defendants believed that they did so for the ultimate aim of solving their financial problem.  They therefore transferred the two flats to the 3rd defendant as inducement for Wong to yield to their deception.  However, there is no suggestion that any of the defendants had suffered any loss by reason of the alleged deception.  Hence there is no cause of action disclosed.  Such averment is again for smearing and is based purely on the defendants’ conjecture.  I therefore strike them out from both actions.

73.Sub-para 6(o) pleaded the defendants’ belief that Tin and the Pongs had fabricated the allegations in the statements of claim so as to escape from their contractual responsibilities and the investigation of Tin by the Social Welfare Department.  The reason being that Tin and the Pongs had failed to provide the supporting documents for their projects, failed to fulfil their obligations in the deeds dated 24 January 2008 and their tenancies with the 3rd defendant, failed to achieve their aim of deceiving Wong and failed to provide the relevant documents, explanations and information to the Social Welfare Department.

74.The first part in the sub-paragraph about the plaintiff’s contractual responsibilities may not be pleaded and it does not add anything to the defence.  For the rest, there are no particulars to provide the causal connection between the various alleged acts and the alleged purposes. They are also irrelevant to the grounds of defence.  I therefore strike out sub-paragraph 6(o) from both actions.

75.Sub-para 6(p) pleaded that Tin and the Pongs were induced by the substantial increase of real property price to make these two claims.  This again is a conjecture unsupported by particulars.  The making of such allegations will only prolong the trial unnecessarily.  I therefore strike out sub-para 6(p) from both actions.

76.Sub-para 6(q) pleaded that Tin is being investigated by the Social Welfare Department for fraudulent claim of CSSA. This again is utterly irrelevant to the grounds of defence, and I strike it out from both actions.

77.Sub-para 6(r) pleaded that Tin and some other persons had resigned from their directorships in E-Pacific and that a number of other companies in which Tin and the Pongs had interest were being struck off. It further pleaded that their friend Chan had disposed of his flat in Kwun Tong Mansion and that the defendants believed that Tin and Full Pacific had fabricated the allegations in the statements of claim to shift the burdens to Wong.  These matters are again unrelated to the grounds of defence and contain the defendants’ conjecture.  I therefore strike them out.

78.Finally, I come to sub-para 19(p) in the first action and 21(p) in the second action.  They pleaded to the same matters, though numbered differently.  They pleaded to clause 17 of the deeds dated 24 January 2008 and alleged that the doubts about the background of Tin and Pong were implied therein, but this is irrelevant to the grounds of defence. 

79.They further pleaded that Full Pacific had, by a letter dated 4 September 2008, sought help from the 2nd defendant to pay rent for Pongs’ flat to the 3rd defendant from 1 October 2008 to 30 September 2010.  The defendants have already pleaded this in paragraph 18 of the defences and this need not be repeated here.

80.The sub-paragraphs then repeated the debt restructuring agreement that Pong had signed, Pong’s failure to pay the basic fee and that Pong was a gambling addict.  This averment has already been struck out above. 

81.They then pleaded that the above matters indicated that the projects of over RMB100 million as proposed by Tin and Pong were unreasonable and the defendants were reasonable in having doubts of the background including the financial situation of Tin and the Pongs.

82.Since the matters relied on as providing the indications are struck out, there is no basis for the conjecture as indicated by those matters to remain.  I therefore strike out sub-paras 19(p) and 21(p) from the defences.

83.Since the plaintiffs have succeeded almost in total in their summonses for striking out, I make a costs order nisi that the defendants do pay the plaintiff the costs of the striking-out summonses forthwith to be taxed with Tin’s own costs be taxed in accordance with the Legal Aid Regulations.

Request for further and better particulars of pleadings

84.I now deal with the applications for further and better particulars.  I refer to Order 18 Rule 12(3B) of the Rules of the High Court, which provides that:

“(3B). No order shall be made under paragraph (3) unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.”

85.I also refer to the helpful comments of Bokhary JA (as he then was) in Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd [1994] 2 HKC 264 at 269 to 270 in determining whether particulars should be ordered:

“…the things which properly particularised pleadings must do are to:

(1) inform the other side of the nature of the case they have to meet as distinguished from the mode in which that case is to be proved;

(2) prevent the other side from being taken by surprise at the trial;

(3) enable the other side to know what evidence they ought to be prepared with and to prepare for trial;

(4) limit the generality of the pleadings, the claim and the evidence;

(5) limit and define the issues to be tried, and as to which discovery is required; and

(6)   tie the hands of the party so that he cannot without leave go into any matters not included (although if the opponent omits to ask for particulars, evidence may be given which supports any material allegation in the pleadings).”

The plaintiffs’ requests for further and better particulars of the defences

86.I start with the plaintiffs’ requests for particulars from the defendants.  I refer to the requests in the second action.  The first outstanding request is on para 2(a).  The defendants pleaded in paragraph 2(a) about the signing by each of the plaintiffs of a sale and purchase agreement dated 7 March 2008 respectively.  The outstanding request is for the place where the plaintiffs signed the documents.  I am of the view that the particulars should be provided to this request.

87.The second outstanding request is on para 2(b), where the defendants pleaded to the execution by each of the plaintiffs of an assignment dated 17 March 2008 respectively.  The request is again for the location where the assignments were executed by the plaintiffs, and I allow it.

88.The next request is under paragraph 2(e).  It pleaded to the respective execution by the plaintiffs of two instruments of transfer dated 15 July 2008 and two bought and sold notes of the same date in relation to the transfer of 16 shares of the 2nd defendant from Wong to the plaintiffs.  The requests are for the date when and place where these documents were executed by the plaintiffs, and I allow them.

89.The next request is on paragraph 2(g), which pleaded that before March 2008, Mrs Pong and Tin had signed two Chinese preliminary sale and purchase agreements regarding the two flats, and the plaintiffs request for particulars of the location where these two documents were signed by Mrs Pong and Tin, and I allow it.

90.The next request is on para 9(a), where it is pleaded that the drafts of the deed dated 9 January 2008, which had been drafted by Wong several weeks before 9 January 2008, were sent to Tin and the Pong family for consideration and amendment.  It goes on to say that after several discussions, copies of the final version were sent to all parties.  The plaintiffs’ request for particulars on whether any of the drafts were amended consequential to such discussions, and if so, what were the amendments.  I would allow the request because it may throw light on whether there was any representation made as pleaded in the December 2007 representations.

91.The next request is on para 9(e), where the defendants pleaded that although Wong stated that he was not satisfied with the contents of the deeds, he was reassured and convinced by Tin and Pong to sign them.  The plaintiffs request for particulars of the parts of the contents of the deeds with which Wong was not satisfied, since the deeds had been drafted by him.  I would again allow this request, as it may again throw light on whether the December 2007 representations had or had not been made.

92.The last request is on paragraph 12(d), where the defendants pleaded that Mrs Pong and Tin had signed two Chinese confirmations dated 10 March 2008 confirming that the purchase price for the two properties would be settled otherwise than through the solicitors.  The plaintiffs request for the date when and place where these confirmations were signed, and I allow the request.

93.Since the plaintiffs have succeeded in the remaining requests, I also make a costs order nisi that the defendants do pay the plaintiffs one‑third of the summonses for particulars of the defence and the full costs of the hearing yesterday.

The defendants’ requests for further and better particulars of the statements of claim

94.Now I deal with the requests for particulars by the defendants on the statements of claim and the amended replies.  The first outstanding request is on paragraph 8 of the statements of claim, where it is pleaded that Tin had contacted Wong and sought professional advice from him on several occasions in relation to financing matters of certain construction projects in the mainland in respect of which Tin, Pong and their friends were business partners.

95.The defendants’ request is for the dates and particulars of these several occasions and also the construction projects in question, including the nature of the projects, values of the advancements sought, names of the companies which handled the projects, the roles of Tin and Pong in each project, and whether they had been shareholders, directors or employees of these entities.  I do not think it is necessary to provide the particulars as requested because the averment in paragraph 8 is merely for providing the background, and there is no dispute that Tin had on occasions sought professional advice from Wong in relation to financing matters.  This has been admitted by the defendants in paragraph 5 of the amended defence.  I therefore disallow this request.

96.The next request is on paragraph 16.1 which pleaded that in or about mid‑March 2008 Wong arranged and asked Tin, Pong and Mrs Pong to attend the solicitors’ office.  The defendants request for particulars of whether Mrs Pong and/or Pong’s daughter were aware of the transfer of ownership of property between the plaintiff and the 2nd and/or 3rd defendants, and for the dates and circumstances in which Mrs Pong and her daughter had become aware of the transaction of the property.

97.I do not think it is necessary for particulars to be provided as sought.  The reason being that the plaintiffs have pleaded in paragraph 16 that as induced by Wong’s representations, they on 17 March 2008 went to the solicitors’ office to execute documents to transfer the flats.  So they were aware that they were going to execute documents for that purpose.  I therefore disallow this request.

98.The next request is on paragraph 16.2 of the statement of claim, which pleaded that on 15 March 2008, only Tin and Pong attended the solicitors’ office as instructed by Wong.  However, no document was signed on that day as Mrs Pong, who was a director of Full Pacific, was absent.  The defendants request on how and when did Wong instruct that only Tin and Pong should attend the solicitors’ office.

99.I think this request is misconceived.  The plaintiffs have not pleaded that Wong had given such instruction.  In fact, paragraph 16.1 of the statements of claim pleaded that Wong had asked all three of them to attend the solicitors’ office.  I therefore disallow this request.

100.The next request is on para 16.3, which pleaded that on 17 March 2008, Wong, Tin, Pong and Mrs Pong attended the solicitors’ office to execute the relevant legal documents for transfer of Tin’s flat and Pongs’ flat, and they were attended to by a clerk of the solicitors’ firm who only showed them where to sign their names without explaining to them the contents of the documents.

101.The defendants request for particulars on whether Tin and/or Pong and/or his wife and/or daughter knew of the existence or contents of the documents signed on 17 March 2008 at the solicitor’s office before their solicitors had found out the exact documents that they had signed as pleaded in paragraph 16.6 of the statements of claim.

102.Again, I do not think the request need be entertained because paragraphs 16.4 and 16.6 of the statements of claim have sufficiently pleaded the plaintiff’s case on this matter that Tin and the Pongs knew that they were signing documents to transfer their flats to Wong’s company on 17 March, but they did not know what kind of document they had signed until they were told by their solicitors.  I therefore disallow this request.

103.The next request numbered 9.1 is on paragraph 16.6 which pleaded that the plaintiffs, with the help of their solicitors, later found out that Tin and Mrs Pong had each signed a sale and purchase agreement dated 7 March 2008 and an assignment dated 17 March 2008.  The defendants ask for particulars of the days when they and the identity of those of them who were informed by the plaintiffs’ solicitors as to the nature of the documents that they had signed.  I will allow this request as it is reasonable for the defendants to know when the plaintiffs had become aware of the nature of documents that they had signed and that the documents did provide for HK$800,000 as consideration for each of the flats and that the flats were ultimately assigned to the 3rd defendant at HK$990,000 each.

104.The next request under this paragraph is for particulars of any knowledge of the plaintiffs’ representatives of signing these documents prior to their being advised by the plaintiffs’ solicitors.  I think the plaintiffs’ case has already been pleaded clearly that they did not know about the nature of documents prior to being so advised.  I therefore disallow this request.

105.The next request under this paragraph is for particulars of whether the Pongs had reported to the Government authorities, including the Inland Revenue Department or other professionals, of the disposal of the Pongs’ flat in the years of assessment from 2007/2008 to 2011/2012.  I will allow this request as it is relevant to know when the Pongs had knowledge of the disposal by the sale and purchase agreement and assignment as otherwise they would have no basis for making any concrete report of the disposal.

106.The last request on this paragraph is for the first date and circumstances that any of the Pongs or Tin had become aware of the disposal of the flats to the 2nd and 3rd defendants.  I will also allow this request because it is the plaintiffs’ case that they were not aware of the assignment of the property to the 3rd defendant until they were advised by the solicitors.

107.The next group of requests is under paragraph 20 where it is pleaded that unbeknown to the plaintiffs, Wong had purportedly transferred from his own name 8 per cent of the shares of the 2nd defendant to each of the plaintiffs on about 15 July 2008.  The first request is for the dates and how any one of the Pongs and Tin had become aware of the transfers.  I think this request should be allowed so that the defendants will know whether the action was taken by the plaintiffs promptly.  This can affect the conduct of the defence on what evidence to collect and to consider whether the plaintiffs have delayed in lodging the action.

108.Paragraph 10.5 of the first action (and 10.4 of the second action) ask for confirmation of whether it is the plaintiffs’ case that the plaintiffs are or were shareholders of the 2nd defendant.  In the light of the plaintiffs’ claim for return of the flats which they say are held by the 3rd defendant as trustee, I think the plaintiffs should confirm whether they had owned the shares beneficially or had merely held them as trustees.  I will therefore allow this request for particulars.

109.The next request is under paragraph 22 (or paragraph 26 of the second action) which pleads that during the period between 2008 and 2010, Tin and Pong had, on divers occasions, approached Wong and asked Wong and/or his companies, including the 2nd and 3rd defendants, to finance no less than 10 construction projects.  However, Wong rejected all the requests and on each occasion told them that the time was not good for making the investment.  Since this is pleaded as one of the matters in support of the plaintiffs’ claim of misrepresentation, I agree that particulars should be given on the dates when Tin and Pong had approached Wong for finance of these projects and also the particulars, including the values, the amount of referral fees and the organisations or companies for which the constructions were proposed.  I therefore allow requests 12.1 and 12.2.  I will not allow request 12.3 which seeks particulars on how Tin and Pong had passed information and materials of the projects to the 1st to 3rd defendants. I think this is evidence.

110.The last request for particulars in the statement of claim of the first action is on paragraph 23 (or paragraph 27 of the second action) which alleges that unbeknown to and without consent of the plaintiffs, Wong had swapped the 8 per cent shares in the 2nd defendant with 8 per cent shares in Mega City.  For the same reasons that I have given for the request on paragraph 20 above, I will allow request number 13.1 and 13.7.

111.There are several requests made on the statement of claim in the second action which have no correspondence in the first action and I now deal with them.

112.The first such request is made on paragraph 16.3 of the statement of claim in the second action which pleaded that on 7 March or 17 March 2008 and upon Wong’s arrangement, Tin, Pong and Mrs Pong attended the solicitors’ office to execute relevant legal documents to transfer the two flats.  They were attended to by a solicitor’s clerk who only showed them where to sign without explaining the contents of the documents to them.

113.The first outstanding request under this paragraph number 7.5 is for particulars of whether Tin had submitted or reported his transfer of property to any Government authorities but not limited to the Social Welfare Department.  I will allow this request because it will throw light on when exactly Tin became aware of the transfer with concrete information as contained in the sale and purchase agreement and assignment.

114.The next group of additional requests in the second action are made under paragraph 16.4 which pleaded that Tin had not received the purchase price or any part thereof on 17 March 2008 or any other time for the transfer of the property to the 3rd defendant.

115.The first request is for particulars on whether Tin had received any form of consideration other than the purchase price.  I will allow it so as to make clear to the defendants on whether it is Tin’s case that he had received consideration other than in the form of the purchase price as it is the defendants’ case that the plaintiffs had been credited the purchase price which was subsequently used for acquisition of the shares in the 2nd defendant.  I therefore allow request number 8.1.

116.The next request is number 8.3 which asks for particulars of when the plaintiff or his solicitors had acquired knowledge or received documents signed by Tin at the solicitors’ office on 7 March or 17 March in respect of the consideration of the property.  I will again allow this request because it will enable the defendants to know when exactly did Tin become aware of what had actually happened.

117.The next request 8.4 is on when did Tin or his solicitors receive the statutory declaration that Tin signed on 17 March 2008. For the same reason given above, I will allow this request.

118.The last one numbered 8.5 seeks particulars on whether Tin had reported to the Social Welfare Department of his execution of the relevant documents for disposing of his flat in relation to the annual review for his receipt of CSSA from the Social Welfare Department.  It seeks the days when Tin gave written notice to the Social Welfare Department regarding the transfer of the property from the plaintiff to the 2nd or 3rd defendants, the consideration of HK$800,000 receivable by Tin and the alleged allotment of 8 per cent shareholding at nominal value of HK$800,000 in the proposed assets management company.  I think these are only for interrogatories and I will disallow it.

The defendants’ requests for further and better particulars of the replies

119.I now deal with the requests for particulars in the reply.  The first request is under paragraph 3.3(d) which pleaded to an email with two attachments having been sent by E‑Pacific to the 2nd defendant on about 20 August 2007.  The defendants ask for particulars on who sent this email, who drafted the email, and also the purpose of the email in attaching a banking facility letter.  I disallow this request because paragraph 3.3(d) of the reply is an admission of an averment in the amended defence and no particulars should be sought from an admission.

120.The next request is under paragraph 3.3 of the amended reply in the first action which pleaded that the plaintiff would refer to the contents of the emails and business registration certificate of E‑Pacific at the trial.  The defendants ask for particulars of the contents of the business registration certificate.  Again, this paragraph is an admission to an averment in the defence.  Therefore no particulars should be allowed and I disallow this request.

121.The next request is made on paragraph 3.5 of both amended replies.  This paragraph is an answer to paragraph 3(f)(iii) of the defences.  That sub-paragraph of the defences has been struck out and paragraph 3.5 of the reply has thereby become unnecessary.  Hence, I will not order any particulars for a paragraph that need not remain in the amended replies.

122.There are several requests in respect of the amended reply in the second action which are unique.  In the second request, which is made on paragraph 3.3(f)(iii), which pleaded that Tin was then unemployed and living on CSSA granted by the Social Welfare Department.  The defendants ask for particulars of the dates when he applied for CSSA and when he obtained it and whether he had reported to the department of his assets at a value of HK$800,000, and also for the names of the authorities to which he had made a report, so on and so forth.  These are matters for interrogatories and not for further and better particulars.  The reason being that they are not relevant to the issues between the parties and should not be provided by way of further and better particulars.

123.The final request is on paragraph 3.6(b).  It seeks particulars about one of the litigations that Tin had responded to in his amended reply.  The litigations are pleaded in sub-paragraph (5)(f)(iii) of the amended defence and that has been struck out.  With the striking out of that paragraph in the defence, paragraph 3.6(b) in the amended reply has become unnecessary and I again will not order any particular for a paragraph that has become irrelevant.

124.Since the plaintiffs have substantially succeeded in opposing the requests for particulars on the statements of claim and have wholly succeeded in opposing the requests for particulars in the amended replies, I order that the plaintiffs should have half of the costs of the summonses for particulars in the statements of claim and the whole costs for the summonses for particulars in the replies, and the whole cost for the hearing yesterday, such costs to be taxed and paid forthwith.

125.Finally, I order that the defendants do, within 14 days, file an engrossed version of the amended defence reflecting the order of striking out and the parties to provide the particulars as agreed or ordered herein within 21 days from today.

(Discussion re striking out summons and costs)

126.Today’s costs must follow the event, including the costs of the hearing.  The plaintiffs get the full costs of the hearing yesterday and today.

127.In relation to Tin’s own, they shall all be taxed in accordance with the Legal Aid Regulations.

Mr Joseph Lee, instructed by Joseph Li & Co, for the plaintiff in HCA 1801/2010

Mr Michael Liu, instructed by Joseph Li & Co, for the plaintiff in HCA 167/2011

Mr Jenkin Suen, instructed by Wong, Hui & Co, for the 1st to 3rd defendants in HCA 1801/2010 and HCA 167/2011