LAM SIU SUN DENNIS AND ANOTHER v. CHEUNG TAK MAN DESMOND AND OTHERS

HCA 2413/2018 &
HCA 844/2019
(Heard together)

[2026] HKCFI 3549

HCA 2413/2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2413 OF 2018

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(by original action)

(by counterclaim)

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AND

HCA 844/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 844 OF 2019

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________________

(Heard together)

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DECISION

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I.  INTRODUCTION

1.  On 10 October 2024, Master Dick Ho made an unless order (the “Unless Order”) that “unless the parties do obtain counsel advice and take out all further interlocutory applications to be listed before the Judge by 31 December 2024…the parties shall be debarred from taking out any further interlocutory application”. Now, before me are the following Summonses filed by the Plaintiffs well after 31 December 2024. Logically, all the Summonses seek relief from sanction first, and then specifically seek various interlocutory orders:-

(1)  Summons filed on 13 March 2026 in HCA 2413/2018 for leave to amend the Re-Amended Statement of Claim filed on 11 May 2023 (the “2413 Amendment Application”);

(2)  Summons filed on 13 March 2026 in HCA 844/2019 for leave to amend the Re-Re-Amended Statement of Claim filed on 18 January 2022 (the “844 Amendment Application”);

(3)  A consolidated Summons filed on 13 March 2026 in both actions for leave to file the 2^nd Supplemental Witness Statement of Lam Siu Sun Dennis (the 1^st Plaintiff herein) (“P1’s 2^nd Supplemental WS”) and the 2^nd Supplemental Witness Statement of Lee Moses (the 2^nd Plaintiff herein) (“P2’s 2^nd Supplemental WS”) (the “Witness Statements Application”);

(4)  Summons filed on 23 March 2026 in HCA 2413/2018 for leave to rely on the documents listed on the Plaintiffs’ 3^rd Supplemental List of Documents filed on 23 March 2026 (the “2413 LOD Application”);

(5)  Summons filed on 2 April 2026 in HCA 2413/2018 for leave to rely on the documents listed on the Plaintiffs’ 4^th Supplemental List of Documents filed on 2 April 2026 (the “2413 2^nd LOD Application”);

(6)  Summons filed on 23 March 2026 in HCA 844/2019 for leave to rely on the documents listed on the Plaintiffs’ 4^th Supplemental List of Documents filed on 23 March 2026 (the “844 LOD Application”); and

(7)  Summons filed on 2 April 2026 in HCA 844/2019 for leave to rely on the documents listed on the Plaintiffs’ 5^th Supplemental List of Documents filed on 2 April 2026 (the “844 2^nd LOD Application”).

II.  THE PLAINTIFFS’ CLAIMS

2.  I set out below the relevant parts of the Plaintiffs’ claims to understand the Applications. I largely draw on the helpful summary from the written submissions of Ms Catrina Lam SC, leading Mr Joseph Wong and Mr Kwan Ping Kan, counsel for the Plaintiffs.

3.  HCA 2413/2018 and HCA 844/2019 are actions concerning the affairs of a dissolved solicitors’ firm, Messrs. Li, Wong, Lam & W.I. Cheung (the “Firm”). The Firm was formed on 1 April 2008.

4.  The Plaintiffs were at the material times partners of the Firm. Desmond Cheung (the 1^st Defendant in HCA 2413/2018 and the 9^th Defendant in HCA 844/2019) was also a partner of the Firm. Wilfred Chiu (the 2^nd Defendant in both actions) was an associate and later a partner of the Firm.

5.  The other Defendants are:-

(1)  Raymond Tam (the 6^th Defendant in HCA 2413/2018 and the 1^st Defendant in HCA 844/2019), a clerk of the Firm;

(2)  Jamie Yan (the 7^th Defendant in HCA 2413/2018), an associate solicitor and later a consultant of the Firm;

(3)  Ida Chan (the 3^rd Defendant in HCA 2413/2018), Desmond Cheung’s assistant;

(4)  Carroll Yu (the 3^rd Defendant in HCA 844/2019), Raymond Tam’s secretary;

(5)  Lawrence Wong (the 8^th Defendant in HCA 844/2019), an associate solicitor; and

(6)  Wise Quest Limited, Sino Growing Limited and Madam Gao (the 5^th, 6^th and 7^th Defendants in HCA 844/2019).

6.  The core allegations of the Plaintiffs’ claim in HCA 2413/2018 are, as set out in §8 of Ms Lam’s written submissions:-

“(a) The 172 Bills: Desmond was the sole signatory of the Firm’s Bank of China account no. 064-780-0-005083-1 (the “BOC Account”): RASOC in 2413 §7….In or about June 2016, Desmond caused 172 bills to be prepared and issued in the Firm’s name (the “172 Bills”). Following their issuance, a total sum of HK$1,125,432.63 was transferred from the Firm’s clients’ account to the BOC Account, and thence to Desmond’s personal bank account (RASOC in 2413 §8(b), (e)-(g)…).

(b) The Secret Profit-Sharing Arrangement: Wilfred and Raymond operated a Secret Profit-Sharing Arrangement within the Firm (RASOC in HCA 2413 §16…). Pursuant to the Secret Profit-Sharing Arrangement, files were opened in Wilfred’s name as if he were the introducer, high-rate referral commissions were paid to Wilfred, and Raymond then distributed those commissions to himself and/or other solicitors and employees, who were entitled to lower commission rates or no commission at all.

(c) Dissolution of the Firm: These matters triggered Desmond and Wilfred to dissolve the Firm hastily and to transfer the Firm’s clients and files to H.Y. Leung & Co., which they joined together with Raymond and Jamie (RASOC §2 and §17A…). The Plaintiffs claim damages and equitable compensation against Desmond and Wilfred for breach of partnership duties.”

7.  The core allegations of the Plaintiffs’ claim in HCA 844/2019 are, as set out in §11 of Ms Lam’s written submissions:-

“(a) Merry Terrace: The Firm acted from 2009 for various Merry Terrace owners in a joint sale (RRASOC §5A…). The 2^nd Proposed Joint Sale to Henderson completed for HK$3.8 billion, generating a consultation fee of HK$21,076,103.77 under the Joint Disposal Agreement and the Merry Terrace SPAs (RRASOC §§7AA-7C…). Without the Plaintiffs’ knowledge or approval, HK$10,538,051.87 of that fee was diverted to Wise Quest Limited (D5), Raymond’s designated vehicle (RRASOC §§7D and 7F…).

(b) Raymond’s undisclosed employment by Pacific Lucky / Union Honest: Raymond was secretly employed as CEO of Pacific Lucky Holdings Limited and/or its subsidiary Union Honest Agency Limited (RRASOC §§8–11…). With Wilfred’s assistance, Raymond used the Firm’s platform and resources to carry out his duties as CEO of Pacific Lucky / Union Honest (RRASOC §§13–14…).

(c) The Secret Profit-Sharing Arrangement (overlapping with HCA 2413): See paragraph 80 above. Carroll (D3, Raymond’s secretary) and Lawrence (D8, a solicitor) also participated in the arrangement and received commissions from it (RRASOC §18(a)…).”

III.  PROCEDURAL BACKGROUND

A.  HCA 2413/2018

8.  I shall set out the relevant procedural background of HCA 2413/2018 here.

9.  HCA 2413/2018 was commenced back in 2018. The Statement of Claim in HCA 2413/2018 has been amended on 10 January 2023 and re-amended on 8 May 2023.

10.  On 6 February 2019, a judgment was entered by the 7^th Defendant against the Plaintiffs upon the Plaintiffs’ breach of an unless order made by Master Grace Chan on 30 January 2019 (the “2019 Unless Order”).

11.  On 8 November 2019, Master Dick Ho set aside the judgment with costs to the 7^th Defendant.

12.  On 18 July 2024, the Plaintiffs filed the 2^nd Supplemental List of Documents. Further, in 2024, the parties filed and exchanged two grounds of witness statements.

B.  HCA 844/2019

13.  HCA 844/2019 was commenced back in 2019. The Statement of Claim in HCA 844/2019 has been amended on 6 November 2019, re-amended on 6 December 2021, and re-re-amended on 18 January 2022.

14.  In 2024, the parties exchanged their lists of documents, and filed and exchanged two grounds of witness statements.

C.  Both actions

15.  Between 2020 and 2024, the parties attended 6 CMS hearings. Further, on 10 October 2024, a CMC hearing took place. For that CMC:-

(1)  All the Defendants confirmed that the matter was ready for trial, but the Plaintiffs requested a 2^nd CMC hearing for them to consider whether to take any further step before setting down;

(2)  The Plaintiffs’ listing questionnaire stated that the only outstanding interlocutory application would be request for further and better particulars of the Amended Defence of the 4^th and 8^th Defendants filed on 9 September 2024 in HCA 844/2019;

(3)  A Certificate of Estimate of Length of Trial for the Plaintiffs, dated 3 October 2024, prepared by counsel, Mr Joseph Wong, was filed together with the listing questionnaire; and

(4)  It was at that CMC hearing that the Unless Order was made.

16.  On 16 March 2026, the 2^nd CMC hearing took place before me. For that 2^nd CMC hearing, in the Plaintiffs listing questionnaire, for the first time, stated that they intended to take out various applications which now they have. Mr Wong, counsel appearing for the Plaintiffs on that occasion, initially took the stance that due to the various applications the Plaintiffs intended to make, the matter was not ready to be set down for trial. He changed his stance during the hearing, saying that the Plaintiffs also agreed that the matter should be set down for trial. At that 2^nd CMC hearing, I granted leave to set down the matter for trial, immediately followed by trial of HCA 844/2019, with a total of 30 days reserved.

17.  On 27 April 2026, the Plaintiffs filed Notice of Setting Down for Trial.

IV.  LEGAL PRINCIPLES IN RELATION TO RELIEF FROM SANCTION AND INTERLOCUTORY APPLICATIONS AFTER SETTING DOWN

18.  In George Chu v Tan Giong Seng Johnson and Another [2019] HKCFI 2594 at §§16-19 (upheld by the Court of Appeal in [2020] HKCA 531), Ng J set out the following legal principles in relation to relief from sanction:-

(1)  Order 2 rule 5(1) non-exhaustively sets out the various circumstances for the Court’s consideration in determining whether to grant relief from sanction.

(2)  Although intentional and contumelious disregard of a court’s peremptory order may be the most usual circumstance leading to the refusal of grant of relief from sanction, the exercise of the discretion to refuse such relief is not limited to cases of intentional and contumelious default.

(3)  Depending on the circumstances, failure to comply with one or a number of orders through negligence, incompetence or sheer indolence may be such as to lead the Court to conclude there is an existence and degree of fault which warrants a refusal of relief.

(4)  Sanction in an unless order is a necessary forensic weapon which the broader interests of the administration of justice require to be deployed unless the most compelling reason is advanced to exempt his failure.

(5)  A sufficient exoneration will almost inevitably require that he satisfies the court that something beyond his control has caused his failure to comply with the order.

(6)  At the core is service to justice.

(7)  The interests of justice require that justice be shown to the injured party for the procedural inefficiencies caused by the twin scourges of delay and wasted costs. The public interest in the administration of justice to contain those two blights upon it also weights very heavily. Any injustice to the defaulting party, though never to be ignored, comes a long way behind the two.

19.  In relation to interlocutory applications made after setting down, once a case has reached the stage of setting down, it becomes increasingly difficult for a party to raise a new case by amending pleadings and/or producing additional evidence: see Subba Alvin v Houng Kee (Asia) Ltd [2012] 4 HKLRD 640 at §7 per Bharwaney J. Further, I repeat my caution sounded at §66 of Lee Charles Goon Lok v Lee Kwok Ching and Others [2025] HKCFI 2444 against substantive amendments to pleadings after setting down. The difference between the present case and the aforementioned two cases is that in the present case, though application for setting down has been made, no trial dates have been fixed yet.

V.  PARTIES’ RESPECTIVE POSITIONS

20.  Ms Lam, on behalf of the Plaintiff, acknowledges the default and apologises to the Court. She submits that there is good explanation for the delay, and even if there is none, the proportionate sanction should be costs, but not dismissing all the Summonses right away.

21.  Mr Benjamin Lam, counsel for the 1^st Defendant (“Desmond Cheung”) in HCA 2413/2018, oppose the Applications insofar as Desmond Cheung is concerned.

22.  Mr Wilfred Tsui, counsel for the 2^nd and 6^th Defendants (“Wilfred Chiu” and “Raymond Tam” respectively) in HCA 2413/2018 and the 1^st, 2^nd, 3^rd, 6^th and 7^th Defendants in HCA 844/2019 (Raymond Tam, Wilfred Chiu, “Carroll Yu”, “Sino Growing Limited” and “Madam Gao” respectively), is not opposed to the Applications but seeks costs on an indemnity basis. Since in question is a breach of the Unless Order, while Mr Tsui’s position is a relevant factor, it is still the Court’s discretion after proper consideration of the circumstances that determines the outcome.

23.  Mr Kenny Lin, counsel for the 3^rd, 4^th, 5^th and 7^th Defendants in HCA 2413/2018 (“Ida Chan”, “Shun”, “Alan Lai” and “Jamie Yan” respectively) opposes all the Applications in HCA 2413/2018.

24.  Mr Martin Ho, counsel for the 4^th and 8^th Defendants in HCA 844/2019 (“Clifton Wong” and “Lawrence Wong” respectively), opposes all the Applications in HCA 844/2019.

VI.  DELAY AND EXPLANATION FOR THE DELAY

25.  The deadline in the Unless Order is 31 December 2024. The Applications before me are made in March and April 2026. There are approximately 15 months’ delay. The delay is inordinate.

26.  The purported reasons for the delay are set out in the 3^rd Affirmation of Lam Siu Sun Dennis (“Dennis Lam’s 3^rd Affirmation”) and the 4^th Affirmation of Lam Siu Sun Dennis.

27.  First, the Plaintiffs allege that they required time to review and consider the evidence in both actions filed in May to August 2024 and the documents obtained from HSBC in September 2024: see §5 of Dennis Lam’s 3^rd Affirmation. However, no particulars as to when the Plaintiffs had been still reviewing and considering the evidence since then and after 31 December 2024 so much so that they decided in March 2026 to make the Applications. There is also no evidence to explain why it would take the Plaintiffs so much time to consider the evidence, and which part of the evidence has made the Plaintiffs think that the Applications, or which of the Applications, are necessary. I do not accept this reason.

28.  Second, the Plaintiffs allege that the documentary evidence in both actions is voluminous and complicated, and involve matters that took place a number of years before: see §6 of Dennis Lam’s 3^rd Affirmation. Therefore, the Plaintiffs allege that they needed more time. This second purported reason is part and parcel of the first, given that the documentary evidence must be the documentary evidence already disclosed. Similar to the first purported reason, no particulars as to when the Plaintiffs had been still reviewing and considering the documentary evidence since then and after 31 December 2024 so much so that they decided in March 2026 to make the Applications. There is also no evidence to explain why it would take the Plaintiffs so much time to consider the evidence, and which part of the evidence has made the Plaintiffs think that the Applications, or which of the Applications, are necessary.

29.  The third purported reason is the “primary”, “honest” reason, as Ms Lam very fairly submits. In the wording of §7 of Dennis Lam’s 3^rd Affirmation is:-

“Third, there has been a change of counsel team from February 2024 to March 2026. Counsel Mr Joseph Wong was last involved in the case at the hearing on 30 January 2024. Subsequently it was decided [to] have another counsel to take over the cases. Counsel Mr Wong was only re-engaged again in these actions recently for the purpose of attending the 2^nd CMC hearing on 16 March 2026.”

30.  This explanation, viewed from any angle, gives an impression that Mr Joseph Wong was not involved at all in the period from February 2024 to March 2026. However, as a matter of fact, on 21 February 2024, Mr Joseph Wong was the counsel representing the Plaintiffs substantively arguing the Plaintiffs’ specific discovery application before Master Alexander Tang. Further, in §25 of the 4^th Affirmation of Cheung Tak Man Desmond (“Desmond Cheung’s 4^th Affirmation”) in response, Desmond Cheung pointed out that Mr Joseph Wong as counsel made the certificate of time dated 3 October 2024, falling within the period between February 2024 and March 2026 when the Plaintiffs alleged Mr Joseph Wong was not involved. The impression one can objectively obtained from this third purported reason is, put mildly, misleading. This is not something expected of a solicitor and a Court officer like Dennis Lam.

31.  Then in §10 of the 6^th Affirmation of Lam Siu Sun Dennis, the Plaintiffs “clarify” the position:-

“Mr Joseph Wong did sign the Certificate of Time Estimate dated 3 October 2024. That was a discrete case management matter. Save for such discrete input, Mr Wong was not substantively engaged during 2024 and 2025 to conduct the full review now undertaken, or to advise on and settle the present applications. The present applications were formulated after he was re-engaged substantively in or about March 2026. I did not intend to suggest otherwise.”

32.  While I agree that preparing a certificate is not the same as advising on the merits and evidence of the matter, I need to point out that preparing a certificate for time estimate is a substantive step. The Court relies heavily on counsel’s time estimates in working out how many days should be reserved for the trial, and in order for the counsel properly to prepare the time estimates, the counsel inevitably has to go through the documents including the evidence to determine the scope of the cross-examination and the length of the cross-examination.

33.  Be that as it may, change of counsel is never a good reason for delay: see Ng Leung Ming trading as Ming Kee Eng Construction Co. v Hanki Contractors (Hong Kong) & Associates Limited [2023] HKCFI 1071 at §22 per Au-Yeung J. Further, given the way this reason was put forward, I do not accept the third purported reason.

34.  The fourth purported reason is that the Plaintiffs’ litigation resources were primarily directed to ancillary and related proceedings, namely, DCCJ 2733/2021 and HCMP 1092/2024 with overlapping facts of the present actions. The Plaintiffs engaged another counsel for those two sets of proceedings and had to take time to avoid any inconsistent positions taken in the various sets of proceedings: see §8 of Dennis Lam’s 3^rd Affirmation. However, no details have been given as to what inconsistent positions there would be, why it would take so much time to consider the matter to avoid inconsistent positions, and how the priority was arranged and how the resources were drained up so that the Plaintiffs would not be able to spend any time on the present actions. If this purported fourth reason means anything, I agree with Mr Lin’s observation that the Plaintiffs made a deliberate choice to ignore the Unless Order, giving priority and resources to the other two sets of proceedings. This purported reason is, in my view, not only a reason to explain the delay, but a reason against grant of relief from sanction.

35.  Fifth, the Plaintiffs allege that they do not have access to the relevant file records, accounting records and transaction documents. The Plaintiffs allege that a substantial portion of such records are withheld at Crown Information Management (“Crown”), not within their possession, custody or power, and Crown denied them access due to failure to settle the storage fee. Therefore, the Plaintiffs allege, they had to undertake “alternative and indirect means, including third-party materials and regulatory correspondence, which has necessarily taken additional time”: see §13-14 of Dennis Lam’s 3^rd Affirmation. However, no particulars have been given. For example, when did they try to retrieve the documents from Crown? When did they decide to use the “alternative and indirect means”? When did they use such means? When did they retrieve the information from such means? What actually were the “alternative and indirect means”? How much time did such means take? The purported reason is just some very general allegation which in my view cannot explain the delay at all.

36.  Worse, Desmond Cheung’s evidence shows that the Crown service was resumed after the storage fee issue was resolved after the end of February 2024. The Plaintiffs had from March to December 2024 a total of 10 months to access any documents they would like to, together with their “alternative and indirect means”. This should be sufficient, absent any evidence to explain what the Plaintiffs really had actually done.

37.  In the circumstances, I find no good reason at all for the delay. Further, I find that in giving priority and resources to DCCJ 2733/2021 and HCMP 1092/2024, the Plaintiffs deliberately made a conscious decision to put aside the present actions despite the Unless Order. This decision is intentional.

VII.  THE APPLICATIONS

38.  Lack of any good reasons for the delay is usually sufficient to dismiss late applications, especially after setting down, let alone applications for relief from sanction. However, I agree with Ms Lam that the Court should bear in mind the primary objective of the CJR, to secure a just resolution of disputes in accordance with the substantive rights of the parties: see Order 1A rule 2(2) as well as any prejudice that would be caused by the dismissal or allowing late applications. This objective is one of the objectives of the CJR, and has been said to be the primary objective. However, this objective is not an overriding objective overriding the other objectives. After all, as Mr Lam submits, it is a balancing exercise in determining how to exercise my discretion.

39.  I shall deal with each Application one by one.

A.  2413 Amendment Application

40.  For the 2413 Amendment Application, the proposed amendments are in §§4(i), 9(b)(iii), 9A, 14A, 15A(i), 16(c), (g) and (h), 18G, and Relief (11A), and deletion of §§20(a) and (b).

41.  Before I analyse certain paragraphs highlighted by Ms Lam, I make a general observation, that the Plaintiffs face a dilemma. The proposed amendments either add material factual averments or do not.

(1)  If they do, then the relevant Defendants would have to amend their pleadings, and this may vary the scope of disputes and consequentially additional evidence (even additional witnesses) would be needed. This would have effect on the length of the trial.

(2)  If they do not, logically, it means that the amendments are not necessary for the fair disposal of the matter and/or saving costs.

42.  §4(i) pleads to “a duty to alert his co-partners to any irregularities in the Firm’s operations and to take steps to stop and rectify those irregularities”. If it is an additional duty, there would be argument on law whether such duty exists, and if so, in what circumstances, such duty would have been discharged and whether in the circumstances, such duty was discharged. This would substantively affect the scope of dispute. If it is not an additional duty and would add nothing new, then I do not see the need for the amendment. Ms Lam submits that §4(i) is related to the proposed §16(h). I shall analyse §16(h) below.

43.  §9(b)(iii) pleads that the “unauthorized transfers to and from BOC Account and NCB Account were not booked under the Firm’s normal account procedures, and as a result no record was registered with the Firm’s Libra billing system”. In my view, if the transfers were unauthorized, then it does not matter whether the transfers were properly booked or not. Similarly, if the transfers were authorised, it also does not matter whether they were properly booked or not. That said, I can appreciate that if they were not properly booked, this may be relied upon as evidence to discredit any denial of unauthorized transfer. However, this is a matter of evidence, and it is not necessary to be pleaded.

44.  §9A pleads that “the Settlement Deed executed on 23 May 205 could not and does not operate as a bar to the Plaintiffs’ claims. At the time in around May 2015, the Plaintiffs had no knowledge of the wrongdoings of the 1^st Defendant…”  This relates to the substantive legal principle that a settlement agreement may not be effective to cover wrongdoings not known to one of the parties. This legal principle is not a straightforward principle and is fact-sensitive. §9A in my view would substantively vary the scope of dispute. Even without any sanction, it is unlikely that such an amendment would be allowed at such late stage.

45.  §14A pleads to the false ICAC complaint made by Desmond Cheung and Alan Lai. The Plaintiffs explain that this plea is irrelevant to their claim for loss of legal fees of at least HK$205,000. While the Plaintiffs have pleaded damages, they have never pleaded this specific head of loss. This is a new factual issue, and the Defendants may well have an answer (for example, there was proper ground for the complaint to the ICAC, and the fee incurred was unnecessary and/or not reasonably foreseeable). Even without any sanction, it is unlikely that such an amendment would be allowed at such late stage.

46.  §15A(i) pleads that had the Firm known that Raymond Tam was the true introducer, no referral commission would have been paid, and the Firm therefore suffered loss in the amount of the referral commission. This is a plea to a specific head of loss. If this head of loss is regarded as having been included already, there is no need to make this amendment. If this head is a new head, this is a variation of the scope of dispute. Ms Lam submits that this relates to causation. True it appears, but causation is a question of fact, and adding §15A(i) would mean adding a factual issue. Even without any sanction, it is unlikely that such an amendment would be allowed at such late stage.

47.  §16(c) proposes to add one staff member and “unknown third parties” to whom commissions were distributed. If these additional persons are necessary, then the Defendants would have to put forward their defences (for example, these persons did not receive the commissions, or were entitled to the same, and/or in any event distribution to these persons did not cause loss). This would vary the scope of dispute. Even without any sanction, it is unlikely that such an amendment would be allowed at such late stage. Ms Lam’s concession that “unknown third parties” could be remove would still have the additional staff member added – the extent of the variation of the scope of dispute may be smaller, but there would still be variation.

48.  §16(g) suggest that because the Secret Profit-Sharing Arrangement breached the Solicitors’ Practice Rules and was therefore “illegal, void and/or unenforceable”, the Firm could not have been lawfully authorised by the Firm. Ms Lam submits that this plea is to make clear that the Secret Profit-Sharing Arrangement is illegal. Insofar as the Plaintiffs would like to rely on this to say that it is inherently improbable that the Plaintiffs or the Firm would have approved such an arrangement which constituted breach of the Solicitors’ Practice Rules, it would be a matter of evidence and submissions. Insofar as such illegality would be relied upon as a cause of action, this would not be permitted at this stage.

49.  §16(h) is said to particularise Desmond Cheung’s knowledge and approval of the Secret Profit-Sharing Arrangement. The particulars need be answered. Further, the proposed plea in relation to “several payments…and…cheques” is void of particulars, for example, as to when the payments and the cheques were made and issued, the amounts and so on. Ms Lam points out that the particulars are Dennis Lam’s Affirmation §§35-36 of P1’s 2^nd Supplemental WS, and that Desmond Cheung has provided the answer in §44 of Desmond Cheung’s 4^th Affirmation. That may be so, but this means that there would be new factual evidence added. Even without any sanction, it is unlikely that such an amendment would be allowed at such late stage.

50.  §18G is, admittedly, an alternative plea, pleading to the duties owed in winding up of the Firm. It is an alternative cause of action. There would be answer to this alternative cause of action. It would vary the scope of dispute. Even without any sanction, it is unlikely that such an amendment would be allowed at such late stage.

51.  For deletion of §20(a) and (b), it is like an abandonment of allegations. It is up to the Plaintiffs to abandon the allegations, though the Defendants are entitled to cross-examine the Plaintiffs on such abandonment insofar as relevant.

52.  Relief (11A) is “damages” against Shun and Alan Lai. It is not clear what damages the Plaintiffs have in mind. In any event, the Plaintiffs already pleaded “damages” against all the Defendants. I do not see any need for adding this Relief. Insofar as Mr Lam submits that this relief is specifically related to the loss arising from the complaint made to the ICAC proposed to be pleaded in §14A, I have expressed my view on §14A above.

53.  Overall, I accept that most of the proposed amendments could be relevant. Ms Lam submits that any need to respond to the proposed amendment, whether by way of pleadings and/or evidence, can be addressed by the Court’s directions that the Defendants be given leave to amend the pleadings and file evidence consequential only upon the amendments within a short timeframe. Ms Lams submits that no trial dates have been fixed, and so there would not any prejudice, but refusal of leave for the Plaintiffs’ proposed amendments would prejudice a just resolution of the dispute in accordance with the parties’ substantive right, and such refusal would be disproportionate. With respect, I disagree, for the following reasons:-

(1)  When a case is set down for trial, whether the dates are fixed or not, this means that the case is ready for trial – the parameters are set with sufficient opportunity for the parties to define the scope of dispute. It is no answer to say that the dates have not been fixed. In this regard, I note that Ms Lam has not been bold enough to say that the 30-day length of trial would not be lengthened as a result of the proposed amendments.

(2)  The Court, as well as the parties, should not be put into uncertainty as to whether the parameters of the matter would still vary. When there is room to suggest that there would be such variation, the Court should be vigilant against any such submissions that the amendments are minor, limited in scope and/or could be controlled by case-management. Any such submissions would make the case-management efforts over the proceedings almost redundant.

(3)  It is for the parties to prepare their case properly, and after the CJR, it is for the parties to prepare their case properly and early: see Converge Design and Construction Company Limited v Mount Kelly International Limited [2020] HKCFI 2433 at §2 per Mimmie Chan J. Allowing such late amendments in the present circumstances would give a wrong signal to litigants.

(4)  When considering whether the sanction is proportional, the Court considers not only the litigants before it, but also the general administration of justice. Further, in the present case, the sanction is not striking out the Plaintiffs’ claim; rather, it is just not to allow the Plaintiffs to add any plea at this late stage. The Plaintiffs would still be able to pursue the core allegations at trial identified above.

54.  Together with the lack of reasons for the delay, and having considered the proportionality and other circumstances under Order 2 rule 5, I am not persuaded to grant relief from sanction and dismiss the 2413 Amendment Application save and except giving leave for deleting §20(a) and (b).

B.  844 Amendment Application

55.  The general observations I made in §41 above on the proposed amendment in the 2413 Amendment Application apply equally here to the proposed amendments here in 844 Amendment Application.

56.  §7BA proposes adding “by Clause 18.04 thereof”. It adds nothing, in my view. It is not necessary.

57.  §7KA avers that Raymond Tam “also used another company, namely Success Ample Limited, to receive advisory fees from the Firm’s clients and deposited the alleged advisory fees into the HSBC Joint Account.”  First, a new entity, Success Ample Limited, would be introduced. The Defendants may have to collate evidence in relation to this new entity. Second, particulars are lacking as to the receipt and deposits of the advisory fees. These proposed amendments would adversely affect the fair disposal of the matter and would unnecessarily increase costs. Even without any sanction, it is unlikely that such an amendment would be allowed at such late stage.

58.  §14A avers that the services provided by Raymond Tam and Wilfred Chiu were not provided to Pacific Lucky and Union Honest in the course of any retainer or client relationship between the Firm and those entitles. Ms Lam points out that this plea is in response to Raymond Tam’s positive case pleaded in §16 of his Amended Defence that the services were “complimentary services” for clients. This response could be pleaded in Reply. Ms Lam submits that this is good practice to plead in the Statement of Claim, rather than Reply, inviting a Rejoinder. With respect, it depends. From time to time, it happens that some pleas are added to the Statement of Claim in response to Defence. However, such responsive pleas are added to the Statement of Claim rather than pleaded in the Reply for good reason: the responsive pleas are necessary for the causes of action relied upon. However, here, insofar as there is any suggestion that this plea has to be raised in the Statement of Claim because this would be a necessary element for certain causes of action, this would mean that the Plaintiffs would now like to raise new causes of action. Such plea should not be allowed even without sanction.

59.  §20(e) pleads to the same “duty to alert his co-partners to any irregularities in the Firm’s operations and to take steps to spot and rectify those irregularities” proposed to be pleaded by §4(i) in the 2413 Amendment Application. For the same reason I gave above in that regard, I do not see any need for the amendment.

60.  §23A(a) – (c) are said to be particulars of the overt acts in support of the existing conspiracy plea. Ms Lam submits that these overt acts have already been pleaded in §18E, but the particulars are necessary, citing Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd and Others [1994] 2 HKC 264 at 269E-270F. A quick look at §18E does not suggest that §23A(a) – (c) are simply replica of §18E. This means that there is some interpretation of how the conduct pleaded in §18E should be understood to mean the overt acts in support of the conspiracy already pleaded. This may vary the scope of dispute. Further, fundamentally, if §23A(a) – (c) were just to particularise the over acts with reference to conduct already pleaded, then the question is, why was this plea of particulars not made earlier, but only at this stage, when the requirement for particulars has at least been established since Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd and Others, supra in 1994, if not earlier.

61.  §23C mirrors §16(c) in the 2413 Amendment Application. For the same reason, I find that even without any sanction, it is unlikely that such an amendment would be allowed at such late stage.

62.  My observations in relation to prejudice and proportionality in §53 above apply equally here. In the circumstances, I am not persuaded to grant relief from sanction and dismiss the 844 Amendment Application.

C.  Witness Statements Application

63.  In support of the Witness Statements Application, Ms Lam submits that:-

(1)  They are relevant to the pleaded issues;

(2)  “substantial parts of the supplemental witness statements are not the Plaintiffs raising new matters at all”; and

(3)  “some passages are contextual only”.

64.  For (2), this means that there are parts which are new matters. It seems that the new matters are the “contextual matters” in (3). The so-called contextual matters are Clifton Wong’s disciplinary and background matters and the former managing partner Lam Chi Ki (“KK”)’s dissatisfaction with Lawrence Wong’s billing performance. I fail to see the relevance of these contextual matters (mentioned apparently to poison the trial judge’s mind), and there is no suggestion that without such “contextual” matters, the other parts of the 2^nd Supplemental WSs would become non-understandable.

65.  For relevance, first, Ms Lam points out that §§38-49 of P1’s 2^nd Supplemental WS are relevant to the 172 Bills, NOC Account, Dragonext and ICAC allegations, and that without these paragraphs, the Plaintiffs would be forced to meet Desmond Cheung’s defence without proper factual evidence. I accept that these paragraphs except §§48-49 are relevant. I can also see that the Plaintiffs would likely mention the contents of all these paragraphs in the cross-examination. I see the force of the submissions that it would be fairer if the Defendants would have a chance to answer these paragraphs in advance. However, first, §§48-49 are irrelevant, concerning the ICAC complaint in §14A in the 2413 Amendment Application which I have dismissed. Second, I agree with Mr Ho’s submissions that the witness may or may not say all these out in any event, but the Court should be competent enough to deal with such situations. For example, the witness may still say out all these, but the Court may give little weight to such evidence given that the other sides are not supposed to deal with all these as evidence first coming out. There is no hard and fast rule, but it is not necessarily that because the witness would say all these anyway, the Court must admit such witness statements despite all other factors (such as delay and breach of an unless order) against such admission.

66.  Second, Ms Lam points out that §§9-19, 35-36 and 58-60 P1’s 2^nd Supplemental WS relates to the Secret Profit-Sharing Arrangement. They do, in a sense. However, new matters like payments to an additional staff member and third parties (mirroring §16(c) in the 2413 Amendment Application which I have dismissed) and payments not pleaded in the pleadings are raised. The Defendants would have to file evidence to answer these new matters, something which Ms Lam does not deny but for which Ms Lam suggests that tight case-management directions could keep the matter under control. With respect, this is not simply a matter of tight case-management. Also, as Mr Ho points out, hearsay evidence from KK would be introduced, and the Defendants would then have to consider and decide whether to call KK to be a witness. If these new matters are allowed, then more factual evidence and even more factual witnesses would be introduced, and there would be uncertainty over whether the 30 days reserved would still be sufficient when the matter was set down for trial. The Court and the parties should not be confronted with such uncertainty after the matter is set down.

67.  Third, Ms Lam points out that §§50-60 of P1’s 2^nd Supplemental WS and §§16-20 of P2’s 2^nd Supplemental WS are relevant to Merry Terrace and Wise Quest Limited. In my view:-

(1)  I agree that §§50-57 of P1’s 2^nd Supplemental WS are relevant and the Plaintiffs would be entitled to rely on the same to explain the incredibility of the arrangement of commission payment mentioned by the Defendants.

(2)  Similarly, §§16-20 of P2’s 2^nd Supplemental WS explain the cheque-signing practice going to the incredibility of the arrangement of commission payment.

(3)  The above paragraphs are limited in scope, and it would be fairer for the Defendants to answer these allegations in advance.

(4)  All that said, my view expressed in §65 above applies equally here.

68.  Fourth, Ms Lam points out that §§79-88 relate to the circumstances of dissolution and the alleged movement of the Firm’s business, staff and premises to another firm. Ms Lam submits that these are relevant to the Plaintiffs’ alternative case that even if dissolution was formally lawful, the winding up of the Firm had to be carried out consistently with Desmond Cheung and Wilfred Chiu’s continuing duties pleaded in §18G in the 2413 Amendment Application. As I have dismissed the 2413 Amendment Application, these paragraphs said to be for this alternative case should also be disallowed.

69.  Fifth, there are other paragraphs Ms Lam tries in §57 of her Skeleton Submissions to explain the relevance and to submit that the other paragraphs do not raise new matters. I do not need to analyse each of the paragraphs in detail. Those matters, if not raising new matters, could be ventilated in the trial, if relevant, and my observation in §65 above applies. Those matters, if raising new matters, would not be permitted.

70.  Having considered all the above in the round, I am not persuaded that I should grant relief from sanction, and dismiss the Witness Statements Application.

D.  LOD Applications

71.  The 2413 LOD Application, 2413 2^nd LOD Application, 844 LOD Application and 844 2^nd LOD Application (collectively, the “LOD Applications”) can be analysed together.

72.  At the outset, Ms Lam confirmed to the Court that certain items on the lists would no longer be pursued. However, such concession, in my view, does not take the Plaintiffs too far. The remaining items on the lists are either referred to P1’s 2^nd Supplemental WS and the P2’s 2^nd Supplemental WS, or not referred to anywhere at all. For the former, given my refusal to grant relief from sanction in respect of the Witness Statements Application, those items should also not be relied upon at trial. For those items not referred to anywhere, such items are even worse than those items referred to in a witness statement. With a witness statement, at least one would know how the items would be relied upon and the provenance of the items. Without a witness statement, the effect on the parameters of the trial is unknown. This would adversely affect the trial.

73.  In the circumstances, I am not persuaded to grant relief from sanction, and dismiss the LOD Applications.

VIII.  CONCLUSION

74.  In conclusion, I dismiss all the Applications.

75.  For costs, in response to all the Defendants seeking costs on an indemnity basis, Ms Lam, in her fair submissions, leaves the matter for me to decide. In the light of the inordinate delay and lack of any good explanation for the breach of the Unless Order, I find it appropriate to order costs on an indemnity basis. Accordingly, I make the following costs order nisi:-

(1)  In HCA 2413/2018 and HCA 844/2019, the Plaintiffs shall pay Mr Tsui’s clients costs summarily assessed on an indemnity basis at HK$108,000;

(2)  In HCA 2413/2018, the Plaintiffs shall pay Mr Lam’s client costs summarily assessed on an indemnity basis at HK$400,000 (including the Summons for specific discovery disposed of upon the parties’ consent);

(3)  In HCA 2413/2018, the Plaintiffs shall pay Mr Lin’s clients (the 3^rd, 4^th and 5^th Defendants) costs summarily assessed on an indemnity basis at HK$250,000;

(4)  In HCA 2413/2018, the Plaintiffs shall pay Mr Lin’s client (the 7^th Defendant) costs summarily assessed on an indemnity basis at HK$300,000; and

(5)  In HCA 844/2019, the Plaintiffs shall pay Mr Ho’s clients costs summarily assessed on an indemnity basis at HK$380,000.

76.  It remains for me to thank counsel for their assistance.