LEUNG PAK WO v. LEUNG HO KWONG

HCA 1460/2021

[2026] HKCFI 5121

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1460 OF 2021

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BETWEEN

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DECISION

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1.  With regret, I must say that the Plaintiff’s conduct in these proceedings have been most unsatisfactory.

2.  The Plaintiff has repeatedly flouted my directions given at the pre-trial review hearing (the “PTR”). In particular: -

(1) Despite the Defendant’s solicitors’ reminders, the Plaintiff’s solicitors did not lodge and serve trial bundles on time, and there was substantial delay. The Plaintiff’s solicitors only lodge the trial bundles in light of this court’s indication to impose sanction.

(2) However, the trial bundles prepared by the Plaintiff’s solicitors are defective in multiple respects. Whilst certain documents are excluded, various pages are not legible. What is most shocking is that the Plaintiff’s witness statement that is included in the trial bundle is not the correct version that was served on the Defendant.

(3) Furthermore, the Plaintiff’s counsel was late in lodging and serving his opening submissions. This court only received the same a few days before the trial commenced. This is obviously very unsatisfactory.

3.  Due to the Plaintiff’s unsatisfactory conduct, the Defendant’s preparation for the trial was seriously disrupted. Be that as it may, the Defendant’s stance was such that he wished to proceed with the trial. As I understand, the Defendant hoped that his dispute with the Plaintiff could be resolved as soon as possible. This was why the Defendant’s legal representatives were, colloquially put, willing to “bite the bullet”.

4.  However, there is another daunting problem that obstructs the trial from proceeding.

5.  Pursuant to an application filed by the parties under a consent summons dated 2 July 2026, at the PTR, I granted leave for the Plaintiff and the Defendant to file further supplemental witness statements respectively.

6.  Surprisingly, in paragraphs 4 and 5 of the Plaintiff’s 3^rd supplemental witness statement dated 7 July 2026, when the Plaintiff referred to the meetings that took place in April and May 2020, he, for the first time, mentioned that there have been audio recordings in respect of the proceedings during these meetings. He even referred to the extract of these audio recordings to support his assertions. However, these audio recordings have not been disclosed throughout the proceedings (which were started as early as 2021).

7.  On the first day of the trial, Ms Deana Law (for the Defendant) applied to strike out the sentences that refer to the audio recordings.

8.  Although I was tempted to accede to Ms Law’s application, I bore mind that in giving effect to the underlying objectives of the Rules of the High Court, the court shall always recognize that the primary aim in exercising the powers of the court is to ‘secure the just resolution of disputes in accordance with the substantive rights of the parties’: RHC O 1A r 2(2).

9.  In my view, the discussions that took place during the meetings were important in showing the parties’ understanding as to whether the shareholding in Grace Deluxe Enterprises Limited (the “Company”) was held on trust by the Defendant in favour of the Plaintiff. Bearing in mind that the meetings in question were mentioned in the parties’ witness statement, I am not of the view that the court should turn a complete blind eye to the audio recordings. It does appear to me that the audio recordings would shed light on the truth.

10.  In the premises, instead of striking out the relevant sentences that refer to the audio recordings outright, I ordered the Plaintiff to carry out the following tasks by 9am on the 2^nd day of the trial: -

(1) providing an electronic copy of the audio recordings;

(2) providing a hardcopy of the transcripts in respect of the audio recordings; and

(3) identifying the part of the transcripts in respect of the audio recordings that the Plaintiff seek to rely on.

This was not a perfect solution. However, it appears to me that with the measures imposed, the disruption to the Defendant’s continuous preparation for the trial would, hopefully, be reduced.

11.  Unfortunately, it transpired the Plaintiff was unable to complete the 2^nd task and the 3^rd task mentioned hereinabove.

12.  In her submissions, Ms Deanna Law categorically emphasized that in light of the limited time available and the Plaintiff’s failure to carry out the aforesaid tasks, the Defendant is simply not in a position to deal with the audio recordings in a meaningful manner. In particular, she pointed out that: -

(1) The audio recordings are lengthy, in that they consist of a few hours.

(2) The audio recordings are truncated, and one cannot rule of the possibility that the same have been edited.

(3) Furthermore, it is impossible to identify certain persons who spoke during the meetings.

13.  In the premises: -

(1) Ms Law reiterated that the relevant sentences that refer to the audio recordings in the Plaintiff’s 3^rd supplemental witness statement dated 7 July 2026 should be struck out; or

(2) In the alternative, Ms Law submitted that if the court is not minded to strike out the relevant sentences, the present trial should be vacated, and the costs being wasted and thrown away should be borne by the Plaintiff on an indemnity basis.

14.  I am unable to form a view that the court should turn a blind eye to the audio recordings, which evidence the discussions during that the meetings that took place in April and May 2020. As mentioned, the meetings are not new assertions, and they do have important bearings on the substantive disputes between the parties. Accordingly, I am of the view that substantive justice will be only served if the audio recordings are admitted and properly canvassed by the court.

15.  Nonetheless, there is no question that the Plaintiff was extremely late in adducing the audio recordings, and no explanation has been offered. In this connection, I do not accept that change of legal representation at a late stage could constitute a valid justification: see Hongkong Changyi Real Estate Development Ltd v Neo-China (Group) Infrastructure Investment Ltd (HCA 1576/2011, 25 February 2014) at para 1 (per Mimmie Chan J); and Yang Yani v Fan Mingyun & Anor [2024] 1 HKLRD at para 9 (per Queeny Au-Yeung J). In any event, the audio recordings and the transcripts in respect thereof should have been put forward by the Plaintiff a long time ago. There is no excuse.

16.  There is also no question that the Defendant would be seriously prejudiced, in that: -

(1) He has no opportunity to file witness statement to address matters relating to what he said and what he meant during the proceedings of the meetings as reflected by the audio recordings.

(2) He has no opportunity to carry out an investigation as to whether the audio recordings are complete and have been edited.

(3) His trial counsel is deprived of time to prepare for cross-examination in respect of the matters relating to the proceedings of the meetings as reflected by the audio recordings.

17.  In the premises, I have no doubt that the appropriate course for this court to adopt is to: -

(1) admit the audio recordings and the transcripts in respect thereof as evidence; but

(2) vacate the present trial and order the Plaintiff to bear the costs that are wasted and thrown away on an indemnity basis to be summarily assessed.

18.  Obviously, the Plaintiff only has himself to blame. He has failed to put his house in order. He has failed to honour his obligations to disclose all relevant documents. He and his legal team have failed to prepare for the present trial in an acceptable manner.

19.  As mentioned, the Plaintiff’s conduct relating to the present trial has been most unsatisfactory in multiple respects. I am of the view that justice would only be adequately served if and only if the Plaintiff pays the Defendant’s costs on an indemnity basis. This is indeed necessary for the court to vindicate its disapproval of the Plaintiff’s litigation conduct.

20.  I have every sympathy for the Defendant. However, we do not live in a perfect world. I am not of the view that it would be appropriate to force the court to adjudicate the disputes relating to the meetings in the absence of the audio recordings, which are plausibly the most reliable evidence that shed light on what happened during the meetings.

21.  Whilst delay is a per se a prejudice, the Defendant will be compensated by indemnity costs.

22.  Meanwhile, I observe that the Defendant has not brought any counterclaim, and being the registered owner of the shareholding in the Company, the Defendant will be in a position to continue exercising control over the Company.

23.  Having considered the matter in the around, I am not of the view that the prejudice suffered by the Defendant is so serious that the court should be forced to adjudicate the parties’ dispute in the absence of a piece of crucial evidence.

24.  For all the above reasons: -

(1) I grant leave to the Plaintiff to adduce the audio recordings in respect of the meetings in April and May 2020 and the transcript in respect thereof;

(2) I grant leave to the Defendant to adduce (i) a further list of documents; and (ii) further witness statement(s), if so advised, within 42 days to address the issues arising from the audio recordings in respect of the meetings in April and May 2020 and the transcript in respect thereof;

(3) I vacate the present trial; and

(4) I order the Plaintiff to pay the Defendant all the costs that are wasted and thrown away as a result of the vacation of the present trial forthwith to be summarily assessed by this court on an indemnity basis on 16 July 2026 at 2:30pm. The Defendant shall lodge and serve his statement of costs by 4pm on 15 July 2026.