SHANGHAI FINANCE HOLDINGS LTD v. SUN TAI CHEUNG CREDITS LTD AND OTHERS

HCA200/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.200 OF 2004

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J U D G M E N T

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1. I have an application before me in this extremely massive strike-out application by the 1st and 2nd defendants to strike out the whole of the pleadings of the plaintiff and to seek a judgment in favour of the 1st and 2nd defendants.

2. The dispute in this action by the plaintiff against the defendants, is basically to set aside transaction entered into by the plaintiff in somewhat unusual circumstances and the plaintiff says the transactions entered into by parties where the assets of the plaintiff were given away knowingly at an undervalue.

3. The present dispute which I have to immediately resolve is the admission of two new affidavits (a large number of affidavits had already been filed). The latest one that the 1st and 2nd defendants wish to rely on are the 5th affidavit of Mr Goh Soon Khian and the 4th affidavit of Ms Wong Sin Yee. Both of them deal with the subject matter of a purported authority given to the 3rd defendant to deal with the transaction involved and that purported authority document is a document which has been exhibited as GSK-6 at page 821, as well as a document which was supposed to be a declaration made in prison just a few days earlier by Mr Chau in the presence of Ms Wong which seeks to deal with both the matter of authority given in January 2003 as well as ratification.

4. The matter of actual authority and ratification are relevant to the issue that had been raised by the plaintiff that the relevant document when signed by the 3rd defendant on behalf of the plaintiff was without authority. Strictly speaking, of course, the two sets of documents now relied upon by the 1st and 2nd defendants are relevant to the trial of the action. The question is to what extent they are relevant to the strike-out. Mr McCoy for the defendants says that once they are admitted and given full value then they would provide complete answers to the point raised by the plaintiff as to the invalidity of the transactions because of the lack of authority.

5. The first point that was suggested against admission is as to timing that is these affidavits have come in very late. Undoubtedly they have come in very late partly explained by the amendment of the Statement of Claim on the lack of authority which was notified to the defendants in May of this year. But still it does not quite excuse the lateness.

6. What however causes me much more concern is the lack of the sufficient source of information given in the affidavits, both of Mr Goh as to the source of information of who gave the document as well as of Ms Wong in paragraph 8 where she said, "I was provided by the Nongkai Group with a copy of this authorisation letter" without saying who in Nongkai Group or what is meant by Nongkai Group. That, of course, cast doubt as to the value of that paragraph as well as offends against the rule which requires identification in affidavits of the source of information.

7. I have considerable doubt myself that even if these omissions are made good that having regard to what Mr Chan has indicated that the plaintiff disputes the authenticity of this important authorisation letter, to what extent these contested documents are going to be determinative of this striking-out proceedings. I am conscious of course also of the fact that if I allow the application then it would mean a delay, a substantial delay, because the defendants will probably want to file affidavits in answer. But it seems to me that, on the whole, I must not deprive Mr McCoy of a chance of at least making good his shortcomings. So, what I am going to do is to allow the application of the affidavits subject to condition of imposing on Mr McCoy the obligation to file supplemental affidavit to explain the circumstances and to identify the sources, together with leave to the plaintiff to file affidavit in answer. That of course inevitably means that the case will have to be adjourned but unfortunately this is unavoidable in the circumstances.