KO NGA CHUN v. COMPANHIA DE DESENVOL VIMENTO WUI SAN LIMITADA AND ANOTHER

HCA 277/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 277 OF 2012

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D E C I S I O N

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The Application

1.  There are two issues adjourned from the previous proceedings to this Court today for determination:

a. The plaintiff’s application for amendment to her Statement of Claim, an application in her summons dated 27 August 2015; and

b. Time to be extended to the plaintiff for setting down for trial adjourned by consent to be dealt with after disposal of the plaintiff’s application for amendment above, as provided in the consent order dated 15 October 2015.

2.  The main dispute is over 1.a. above as the defendant seems to have no reason to oppose the application of extension of time as time has already expired for setting down pursuant to this Court’s order dated 7 July 2015.

3.  The parties are legally represented.[1]

The Plaintiff’s Reasons

4.  Below are the plaintiff’s reasons for the amendments:

“What P proposes to do is simply to add more facts and clarification to the original Statement of Claim on (a) the background leading to the power of attorney and the alleged sale and purchase agreement, (b) how the dispute between Kong Cheong and D1 came into existence, (c) how as a result P and her husband agreed with D2 on the intermediary agreement, and (d) how P’s husband and father on her behalf took the cheques delivered by D2 and extended the time for payment. All these are fitting in the original context of P’s claims.

The Court’s attention is drawn to the first witness statements for P. Taking a look at paragraphs 6-18 of Ko Nga Chun’s witness statement (P.80-85), paragraphs 3-25 of Ko Kan’s witness statement (P.91-99), paragraphs 2-7 of Kuang Zhaosheng’s witness statement (P.106-109), one can readily see that the proposed amendments were put in to tally with what the 1st round of witness statements said. No new allegations are made.

It is in fact more of a house keeping exercise. It is not a case where P is seeking to add a new cause of action or moving the goal post, so to speak. Even if such amendments are to be made at a even later stage, the usual practice is to allow the same, let alone the fact that this case has not been set down, a 10-day trial will in any event be at least ½ year – 1 year later, no prejudice whatsoever will be caused to D because these are not new allegations…”[2]

The Defendants’ Reasons to Oppose

5.  The defendants oppose this application on the ground that “These amendments do not relate to the issues in dispute and predate the P Oral Agreement.  They are merely background information relating to the dealings between Ds, Ko Kan and Kong Cheong, not P.”[3]

6.  They rely upon the principles that amendments to pleading should only be granted if the amendments were made “for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings and it is necessary either for disposing fairly of the cause or matter or for saving costs.ˮ  O.20, r.8(1A) RHC.  Also O.18, r.7 of the RHC provides that pleadings should contain only material facts on which the party pleading relies on for his claim, but not evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits.

The Factual Background

7.  In view of the disputes between the parties, it is necessary to examine the facts of the matter, which have been summarized by The Honourable Madam Justice M. Chan in her Decision delivered on 31 December 2013 and I shall gratefully adopt as follows:

“2. The claim made by the plaintiff Mdm Ko Nga Chun (“Mdm Ko”) against the defendants is that, by an agreement for sale and purchase made on 18 January 2007 between the 1st defendant Companhia De Desenvolvimento Wui San Limitada (“Company”) and Empresa De Fomento E Investimento Kong Cheong (Macau) Limitada (“Kong Cheong”), the Company agreed to purchase and Kong Cheong agreed to sell a piece of land in Macau (“Land”). The Company is incorporated in Macau. Suen is the majority shareholder and Administrator of the Company.

3. Disputes arose between the Company and Kong Cheong over the sale and purchase of the Land (“Land Transaction”), as a result of which the certificate of transfer was not executed by Kong Cheong for the transfer the Land to the Company. Kong Cheong was at the material time beneficially owned by Mdm Ko’s father. Mdm Ko claims that in March 2007, Suen asked her to be the intermediary in the dispute between the Company and Kong Cheong, and that at a meeting in Hong Kong which took place in November 2008, it was orally agreed between Suen and herself (“Oral Agreement”) that she would assist the Company, so that the certificate for transfer of the Land could be signed by Kong Cheong in favor of the Company. Mdm Ko claims that in return, the Company and Suen agreed to pay her a fee of HK $95 million (“Fee”) if the certificate of transfer was successfully signed.

4. Mdm Ko claims that the Oral Agreement is evidenced by a Chinese agreement dated 10 January 2009 (“Written Agreement”), which provides for the Company’s payment of the Fee to Suen, and as Suen asked for further time to make payment of the Fee which was due, the Written Agreement provided for Suen’s issue in his name of 3 cheques which were post-dated 30 April 2009, 31 August 2009 and 30 November 2009 for the amounts of HK $15 million each, and a cheque post-dated 31 July 2011 for the amount of HK $50 million, the cheques totaling $95 million, as security for due payment of the Fee by instalments.

5. According to Mdm Ko, the certificate for transfer of the Land was duly signed on 10 January 2009, but Suen has only made payment of a sum of HK$10 million, and defaulted in making payment of the balance of the Fee due under the Oral Agreement. Save for payment of the HK$10 million as aforesaid, Suen’s cheques were not honoured upon their presentation for payment. Mdm Ko accordingly claims the outstanding Fee in the sum of $85 million, and alternatively seeks payment of the total sum of HK$80 million under the 3 cheques dated 31 August 2009, 30 November 2009 and 31 July 2011.

6. Suen denies having met Mdm Ko or having discussed or made any agreement with her. On his case, he had orally agreed with Mdm Ko’s father, Ko Kan (“Ko Senior”), at the end of 2008, that they would discontinue the proceedings which the Company had commenced against Kong Cheong in December 2007, and the proceedings which Kong Cheong had on its part commenced against the Company in July 2008. These were proceedings which were instituted in Macau. Suen also claims that he had orally agreed with Ko Senior in January 2009 (“Suen’s Oral Agreement”) that Ko Senior would procure the delivery of vacant possession of the Land to the Company and the discharge of all judicial charges on the Land, in return for which Suen agreed to pay Ko Senior HK$105 million in stages. HK$10 million was to be received by Ko Senior on the day that Kong Cheong executes the certificate of transfer of the Land, and the balance of HK$95 million was to be paid by 4 installments on 30 April 2009, 31 August 2009, 30 November 2009 and 31 July 2011. According to Suen, he issued 4 post-dated cheques for the HK$95 million as security for payment, which cheques were not to be banked by Ko Senior without his prior consent.

7. Suen accepts that the certificate of transfer of the Land was duly executed on 10 January 2009, but according to Suen, Ko Senior asked Suen to pay him HK$7 million only, and for the balance to be paid by Suen to the court in Macau to settle the legal costs of the Macanese proceedings.

8. In respect of the Written Agreement, Suen claims that this was a sham which was produced by Ko Senior when Suen gave him the 4 post-dated cheques. On Suen’s case, the name of Mdm Ko which appears in the Written Agreement had been left in blank in the Written Agreement when it was first produced to Suen. Suen claims that he was told by Ko Senior that the Written Agreement was required “to facilitate (Ko Senior’s) works” under Suen’s Oral Agreement, and was “only a pretext to facilitate (Ko Senior)’s discussion with the creditors of Kong Cheong”. On Suen’s case, he only signed the Written Agreement as a result of these fraudulent misrepresentations made by Ko Senior.”[4]

Discussion

8.  The above summary of the facts sets out a more comprehensive picture of disputes between the parties.  As the parties agreed in their previous proceedings before me over the issue of expert evidence, this matter is going to be facts intensive, more apparent so where Suen has made allegations that he only signed the Written Agreement as a result of fraudulent misrepresentations made by Ko Senior.

9.  There is no dispute that the amendments tally with the context of the witness statements as stated in paragraph 4 above.

10.  “17.  The function of particulars is to inform an opponent of the case he has to meet at trial: see Hong Kong Civil Procedures 2002 at paragraph 18/12/1.  Thus, the provision of full and proper particulars not only enables the parties and the Court properly to prepare for trial, it also serves the important function of encouraging settlement.  Settlements rarely occur without each side knowing the full and precise extent of the case made against him.”  Ping Kai Engineering Co Ltd v Hong Kong Teakwood Works Ltd (unreported, HCCT 2/2001, Ma J (as he then was) 6 February 2002)

11.  In assessing whether it is “necessary” to make the amendment under O.20, r.8(1A), one must bear in mind the fundamental functions of pleadings, as stated by Ma CJHC (as he then was) in Wing Hang Bank Ltd v Crystal Jet International [2005] 2 HKLRD 795 at 799:

12.  “…(2) In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues.  Where issues are sought to be introduced that have not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties has been obtained….”

13.  There is no application before the court to strike out those parts of the witness statements that the plaintiff has now relied upon in support of her case.  This morning, I have made enquiry with the defendants if they would object to those parts of the witness statements at the trial.  They confirm that they will not oppose and the evidence will be allowed to be adduced just as background facts only, whereby they will not treat those issues seriously.  This should not be the proper conduct for the trial as this is the situation as mentioned in Wing Hang Bank Ltd case.  The plaintiff should be allowed to plead those facts in the Statement of Claim.  Otherwise, according to Wing Hang Bank case, those particulars in the witness statements would be excluded by the trial judge.

14.  In the circumstances, it is quite clear that leave should be granted to the plaintiff to make the amendments as set out in the proposed Amended Statement of Claim.

15.  As to the costs of this application, the plaintiff agrees that the costs of and occasioned by the amendments should be given to the defendants, to be taxed, if not agreed.  But the costs for today’s hearing, which the defendants have failed, should be given to the plaintiff.  The defendants argue that since the application is late, the costs of today’s hearing should be in the cause. I consider that if the parties are acting reasonably and properly under the guidance of the above authorities, the amendments should be made by consent and today’s hearing should be unnecessary.  The costs for the hearing today should be given to the plaintiff, to be assessed summarily under O.62, r.9A RHC.  The plaintiff has submitted her schedule of costs, which amount to $68,603, which appear to be excessive.  There are a number of deficiencies in the schedule of bill: the litigation clerk’s fee should be $1,000 per hour instead of $1,500; time spent on communication between solicitors and client and counsel are admittedly excessive; the costs for the preparation of the documents are high.  Taking all the factors into consideration and adopting a broad brush approach for assessment, the costs for today’s hearing, including the costs reserved, should be $40,000, to be paid within 14 days from the date hereof by the defendants.

Costs and Order

16.  I shall make an order in terms as follows:

a. Leave be granted to the plaintiff to amend the Statement of Claim as per draft, the same be filed and served within 7 days from the date hereof;

b. Leave be granted to the defendants to make the consequential amendments to the Defence and Counterclaim within 28 days thereafter;

c. Costs of and occasioned by the application be to the defendants, to be taxed, if not agreed;

d. Costs of today’s hearing be as per paragraph 15 above.

e. By consent, the parties shall obtain Counsel's advice within 28 days after close of the amended pleadings;

f. All interlocutory applications as may be advised shall be taken out within 14 days thereafter; such applications, if contested, shall be fixed before the Registrar for argument;

g. There shall be another Case Management Conference at 11:30 am on 29 June 2016 before the Registrar and the parties shall inform the Court whether they are ready for trial.

h. The costs for this Case Management Conference (20 minutes) be in the cause.