HUI YIN SANG AND OTHERS v. TSOI PING KWAN AND OTHERS

HCA392/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 392 OF 2008

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D E C I S I O N

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1.   In this action the 1^st and 2^nd Plaintiffs were business colleagues. The 1^st Defendant was also a business colleague. The three of them, together with another colleague by the name of Cheng Chung Hing formed a joint venture in or about 1993, to invest in land in Shanghai to construct a commercial building. This has been called the Far East Building Project.

2.  In 1994 the same four persons entered into a second joint venture of a similar nature and this has been called the New Land Plaza Project.

3.  In about 1995 all four persons orally agreed that their respective interests should be held in a corporate structure involving BVI companies in the proportions of 26%, 20%, 20% and 34% respectively.

4.  The principal company was Smart Lot Assets Limited in which the 1^st and 2^nd Plaintiffs held 26% and 20% respectively and the 1^st Defendant held 20%. This appears to leave Cheng with the balance of 34% as originally provided for.

5.  Smart Lot itself owned Shanghai Consultant Limited, Location Plus Properties Limited and Direct Properties Limited. These three BVI companies held 66% of New Land Holdings Limited.

6.  In New Land, Shanghai Consultant held the 1^st Plaintiff’s interest of 26%, Direct Properties held the 2^nd Plaintiff’s interest of 20%, and, Location Plus held the 1^st Defendant’s interest also of 20%.

7.  Accordingly, Shanghai Consultants are the 3^rd Plaintiff and Direct Properties the 4^th Plaintiff.

8.  The other individual in the action is the niece of the 2^nd Defendant. New Land as the 4^th Defendant represented a 20% interest of the 2^nd Plaintiff, and was jointly owned by the 3^rd Plaintiff (Shanghai Consultants), Location Plus and Direct Properties to the extent of 66%.

9.  The 4^th Defendant (New Land) also wholly owned Catford (the 3^rd Defendant) which in turn wholly owned Shanghai New Land which wholly owned the New Land Plaza, the subject of the second joint venture.

10.  The 1^st and 3^rd Plaintiffs have reached some agreement with the 1^st and 2^nd Defendants and therefore no longer feature in this action.

11.  The original corporate arrangements between the parties are extremely convoluted. The original version of the Statement of Claim does nothing to simplify matters and has undergone several amendments. It would have been better to have re-drafted it altogether.

12.  I need to review a little of the history of the Statement of Claim from the viewpoint of the remaining Plaintiffs and the four Defendants since it was served on 11 March 2008. Unfortunately the “rainbow” pleading with its various amendments is, as I have said, not easy to follow and the claim has thus become somewhat complex. The use of colour to represent the various amendments has been somewhat wayward. I do have sympathy for Mr Ambrose Ho SC, and his current team in their current position having inherited the pleading of others, always a potential nightmare.

13.  The first amendment came on 4 May 2010. It added the 3^rd and 4^th Plaintiffs and the 3^rd and 4^th Defendants. Essentially the pleaded case against the 1^st and 2^nd Defendants is that they fraudulently effected share transactions in New Land Holdings and Catford for their own benefit thus depriving the 2^nd Plaintiff of his interest, and transferred the New Land Plaza project, the second joint venture, into their ownership. Implicit in these accusations is the falsification of documents in order to achieve that.

14.  The 1^st Defendant contends that he bought the interest of the 2^nd and 4^th Plaintiffs in the New Land Plaza project having paid the proper consideration and that the 2^nd Plaintiff voluntarily and with full cognisance signed the Resolution of the New Land Holdings Board which is dated 1 December 2000. Connected with this is the 1^st Defendant’s contention that the signature of the 1^st Plaintiff on the Resolution of the Shanghai New Land Board which is dated 8 October 2001 is a genuine and valid signature. Those are the principal factual issues.

15.  In approaching the Plaintiff’s application I have relied upon the proposed re-re-re-Amended Statement of Claim attached to the summons. That at least has the staged colouring of amendments to facilitate an identification of the additions sought to be made. The copy in the PTR bundle has no such colour distinctions and is impossible to follow. I recall Mr Ho making references to pagination in the PTR bundle and have checked on the transcript but I think those references do not illuminate the proposed changes.

16.  The first application to amend came before Au, J on the 28 January 2010. He disallowed some of those sought for reasons set out in his judgment. Mr Johnny Mok SC for the Defendants endeavoured to persuade me that the amendments sought by the Plaintiffs in their application before me on the hearing of the Pre-trial review, fell foul of the decision by Au, J. I do not agree. The proposed ones are still in my view essentially cosmetic – but unnecessary. Although I appreciate Mr Ho’s suggestion that they merely crystallise the issues in this case I consider that any amendment to the existing pleading will contribute nothing to a rational explanation of the issues. Too much water has passed under the bridge and too much time has elapse to allow yet another volume of paper to expand the bundles in this trial. I shall rely on counsel to ensure that I have a proper and straightforward understanding of this case.

17.  Further amendments were made on 21 July 2010, and 12 May 2011. I do not need to consider the substance of those. They exist as the basis of the 2^nd and 4^th Plaintiffs’ pleaded action.

18.  The application is dismissed but I make no order for costs. I cannot see that the proposed re-re-re-amendments would have seriously troubled the Defendants.

19.  I have already at the Review indicated that I dismissed the two applications by the Defendants for the reasons I then set out essentially in the course of the argument.

20.  I also made an order that the Plaintiffs should have their costs in respect of those two applications on an indemnity basis for reasons which are also implicit in the exchanges.