SPOTLIGHT PRODUCTIONS O/B TOCHI INVESTMENT LIMITED

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

Action No.A10306/1995

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J U D G M E N T

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Le Pichon, J.:

1. This is an action by the Plaintiff, Spotlight Productions Limited, for a final injunction to restrain the Defendant Koonkai Investments Limited from releasing the film version of Cao Yu's classic work, "Thunderstorm".

2. The principal issue in this case is whether the Plaintiff and the Defendant, through Mrs Wong and Mrs To, agreed to the inclusion of two handwritten provisions, namely paragraphs (f) and (g) of Clause 2.01, as part of the Production Agreement dated 6 April 1995 made between the Plaintiff and the Defendant. It is common ground that the Production Agreement was not signed on the date appearing on its face but at the end of June. The relevant paragraphs read as follows :

"Spotlight shall -

(f) as director of the film make final artistic and technical decision on filming and post-production until the completion of the final cut ready for general release in any form of medium.

(g) supervise the design and make final decisions on the order and size of both English and Chinese opening and closing credits."

3. The Plaintiff is a $1,000 company wholly owned by Wong Ho-Yi ("Mr Wong") and his wife Wong Chow Tsai Tse Vivian ("Mrs Wong"). Mr Wong wrote the script of the film and is the director as well as the leading male actor in the production. The Defendant is a company wholly owned by William To ("Mr To") and his wife Wai Sau Ming Marilyn ("Mrs To"). It financed the production of the film.

4. By way of background, the Plaintiff obtained an injunction from Rogers J. on 23 October 1995 restraining the Defendant from distributing and publishing or exhibiting the film for one month from the date of the order. The injunction lapsed on 22 November. The Plaintiff's application for further injunctive relief came before me on 7 December 1995. A speedy trial was ordered with the Defendant providing an undertaking not to distribute, publish or exhibit the film until trial or further order.

5. What was a relatively short and simple question of fact developed into an eight day trial caused, in part, by lengthy and irrelevant evidence on peripheral matters, largely to do with various scenes in the film. The evidence which I will be dealing with in some detail will be confined to matters germane to the issues here.

Chronology of events

6. Set out below, in chronological order, is a summary of the evidence relating to the main events culminating in the execution of the Production Agreement and the circumstances concerning the addition of the handwritten provisions. It is the parties' agreement (if any) to their inclusion which lies at the heart of this action.

7. In November 1994, Mr Wong started working on the script of Thunderstorm and concluded it by the end of November. He began looking for investors for the film.

(a) Chinese New Year 1995

8. Over Chinese New Year, Mr and Mrs Wong paid a visit to Mr and Mrs To. It is common ground that by this time Mrs Wong and Mrs To were close friends although they could not agree when they first met : according to Mrs Wong it was late 1992 or early 1993 and according to Mrs To, it was late 1991.

9. On that occasion, according to Mrs Wong, Mrs To who through her friendship with Mrs Wong knew about the project, brought up the subject of the film. Mrs Wong then told her that two producers were working on getting finance for the film. Mrs To apparently expressed respect for Cao Yu and showed an interest in the film.

10. Mrs To's evidence was that during that visit, Mr and Mrs Wong tried to interest them into backing the project. Mr and Mrs To were told that the film was a low budget film with production costs in the region of 3 to 4 million and that the profit should be good. Mr To answered that they were business people and had no interest in making films.

(b) February

11. Spotlight entered into an agreement with Cao Yu to acquire from him the right to transform the script of the play and the right to film the play in consideration for HK$50,000. The agreement was signed by Spotlight on 6 February 1995 and by Cao Yu on 10 February 1995. However, the Agreement was only to take effect when full payment for the copyright had been made. No payment was made to Cao Yu at the time the Agreement was signed.

12. Sometime thereafter, Mr and Mrs Wong met Mrs To for dinner and Mrs To was given a copy of the script. According to Mrs To, Mrs Wong called her repeatedly before and after that dinner to persuade her that the film was a good investment and asked her to look at the proposal.

13. The next meeting took place on 28 February 1995, attended by Mr and Mrs To and Mr Wong. Prior to the meeting, Mr Wong prepared a rough estimate of potential income of the film. In compiling the figures, he sought the assistance of a film organiser. The profit forecast was $2.3 million.

14. At that meeting, Mr Wong explained to Mr and Mrs To the meaning of the concept of first founder. That meant an investor who was prepared to put up an initial amount to pay deposits for key actors, the author's fees and the script fee to get the project going. He would eventually get to share in the profits of the owner of the intellectual property on a 50/50 basis if the latter were able subsequently to secure financial backing for the film, usually from a large corporation. Mr Wong also told them at that meeting that it was the usual experience for a low budget film, meaning one costing less than $3.5 million to produce, that the possibility of loss was remote. He said that he could not guarantee that there would be no loss but if the investment was made as a first founder, it meant a small investment and was probably worth it. According to Mr Wong, Mr To's response was that he was a businessman; he had no interest in producing films and he was not interested in being the first founder. However, he was prepared to lend Mr Wong the money for the copyright and he did not mind paying this initial sum like helping a friend. It was in these circumstances that Mr and Mrs To provided Mr Wong with $60,000, $50,000 to acquire the copyright and $10,000 for petty cash.

15. Mrs To's recollection of the meeting of 28 February was a little different. She recalled that she was told that the production costs would be affected by who the leading actress was. Vivian Wu was mentioned and her fees of $1 million had been provided for in the estimated production costs. At some point Mr Wong gave an assurance that the production fees could be kept to $3.5 million and that any excess would be his responsibility. Mrs To also said that the money advanced by Mr To as first founder and not, as suggested by the Wongs, as a loan from a friend.

(c) March

16. Mr Wong visited Beijing between the 5 and 7 March and paid Cao Yu $50,000 on 6 March.

17. A week after Mr Wong's return from Beijing, there was a dinner at the home of Mr and Mrs Wong. The question of royalties was discussed. Mr and Mrs To were told that if they were to become full investors, the split would be 80/20 and if they were simply first founders, the profit going to Spotlight would be split 50/50 with them. Mr To's response was that he wanted to see a rough budget and a breakdown of expenses from the shooting of the film to the "A" copy.

18. According to Mrs To, in addition to those matters, Mr Wong also elaborated on the project and for the first time mentioned his remuneration : $120,000 for the script and $280,000 as director and leading male actor.

19. The next meeting was a dinner at the house of Mr and Mrs To about a week later. On this occasion, Mr Wong told Mr and Mrs To that if he had to carry on, he would like to be paid for the script. Also a line producer and production manager would have to be engaged. Mr Wong went into detail about expenditure required to get the project going. According to Mrs Wong, the following matters were agreed at that meeting :

(1) Mr Wong would defer receiving half of his total fee of $400,000 as script writer, director and actor until all the production costs had been recouped, i.e. he would be paid $200,000 first : the script fee of $120,000 and $80,000 of the total fee of $280,000 as director and leading male actor;

(2) Profits would be split between the Defendant and the Plaintiff in the proportions of 75/25 instead of 80/20;

(3) In consideration of Mrs Wong's participation in the project, Mr and Mrs To would waive the outstanding loan (amounting to $321,550) to Mrs Wong;

(4) The loan of $600,000 to Angela Luk would be repaid out of the Plaintiff's share of the profits incrementally.

Mr To required a detailed budget. To facilitate the preparation of the budget, Mr To agreed to provide the necessary office space rent free. It is to be noted that the evidence of Mr Wong as regards (3) and (4) was a great deal less specific. As to (3), his evidence in chief was "[Mrs Wong's] sum with Mrs To could be fixed up." As to (4) it was "if it were profit-making then payment could be made to Angela Luk". In cross-examination, this became "if a profit were made then the sum of Angela Luk could also be fixed up."

20. Mrs To's account is different in material respects. She said that following the dinner at the home of Mr and Mrs Wong, Mrs Wong called to say that since the script was finished, Mr Wong wanted his script fee to be paid. That request suggested to Mr and Mrs To that they were considered the sole investor in the film rather than the first founder since payment of the script fee would exhaust the amount of $200,000 which they understood to be the first founder's obligation. Having discussed the matter between themselves, Mr and Mrs To decided that they were prepared to invest in the project and a dinner at their house was accordingly arranged.

21. The dinner took place a day or two prior to 24 March. Mr and Mrs To informed Mr and Mrs Wong that evening that they agreed to be the sole investor in the film. They then suggested that Mr Wong defer the receipt of half his fees as a mark of his sincerity. Mrs Wong said it was not a problem but at the same time requested that their share of the royalties be increased from 20% to 25%. That the parties agreed to the deferral of the payment of half of Mr Wong's fees and the increase of the Plaintiff's share of royalties to 25% is not in dispute. However, Mrs To denied that there was any discussion regarding Mrs Wong's remuneration or that there was any agreement to waive the loan that had been made to Mrs Wong. As will become apparent from the loan transaction considered in greater detail below, there is disagreement as to the amount loaned to Mrs Wong.

22. It was agreed at that meeting that Mrs To would be the executive producer. She explained that this was her suggestion. As she and her husband were the sole investors, they had to keep control of the film. It was also agreed that an office would be provided for Mr Wong, the line producer and the production manager to work on the budget in April. There was no discussion of any role for Mrs Wong.

23. A cheque in favour of the Plaintiff for $60,000 (being half the script fee) which was given to Mr Wong that evening, was cashed on 24 March. On 27 March 1995, the Defendant signed a contract with the leading actress and paid a deposit of $66,000.

(d) April to May

24. On or about 5 April, the line producer and production manager began working on the budget together with Mr Wong. The exercise took a month and the budget went through three revisions. By mid to end April, the budget was $3.3 million odd with a contingency of $300,000. Mr Wong said that he assured Mr and Mrs To that provided everything was under his control, the budget would not overrun.

25. Meanwhile on 6 April 1995, Mrs Wong prepared a draft Production Agreement which was forwarded to Mrs To for the Defendant's signature. It set out Mr Wong's fees as script writer, director and actor, the payment arrangements and the Plaintiff's share of royalties. In cross-examination, Mr Wong admitted to having seen the draft before it was sent and that the draft set out his understanding of the agreement reached with Mr and Mrs To. It is to be noted that the Agreement did not contain any provision relating to Mr Wong's entitlement to sole artistic control or any final say regarding the size and order of opening and closing credits.

26. On 19 April, Mrs Wong introduced Mrs To to Winnie Tsang, the general manager of Panasia Films Limited, with a view to Panasia or one of its subsidiaries becoming the distributor of the film. On 25 April, Mr Wong wrote to Winnie Tsang asking for the draft terms of the distribution agreement. Attached to this letter was a list of the participants in the production and their capacities prepared by Kenny Bi, the line producer. Mrs Wong's name was not on this list. It did not appear until the third version of the list of 2 May in which she was described as Production Consultant.

27. In early May, the Defendant paid the studio deposit of $200,000. Mrs To was asked to provide an accountant and production started.

(e) June 1-28

28. Shooting commenced on 6 June.

29. On or about 8 June, a draft Production Agreement was prepared by Mr To's sister who is a lawyer, based on the April draft of Mrs Wong. In Clause 1.01, it was stated that the Defendant and the Plaintiff have agreed to conduct the business of producing the film. Clause 2.02 provided that the Defendant was to be responsible for all financial input for conducting the business and to have the sole right in determining how the business was to be carried out. The second draft prepared on 13 June differed from the first draft in several respects : it limited the Defendant's financial input to a maximum of $3.5 million for conducting the business and inserted a provision relating to the ownership of the copyright of the film. The third draft of 14 June was not materially different. Mrs Wong accepted that she was either shown these drafts or the main points were discussed with her although it was her evidence that she was not given copies to retain.

30. On 27 June, a fourth draft was prepared. This draft differed from the former drafts in material respects : it introduced a definition of "marketing costs"; (hitherto discussions as to costs had been restricted to production costs and marketing costs had never been mentioned); clause 2.01(d) required the Plaintiff to "diligently and competently exercise its artistic direction for production of the film"; paragraph (e) required the Plaintiff to be responsible for any production costs beyond $3.5 million; clause 2.02(e) provided that the Defendant would secure the business with a loan of up to $1 million to the extent that it was required for marketing costs. Such loan was to be interest bearing at a maximum rate of 25%.

(f) June 29

31. Mrs Wong's evidence was that when she was shown the draft of 27 June by her husband during the morning of 29 June. They discussed it and their reaction was that it was extremely one-sided, particularly after seeing the provision regarding their responsibility for production costs beyond $3.5 million. They decided that it would either have to be re-negotiated or at least the term "diligently and competently" had to be rewritten and changed to "sole discretion and decision-making on artistic, technical and credit". Mr Wong said that otherwise he would be writing a blank cheque for other people to run the production costs. Their thoughts at the time were that if they were not in control of the artistic and technical side, then there was no way that they could guarantee that the production costs would not exceed $3.5 million.

32. Mrs Wong had a telephone conversation with Mrs To that afternoon and informed Mrs To that the two clauses, namely, paragraphs (d) and (e) were not acceptable and in order for the Wongs to guarantee the $3.5 million production costs, they had to have a better clause in paragraph (e). Mrs Wong said that the word "sole" was used by her several times during that conversation and she emphasised the need for her husband to have the final say. Mrs Wong said that Mrs To tried to make excuses for not making any changes : she did not want to pester her daughter to correct the draft and furthermore, she had already told her husband that the contract had been signed.

33. That evening Mr and Mrs Wong and Mr and Mrs To attended a function at the Grand Hyatt where Mrs To gave Mrs Wong the amended Production Agreement which she had signed. When Mrs Wong saw the word "responsible" rather than "sole right", she said that that was not good enough. Mrs To explained that "responsible" did include having sole right and final decision. Mrs Wong was asked but refused to sign the Production Agreement there and then. She gave two reasons : first, she did not have the company chop with her and second, she needed to discuss the matter with her husband further. She told Mrs To "I can't sign anything which deals with my husband's soul. It is not something that I can speak on his behalf." According to Mrs Wong, Mrs To said to her "Take it home, make sure you give it to me first thing tomorrow. I want it before the love scene is done, starts." She allegedly also said she had already told her husband that the Production Agreement had been signed. Mrs Wong suggested that in addition to those reasons, Mrs To needed to have the Production Agreement signed in order to sign a Distribution Agreement with Golden Harvest.

34. I now turn to consider Mrs To's account. Mrs To agreed that she received a telephone call from Mrs Wong during the afternoon of 29 June concerning the fourth draft. The only question raised by Mrs Wong was that she thought the words "diligently and competently" were too vague and ought to be clarified. Mrs To said that it occurred to her that the word "responsible" might better reflect the meaning. In her mind, this paragraph was meant to reflect Mr Wong's obligation as director. It was not meant to be a clause that dealt with Mr Wong's rights or entitlement. Mrs To said she would have the draft altered to substitute the word "responsible" for "diligently and competently" by her husband's secretary and would bring along the finalised draft that evening. Her daughter who was only 15 was not involved in the preparation of any of the drafts and it was absurd for Mrs Wong to suggest it.

35. When the parties met that evening, Mrs To handed to Mrs Wong two copies of the Production Agreement that had been signed by her on behalf of the Defendant with the Defendant's chop affixed to it. According to Mrs To, Mrs Wong looked at the revision that had been made and raised no objection. Her excuse for not signing the contract there and then was that she did not have the company chop with her. She never said that she needed to discuss the matter with her husband before agreeing to the change that had been made.

(g) June 30

36. As will become apparent, Mrs Wong and Mrs To gave completely irreconcilable accounts of what happened on June 30. The evidence from the main protagonists as well as witnesses called by them is summarised below.

(i) Mrs Wong

37. On the following day, Mr and Mrs Wong arrived at the studio at about 3 p.m. They went inside the studio and shortly thereafter, Mrs Wong went to look for Mrs To. Prior to going to the studio, Mrs Wong had added two additional clauses, namely paragraphs (f) and (g), into the Production Agreement in her hand.

38. Mrs Wong found Mrs To and handed her a copy of the Production Agreement. When Mrs To saw what had been inserted, she flared up. Mrs Wong told Mrs To that "From day one, it has always been you look after the money, we'll look after the artistic side, so this is the way it is." Mrs Wong's evidence was that eventually Mrs To said "O.K., O.K." Mrs Wong said "Do you want to give it back to me?" and Mrs To replied "No, its O.K." Mrs Wong said that discussion took eight or nine minutes. As far as Mrs Wong was concerned, Mrs To had accepted the additional provisions.

39. After that she returned to the studio. Her husband enquired as to what had happened and she told him that Mrs To was still grumbling. Mrs Wong then made her way to the dressing room to see Elizabeth Lee. She said that she ran into Mrs To and Mowana Tse. They walked together towards the dressing room and Mrs To kept on grumbling. She kept on saying "I spent so much money and we are such good friends, do we have to be so detailed, so specific." When they got to the dressing room, they stopped talking and after sorting out Elizabeth Lee's make-up and costume, they left the dressing room together. When they got back into the studio, Mrs To allegedly said "O.K., O.K., everything is O.K. now, let's start shooting." According to Mrs Wong, all this took place before the shooting of the love scene. It would have been around 4 p.m. to 5 p.m. Mrs Wong said that she was never asked by Mrs To to delete the two clauses nor did Mrs Wong ask Mrs To to put her initials against the two clauses.

(ii) Mowana Tse and Andrew Foo

40. Miss Mowana Tse and Mr Andrew Foo gave evidence on behalf of the Plaintiff. In her evidence in chief, Miss Tse said that after arriving at the studio shortly after three, she went about her own duties. She was asked by Mrs To to handle the costume of Miss Lee in the love scene. She said she had a discussion with Mrs To as to what costume Miss Lee should wear. They went to the dressing room to meet Miss Lee to discuss costumes. The dressing room was about a 10 minute walk away from the studio and when they were on their way, they were joined by Mrs Wong. Miss Tse said that Mrs To was very angry and was complaining, saying that they had paid several million and yet they could have no say, to which Mrs Wong replied "That's right, that's right. But my husband insisted." Miss Tse said that Mrs To was holding a piece of paper in her right hand and was waving it about in an angry manner. When they arrived at the dressing room, the discussion stopped and their attention then focused on preparations for the love scene. Miss Tse said that she and Mrs To concentrated on discussing how the scene was to be acted and the costume to be used and were in the dressing room for about 10 minutes. Then Mrs To, Mrs Wong and Miss Tse went back to the studio together. Mrs To and Mrs Wong apparently resumed their discussion and Mrs To said "We are such good friends, why are such things required to be in black and white. We could do it orally."

41. Mr Andrew Foo was an actor with a minor role in the film, being involved in only three scenes. Mr Foo's evidence was that he was outside the studio that evening waiting for his turn which did not occur until way past midnight. He did not witness or hear any argument between anyone that evening. Had such an argument occurred in the carpark, he would have been able to hear and see it.

42. In his statement dated 20 January 1996, made less than a week before he gave evidence, Mr Foo said that he arrived at the studio at between 8 and 9 that evening. He said that he sat outside the film set at the main entrance of the studio at about 9 to 10 p.m. This statement was subsequently amended : inter alia, Mr Foo changed the time of his arrival from 8 p.m. to 9 p.m. to approximately 9 to 10 p.m.. He did not explain his reasons for this amendment. However in his evidence in chief, Mr Foo changed the time of his arrival yet again. He said that he was outside the studio before 9 p.m. but again no explanation was given.

(iii) Mrs To

43. Mrs To does not accept Mrs Wong's account of events on 30 June. She said that was the day when the love scene was to be shot and she was anticipating problems between Mr Wong and Miss Lee, the leading actress. That was also the reason why she had asked Mrs Wong to be present because she felt that her presence might help smooth matters between Mr Wong and Miss Lee. After arriving at the studio, Mrs To said she was very busy preparing for the shooting of the so-called love scene referred to earlier. The working relationship between Mr Wong and Miss Lee was not good and it had deteriorated during the course of the shooting in June. Mr Wong had told Mrs To that Miss Lee was stupid to argue with him because as film director he could cut away all her scenes and there was nothing that Miss Lee could do about it.

44. Mrs To's evidence was that shooting started after 4 p.m. that day and very quickly they came to the love scene. There were arguments but after the scene was done which took quite some time, they had a dinner break at around 9 p.m. She was feeling happy as everything had gone smoothly. She then remembered the contract and asked Mrs Wong whether it had been signed. Mrs Wong said that it was in the car. They then went to Mrs Wong's car which was parked in the parking lot outside the studio. Mrs Wong showed Mrs To the contract and said that she had added two clauses in and wanted her to initial them. Mrs To said that she was very angry because she had already signed the contract and for Mrs Wong unilaterally to add the two clauses was illegal and disrespectful.

45. Mrs To said that she could not accept these new additional terms because there was another clause already in the contract, namely 2.02(b) where the Defendant was given the sole right to decide the manner of how the business was to be carried out. That clause was inconsistent with paragraph (f) that the Plaintiff wished to add. Further, Mrs To considered paragraph (f) to be unacceptable because she and her husband were the sole investors and because Mr Wong's remarks regarding his arguments with Miss Lee prompted a concern that if he were granted sole artistic control, he might abuse or misuse that power. Mrs To was unhappy with paragraph (g) because it would entitle the Plaintiff to delete her name as executive producer. Mrs Wong said that they could add a proviso to protect the situation. Mrs To said there was no reason why they had to go to all this trouble and complicate the contract.

46. Mrs Wong then said to Mrs To that if she refused to initial the new clauses, the Plaintiff would not be in a good mood to finish shooting the film. When she heard that, Mrs To said she "exploded". She regarded it as a threat and lost her temper. She left Mrs Wong and walked towards her car saying that she was not going to sign and she was not going to shoot the movie. Mrs To then got into her car and drove away. She wanted to go home but at the entrance when she wanted to pick up her mobile phone, she realised that she had left her handbag containing her driving licence, I/D card, mobile phone and everything else in the studio. She sat in the car for five minutes and decided that she had to go back to clarify matters with Mrs Wong. She drove back to the studio and found Mrs Wong in a much softer mood. Mrs Wong said to her "O.K., you make the decision whatever you say." Mrs To said "O.K. Then I take your word. I will go home and delete [paragraphs (f) and (g) from] my copy and you do the same to your copy."

(iv) Esther Wai, Eric Ho and Shing Chiu Kwong

47. Esther Wai, Eric Ho and Shing Chiu Kwong gave evidence as to what they witnessed after the dinner break during the evening of 30 June 1995 outside the entrance to this studio. Miss Wai who is Mrs To's sister is a still photographer. She arrived at the studio when the crew had just finished dinner and she was outside the entrance to the studio waiting for them to prepare the set. Mr Ho was an assistant to the art designer and Mr Shing was a co-ordinator. Both of them said they were outside on standby ready to stop cars when shooting resumed.

48. All three of them saw Mrs To and Mrs Wong talking in the parking lot which was opposite the entrance to the studio, on the other side of a two-lane access road. Miss Wai and Mr Shing said Mrs To and Mrs Wong were having an argument. Mr Ho was more specific as to where they were. He said they were standing by Mrs Wong's car. Mr Ho saw Mrs Wong hand some documents to Mrs To. Mr Shing saw Mrs To holding some papers in her hand but could not say how they got there. All three saw Mrs To walk angrily from the parking lot to her own car which was parked outside the studio, to the left of the entrance when facing the studio. They heard her say "I'm not shooting any more" or words to that effect. Mr Ho and Mr Shing also heard her say "I'm not signing". All three saw her drive off. They also saw her return after about 10 minutes and walk into the studio.

49. Miss Wai who was just inside the studio by the pantry at the time saw Mrs Wong come out just as Mrs To was entering the studio. Miss Wai said that she overheard Mrs Wong say to Mrs To "O.K., do whatever you want. I'll follow what you want to do" or words to that effect.

(h) July to September

50. Shooting of the film finished on 2 July. Mr Wong completed a director's first cut and on 24 July this was shown to a selected group. Mr Wong made some changes to the director's first cut after the viewing. These changes did not significantly affect the length of the film. Subsequently, upon learning that Golden Harvest required the length to be only 95 minutes, further editing was done. It is agreed that this version, being the director's final cut, runs to 110 minutes.

51. On 29 July, Mrs Wong received a call from Mrs To to the effect that Golden Harvest had seen the director's final cut and did not like it, that Mr Wong was too involved and that someone else should do the re-editing. There appears to have been a misunderstanding : Mrs Wong thought Mrs To was conveying Miss Tsang's views whereas Mrs To was apparently conveying the joint views of herself and Miss Tsang. Mrs Wong had a conversation with Miss Tsang. After discussing the matter with Mr Wong, Mr Wong decided that he would neither edit nor do any post-production work. He was happy for Mrs To to do it "subject to his approval after everything was finished". A second telephone conversation then took place between Mrs Wong and Mrs To when Mrs To was informed that she could do the re-editing but it had to be subject to Mr Wong's approval in accordance with the contract. In cross-examination, Mrs Wong went further and said that Mr Wong's approval was required "at every stage". As to the second conversation, Mrs To understood Mrs Wong to be saying that Mr Wong had discharged his responsibility as director and that he did not wish to be involved in any of the post-production work but that she should let Mr and Mrs Wong see the film before general release.

52. Mrs To said that the next conversation she had with Mrs Wong was on 5 September. By that stage the film had been re-edited and shown to Golden Harvest. It was during the conversation on 5 September that Mrs To brought up the subject of the personal loan made to Mrs Wong. The conversation with Mrs Wong was not a happy one and on the following day, Mrs To deposited the three cheques that had been given to her by Mrs Wong.

The $1 million loan

53. This transaction is relevant because according to Mrs Wong the treatment of the loan and its repayment formed part of the overall arrangement reached with Mr and Mrs To. It is also germane to the credibility of the various witnesses.

54. The undisputed fact is that on 22 November 1993, there was a meeting at which Mr and Mrs To, Mrs Wong and Miss Luk were present. The upshot of this meeting was that an interest free loan of $1 million would be made by Mr To via Mrs To but there is a conflict of evidence as to the identity of the borrower or borrowers. The cheque was made out to Mr Wong a few days after that meeting. On the day that it was cashed, a sum of $600,000 was transferred from Mr Wong's account into Miss Luk's account.

55. Mrs Wong testified to the effect that her share of the loan was $400,000, the balance was a loan to Miss Luk. Miss Luk was experiencing financial difficulties and in great need of cash. She was with Mrs Wong and mentioned that she might approach Mr To for a loan. Mrs Wong was also in need of cash. She therefore went along with the idea of obtaining a loan from Mr To at Miss Luk's "insistence" although she had no expectation that it would be granted since she did not know Mr To having met him only a few times. As Miss Luk needed at least half a million, she allegedly said that she would ask for a loan of $1 million so as not to look "small time". Mrs Wong was to get what Miss Luk did not need. To her surprise, Mr To was willing to grant a loan of $1 million. Mrs Wong said that although she had asked Mrs To to make out two cheques, Mrs To in fact wrote out only one cheque in the name of Mr Wong. That was why $600,000 was transferred into Miss Luk's account. Two weeks or so after obtaining the loan, Mrs Wong presented Mrs To with a Cartier watch as a token of her appreciation for the interest-free loan and gave her three post-dated cheques totalling $1 million as "security". It is to be noted that there was no suggestion in Mrs Wong's evidence (in chief) that the gift was other than from her alone. A fresh set of undated cheques were given to Mrs To in December 1994 to replace those that had expired.

56. Miss Luk's account was that she was present at Mr To's office at Mrs Wong's request since she knew Mr To well. Since 1990, Miss Luk and Mrs Wong had many money transactions together. It was Miss Luk's evidence that it was always Mrs Wong who was indebted to her and not the other way round. At or about this time, Miss Luk had been pressing Mrs Wong to repay monies owing to her as she needed money for her restaurant business in Shanghai. In her affirmation, Miss Luk stated that she was owed $700,000 at the time. She said she did not specify an amount Mrs Wong had to repay but simply that Mrs Wong should repay whatever she could. Her assessment of the amount of indebtedness was based principally on the increase in the price of a property (referred to below) she owned jointly with Mrs Wong. Mrs Wong had capitalized on that increase by re-mortgaging the property without accounting to Miss Luk for the larger loan obtained prior to November 1993. At the meeting with Mr To, Miss Luk said that she never said a word and it was Mrs Wong who asked for the loan.

57. Mrs To said that some time in November 1993, Mrs Wong approached her and asked for a loan of $1 million. When Mrs To said she did not have that amount of cash, Mrs Wong suggested that Mrs To mortgage one of her properties in order to do so. Mrs Wong apparently needed the money because she had some financial difficulties with her projects in China. Mrs To suggested if she really needed the money that badly, she had better talk to Mr To. It was against that background that the meeting of 22 November took place.

58. Mrs Wong apparently asked Miss Luk to join them at Mr To's office. At that meeting, Mrs Wong said that she wanted to borrow a million dollars because of an investment she had in Shanghai. Mr To agreed to lend her $1 million but needed two or three days to arrange it. No interest was to be charged and Mrs Wong offered to repay the money in three instalments : in April, May and June 1994. At a fund raising dinner on 25 November that Mrs To wanted to write out a cheque to Mrs Wong in respect of the loan. Mrs Wong said that it was not convenient to have the cheque in her name because she was a government servant and suggested that her husband's name be used instead. Mrs To left it to Mrs Wong to fill in the name of the payee. She simply signed the cheque. Mrs Wong then gave Mrs To three post-dated cheques for $300,000, $300,000 and $400,000 respectively.

59. In March 1994, Mrs To received a call from Mrs Wong not to cash the cheques until her return from a world trip. By December 1994, all three cheques had expired. Mrs To asked for three replacement cheques which were to be undated. The three replacement cheques totalling $921,550 took into account the amount that had been repaid by Mrs Wong in 1994. Mrs To said that these cheques were given to her in March 1995 and not as Mrs Wong said in December 1994.

60. Between March and September 1995, Mrs To did not ask Mrs Wong for repayment. She knew that Mrs Wong did not have the money to make repayment. Their joint film venture, if profitable, would enable Mrs Wong to repay her. She therefore saw no point in asking for repayment whilst the project was on-going. In September, by which time the parties had fallen out, she presented the cheques for payment and when they were not honoured, she issued proceedings against Mrs Wong on those cheques which are still pending and which precipitated the present litigation.

On the issue of the loan, whose evidence is to be preferred?

61. I have no hesitation in preferring the evidence of Miss Luk and Mrs To on this issue. First, why would Miss Luk "insist" that Mrs Wong approach Mr To for a loan? Miss Luk knew Mr To well and there was no reason why she had to drag Mrs Wong into the transaction if she wanted to borrow from Mr To. Second, if only part of the $1 million was for Mrs Wong why did she provide three post-dated cheques as security? Not only did this occur once but fresh cheques were provided when the first batch expired. Third, her allegation that Mrs To wrote out the $1 million cheque in Mrs Wong's name was simply untrue : the name of the payee on the cheque was in fact in Mrs Wong's hand. Fourth, that there should have been one cheque for $1 million issued is also consistent with there being one borrower, namely Mrs Wong. Fifth, why would Mrs Wong agree to the discharge of the $600,000 loan out of the Plaintiff's share profits generated by the film if the loan was not hers but Miss Luk's?

62. If, as was Miss Luk's evidence, Mrs Wong owed her a substantial sum at the time the loan was obtained and she had been pressing for repayment because she needed the money, then the whole transaction is comprehensible. Is Miss Luk's evidence as to Mrs Wong's indebtedness to her believable?

63. Although there was no direct proof of this indebtedness, Miss Luk's veracity was put to the test concerning a related transaction. Miss Luk asserted in the course of cross-examination that Mrs Wong owed her $1.2 million arising out of the sale of a flat in Robinson Heights which they had jointly purchased in 1990 for approximately $2 million but which was in Mrs Wong's sole name. Both Miss Luk's entitlement to a half share in the property and Mrs Wong's indebtedness of $1.2 million became an issue. It was suggested in court that Miss Luk had no interest whatsoever in the property and in cross-examination that her interest was no more than 25%.

64. The alleged indebtedness arose out of the distribution of the proceeds of sale of the flat. Miss Luk was not only able to produce a partnership agreement regarding the purchase of the flat signed on 1 September 1991, approximately a year after the property had been acquired, to the effect that the property was owned by Mrs Wong and Miss Luk in equal shares, she also produced a document showing how her half share was being accounted for. It was written by Mrs Wong after the sale of the property for approximately $6.5 million in February 1994. It is clear from that document that Miss Luk and Mrs Wong had a half share each in the property and a sum of $1.2 million was borrowed by Mrs Wong from Miss Luk out of the latter's share of the proceeds of sale. Moreover, the land search revealed that the property was in fact remortgaged in February 1992 as was Miss Luk's understanding. It lends credence to Miss Luk's allegation, as at November 1993, Mrs Wong was indebted to her.

65. One matter had been relied on by Mrs Wong's counsel as evidence that the $600,000 paid to Miss Luk was a loan from Mr To to Miss Luk. As noted above, several weeks after the loan was made, Mrs To was presented with a gift in the form of an expensive watch from Mrs Wong. According to Miss Luk, Mrs Wong asked her to contribute a half share for the gift as Mrs Wong was only able to repay Miss Luk as a result of the loan made by Mr To. It was not Miss Luk's idea but she was happy to go along with it as they have been in the habit of giving joint presents in the past to various of their mutual acquaintances and but for the loan to Mrs Wong, Miss Luk would not have been repaid. Miss Luk's share was $33,000 odd and in fact that was brought into account at the time calculations were done regarding the distribution of the proceeds of the sale of the flat which took place in February 1994 and is referred to in that document. At the time Miss Luk was cross-examined about this, it was not known that the document containing the calculations would be produced. She could easily have lied about her contribution. She did not.

66. I do not regard the fact that Miss Luk shared the cost of this gift as establishing that she borrowed $600,000 from Mr To. I come to that view because Miss Luk's explanation is plausible and more importantly, she rather than Mrs Wong has shown herself to be the reliable and truthful witness.

67. In her evidence in chief, Mrs Wong chose to denigrate Miss Luk by gratuitously casting aspersions on Miss Luk's financial standing. More than once she described Miss Luk as "destitute" and "desperate" in the financial sense. But the evidence that I have seen suggests otherwise. There was no evidence to support Mrs Wong's assertion and the evidence that I have seen showed Mrs Wong being indebted to Miss Luk rather than the other way round. Not only did she borrow from Miss Luk, there is also evidence that Mrs Wong borrowed half a million dollars from Miss Luk's daughter in February 1994. In fact, Mrs Wong appeared to be in constant need of cash and certainly acknowledged that in February 1995 she could not afford to pay Cao Yu's fees.

68. Having regard to the above, the accuracy, reliability and truthfulness of Mrs Wong's evidence in general are plainly suspect.

Mr and Mrs Wong's credibility

69. As is not surprising for someone who had been a senior government information officer for a number of years, Mrs Wong was fluent and articulate. She is intelligent, if a little emotional, with a tendency to exaggerate. However her evidence concerning $1 million loan has engendered considerable doubts as to her veracity as a witness and the accuracy and reliability of her testimony generally.

70. Mr Wong has been described by Mrs To as stubborn and self-centred. The latter appears to be amply borne out by Mr Wong's own evidence. I had the opportunity of seeing him give evidence over a period of two days. His hostility towards Mrs To in particular may have coloured some of his evidence. Nevertheless his answers lacked spontaneity.

71. The matters considered below reinforce and confirm those views.

(a) Waiver of the loan

72. In March 1995, even according to Mrs Wong's version, there was still some $321,000 outstanding from the loan of $400,000 from Mr To. Her evidence was that on the occasion when they had dinner at the home of Mr and Mrs To, it was agreed that this amount would be waived. This is not credible because -

(i) if this was a contractual term between the parties, it is inconceivable that it should not have been referred to in Mrs Wong's own draft of the Production Agreement sent to Mr and Mrs To in April, which as Mr Wong acknowledged, encapsulated his understanding of the arrangements;

(ii) the amount represented approximately 9% of the estimated production costs. Since it was to be borne solely by the Defendant out of its share of the profits generated from the venture, grossed-up, it would effectively have increased production costs by $430,000;

(iii) the profit ratio would have to be revised from 75/25 to 61/39. From the Defendant's point of view, this has to be a singularly unattractive business proposition;

(iv) Mrs Wong's attempt to treat the amount allegedly waived as the quid pro quo for her contribution to the production was unconvincing. At that point of the negotiations between the parties, Mrs Wong had no role to play in production. She had just taken on a job as a public relations consultant and at best, could only devote part of her time to the production. As late of 2 May, her "role" as described by the line producer was no more than "Production Consultant" although I note that by 8 December 1995, she had ascribed to herself the roles of "publicity director, the associate executive producer (pre-production) and executive production designer" as appears from her affirmation of that date in the litigation over the dishonoured cheques;

(v) it is out of all proportion to what the main participants in the project would be earning : Mr Wong as script writer, director and actor was to be paid a total fee of $400,000 and the leading actress $220,000. How could Mrs Wong command a fee that exceeded what either Mr Wong or Miss Lee was charging? It defies common sense;

(vi) whilst Mrs Wong may have many talents and, as was apparent from her evidence, she clearly regards herself an expert in many fields, her undefined services would be a luxury that a low budget production could not reasonably afford; and

(vii) if one would have expected one of the three cheques given by Mrs Wong as "security" to have been returned to Mrs Wong.

(b) The $600,000 loan

73. Assuming, for present purposes, that $600,000 of the $1 million was loaned to Miss Luk by Mr To, Mrs Wong's evidence was that it was part and parcel of the agreement reached with Mr and Mrs To that this loan would be repaid out of the Plaintiff's share of the profits generated from the venture. I find this evidence incredible and reject it :

(i) based on Mr Wong's projection of expected profits, the Plaintiff's share of 25% would only have yielded $575,000. Mrs Wong's proposal meant that Mr and Mrs Wong were prepared to apply the whole of their share of expected profits from the venture to pay off Miss Luk's debt to Mr To;

(ii) it was Mrs Wong's evidence that she became extremely angry with Miss Luk when she discovered in February or March 1995 that Miss Luk had cheated her by disposing of a car in the PRC which had belonged to Mrs Wong's company without accounting to Mrs Wong for the profit of some RMB400,000. Mrs Wong said that she felt "very disgusted" and "very hurt". Yet the court is asked to accept that she was prepared to assume the entirety of Miss Luk's indebtedness a day or two prior to 24 March which was when the alleged arrangement was struck;

(iii) Mr Wong who was present at the time when the alleged arrangements were agreed, could not describe with any specificity either the waiver of the loan or the arrangements relating to the repayment of Miss Luk's loan. All he could say was that they would be "fixed up". Had the terms as alleged by Mrs Wong really been agreed by the parties, one would have expected Mr Wong to have been more precise about what had been agreed. He was unable to elaborate and his inability to do so must inevitably cast doubt on the existence of the arrangement as alleged by Mrs Wong.

74. It was also Mrs Wong's evidence that she had repeatedly urged Mrs To between March and July 1995 not to tell Miss Luk of this arrangement. The reason was that she wanted Mrs To to continue to press Miss Luk for repayment and if Miss Luk did repay, Mrs To would channel the sum back to Mrs Wong. Yet it would appear from a draft letter Mrs Wong faxed to Miss Luk in September 1995 that Mrs Wong had herself informed Miss Luk of the arrangement in March 1995. The contents of this letter are plainly at variance with Mrs Wong's own evidence.

(c) The artistic control requirements

75. Mrs Wong said many times during her evidence that she had made it clear from day one that the business side belonged to Mr and Mrs To and artistic side to Mr and Mrs Wong. However, when she and Mr Wong gave evidence as to what was discussed at each of the meetings with Mr and/or Mrs To prior to her draft of the Production Agreement of 6 April, this matter was never raised, let alone formulated as specifically as "sole artistic control" or "final say". More significantly, the Production Agreement itself did not contain such a provision and here Mr Wong acknowledged that the draft did embody his understanding of what had been agreed with Mr and Mrs To. Had that issue been so crucial to Mr and Mrs Wong as they would have the Court believe, surely it would have featured in what was, after all, their draft of the Production Agreement?

76. As to the two paragraphs in issue, it is to be noted that paragraph (g) has nothing to do with artistic control. The reason why Mr Wong wanted it so badly emerged in his evidence. It was purely a question of ego : he was concerned that the name of the leading actress would precede or overshadow his in the credits. It is his view, though unlikely to be universally shared, that the leading male actor rather than the leading actress is the central character in the film. It is reasonably clear from the evidence that Mr Wong did not see eye to eye with Miss Lee who had the leading female role. They had many arguments during the course of the shooting and it is not unreasonable to suppose that as the arguments intensified, the appeal of a provision such as paragraph (g) proved irresistible.

77. It is reasonable to conclude from the evidence that the need for artistic control was in reality, very much an afterthought and not, as Mrs Wong asserted, an understanding from day one. It did not have much to do with her husband's "soul" as Mrs Wong would have the Court believe. Rather, the inference to be drawn from the evidence of both Mr and Mrs Wong that the reason that prompted them to seek sole artistic control was the provision in the Defendant's 4th draft of 27 June, requiring the Plaintiff to be responsible for production costs beyond $3.5 million.

(d) Budget overrun

78. A related and subsidiary point is whether the alleged concern of Mr and Mrs Wong as to any overrun of production costs which would be for their account was genuine. Given the arrangement as alleged by Mrs Wong that Miss Luk's loan of $600,000 was to be paid off out of the Plaintiff's share of profits generated by the film, it is difficult to believe that they could have entertained any serious concern over production costs being in excess of $3.5 million. They were unlikely to receive a cent of the profits in any event. There is also the point, as rightly submitted by Mr Tong, that Spotlight has no capital to speak of and would not be in a position to pay if an overrun were to occur.

79. That apart, was an overrun a real possibility? The reality was that there was one shooting day and at most two left by 29 June. The bulk of the costs had thus already been incurred. The outstanding costs were insignificant since the editing work would be done by Mr Wong. Even allowing for poetic licence, Mr Wong appeared to let his emotions get the better of him when he suggested that additional costs of $30 million or $50 million could be incurred by Mrs To when according to his own estimate, gross earnings were expected to be $6.5 million.

80. According to Mrs Wong, by the end of June everything was on time and within budget. Mrs Wong's evidence in cross-examination was :

"[Mr Wong] is very conservative in making budgets etc. He's also very strict in carry out budgets. And this is one of the reasons why we eventually undertook the $3.5 million undertaking because he knew the system he set out from the very beginning which was agreed to by Marilyn worked ....."

That being the case, why would an overrun arise? I do not therefore accept that the concern was genuine. More likely, it served as a convenient excuse for introducing new requirements which would satisfy Mr Wong's ego.

(e) Conditions for re-editing by the Defendant

81. Mrs Wong's evidence in chief and in her affirmation of 10 October 1995 was that Mr Wong did not physically want to get involved in the editing and post-production work, that the Defendant could physically do it but that Mr Wong's approval was required "as per the contract". In cross-examination, Mrs Wong said that the condition was that Mr Wong should be consulted "at every stage" and not simply that the film had to have his approval before release. I accept Mr Tong's submission that Mrs Wong could not have been telling the truth when she gave this answer. First, it was contrary to her own evidence in chief and her earlier affirmation; second, she could not explain how this requirement was to work in practice. In fact, after laying down this requirement on 29 July, there was no further communication between the parties for five weeks. It is hardly credible, had Mrs To accepted a condition in those terms, that Mr and Mrs Wong would have done nothing during that period when they well knew that post-production work was going on. It was not mentioned in any of the correspondence and is not supported by Mr Wong's own evidence which was that "the film had to be produced to me for my approval after everything was finished".

82. This incident highlights the unreliability of Mrs Wong's evidence.

(f) Urgency for the Production Agreement

83. Mrs Wong gave three reasons why Mrs To was extremely anxious to have the Production Agreement signed : that she had already told her husband that the contract had been signed; that it had to be signed in order that the Defendant could enter into a Distribution Agreement with Golden Harvest; that she needed it before the shooting of the love scene.

84. Mrs To said that from her point of view, there was no urgency in signing the Production Agreement at all. They (through the Defendant) were the investors and but for any contract providing otherwise, they would be entitled to 100% of the profits. So the execution of the Production Agreement was more important from the point of view of the Plaintiff. As Mr To had been involved in the preparation of each of the drafts, he was fully aware of progress on that front. From the timing point of view, the relevant draft was only brought back by Mr To and given to Mrs To at the earliest on 27 June and more likely, 28 June. The earliest Mrs To could have handed it to Mr Wong was during the shooting on 28 June which did not finish until the early hours of 29 June. It is difficult to believe that before she spoke to Mrs Wong in the afternoon of 29 June Mrs To had told her husband that the Agreement had been signed. Why would she have done that?

85. There also appears to be no substance in the point that the signing of the Production Agreement was a pre-requisite to the Defendant entering into a Distribution Agreement with Golden Harvest. Mr Tong rightly submitted that the Production Agreement was an internal document regulating the rights and obligations of the Plaintiff and the Defendant. It had nothing to do with third parties. There was no reason why the Production Agreement should be of concern to Golden Harvest. Indeed, Mrs To's evidence was that the Production Agreement was never shown to Golden Harvest before the Distribution Agreement was signed on 21 July 1995. If the Defendant was the sole proprietor, it was free to enter into the Distribution Agreement and, if it was in partnership with the Plaintiff, as partner the Defendant would have had ostensible authority to do so.

86. Turning then to the substantive reason for wanting the Production Agreement signed prior to the shooting of the love scene, Mr Wong and Miss Lee had disagreed over the manner in which that scene was to be acted. Having the Agreement signed in the form handed to Mrs Wong during the evening of 29 June could not have been relevant to the argument that was brewing between Mr Wong and Miss Lee. Nor could it help resolve it. As was Mrs To's believe, the word "responsible" in paragraph (d) did not enable Mrs To to dictate to Mr Wong how to exercise his duties as director. I can see no valid reason for Mrs To wanting the Production Agreement signed by 29 or 30 June and there is no reason to suppose that she would have told her husband that it had been executed by the Plaintiff when it had not.

Mrs To's credibility

87. In her quiet and unassuming way, Mrs To gave a very coherent, logical and consistent account of the various events in which she was involved. There was nothing contrived about her answers; they were direct, spontaneous, to the point and showed Mrs To to be very astute. Nothing in her evidence gave rise to concern regarding its reliability. In this connection, much was made of letters from her solicitors written in September 1995 which appeared to be inconsistent with Mrs To's evidence. The circumstances in which the letter of 23 September in particular was written have been clarified by Mrs To as well as Mr Francis Ho, the partner who wrote the letters and I am satisfied that a mistake did arise from a genuine misunderstanding on the part of Mrs To's advisers when they wrote the letter of 23 September. It does not therefore undermine the reliability of Mrs To's evidence.

Did the parties agree to the incorporation of the handwritten clauses?

88. Whose account was the truth? On this critical issue, it is Mrs To's account rather than Mrs Wong's account that I accept.

89. I have already set out Mrs Wong's account of events on that day. The first person she saw after her first conversation with Mrs To was Mr Wong. The evidence of Mrs Wong is clear : her first conversation with Mrs To during the afternoon of June 30 lasted some 8 to 9 minutes. During this period of time, Mrs To had the opportunity to let off steam. As far as Mrs Wong was concerned, although Mrs To was still grumbling, she had accepted the additional provisions. After her first conversation with Mrs To, Mrs Wong went back to the set and saw Mr Wong. Mr Wong's evidence was as follows :

"... within 15 minutes my wife came back and said the contract had been received and read by Mrs To and she was losing her temper outside. Then I said, 'Well, if she did not like it, then there would be no contract between us. We should discuss and settle the matters before shooting resumes'. My wife remained silent and I got on with my work. Later, my wife went out and after some time, about without 30 minutes my wife came back and I asked her, 'How is she?' and my wife said she was still losing her temper."

90. Had Mrs Wong really believed that Mrs To had accepted the additional provisions, would she not have immediately communicated this fact to Mr Wong? I find it significant she did not : she remained silent. Even after going back to the studio after the trip to the dressing-room, all Mrs Wong was able to say to Mr Wong was that Mrs To was still losing her temper and not, as one would expect, she has agreed.

91. I now come to the evidence of the other supporting witnesses.

(a) Miss Tse

92. Miss Tse's evidence, if accepted, is generally supportive of Mrs Wong's account of the trip to the dressing-room. Nevertheless Miss Tse did not actually witness what Mrs Wong's said was acceptance of the additional provisions by Mrs To.

93. On 17 October 1995, Miss Tse had filed an affirmation. That affirmation first dealt with her having witnessed an "intense discussion" between Mrs To and Mr Wong regarding Miss Lee. In cross-examination, Miss Tse acknowledged that this "intense discussion" led to Miss Lee having to sign a piece of paper. According to the evidence given by Mr Wong and Mrs To, that related to a scene in which Miss Lee had to undo two buttons and as a result of her earlier refusal to act a love scene in the way in which Mr Wong had wanted, Mr Wong threatened to refuse to shoot that scene unless Miss Lee signed a piece of paper stating that she was undoing the buttons of her own volition. It then went on to deal with the trip to the dressing-room.

94. When she was asked about the sequence of events that occurred that afternoon, all I can say is that Miss Tse's evidence was very confused. She was unable to give a clear answer to a simple question. Although she purported to confirm the sequence of events as set out in her affirmation, she also appeared to insist that the trip to the dressing room took place before the incident relating to the "intense discussion". It was suggested by Counsel for the Plaintiff that Miss Tse was not dealing with the events sequentially in her affirmation and may have been attempting to deal with matters raised in Mrs To's affirmation in the injunction proceedings filed on 13 October. But it is a fair reading of her affirmation that she was dealing with the two events sequentially. Moreover, I note that the incident to which the "intense discussion" related was not even mentioned in Mrs To's affirmation of 13 October 1995 to which Miss Tse's affirmation referred.

95. Apart from this, Miss Tse's account of the trip to the dressing-room raises doubts as to whether or not that incident as related by her did occur. First, it is evident that those working on the film were preoccupied with the love scene that was to be shot that afternoon. Indeed, the alleged purpose of the trip to the dressing-room was to discuss an alternative way of acting it and to decide on the costume. Although it is Miss Tse's evidence that Mrs Wong accompanied them to the dressing-room and also walked back with them, she had absolutely no idea where Mrs Wong was during the time that she and Mrs To were in the dressing-room having a discussion with Miss Lee. One would also have to believe that Mrs To who appeared to be very angry with Mrs Wong when they were on their way to the dressing-room, was able to put that aside and concentrate on the love scene that had been preoccupying her whilst in the dressing-room, only to resume where she had left off with Mrs Wong on the way back to the studio.

96. I should add that it emerged in cross-examination that the only occasions when Miss Tse had been involved as a costume designer in a film was in this production. The only previous experience that she had as costume designer in stage productions were again plays in which Mr Wong participated. So, in a sense, Miss Tse was beholden to Mr and Mrs Wong. In addition, whilst Miss Tse denied that she was financing the present litigation, she admitted to rendering financial assistance to Mr and Mrs Wong should they have a financial problem. Suffice to say that in these circumstances, I reject Miss Tse's evidence.

(b) Mr Foo

97. So far as Mr Foo's evidence is concerned, even if I were to accept that any argument that took place in the carpark would have been witnessed by him, that would only be the case if the argument took place at a time after Mr Foo's arrival. The time of his positioning himself outside the studio is critical. Given the different versions he has given as to the time he arrived at the studio, it is as likely as not that any argument between Mrs To and Mrs Wong, if it did take place, took place prior to Mr Foo's arrival. Moreover, although asked in cross-examination about it, he did not provide any explanation, much less a credible one, as to what caused him to alter the time of his arrival in his supplemental statement. Nor is it apparent why he resiled from that amendment when he gave evidence. His evidence is therefore not conclusive of the fact that no argument could have occurred between Mrs To and Mrs Wong in the carpark that evening as alleged by Mrs To.

98. I should add that in evaluating Mr Foo's evidence, I have disregarded the fact that he is a friend of Mr and Mrs Wong and that he might be beholden to them as it was apparently at his request that he was given a role in the film.

(c) Miss Wai, Mr Ho and Mr Shing

99. The evidence of these witnesses supports Mrs To's version of events on 30 June 1995. Mr Lam submitted that their evidence is unreliable because Miss Wai is related to Mrs To and cannot be expected to be a disinterested witness; Mr Ho is in litigation with Mr and Mrs Wong and it was suggested that therefore he would not be a truthful witness. Whilst I agree that the evidence of Miss Wai, if standing on its own, would have to be viewed with a degree of circumspection, that it is not the case here. Her evidence is consistent with that of Mr Ho and Mr Shing and unless the evidence of Mr Ho and Mr Shing is unreliable, Miss Wai's evidence would be corroborative and must be given due weight. The fact that Mr Ho is suing Mr and Mrs Wong for unpaid bills relating to car repairs, of itself, is not a valid reason for rejecting his evidence.

100. The only inconsistency in the evidence of Mr Ho and Mr Shing relates to the duties performed by them that evening. Mr Shing identified three persons who were responsible for blocking cars that evening and Mr Ho was not one of them. He said that Mr Ho who was in the art design department was constantly walking in and out. This discrepancy is not a sufficient reason for me to reject the evidence of Mr Ho and/or of Mr Shing. Mr Shing could easily have been mistaken as to who was performing that duty since shooting occurred over a period of 23 days.

101. It was never challenged that the cars of Mrs Wong and Mrs To were not parked where these witnesses said they were parked. Given the location of the cars, and where the witnesses said they were standing at the relevant time, the account of events given by them is entirely plausible. Pausing here, the evidence of the three witnesses is entirely consistent with Mrs To's evidence (in chief) that when she said "I'm not shooting" she was on her way to her car. Mr Lam's submission that this was never Mrs To's evidence is not correct. The evidence of these witnesses is consistent in its essentials. To reject their evidence altogether, I would not only have to be satisfied that they were not telling the truth because they were "interested" witnesses, I would have to go further and find that their evidence was the result of a conspiracy to lie to this Court. They struck me as truthful witnesses and I accept their evidence.

Conclusion

102. As to the only factual issue in this case, which is whether the two paragraphs formed part of the Production Agreement and agreed to by the Defendant, I find for the Defendant. I am not satisfied on the evidence that the Defendant, through Mrs To, ever consented to the inclusion of these provisions. I also find that their rejection by Mrs To was accepted by Mrs Wong.

103. Having regard to this finding of fact, it is unnecessary to consider the alternative submission of the Defendant which turns on the true and proper construction of the Production Agreement.

104. Accordingly, the Plaintiff's action is dismissed with costs nisi to the Defendant. The Defendant is released from its undertaking not to distribute and publish or exhibit the film with immediate effect. I also order that there should be an enquiry as to damages sustained by the Defendant by reason of the order made by Rogers J. on 23 October 1995 and the undertaking given by the Defendant on 7 December 1995.