李錫強 v. 謝萬香

DCCJ 5154/2018

[2022] HKDC 172

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5154 OF 2018

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JUDGMENT

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1.  In 2009 to 2010, the parties together with one Siu Fat Nam (“Siu”, and the 3 of them together “the Trio”) provided certain services in relation to the investment by the Clients (defined below) in a land re-development project in Guangzhou. The Trio’s involvement in that project ended in about August 2010 and they had been remunerated without any disputes among them over it for 8 years.

2.  The plaintiff and the defendant however had fallen out over other matters, particularly over a dispute concerning a red wine business that they undertook together, which dispute was eventually litigated in DCCJ 5380/2015.

3.  Now years later, each of the parties claims that he has “discovered” that the other in fact had received remunerations from the said project that he ought to be entitled to a share. The plaintiff now claims against the defendant HK$600,000. The defendant counterclaims RMB2,480,000 and HK$400,000. Both parties have been acting in person since the commencement of this action. Together, they proffered 1,659 pages of documents in the Trial Bundles, including documents relating to the said project and their services and some of the documents in HCA 2020/2012 (“the 2012 Action”).

4.  At the close of the plaintiff’s case and essentially by then willing to accept that he did not have a good claim, the plaintiff sought, and was granted, leave to discontinue his claim. The question of the costs of his claim was reserved to be determined at the end of trial. Therefore, what remains to be determined in this judgment is the defendant’s counterclaim.

5.  The main issue in dispute is what exact was orally agreed in a meeting among the Trio held in Siu’s office in January 2009 before Chinese New Year (“the Subject Meeting” and “the Oral Agreement”).

6.  Both parties respectively gave evidence on behalf of his case. The only other witness, Mr Petras Tsui Hin Chi (“Tsui”), a citizen of Singapore, gave evidence for the defendant’s case via video link.

The background and relevant events

7.  Having referred to the many documents and sorted matters out in the parties’ oral openings, it was apparent that there were but only a few disputes over the relevant events. They were not serious disputes either. The following background and facts are either common ground or not seriously disputed, unless otherwise indicated, in which case I will indicate my finding there (save over those relating to the main issue concerning the Oral Agreement).

8.  The parties were university schoolmates knowing each other briefly in 1985. They had not contacted each other since. Siu, also a university schoolmate, was their mutual friend.

9.  At the material time, the plaintiff was an accredited mediator and a provider of services relating to dispute resolution and project development for clients in the PRC and Hong Kong. The defendant had been an estate agent in the PRC from 1992 to 2006 and afterwards was said to be a real property investor.

10.  In around October 2007, the plaintiff was engaged by Tsui and Mok Wah Pui (“Mok”, and together the “the Clients”) to assist in a land re-development project they invested, which involved a dispute with their counterpart in the PRC one Madam Liang Jun Xian (“Liang”) and other complications. The plaintiff provided his services through his company Anderson & Company. He generally charged the Clients by the time he spent calculated at an hourly rate. Where there were specific tasks to be accomplished in tackling the situation, he and the Clients would agree on a lump-sum service fee, payable if and when the task was achieved. They would usually call these specific tasks “missions”.

11.  For the present purpose, it is only necessary to briefly introduce the dispute and the other complications.

12.  The land project was the re-development of the land known as 19-49 De Zheng Road South, Guangzhou City by erecting a commercial building thereon (“the Land Project”). The rights and entitlement to the Land Project was held by one 廣州遠興房產有限公司 (“the Land Company”), 60% shareholding in which was owned by a Hong Kong company called China Investment Group Int’l Finance Limited (“CIGIF”) and the remaining 40% owned by a PRC company controlled by Liang (“Liang’s Company”). The Clients invested HK$50 million into the Land Project and, according to them, had thereby acquired the 100% shareholding in CIGIF previously owned by Liang (“the Clients’ Shareholding”). Liang disputed the validity of the transfer of these shares in CIGIF by HCA 2288/2007 (“the 2007 Action”), which was bitterly fought by the Clients and Liang.

13.  While the 2007 Action was on-going, the Clients and Liang were vying for the control and management of the Land Company. Liang and her husband were said to have considerable influence in Guangzhou.

14.  I will refer to the dispute over the entitlement to the Clients’ Shareholding and the struggle for control of the Land Company between the Clients and Liang as “the Dispute”.

15.  The other complications (“the Complications”) included:-

(a)  apparently the business license of the Land Company would be expiring by August 2010 and its extension would require the consent and cooperation of Liang’s Company;

(b)  the original of the國有土地使用証of the land in question was in the possession of Liang;

(c)  some of the permits necessary for the Land Project either had not been successfully obtained or had expired, and in any case, the originals of these permits or related documents were in the possession of Liang;

(d)  if the construction of the Land Project could not commence or be completed in time, the land might become “idle land” and liable to forfeiture or penalty under the applicable PRC laws;

(e)  as Liang had possession of the originals of the above documentations, the Clients could not obtain or extend the necessary permits/approvals/business license from the relevant authorities without Liang’s full cooperation or consent.

16.  The Clients’ intention all along was to achieve a sale of their interest in the Land Project to yield a quick profit. Therefore, while fighting with Liang, the Clients were also minded to take steps to resolve the Dispute and to overcome the Complications to keep the Land Project “alive” at least to the extent that they could achieve a sale of their interest at a good price.

17.  There were a lot of details regarding the Dispute and how the Clients, the plaintiff and the plaintiff’s associates tried to tackle various matters. The plaintiff gave a detailed and full account in his very lengthy witness statement filed in the 2012 Action[1]. For present purpose, I will only mention those that are relevant to the parties’ present dispute.

18.  Shortly after the plaintiff was engaged by the Clients, he enlisted the help of Siu, whom he knew well and trusted. With the engagement of, and then help from, one Lam Pong (“Lam”) and his connections, the Legal Representative (法人代表) of the Land Company was changed from Liang to Lam in late November 2007. However, Liang later responded by commencing a legal action to set aside the change.

19.  In early March 2008, Siu mentioned the defendant to the plaintiff as someone who had “special relationship” and “strong background” in China. The plaintiff then engaged the defendant to track the activity of Liang. The defendant showed himself able by successfully obtaining in a few days the phone calls and SMS records of Liang.

20.  Upon Lam’s representation that he had the connection to people of influence who could tackle the Dispute and overcome the Complications, the plaintiff, Siu and Lam signed an “agency” agreement dated 20 June 2008 (“the Agreement with Lam”) whereby, among other things, Lam was appointed as the person to exclusively deal with all the relevant authorities in the PRC in relation to the Dispute and the Complications.

21.  Also in June 2008, the defendant represented to the plaintiff that his connections could find a buyer to purchase the Clients’ Shareholding at the price of RMB65 million. Many meetings and discussions between various parties ensued leading to an Authorization & Appointment agreement, and later two supplemental Authorization & Appointment agreements, being signed with the defendant[2] and the deposit of HK$3,000,000 by the Clients to an accounting firm in Hong Kong in July 2008 for the firm to stake-hold the same to be released to the defendant as payment to him of the promised remuneration upon completion of the intended sale. The sale however never went through (“D’s Unsuccessful Sale”), to the disappointment of the Clients and the Trio.

22.  On 26 September 2008, the Court of Appeal in Hong Kong delivered its decision in CACV 88/2008, on appeal from the 2007 Action, setting aside the CFI judge’s order which was favourable to the Clients and the Court of Appeal also refused to order any security of costs against Liang. The Clients thus suffered some setbacks in their legal fight with Liang.

23.  Moreover, by the end of 2008, Lam was still not able, as he previously promised, to successfully tackle the Dispute or make any progress in overcoming the Complications, while Lam in the meantime had been claiming and receiving substantial disbursements and expenses under the Agreement with Lam. Moreover, Lam had been making further demands, including demanding to be appointed as a director of CIGIF.

24.  The Clients became impatient and nervous and constantly chased after the plaintiff and Siu.

25.  Around that time, Siu suggested to the plaintiff about asking the defendant to station in Guangzhou as the Project Manager to spearhead the Land Project.

26.  The Trio then had the Subject Meeting in which, as is common ground, an oral agreement was reached. As mentioned, what precisely was agreed is hotly disputed. Nevertheless, it is common ground, and I will say more in due course, that the defendant professed himself as “the expert in diffusing bombs” (“拆彈專家”) and that his role was to replace Lam to accomplish what Lam could not, so as to enable the Land Project to commence construction within good time.

27.  With the agreement of the Clients, the defendant moved to Guangzhou in February 2009 and was engaged by the Land Company as a Project Manager running and managing its Guangzhou office (“the Guangzhou Office”). I accept the evidence of Tsui that he agreed to pay to the defendant a monthly salary of RMB35,000, but because funds were tight and with the defendant’s agreement, only half of that ie. RMB17,500 was at the time paid to the defendant monthly, with the balance to be paid to him by one lump-sum after the project was sold by the Clients.

28.  When in Guangzhou and despite efforts and the fact that there were a number of potential buyers expressing interest, the Trio were unsuccessful in concluding a sale of the Clients’ Shareholding.

29.  In his oral opening, the defendant portraited that he was quite successful in the tasks he was to achieve, however, in cross-examination and when confronted, the defendant expressly accepted, and I find,

(a)  that his effort in applying for a new國有土地使用証, though initially showed some promises, proved to be unsuccessful by early December 2009 when they received a formal notice from the relevant authority to that effect[3];

(b)  he was not able to secure from the relevant authority the approval for applying a higher plot ratio to the Land Project; and

(c)  as shown by an email he sent out on 20 July 2010[4], the actual size of the building site was made smaller than it should have been as a latitude and longitude point was apparently missing in the relevant survey plan.

30.  In March 2010, Liang successfully obtained a judgment from the PRC Court setting aside the change of Legal Representative of the Land Company from Liang to Lam.

31.  According to the plaintiff, which I accept and find, that (a) with the setbacks in the 2007 Action, (b) the reversal of the Legal Representative to Liang, (c) despite huge expenses of the Guangzhou Office, no progress was made by the defendant in overcoming the Complications and (d) the expiry of the business license of the Land Company was approaching, the Clients requested the plaintiff to actively find a buyer and indicated that they were prepared to pay substantial remunerations to anyone, including the plaintiff, who could successfully find a buyer to purchase their interest despite the Dispute and the Complications. With much effort, the plaintiff reached out to all the possible channels and contacts he had with offers of substantial monetary incentive. Eventually, he was connected to an interested potential buyer.

32.  According to the plaintiff, on which I make no finding thereon as these formed the subject matters of dispute between the plaintiff and Tsui in the 2012 Action, that

(a)  He reached an oral agreement with the Clients that in the event his potential buyer purchased the Clients’ Shareholding for RMB85 million payable by instalments, the plaintiff would be paid a service fee of RMB15 million.

(b)  Pursuant to the said oral agreement above and after many further negotiations and efforts[5], the Clients’ Shareholding was eventually sold in late June 2010 to the potential buyer at RMB83 million (“the Sale”).

(c)  The plaintiff and the Clients agreed to correspondingly reduce the plaintiff’s service fee to RMB13 million (“the June 2010 Agreement”).

33.  The defendant did not dispute that he was not involved and did not contribute at all to the Sale, but he complained that the plaintiff secretly brokered the Sale behind his back. I note however that the defendant did not complain about any breach of any agreement thereby.

34.  In July and August 2010, as the manager of the Guangzhou Office, the defendant was asked to, and did, assist in collating all the relevant documents to be given to the buyer as part of the completion of the Sale. He also assisted in closing down the Clients’ operation in the Guangzhou Office and in the handover of that office to the buyer. Those notwithstanding and in his evidence initially, the defendant denied that he knew at the time that the Clients’ Shareholding was sold. Later in cross-examination, he changed his evidence and said that at the time he had asked Siu and Siu told him that the Clients’ Shareholding was sold. I thus find that the defendant knew at the time that the Clients’ Shareholding had been sold by the Clients.

35.  Tsui, as promised, paid to the defendant in one lump-sum half of the monthly salary previously unpaid, amounting to RMB300,000 odd.

36.  Importantly, the following email was sent by Siu to the plaintiff and the defendant at 4:02 pm on 2 August 2010[6], which I quote in its entirety:-

“Subject: bonus confirmation from boss

hi all,

Boss confirm HK$2M for our effort.

According to our agreement, the distribution will be as follows!

Li (30%)	Peter (30%)	Edmand (40%)
0.6M	0.6M	0.8M
	0.3M (I have loan from tsui a years [sic] before)
	-------
0.6M	0.3M	0.8M

i.e. Boss will deposit 1.7M in Alex Chung’s clients’ account in early Aug … and Alex will release by following schedule.

	Li	Peter	Edmand	Total
30% on Early Aug.	0.18M	0.09M	0.24M	0.51M
After 2nd Payment In mid Oct	0.24M	0.12M	0.32M	0.68M
After final Payment In next Feb.	0.18M	0.09M	0.24M	0.51M

My dearest brothers,

Thanks a lot!

Peter Siu”

37.  It is common ground that the defendant was also known as Edmand and he was the recipient of, and has received, this email.

38.  There were 2 more emails on this subject among the Trio. One was sent on 5 August 2010 by the plaintiff[7] in which he suggested instead that Siu should receive 40% and he and the defendant 30% each as Siu was the only person in the Trio not otherwise remunerated (the plaintiff earned time costs through Anderson & Company while the defendant was paid a monthly salary). The defendant replied by email the next day[8] and said that he would like to adhere to the distribution in Siu’s email sent on 2 August 2010.

39.  It is common ground that the Trio received their respectively share of the bonus in the amounts and manner set out in Siu’s said email.

40.  Regarding the June 2010 Agreement, the Clients only paid up RMB6.2 million and refused to pay to the plaintiff the balance. The plaintiff then commenced the 2012 Action against the Clients. The 2012 Action was eventually settled by a Consent Order dated 26 July 2016. Pursuant thereto, the Clients paid the plaintiff HK$1 million (inclusive of costs).

41.  According to the plaintiff, the RMB6.2 million paid by the Clients were actually fees and remunerations promised by the Clients to be paid, and were actually paid, to the agents and intermediaries the plaintiff engaged to achieve the Sale. The plaintiff further said that the sum was paid by the Clients directly to Alex Chung, the accountant in Hong Kong, and was paid out by him to various recipients. The defendant did not accept this.

42.  The plaintiff such evidence was corroborated by the evidence of Tsui given in the 2012 Action, thus

“合約簽署後，原告便分多次通知我把款項轉到指定戶口名下，是指交給那四名人士。當中第一筆是轉HK$1 M到鍾卓明會計師事務所，而根據原告提供的資料，亦有轉到肖雨田名下。如是者，一共轉了RMB6.2 M。”[9]

It was again corroborated by Tsui’s evidence herein[10], which evidence I accept. This was also corroborated by what Siu said in his witness statement filed in the 2012 Action[11]. In the premises, I accept the plaintiff’s such evidence and find accordingly.

43.  It is common ground that the defendant was not at all involved in the 2012 Action, nor had he contributed to the legal costs incurred by the plaintiff in that action, which was solely borne by the plaintiff.

44.  The defendant now counterclaims against the plaintiff for 40% of the said RMB6.2 million and 40% of the HK$1 million the plaintiff received in settlement of the 2012 Action, in the respective sums of RMB2,480,000 and HK$400,000.

The parties’ respective case regarding the terms of the Oral Agreement and regarding the counterclaim

45.  In paragraph 9 of his witness statement[12], the defendant set out the terms of the Oral Agreement he alleged to have been agreed:-

(1)  由原告人負責處理在香港的法律手續及文件，由蕭發南在香港與客戶溝通，由我在廣州開發地盤以外，我們三人均會各自尋找合適的買家。我們三人都有一致的目標就是要為中國投資集團找到香港或內地的買家買下所有股權。

(2)  因為我本身將會長駐廣州，原告人便希望我亦同時加重力度在內地尋找買家。

(3)  如果我們三人之間任何一人找到合適的買家，其他人將會全力配合以促成交易，並且絕不可互相阻撓彼此尋找買家完成交易。

(4)  為了能達到此目的，我們三人便同意最終不論買家是誰找到的，只要成功完成交易（即只要賣出了中國投資集團的股份），我們三人就完成交易的所有所得便會以我40%、原告人30%的及蕭發南30%的方式攤分（“433協議”）。這亦是為了防備彼此有利益衝突而互相拖後腿，否則一旦其中一人找到買家便能獨享所得，其他兩人一定會阻撓交易，更遑論會在後勤、溝通、手續、行政等範疇上幫忙。

46.  According to the defendant’s version, the matter of spearheading the Land Project (“開發地盤”) was part of his role and work, albeit his version seemed to suggest that it was only a minor matter.

47.  He contends that according to his version of the Oral Agreement, once the agreement was entered into, regardless of whether the buyer was found by him, and regardless of whether he had any contribution to the success of the ultimate sale at all, whether by way of efforts or connections at all, he would still be entitled to the bigger share of 40% of everything received (“所有所得”).

48.  It was also the defendant’s case that in negotiating the Oral Agreement, it was mentioned to him that Tsui expected a profit of RMB10 million, of which Tsui would give 20% - RMB2 million - as bonus, which would be shared 40:30:30 among the Trio, with him getting 40%[13].

49.  The plaintiff’s case regarding the Oral Agreement, as I understand it, is

(a)  There was an agreement reached in the Subject Meeting with the defendant regarding their cooperation.

(b)  In light of the above narrated background up to the time of January 2009, including the experience of D’s Unsuccessful Sale, it was the Trio’s understanding that it would be extremely difficult to sell the Clients’ Shareholding if the Dispute and/or the Complications were not resolved.

(c)  However, Lam was not able to deliver. On the other hand, the defendant professed himself as ”拆彈專家”with strong background and connections. It was therefore agreed that the defendant would move to Guangzhou and be employed as the Project Manager (to be paid a salary), to accomplish what Lam could not, specifically to achieve whatever needed to be done so that the development of the Land Project could progress, which would in turn facilitate the sale. And if the defendant accomplished such tasks (“完成任務”) and thereby facilitating a sale which was thereby achieved, the Trio would share the bonus 40:30:30 with the defendant receiving 40%, recognizing that the defendant’s such tasks were not easy.

(d)  The sharing of the bonus was clearly understood to be based on the defendant completing the tasks or that his service being the effective cause bringing about the sale, and not, as he alleged now, that he would be entitled to the lion’s share regardless of whether he had any contribution at all.

(e)  The agreement only concerned the sharing of “bonus” only and not “everything” as the defendant said, and particularly, the sharing would not include “service fee” the plaintiff negotiated with and received from the Clients for achieving a “mission”.

(f)  He had entered an agreement with the defendant in the terms above and not in the terms he now alleged.

50.  It is also the plaintiff’s case that:-

(a)  the defendant evidently had not accomplished any of his tasks;

(b)  his service was not the effective cause of the Sale;

(c)  the RMB6.2 million and HK$1 million were part of the service fee he agreed with the Clients separately for a specific “mission” and were received by him as such, and were therefore not bonus to be shared under the Oral Agreement;

(d)  the bonus of RMB2 million, as mentioned to the defendant in the negotiation, was in any case actually paid by Tsui and had been shared to and received by the defendant accordingly to the Oral Agreement.

Discussion

51.  As set out above, it is common ground that a sharing of 40:30:30 with the defendant receiving 40% was agreed. What divided the parties was that the defendant’s case is that he would be entitled to a sharing of everything that was received and regardless of whether he had effectively caused the Sale (by overcoming the Complications or otherwise); while the plaintiff’s case is that the defendant was entitled to a share of the bonus if he had overcome the Complications or had effective caused the Sale.

52.  Having heard and carefully considered the evidence, I am of the clear view that the defendant’s counterclaim should be dismissed. My reasons are the following.

53.  Firstly, I do not find the defendant a reliable or truthful witness. Specifically, I do not accept that the defendant had accurately and reliably remembered the terms of the Oral Agreement. I find that when giving evidence he often times was not answering the questions put to him or telling the facts according to the truth, rather, he was often times telling half-truths or was prepared to say things that were untrue, in order to advance his case. I find also that he had changed his evidence over material matters a number of times, most of them when he was cornered, some of which I have already briefly mentioned, namely:-

(a)  Early in his evidence, he said he was successful in his tasks and referred the court to the initial favourable response of the authority regarding the re-issuance of the國有土地使用証. Later on, when confronted in cross-examination with the Notice in Chinese dated 4 December 2009[14], he readily changed his evidence and accepted that actually he was not successful in that regard. I have no doubt in my mind that he must have known that the effort was ultimately unsuccessful and that his earlier evidence was untrue. Yet he said so on oath nevertheless.

(b)  Initially, he said at the time he did not know about the sale of the Clients’ Shareholding and he complained against the plaintiff that he purposefully withheld the Sale from him, and that he just followed the plaintiff’s instructions to pass the documents over without knowing why. Later, when the contemporaneous documents were referred to regarding his involvement in the transition after the Sale and when being confronted in cross-examination that he must have known, he accepted that he had asked Siu at the time and Siu had told him that the Clients’ Shareholding was sold by the Clients.

(c)  As we see above, in his witness statement, his work and tasks to “開發地盤” were only briefly mentioned as part of the Oral Agreement, without any mention of their importance and that he was required to accomplish them. In the course of evidence when the fact that he was brought in for the purpose of accomplishing, and was required to accomplish, the tasks became more and more prominent and in re-examination, he “clarified” and said for the first time that in talking about “完成任務”, it was agreed that the mission (“任務”) meant that “the Clients earned a profit”, and that it was actually agreed that so long as the Clients ultimate earned a profit, regardless of who brought it about and why, he had accomplished his contractual task. He said that it was so agreed between him and Siu, who was then a director of CIGIF. This new assertion clearly is absurd, inherently improbable, totally lacking in commercial and common sense, and totally unbelievable, quite apart from being hitherto totally unmentioned. I completely reject it as untrue and as something the defendant made up in the witness box.

(d)  Also notably, I find that the defendant’s evidence that Siu at the time of the Subject Meeting was a director of CIGIF was untrue. As evidence by the Notice of Change of Director, Siu was only appointed as a director on 26 June 2009. I also think that by alleging that Siu, who was not a witness, was the counterpart in this conversation, the defendant was trying to put this allegation out of the ability of the plaintiff to contradict.

54.  Furthermore, the defendant himself said in evidence, not disputed by the plaintiff, that the Subject Meeting lasted one and a half to 2 hours, that there was no agenda or any minutes of meeting prepared, that there was a lot briefing on how to tackle the situation, and the discussion or briefing was not systematic (“冇條理性”), that none of the Trio said anything to the effect of reiterating or concluding what were agreed. The defendant said he only took written notes on the parties involved, their background, and certain details about the tasks. He also confirmed that the “terms” he set out in his witness statement did not represent the exact words, insofar as he could best remember, of the terms agreed. That being the case and particularly in view of my finding that he is not a truthful or reliable witness, I find that these so-called “terms” were more likely his vague recollection of fragments of the discussions the Trio had in the Subject Meeting that, as a matter of afterthought, he picked, chose and then glued together and alleged such were “the terms of the agreement”.

55.  I am more favourably impressed by the plaintiff as a witness. The plaintiff’s evidence on all the other matters was on the whole well supported by documentary evidence, by the witness statement filed by Siu in the 2012 Action, and also by Tsui’s witness statement filed in 2012 Action (save on the existence of the 2010 June Agreement). I prefer the evidence of the plaintiff whenever his evidence conflicts with that of the defendant.

56.  Secondly, I find that in the Oral Agreement there was a requirement of an element of success or contribution on the part of the defendant.

57.  I accept the plaintiff’s evidence, which was not seriously disputed, that at the time of the Subject Meeting, the existence of the Dispute and the Complications made a sale of the Clients’ Shareholding most difficult to achieve, and I find that such was the understanding of the Trio prior to the making of the Oral Agreement, which formed an important factual context to it.

58.  Against that factual context, it was not only the plaintiff’s evidence said many times, but also the defendant’s own evidence and also said by him many times, that the defendant was brought in as “拆彈專家”, that the defendant’s role was to complete what Lam Pong could not (“林邦攪吾掂我攪”), that the defendant’s tasks were very clear (“任務鮮明”) and he was to accomplish his tasks (“完成任務”). Therefore and bearing in mind particularly that the defendant would also be receiving a good salary for his daily work, it would be totalling lacking in business sense, and would be inherently and highly improbable, that the plaintiff and Siu would agree to give the defendant the lion share of the reward regardless of whether the defendant would accomplish his tasks in overcoming the Complications or whether he would contribute to the success of a sale. In my view, there simply was no business or good reason at all why the plaintiff and Siu would agree to such a deal with the defendant. After all, the clear context was that the Clients and the plaintiff were frustrated by the lack of progress on the part of Lam and was eagerly searching for someone who could deliver a solution.

59.  In the premises, I have no difficulties in rejecting the defendant’s evidence and case that it was agreed that he was entitled to a share regardless of whether he was able to complete his tasks or whether he had any contribution. Rather, I find for the plaintiff’s case. I find that what was agreed in the Oral Agreement was that the defendant was engaged to overcome the Complications and that if the Complications were overcome to an extent that a sale of the Clients’ Shareholding was achieved (and based on the Clients’ indication that they would pay the Trio a bonus out of their profits), the bonus was to be shared 40:30:30, with the defendant receiving 40%.

60.  As mentioned, towards the end of the trial, it was not seriously disputed that the defendant had not achieved what he was asked to accomplish to overcome the Complications. I so find. Thus, I find for the plaintiff’s contention that the defendant’s claim would fail as the defendant had not fulfilled his part of the bargain.

61.  Thirdly, I reject the defendant’s evidence and case that the reward agreed to be shared under the Oral Agreement covered “everything”, including service fees agreed by the Clients and paid to the plaintiff for achieving specific “missions”. As is common ground, the reward mentioned and discussed in the negotiation of the Oral Agreement consisted of the Clients paying the Trio as “bonus” a part of their profits, and that it was indicated to be 20% of HK$10 million. It was not even mentioned by the defendant that the Trio had brought up the topic of the plaintiff’s service fees chargeable for achieving specific missions. The defendant’s own evidence was that the reward would apply to such payment whatever it would be called or named as, be it “commission” or “bonus” or whatever. In other words, the parties were in agreement that the reward to be shared was a payment in the nature of a bonus whatever it would be called. I so find. Properly analyzed, such payment was very different in nature as what the plaintiff termed as “service fee” negotiated with and payable by the Clients for achieving a specific “mission”. The “service fee” did not depend on the Clients’ earning any profits. It was not calculated on the basis of a percentage of the profits the Clients would earn. With the undisputed background that the plaintiff also provided service to the Clients by way of achieving specific tasks and charged them a “service fee” for achieving each such tasks, and such was separately negotiated with the Clients whenever the specific mission came up, I find it inherently and highly improbable that by the Oral Agreement the plaintiff agreed to pay to the defendant 40% of such service fee he would be receiving in the future regardless of whatever task and whether the defendant would be involved in or would make any contribution. I find it most hard to accept, and do not accept, that such was intended or agreed by the Trio in entering the Oral Agreement.

62.  In this regard, I accept the plaintiff’s evidence and find that by about March 2010, it was quite clear to the Clients that the defendant was not able to move the re-development project forward by overcoming the Complications and based also on other considerations, the Clients became desperate and they effectively decided to take another approach – by agreeing to pay out handsome fees, in the tune of millions, as incentive to intermediaries, to achieve a sale.

63.  I take the view that such new approach of achieving a sale was not the one contemplated in, and forming the basis of, the Oral Agreement – which was by overcoming the Complications thereby making the Clients’ Shareholding marketable.

64.  I further accept the plaintiff’s evidence that he had negotiated with the Clients a service fee for the service of finding the intermediaries and achieving the Sale. I find for the plaintiff’s case that the RMB6.2 million was actually paid out to the intermediaries, and not to the plaintiff, and the HK$1 million he received, net of his legal costs incurred in the 2012 Action, was received as service fee for achieving a “mission”, which was not the reward contemplated by, or within the ambit of, the Oral Agreement. I therefore hold that, for this reason also, the defendant’s counterclaim fails.

65.  As mentioned and I also find that, in any case, Tsui did pay to the Trio a bonus of HK$2 million, which had been duly shared by the Trio according to the Oral Agreement.

66.  The defendant relies heavily on what the plaintiff said in his witness statement in the 2012 Action, thus[15]

“… Siu suggested that the mission fee to be divided according to 40:30:30, Tse [the defendant] entitled 40%, I [the plaintiff] entitled 30% and Siu entitled 30%. After the meeting, I treated this as an alternative to the highly possible failure of the Beijing connections and Lam, I decided to suggest to Tsui and Mok to employ Tse [the defendant] to station in Guangzhou office on a full time basis to take over Lam’s job. Upon the confirmation of Tsui and Mok for Tse [the defendant] to station in Guangzhou, I emailed to Siu and Tse [the defendant] to confirm their proposal of dividing the mission fee, commissions, bonuses (I refer as project sharing) on 2 February 2009…” (my emphasis)

67.  The defendant contends that what was said there proves the existence of what he calls the “433 agreement”.

68.  As I said above, the plaintiff did not dispute the existence of an agreement to share the reward by 40:30:30. It can be seen that the plaintiff there described it as “the mission fee”. It therefore supported the plaintiff’s contention that an element of success and contribution was part of the deal. Also, what the plaintiff said there clearly supported his case that the defendant’s role was to achieve what Lam could not, as I find above. Moreover, the plaintiff there referred to it as “project sharing”, which in my view, did not include the service fee for achieving “missions” he might later negotiate with and received from the Clients.

69.  Thus, I do not find what was said there by the plaintiff in any way helps the defendant’s case or affects my discussions and findings above.

Disposal

70.  For the reasons expressed above, I find against the counterclaim and hereby dismiss it.

71.  Costs should usually follow the event and the defendant should pay the plaintiff the costs of the counterclaim. On the other hand, a plaintiff who discontinues his claim is usually liable to pay the costs of his claim incurred before the discontinuance. In the circumstances, it seems to me just that there be no order as to the parties’ costs incurred up to the time the plaintiff discontinued his claim. For costs incurred thereafter, the defendant should pay the same to the plaintiff.

72.  In his closing submissions, the plaintiff asked for such costs to be taxed on an indemnity basis. The basis was that the defendant’s counterclaim was clearly unsustainable and should not have been brought or persisted. That I agree, and even though at the same time the plaintiff’s own claim is as unsustainable since there is no evidence whatsoever that the defendant had received some further bonus from the Clients, the plaintiff had sensibly yielded in the middle of the trial, but the defendant had not, and persisted in prosecuting his obviously unsustainable counterclaim (such unsustainability having been made even more apparent during the parties’ oral opening submissions) by untruthful testimony. Considering the circumstances and presently, I think it just and appropriate that the defendant should pay such costs on an indemnity basis.

73.  I would therefore make a costs order nisi that there be no order as to the costs of this action, including the counterclaim, incurred before the plaintiff discontinued his claim and that the defendant do pay the plaintiff his costs of this action incurred thereafter on an indemnity basis, to be taxed if not agreed. This costs order nisi will become absolute within 21 days unless either party applies by summons to vary within that time.

74.  To facilitate matters, I would indicate here that the plaintiff was granted leave to discontinue at about 10 am on day 4 of trial, which was 26 March 2021.