STRONG OFFER INVESTMENT LTD v. NYEU TING CHUANG

HCA 10541/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10541 OF 2000

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REASONS  FOR  JUDGMENT

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Introduction

1.  The plaintiff is and was a licensed money-lender and commenced this action in December 2000 claiming a sum of HK$41,220,569.84 being the amount due and payable by the defendant.  At the end of the trial of this action, judgment in the amount claimed was entered against the defendant together with interest and costs.  The following are the reasons for that judgment.

Background Facts

2.  The following facts are undisputed.

3.  The plaintiff is and was a licensed money-lender whereas Okachi Investment (HK) Co. Ltd. (“Okachi HK”) is and was a licensed stockbroker.  They are both subsidiaries of Okachi & Co. Ltd. (“Okachi Japan”), a company incorporated in Japan.  Mr Ying (“Ying”) was an account executive of Okachi HK.  He was introduced to the defendant by Mr Fan (“Fan”) in April 1995.

4.  The defendant is a resident of Taiwan.  He has occupied high positions in the education sector there.  Fan has been a long-standing friend of his and his family.  The defendant calls Fan “Uncle Fan” (范叔叔) which may be indicative of their close relationship.

5.  For a period of more than 2 years (viz., from May 1995 to September 1997), the defendant was a customer of Okachi HK with 2 margin stock trading accounts; one was numbered M3001 and the other M3480 (collectively “the said margin accounts” and respectively “M3001” and “M3480”).  The period from September 1997 to December 1998 involves factual disputes which need determination in this action.

6.  The plaintiff provided funding for purchasing shares in the said margin accounts by way of loans. 

7.  The defendant spent most of his time outside Hong Kong.  He instructed Ying to operate the said margin accounts for him.  In short, Ying was to buy and sell shares through the said margin accounts and to fax the daily activities of the said margin accounts to Taiwan.  He did so mostly on a daily basis.  The faxes contained information relating to the stocks bought or sold and the prices at which they were transacted.  Further, detailed statements of Okachi HK would be sent to Taiwan at the end of each month.

8.  The plaintiff liquidated the said margin accounts in December 1998.  The amount claimed in this action represents the loss suffered from the stock trading activities of the said margin accounts.

9.  There were 4 payments into the said margin accounts in the months February to April 1998: 3 payments by Fan in the respective sums of $750,000 (on 4 February 1998), $750,000 (on 11 March 1998) and $500,000 (on 29 April 1998) and one payment by the defendant in the sum of $499,900 (on 26 March 1998).

10.  Various correspondence (including faxes) passed between Hong Kong and Taiwan during the relevant period.  Some of them will be referred to below.

Issues in this Action

11.  The following lines of defence were raised.

12.  In about September 1997 (and also in October and November 1997), the defendant instructed Okachi HK (through Ying) to sell off the shares in the said margin accounts and close them.  As at the said dates, the sale proceeds should either exceed, or at least be sufficient to set-off, the amount of loans owed by the defendant.  In breach of its duty, Okachi HK failed to do as instructed.

13.  The defendant always regarded the plaintiff and Okachi HK as one and the same entity.  In any event, the circumstances were such that the corporate veil of the plaintiff and Okachi HK ought to be lifted.  Accordingly, the plaintiff’s loans ought to be set-off against the amount of loss caused to the defendant by Okachi HK’s breach of duty.

14.  The plaintiff has contravened s. 18, Money Lenders Ordinance (Cap. 163).  The loans owed to it should not be enforced by the court.

15.  The plaintiff was under a duty, but has failed, to mitigate its loss by selling the shares in the said margin accounts in good time and using the sale proceeds to set-off the indebtedness.

Credibility of Witnesses

16.  The defence relating to the alleged breach of duty by Okachi HK is closely related to the credibility of the witnesses who testified at trial.

17.  In brief, I accept the testimony given by the plaintiff’s witnesses to be truthful and reliable.  On the other hand, I find the defence witnesses to be untruthful.  For this reason, the testimony of the defence witnesses is rejected.

18.  There are usually two objective methods for assessing the credibility of a witness:-

(a)     the inherent plausibility or implausibility of his testimony;

(b)    whether his testimony has in a material way been contradicted by undisputed or indisputable evidence.

These have been adopted in my assessment of the credibility of the witnesses.

19.  For the avoidance of doubt, although specific points are discussed under the sub-headings below, I have also considered credibility and reliability in the light of the overall evidence adduced at trial.  Further, various points relating to credibility and reliability have been advanced during cross-examination and/or submissions.  I have also considered them even though they may not be expressly referred to in this judgment.

(1)  Plaintiff’s Witnesses: Mr Ying

20.  By and large, Ying’s testimony is supported by what can generally be categorised as contemporaneous documents; such as, the contractual documents, the faxes sent by him, the account statements and the faxes written by the defendant.

21.  The defence criticised his credibility on the following grounds:-

(a)     he has motive not to close the said margin accounts because he could benefit from the substantial amount of commission there from;

(b)    his testimony shows that he was not a responsible account executive because he admitted he did not ask the defendant what the defendant’s investment objective was;

(c)     in his witness statement, he said he had a meeting with the defendant in August 1997.  After he has seen the defendant’s immigration records, he changed this part of his testimony to fit the records;

(d)    although he denied having agreed to provide special service to the defendant, he offered to the defendant to get his friend to lend HK$10 million to the defendant.  Further, Ying treated the defendant and his elder sister differently from other customers by sending faxes to them almost on a daily basis (but not to other customers).

22.  I do not consider points (a) and (d) above (whether singly or cumulatively) to be sufficient reasons for doubting Ying’s credibility.  I do not find point (b) above to have any substance.  As regards, point (c) above, I consider the inaccuracy in the witness statement to be the result of a mistake, and not evidence of untruthfulness or unreliability.

(2)  Plaintiff’s Witnesses: Mr Naruhito

23.  He is the plaintiff’s director.  At the relevant time, he was a director of both the plaintiff and Okachi HK.  I also find him to be truthful and reliable.

(3)  Plaintiff’s Witnesses: Mr Cheng

24.  Mr Cheng worked as an accountant for the plaintiff and Okachi HK and now still works for Okachi HK.  Almost all the matters contained in his witness statements (which stood as evidence-in-chief) were gleaned from documents and records relating to the said margin accounts kept by Okachi HK and the plaintiff.

25.  I find him to be an honest and reliable witness.

(4)  Defence Witness: the Defendant

26.  I find the defendant to be an untruthful and unreliable witness.  The plaintiff relies (among other things) on the faxes sent by Ying to the defendant to show that the defendant must have been aware of what was going on in the said margin accounts.  The defendant claimed that he had engaged a Mr Wong (“Wong”) to look after the faxes for him.  In gist, the defendant’s account relating to the daily operation of the said margin accounts is as follows.

27.  He has instructed Ying to buy and sell whatever stocks Ying considered appropriate.  Ying would have to fax a summary of the daily transactions to Wong in Taiwan.  Wong was an elderly man who worked part-time for the defendant.  His job as regards the faxes and the monthly account statements was basically to check their accuracy by adding up the figures.  Wong and the defendant only met occasionally by chance.  As a result, the defendant claimed he effectively did not know about the transactions until about one to two months after the event.

28.  The defendant has also written a letter to Fan on about 9 January 1998.  The letter was copied to Ying.  The relevant parts read:-

“甫自港歸來，近日港股連挫，迋莊 … 前曾蒙叔父大人介紹應先生代為操做 [ 股票户口 ] …

… 近三年來迋莊不曾過問，均由應君操作。應君亦盡心盡力，可與迋莊推心置腹，誠難可貴 … ”.

The references to “迋莊” are references to the defendant whereas the references therein to “應先生” and “應君” are references to Ying.  The defendant explained that the praises in that letter were to conceal his on-going (or intended) investigation regarding the said margin accounts and/or Ying’s conduct in handling them.

29.  In relation to the partial payments to the said margin accounts, the defendant’s explanation is as follows.  The 3 payments made by Fan were made without his knowledge or consent at the time of payment.  He only discovered the payments at a meeting with Fan after April 1998 (para. 13, the defendant’s supplemental witness statement).

30.  In relation to the payment of $499,900 on 26 March 1998, the defendant said this was erroneously paid by one of his staff.  He said the staff received a demand for payment from the plaintiff when he was away and could not be reached.  The staff wrongly thought that payment should be made.  She has had access to the bank passbook and the chop for authorising payment and paid the sum without the defendant’s consent or knowledge.

31.  The defendant’s background shows that he must be a man of sophistication.  He holds a doctors degree.  His name card states that he occupied the following posts:-

(1)     secretary general, private education association of Republic of China (中華民國私立教育事業協會秘書長);

(2)     中國國民黨台北市黨部委員;

(3)     台北市私立强恕高級中學校長;

(4)     財團法人中華民國私立學校教職員工退休撫卹基金管理委員會執行長。

The English description for the last post is executive director.  The defendant said in his testimony he later became the chairman thereof.

32.  In view of his background, and the inherent implausibility of his above stories, I conclude that he made them up in a pathetic attempt to avoid the plaintiff’s claim.

33.  His story that he basically knew very little or nothing about the transactions in the said margin accounts (at least until long after the event) is an example of such an attempt.  If the defendant were believed, essentially the said margin accounts have been left in Ying’s free hand without much (if any) supervision for over 2 years.  The defendant said in testimony the portfolio in the said margin accounts was at one time worth about $150 million.  It was never explained why he choose to leave the said margin accounts unchecked for such a long time.

34.  The defendant’s explanation about his letter dated 9 January 1998 is another example.  It is obvious both from the contents of the letter and the defendant’s testimony that by January 1998 he must have been aware of the state of the said margin accounts.  He should therefore have known Ying had not followed his alleged instruction (given much earlier than January 1998) to close the said margin accounts.  He claimed the praises in the said letter were to cover his investigation (or intended investigation) into the matter.  But he has not explained what investigation was needed, and why concealing the investigation would help him find out the truth.  According to the defence, loss was caused to the defendant simply because of Ying’s failure to carry out the defendant’s instruction to close the said margin account.

35.  The same applies to his story about the 4 partial payments made allegedly without his consent or knowledge.  In relation to the 3 payments made by Fan, as will be discussed under the sub-heading “Defence Witness: Fan”, there is an inconsistency between him and Fan about how he came to know of the 3 payments.  I find the inconsistency shows that the alleged lack of knowledge on the defendant’s part is a lie.  In relation to the payment made by the defendant’s staff, his story is simply incredible.

(5)  Defence Witness: Fan

36.  Fan testified that he did not know what exactly happened to the said margin accounts and was unaware of precisely what went on between the plaintiff and Ying on the one part and the defendant on the other.

37.  Fan also testified that Ying told him the plaintiff could not find the defendant or obtain payment from the defendant.  Ying begged Fan to help make the defendant pay.  However, Fan was unable to do so either.  Partly out of mercy for Ying, Fan decided to pay for the defendant.  He testified that he regarded the payments to be temporary advances for the defendant.

38.  Fan further testified he still could not find the defendant after the payments were made to the plaintiff.  Fan therefore left a brief message with the defendant’s secretary to the effect the money matter in Hong Kong had been taken care of.  Fan said the defendant never telephoned to query what was the meaning of his messages.  If Fan’s account was true, this must be because the defendant knew what Fan was talking about. 

39.  Fan however recalls the defendant telephoned him and said the payments made by Fan were not the defendant’s responsibility.  I conclude that Fan was making this up to help keep the defendant away from the 3 payments into the said margin accounts.  This part of his testimony is different from what the defendant said in his supplemental witness statement (see para. 29 above).

40.  Fan was careful when he testified and indicated from time to time he could not remember certain events.  However, he appeared to have a clear recollection about the defendant’s refusal over the telephone to accept responsibility for the payments.  The inconsistency between this part of his testimony and the defendant’s account (see para. 29 and 39 above) could not thus have been caused by Fan’s mistake.  It rather shows the defendant and Fan have not been telling the truth.

(6)  Defence Witness: Ms Lai

41.  Ms Lai testified that she likes shopping in Hong Kong and therefore she would visit Hong Kong from time to time for such purpose.  She said the defendant is a close friend of her family and (in effect) she works under the defendant.  The plaintiff suggested her relationship with the defendant was closer than what she described but she denied this.  It appears she agreed in cross-examination she would meet up with the defendant when she visited Hong Kong.  Whether this is invariably the case is irrelevant.  The overall impression one gets from her testimony is that she and the defendant are good friends.

42.  Ms Lai said she recalls a meeting in October 1997 when she and the defendant meet up in similar circumstances.  Ying was present in this meeting (according to her witness statement, she already knew him from previous meetings).  She recalls the defendant told Ying to close the said margin accounts and sell all the shares therein.  Ying agreed to do so.  The defendant’s reason for doing so was he was in need of money for his projects in the mainland.

43.  I do not believe Ms Lai.  She gave this account in her witness statement dated 16 July 2003, more than 5 years after the event.  The topic (if in fact discussed between the defendant and Ying) should not be something which concerned her (or should interest her).  No valid reason has been given by her why she would recall this meeting.

44.  Bearing in mind the good relationship between Ms Lai and the defendant, I find that her testimony about the said meeting is untrue and she was trying to help the defendant avoid the claim in this action.

Findings

45.  In view of the above paragraphs, I find that:-

(a)     the defendant has entered into 2 agreements on the same terms in relation to the said margin accounts;

(b)    the defendant instructed Ying to buy and sell Hong Kong shares through the said margin accounts;

(c)     the defendant agreed funding for operating the said margin accounts was to be provided by the plaintiff by way of loans at the interest rate(s) charged in the said margin accounts;

(d)    the defendant failed to meet the margin calls;

(e)     consequently, the plaintiff was entitled to, and did, liquidate the said margin accounts;

(f)     the defendant has asked for indulgence from the plaintiff and, at least partly for that reason, the plaintiff did not liquidate the said margin accounts earlier;

(g)     the sum claimed in this action is the amount due from the defendant as a result of the liquidation of the said margin accounts;

(h)     there was no breach of duty by Ying or Okachi HK in relation to the said margin accounts.

I also infer from the contemporaneous documents relating to the said margin accounts that the defendant must have been aware of the events relating to the said margin accounts shortly after the event.

(1)  Was there only One Entity?

46.  The witnesses for the parties have been asked about this aspect.  It is, however, accepted by both parties that this issue is to be determined by way of an objective test.  In order words, the personal views of the witnesses about this matter are irrelevant.

47.  It is trite law that a limited company is a separate legal entity.  Gower & Davies’ Principles of Modern Company Law (2003) 7^th Ed. (relied on by the defendant) states:-

“There is no general principle that all companies in a group of companies are to be regarded as one; on the contrary, the fundamental principle is unquestionably that “each company in the a group … is a separate legal entity possessed of separate rights and liabilities” (p. 184).

An “economic entity” is not to be confused with a “legal entity”: Peregrine Investment Holdings Ltd. v. Astan Infrastructure Fund Management Co. Ltd. LDC [2003] 1 HKC 455, 471.

48.  It is accepted by the defendant that corporate veil will only be lifted where there are special circumstances to justify the court to do so: para. 35, the defendant’s closing submissions, citing Gower, p. 185.  Instances given in Gower (at pp. 185 to 189) as justifying judicial intervention were:-

(a)     where the corporate structure is a “mere façade concealing the true facts”;

(b)    where one company has been acting as an agent of another company;

(c)     where a company has been used to carry on an unlawful activity;

(d)    where a company has been used to avoid the impact of a court order.

49.  The defendant argues that in this action:-

(1)     the plaintiff and Okachi HK are and were associated companies having the same parent company;

(2)     the plaintiff and Okachi HK shared the same office and address, same staff and were controlled by the same decision-makers;

(3)     the plaintiff served no commercial purpose other than to hold the money lender licence;

(4)     there was a deliberately and obvious blurring of edges in their operations;

(5)     the operations of the plaintiff and Okachi HK were inexorably interlinked.

50.  The defendant’s points (1), (2), (3) and (5), whether considered singly or cumulatively, do not justify the corporate veils of the plaintiff and Okachi HK to be pierced.

51.  As regards the defendant’s point (3) above, I agree with the plaintiff that, whether the plaintiff was incorporated merely to hold the money lender licence or with other “legitimate” purposes (such as tax planning) in mind, is not a special circumstance in the context of this action.  I disagree with the defendant’s point (4) above.  The names of the plaintiff and Okachi HK are clearly different and could not have led to confusion.  Both of them have been clearly named in the various contract documents.  As stated above, the defendant must have been a man of sophistication.  None of the instances given in Gower has featured in this action.

52.  The defendant refers to two authorities.  Yue Tai Plywood & Timber Co. Ltd. v. Far East Wagner Construction Ltd. [2001] 2 HKLRD 446 was a case where there was an attempt to dodge the debt.  DHN Food Distributors Ltd. v. London Borough of Tower Hamlets [1976] 3 All ER 462 was a case of compulsory requisition of land where the court found the company, though not the owner thereof, had sufficient interest in the land to qualify for compensation for disturbance.  Both cases are factually distinguishable from this action.

53.  By virtue of the above matters, I do not find that there is any justification for lifting the corporate veil.

(2)  S. 18, Money Lenders Ordinance (Cap. 163)

54.  Here the defendant relies on ss. 18(1)(a), 18(2) and 18(3), Cap. 163.

55.  The relevant parts of s. 18(1)(a) stipulate:-

“No agreement for the repayment of money lent by a money lender or for the payment of interest on money so lent, and no security given to any money lender in respect of any such agreement or loan, shall be enforceable unless …  a note or memorandum in writing of the agreement is made in accordance with subsection (2) and signed personally by the borrower, and a copy of such note or memorandum is given to the borrower at the time of signing … ” (emphasis supplied).

56.  According to s. 18(2), various information (especially the terms of the loan and the interest chargeable) needs to be given in the said note or memorandum.  S. 18(3) provides:-

“Notwithstanding subsection (1), if the court before which the enforceability of any agreement or security comes in question is satisfied that in all the circumstances it would be inequitable that any such agreement or security which does not comply with this section should be held not to be enforceable, the court may order that such agreement or security is enforceable to such extent, and subject to such modifications or exceptions, as the court considers equitable” (emphasis supplied).

57.  The leading authority on how the discretion conferred by s. 18(3) is to be exercised is the Court of Final Appeal’s decision in Emperor Finance Ltd. v. Belle Fashions Ltd. [2003] 3 HKLRD 995.  There the court said:-

“In exercising its discretion, the court should examine the breach or breaches in question, their consequences for the parties to the transactions and any other circumstances which may make it inequitable to hold the agreements unenforceable.  In my judgment, it is clear that upholding unenforceability in this case would be inequitable and accordingly that the Court's discretion should be exercised in Finance's favour so that its claims against La Belle, Hubbard and Madam Ng are enforceable in full” (para. 119).

I agree with the plaintiff that the pre-Emperor Finance decisions (insofar as they should contain anything which is inconsistent with the above observations) should be looked at with caution.

58.  The court’s first task is therefore to identify the breach(es).  The defendant argues that:-

(a)     no note or memorandum required by s. 18(1) has been made or signed at all;

(b)    alternatively, if the contractual documents can be regarded as such the required note or memorandum, ss. 18(2)(d) [amount of principal loan], 18(2)(i) [interest rate chargeable], 18(2)(h) [precise form of security] and 18(2)(f) [date of making of loan] have not been complied with.

59.  The plaintiff contends, on the other hand, the contractual documents signed by the defendant constitute the note or memorandum required by s. 18(1).  It concedes there have been breaches of ss. 18(2)(d) and 18(2)(i) only.

60.  I agree with the plaintiff that the contractual documents can be regarded as the note or memorandum required by s. 18(1).  In relation to s. 18(2)(h), I also agree with the plaintiff that this has in effect been set out in the contractual documents.

61.  However, I disagree with the plaintiff in relation to ss. 18(2)(f) and 18(2)(j).  The plaintiff submits that s. 18(2)(f) has been complied with because the faxes sent by Ying to Taiwan and the plaintiff’s monthly statements clearly set out details of the advances.  They are however not contained in the “note or memorandum” required by s. 18(1).  In relation to s. 18(2)(j), although it is true there is no dispute as to the place of agreement, there is no declaration which complies with that provision.

62.  I turn now to consider if the breaches were deliberate and fragrant.  The defendant contends they were deliberate breaches in that the contractual documents were pro forma documents.  Hence, the breaches must have taken place in relation to most if not all of the customers.  That may be so, however, I do not consider this per se shows that the plaintiff has chosen to contravene s. 18.  Looking at the whole circumstance, I find that the breaches were unintentional.  There was no conceivable practical advantage (commercial or otherwise) for the plaintiff to deliberately contravene Cap. 163.

63.  The defendant also contends that the breaches could have serious financial consequences for him.  This is because the said margin accounts were effectively left in Ying’s hands and potentially the defendant could be exposed to unlimited indebtedness.  Whether the potential unlimited exposure is real or not, I do not consider this to be related to the breaches; they were rather the result of the defendant consciously choosing to operate the said margin accounts in such manner.  Moreover, even though there was no note or memorandum, even up to the time of trial, the defendant has not complained (besides the alleged failure to close the said margin accounts (which I have rejected)) unauthorised loans had been incurred or excessive interest had been charged.

64.  By virtue of the above matters, I conclude that the breaches were technical and they did not cause the defendant any real prejudice.  On the other hand, it would be inequitable not to enforce the loans because this would result in huge financial loss to the plaintiff.  This is accordingly a case where I should exercise my discretion to enforce the loans.

(3)  Plaintiff’s Duty to Mitigate

65.  The defendant relies on the settled principle that a plaintiff is under a duty to take all reasonable steps to mitigate his loss.  It is submitted that in doing so, a plaintiff must act with both his own and the defendant’s interests in mind: British Westinghouse Electronic & Manufacturing Co. Ltd. v. Underground Electric Railways Co. of London Ltd. [1912] AC 673, 689.  A failure to effect an earlier sale of the security when market prices were more favourable constitutes a failure to mitigate: Bristol & West Building Society v. Fancy & Jackson [1997] 4 All ER 582, 623 (the court found there had been unreasonable delay in the mortgagee’s sale of real properties in a falling market).

66.  The stock market is a highly volatile market.  As the defendant said repeatedly in his testimony, it can rise and fall (and does so rapidly).  With hindsight, it may be obvious that there has generally been a falling market between October 1997 and the time of liquidation of the said margin accounts.  But there was no evidence (not even from the defence) that such market trend must have been obvious (or at least obvious to the plaintiff).  The plaintiff’s witnesses have explained in effect that liquidation of an account was a drastic step and many customers did not want that to happen.

67.  As stated above, I have found that the defendant also did not wish the said margin accounts to be liquidated immediately.  Further, there have been partial payments from the defendant.  In these circumstances, even adopting the test propounded by the defence (that a plaintiff must act with the interests of both parties in mind), there is nothing unreasonable in the plaintiff’s decision to liquidate in December 1998 and not earlier.

68.  By reason of the above conclusion, there is no need to consider whether the contracts have conferred on the plaintiff a right (as opposed to a duty) to liquidate the said margin accounts.  If it had been necessary to do so, I would have found that clauses 5, 7 and 8 thereof have  conferred a right to do so.

Application for Leave to Further Amend Re-Amended Defence

69.  At the beginning of the trial, the defendant sought leave to further amend his Re-Amended Defence.  Having heard the parties, I refused to give leave for him to do so in relation to para. 50A and 50B of the draft pleading.  The following are the reasons for the ruling.

70.  Para. 50A relied on Rule 532, Rules of Exchange (March 1997 Edition) (“the Rules”) and averred Okachi HK failed to enter into a Uniform Margin Client’s Agreement with the defendant.

71.  Para. 50B relied on:-

(a)     s. 81(3), Securities Ordinance (Cap. 333);

(b)    Rule 532(1), the Rules;

(c)     S. 75, Cap. 333;

(d)    Rule 532, the Rules;

(e)     Rule 533, the Rules.

72.  Both paragraphs of the draft pleading averred that the contracts were illegal and hence unenforceable.

73.  The plaintiff opposed the application for leave, contending that (among other grounds of objection) there was no illegality or, more importantly, unenforceability, even if the Rules and/or the provisions in Cap. 333 were breached.

74.  In relation to the Rules, the plaintiff submitted that they were only internal rules made by the Council of the Stock Exchange of Hong Kong Limited (“HKSE”).  They do not have the force of law.  The consequences of non-compliance being disciplinary action by HKSE.  I agree with this submission.

75.  In relation to the relevant provisions in Cap. 333, they only provide for criminal sanctions and do not prescribe any civil consequences.  On the other hand, ss. 72(3) and 73(4) expressly give customers a right to rescind whereas s. 76(4) provides that an offending contract is not enforceable; s. 76(4) is a similar provision.  Finally, s. 143(5) gives the customer a right to avoid an offending contract.  In view of this difference, I agree with the plaintiff that Cap. 333 does not intend any breach of ss. 81(3) and/or 75 to render the contracts in question unenforceable.

76.  The defendant submitted that, even if a proposed amendment is unsound as a matter of law, leave to amend should still be given.  It is trite law that useless or immaterial proposed amendments should not be allowed: Hong Kong Civil Procedure 2004, para. 20/8/24.  Accordingly, I disagree with the defendant’s submission.

77.  In short, I agree with the plaintiff’s argument in its written opening submission (especially those set out above) and therefore refused the application for leave to further amend.

Interest and Costs

78.  The amount of interest sought by the plaintiff has been set out in para. 11, Statement of Claim.  The plaintiff asked for interest as claimed together with the costs of this action to be paid by the defendant.  The defendant did not oppose this.  Further, in relation to costs, there is also no sufficient ground for departing from the usual rule that costs should follow the event.  Accordingly, I awarded interest as claimed as well as the costs of this action (including any reserved costs) to the plaintiff, to be taxed if not agreed.