LAU MO CHOI v. LAU MUK FAT (as the Manager of Lau Shau Wo Tso ‘劉壽和祖’)

HCA 1263/2012

[2025] HKCFI 4748

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1263 OF 2012

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BETWEEN

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DECISION

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I. INTRODUCTION

1.  After hearing on 17 June 2025 (the “Hearing”), on 2 July 2025, I handed down my decision (the “Decision”) ([2025] HKCFI 2656), whereby I allowed the appeal against Master Ebony Ling of the High Court (the “Master”)’s Order dated 9 January 2025 and ordered that the Defendant shall disclose the today the global settlement agreement between the Defendant and Mr Wong Kwok Wah (“WKW”) in relation to all or any of HCA 1879/2011, HCA 896/2012 and HCA 897/2012. This is the Defendant’s Summons filed on 15 July 2025 (the “Summons”) for leave to appeal against the Decision. I shall analyse below the grounds set out in the draft Notice of Appeal attached to the Summons to see if there are any reasonable prospects of success in the grounds.

II. GROUND 1

2.  Ground 1 is in essence a repetition of the Defendant’s argument, with much elaboration however, that the Agreement for Sharing Liabilities should only be concerned with payment of costs and expenses even if the settlement sum would go direct to such costs and expenses, and that the settlement sum, even if meant to go direct to such costs and expenses, should be a matter for the Agreement for Distribution of Assets. At §§7-10 of the Decision, I explained why I disagreed with the Defendant’s such argument and why I though such settlement sums should be considered under the Agreement for Sharing Liabilities. I have reviewed the reasoning and see nothing wrong.

3.  In his written submissions in support of the Defendant’s application for leave to appeal, Mr Billy Ma, counsel for the Defendant, submits that the concept of set-off is distinct from the concept of liability arising from a running account, referring to Loren Enterprises Pty Ltd v Shell Co of Australia Ltd (2001) 108 FCR 496 and Derham on the Law of Set-off (5^th ed) §1.01. Such submissions and authorities were not cited to me during the Hearing. In any event, Mr Ma’s submissions, with respect, are barking at the wrong tree. Those authorities concern running accounts. In a running account, there are ins and outs of different nature and that is why there cannot be any true set-off. In the present case, any settlement sum in relation to the litigation concerning the expenses in question would be attributable to the expenses because the litigation concerns the very expenses under the Agreement for Sharing Liabilities.

4.  Mr Ma also submits that counting the settlement sums towards the expenses would deprive trustees of their costs charges and expenses, citing Byrnes & Another v Kendle (2011) 279 ALR 212 and Sin Hua Bank Trustee Ltd. v Ip Cheung-kwok (appointed to represent the estate of Ip Koo-chi, deceased) & Others [1992] 1 HKLR 211. Again, such submissions and authorities were not cited to me during the Hearing. In any event, such submissions are alarming – it seems to me that such submissions suggest that even though the settlement sum would be directly made to reduce the expenses in question, the trustees would have the priority to deduct for their own sake first. I do not accept such submissions, subject to a caveat that it would depend on the nature of the settlement sum. But in the absence of any evidence to the contrary (for example, the settlement sum is specifically labelled for expenses or costs outside the Agreement for Sharing Liabilities), the settlement sum in respect of the litigation would be related to the matters underlying the litigation, namely, the expenses.

5.  Lastly, Mr Ma, referring to the Plaintiff’s own plea that the Plaintiff does not want to be “dragged into” HCA 1879/2011, HCA 896/2012 and HCA 897/2012, submits that such plea means that on the Plaintiff’s own case, HCA 1879/2011, HCA 896/2012 and HCA 897/2012 are irrelevant. I am unable to accept such submissions. The Plaintiff’s disagreement to be dragged into the litigation does not logically mean that the Plaintiff thinks that the litigation is irrelevant.

6.  In the circumstances, I am not satisfied that there is any reasonable prospect of success in this Ground.

III. GROUND 2

7.  Ground 2 complains that I erred in failing to appreciate that (1) there was no or no sufficient basis for me to find that there were payments made under the Settlement Agreement and (2) any payments made under the Settlement Agreement were related to the items under the Agreement for Sharing Liabilities.

8.  As I pointed out in §11 of the Decision, against the Plaintiff’s evidence that there was the Settlement Agreement, the Defendant made no denial. There was a prima facie case of the existence of the Settlement Agreement.

9.  There is no positive case from the Defendant about the Settlement Agreement at all. The Settlement Agreement was a global settlement between the Defendant WKW and in relation to their dispute, and logically, or at least inherently probably, the Settlement Agreement would cover HCA 1879/2011, HCA 896/2012 and HCA 897/2012.

10.  As against the Plaintiff’s evidence that WKW had paid the Defendant HK$21 million under the Settlement Agreement, again, there was no denial from the Defendant.

11.  Mr Ma’s complaint is in essence that the Plaintiff’s evidence is only qualified by words such as “may”, “strong possibility”, “cannot confirm”, “zero knowledge”, “could not know”. However, one must consider the evidence in context, and bear in mind that the standard of proof is on balance of probabilities only. All this qualification has to be considered in the light of the Plaintiff’s evidence at §10 of his Affirmation filed on 16 September 2024, which I mentioned in §11 of my Decision. For convenience, I quote §10 of his Affirmation:-

“In mid-August 2024, I had a conversation with WKW. He told me that there was a global settlement of the litigations between the Tso/Defendant and WKW in some months ago whereby he would compensate the Tso/Defendant in the amount of approximately HK$21 million. WKW refused to tell me any specifics about the global settlement because he is bound by a non-disclosure term therein.”

12.  This piece of evidence is clear and firm, stating the source of the hearsay evidence of the Settlement Agreement. As I said at §11 of my Decision, there was no denial of the Settlement Agreement.

13.  In the circumstances, I was satisfied that there was the Settlement Agreement under which payments were made in relation to HCA 1879/2011, HCA 896/2012 and HCA 897/2012, which covered some of the items under the Agreement for Sharing Liabilities (as explained in §§7-9 of the Decision). I see nothing wrong in that.

14.  I find no reasonable prospect of success in Ground 2.

IV. GROUND 3

15.  Ground 3 complains that I erred in not giving sufficient regard to the Master’s reasoning and decision. This ground is, with respect, stated to be rejected. A hearing of an appeal against a Master is a de novo hearing. While I could consider the reasoning of the Master’s decision, it was after all my decision to decide the matters afresh.

16.  I see no reasonable prospect of success in Ground 3.

V. GROUND 4

17.  Ground 4 complains that I failed to appreciate delay. Contrary to that, I considered delay in §§16-17 of the Decision. I also pointed out, and it is worth pointing out here again, that the Summons was taken out before the scheduled trial for assessment and as a result of the trial was adjourned sine dine. Before me, there was no appeal or even any criticism against the adjournment. As a result, there was no milestone date, and any delay had to be considered against this context.

18.  How much weight should be accorded to such delay was within my purview in making the Decision. I accorded little weight to it, but it does not mean that I did not consider this factor at all, as submitted by Mr Ma in his reply skeleton submissions §18. I see no reasonable prospect of success in Ground 4.

VI. GROUND 5

19.  Ground 5 complains that the discovery order I made cover all terms of the Settlement Agreement and it was too wide.

20.  Consistent with the Defendant’s non-denial and non-admission of the existence of the Settlement Agreement, there was (and still is) no evidence before me as to what terms there were in the Settlement Agreement, what terms were relevant and what not. In other words, the Defendant had no positive case about the Settlement Agreement but a bare denial. It is trite that an agreement has to be construed against its context and background. The starting point must be that the whole agreement has to be read before one can construe a specific term. Against this starting point, without any positive case from the Defendant on the Settlement Agreement, I fail to see anything in the Defendant’s complaint.

21.  I add that even in the written skeleton submissions in support of the Defendant’s application for leave to appeal, Mr Ma, understandably bound by the evidence of non-denial and non-admission of the Settlement Agreement, does not inform the Court how the order should be narrowed down or what part of the documents to be discovered should be redacted.

22.  I see no reasonable prospect of success in Ground 5.

VII. CONCLUSION

23.  In the circumstances, I dismiss the Summons, and order that the Defendant shall pay the Plaintiff costs of the Summons be summarily assessed at HK$75,000.