SUN FOCUS INVESTMENT LTD v. TANG SHING BOR AND ANOTHER

HCA 538/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 538 OF 2007

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JUDGMENT
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1. The present dispute arose out of a sino-foreign joint investment project in Shanghai (“the Project”) to redevelop a piece of land into a multi-storey building (“the Building”) to be used for office and retail purposes.

Background

2. The Mainland side of the Project was a company called Shanghai Kong Tung Cheong (“SKTC”)

3. In or about early 1992, one Mr Kwong Pui (“Mr Kwong”) first introduced the Project to the 2nd defendant.  In the months following the initial discussion between Mr Kwong and the 2nd defendant, they approached the 1st defendant, who expressed interest in joining the Project in or about April 1992.

4. At the 1st defendant’s suggestion, a shelf company, namely Master Kingdom Company Ltd (“Master Kingdom”), was acquired as the vehicle of investment.  On or about 6 May 1992, the 1st defendant and Mr Kwong became the first directors of Master Kingdom.  Mr Kwong also became the secretary of the company on the same day.

5. At that time, the 1st and 2nd defendants and Mr Kwong were the only investors who were committed to investing in the Project.  Pending the formal allotment of shares, it was agreed between them that while the 1st defendant was to hold 1/2 shares in Master Kingdom, the 2nd defendant and Mr Kwong were to take up the remaining half of the shares.  Further, the 2nd defendant and Mr Kwong could, if necessary, invite other people to share their 1/2 interest in Master kingdom.

6. On or about 8 May 1992, Mr Kwong on behalf of Master Kingdom signed a letter of intent with SKTC, which provided that: (i) Master Kingdom and SKTC would form a sino-foreign joint venture company (“the JVC”); and (ii) Master Kingdom would hold 60% and SKTC 40% of the Project.  On or about 7 July 1992, Master Kingdom opened a bank account with the Kwangtung Provincial Bank for the Project.  On 23 July 1992, Mr Kwong on behalf of Master Kingdom informed SKTC that the terms of co-operation between SKTC and Master Kingdom were generally agreed.

7. As one can see from the above, as of July 1992, the mode of investing in the Project on the Hong Kong side was decided (ie through Master Kingdom which would in turn hold 60% interest in the JVC).

8. In or about November 1992, the 2nd defendant invited Mr Tang Ngai Piu (“Mr NP Tang”) and Mr Eddy Yau to consider investing in the Project.  According to the defendants’ case, the 2nd defendant told Mr NP Tang the investment corporate structure, and if he was to invest in the Project, he would need to join Master Kingdom as a shareholder and his initial contribution to Master Kingdom would be HK$1,5000,000.

9. On or about 23 November 1992, the 2nd defendant faxed a copy of the draft agreement between Master Kingdom and SKTC together with Master Kingdom’s bank account number to Mr NP Tang.

10. Before Mr NP Tang made his decision to participate, on or about 28 December 1992, Master Kingdom and SKTC entered into an agreement for the establishment of the JVC.  Subsequently, on or about 15 May 1993, Master Kingdom and SKTC formally signed the joint venture agreement and the Articles of Association whereby the JVC was set up.  The 1st and 2nd defendants and Mr Kwong were appointed to the board of the JVC on behalf of Master Kingdom on or about 1 June 1993.  SKTC appointed the remaining 2 board directors of JVC.

11. In or about mid-1993, Mr Eddy Yau and Mr NP Tang finally expressed interest to invest in the Project.

12. In or about July 1993, the 2nd defendant decided to hold his shares in Master Kingdom through another company called Long Goal Limited (“Long Goal”), which was incorporated on 23 February 1993. It is the defendants’ case that, at about the same time, Mr NP Tang also informed the 2nd defendant that he intended to hold his shares in Master Kingdom through the plaintiff, which was incorporated on 16 March 1993.  Mr Eddy Yau, on the other hand, told the 2nd defendant that he preferred to hold the shares of Master Kingdom in his own name.

13. It is the defendants’ case that after further discussion (with the 2nd defendant acting as the liaison person between the 1st defendant of the one part and the other investors of the other), it was agreed that the shares in Master Kingdom would be held in the following manner (“the Master Kingdom Agreement”):

(1)  The 1st defendant would hold 50 shares in his personal name;

(2)  The 2nd defendant would hold 25 shares through Long Goal;

(3)  Mr Kwong would hold 10 shares in his personal name;

(4)  Mr NP Tang would hold 10 shares through the plaintiff; and

(5)  Mr Eddy Yau would hold 5 shares in his personal name.

14. It was also agreed that the 5 investors above would make respective contributions to Master Kingdom in accordance with their respective shareholdings.

15. On or about 14 September 1993, the shares of Master Kingdom were allotted to the 5 said investors accordingly.

16. On the other hand, the plaintiff disputes that it was a shareholder of Master Kingdom.  Instead, the plaintiff claims that it invested in the Project through a personal co-operation agreement made with the defendants.

17. From June to August 1993, the JVC obtained the relevant business approval, certificate and the land use certificate from the Mainland authorities.

18. Afterwards, the 5 said investors started to inject funding into the Project.  So far as the plaintiff was concerned, it contributed a total amount of HK$3,183,600 from 12 July 1993 to 1 May 1995.

19. The Project however did not go smoothly.  In or about 1997, the Asian financial crisis took place.  The sluggish economy in the Mainland and worldwide in the following years caused difficulties for the JVC to find further funding for the Project.

20. In around 2000, the Project was in a state of halt and SKTC wished to withdraw from the Project.  As a result, a meeting between Master Kingdom and SKTC was held on 1 August 2000 in Shanghai, which was attended by, among others, the 2nd defendant, Mr Kwong, Mr Ng Sun Po (the JVC’s financial manager) and Mr NP Tang himself.  It was agreed in the meeting that SKTC would transfer its 40% shareholding in the JVC to Master Kingdom.

21. Mr NP Tang disputes that he attended the meeting himself.  At the trial, Mr NP Tang avers for the first time that the minutes of the meeting on 1 August 2000 was a forgery.

22. On or about 9 May 2001, Master Kingdom and SKTC entered into the share transfer agreement, whereby SKTC’s 40% shareholding was transferred to Master Kingdom for a consideration of US$1,730,400 (ie around RMB13,843,200 at the exchange rate of 1:8).  From then onward, Master Kingdom became the 100% shareholder of the Project.

23. As SKTC had injected around RMB23,440,000 by that time, this means that it only managed to recover less than 60% of its investment.

24. In or about 2002, the Project was yet to complete.  Its financial difficulties however continued.  The JVC started to find a purchaser of the Project in the hope that the purchaser would be able to provide further funding for the completion of the Project.

25. In or about April 2002, Mr NP Tang introduced to the JVC a potential purchaser for the Project who offered to pay RMB80 million.  The offer was not acceptable to the JVC as the price was considered too low.

26. In or about May 2002, through the effort of Mr Kwong, a company called Fuk Hei Investment Holding Limited (“Fuk Hei”) offered to purchase the Project at the price of RMB115,000,000.  The JVC accepted the offer and signed the pre-sale agreement on or about 31 July 2002. The Building was completed in around the end of 2002.

27. It is the defendants’ case that, at that point of time and even before the preparation of any detailed account, it was clear to all investors that given the difficulties experienced by the Project, the JVC was making a substantial loss rather than any profit.

28. After the sale of the Project to Fuk Hei, the JVC had no other substantial business.  It was therefore considered that a final account should be prepared as soon as possible so that the remaining money in the JVC could be distributed back to Master Kingdom and the 5 investors without waiting for the ultimate dissolution of the JVC.

29. Accordingly, the JVC instructed Shanghai Haijia Certified Public Accountants Co Ltd (“Haijia”) to carry out an audit of the JVC’s account as of 31 January 2003.  Haijia produced its audited report on or about 12 February 2003 (“the Haijia Report”) which showed that the JVC suffered a loss of RMB12,375,863.41 as of that date.

30. Following the production of the Haijia Report, on or about 19 February 2003, Master Kingdom calculated its own profit and loss in the Project taking into account its other expenses.  The final assessment was that Master Kingdom suffered a total loss of HK$20,220,907 (or 49.85% of its investment).

31. No one, including the plaintiff, has complained or challenged the timing used for calculating distribution (ie as of 31 January 2003) or Master Kingdom’s other expenses.

32. Afterwards, the 2nd defendant met Mr NP Tang in Hong Kong.  During the said meeting, the 2nd defendant delivered, among others, Master Kingdom’s profit and loss table and the Haijia Report to Mr NP Tang for his consideration.  According to the calculation, as the plaintiff only injected HK$3,183,600 into Master Kingdom and the Project (which suffered a loss of 49.85%), the total amount of money that should be returned to the plaintiff was HK$3,183,600 x (1–49.85%) = HK$1,596,575).

33. On or about 17 March 2003, the 2nd defendant met Mr NP Tang again.  On that occasion, the 2nd defendant delivered 2 cheques in the total amount of HK$1,596,575 to Mr NP Tang as the net return of the plaintiff’s investment.

34. In or about June 2003, the JVC formally applied to the relevant Shanghai authorities for cessation of business and dissolution of the company.  For the purpose of such application, the JVC published openly its cessation in a local newspaper in Shanghai for 3 consecutive days from 25 to 27 June 2003 and instructed Shanghai Xing Zhong Certified Public Accountants Co Ltd (“Xing Zhong”) to produce a cessation audit report for the JVC as of 3 December 2003 (“the Xing Zhong Report”).  The application was eventually approved on or about 18 March 2004.

35. According to the Xing Zhong Report, the JVC suffered a loss of RMB10,919,832.83 as of 3 December 2003.  It is the defendants’ case that the difference between the Haijia Report and Xing Zhong Report was mainly due to (1) the further operation costs of the JVC between 31 January 2003 and 3 December 2003; and (2) RMB exchange rate fluctuation.  The plaintiff has again not complained or challenged the aforesaid 2 matters.

36. After the dissolution of the JVC on or about 18 March 2004, none of the other investors such as Mr Kwong or Mr Eddy Yau had made any complaint against the 1st or 2nd defendant.  Indeed, even the plaintiff’s 2 other shareholders, Mr SS Cheung and Mr KC Yau, accepted and agreed with the final amount they received from the Project.

37. The plaintiff, or more accurately Mr NP Tang himself, was at all material times the only party who made various allegations against the defendants.  However, Mr NP Tang’s allegations have changed drastically over the years.

38. In or about early 2005, Mr NP Tang on behalf of the plaintiff instructed Messrs George Y C Mok & Co and prepared a draft winding-up petition against Master Kingdom and its shareholders.

39. Mr NP Tang’s case at that time was that:

(i)  The plaintiff joined as a minority shareholder of Master Kingdom in or about July 1993 holding 10% of the total issued shares and the defendants and Mr Kwong invited the plaintiff to invest in the Project by becoming a shareholder of Master Kingdom.  There was no mention of any “Partnership Agreement” or “Co-operation Agreement”.

(ii)  The plaintiff generally complained of failure to pay dividends, expropriation of the plaintiff’s properties, lack of transparency of company affairs, denial of access to the books of account of the JVC and diversion of assets.  There was no complaint in respect of the Haijia Report or the Xing Zhong Report.

(iii)  The plaintiff principally asked for winding-up of Master Kingdom, or alternatively a compulsory buy-out of the plaintiff’s shares in Master Kingdom.

40. The winding-up petition had not been filed with the court.  Mr NP Tang complains that the allegations included in the draft petition were made up by the solicitors without first consulting him.

41. In or about March 2007, the plaintiff commenced this High Court action, instead of a petition, against the 1st and 2nd defendants only.  In its then Amended Statement of Claim, the plaintiff’s case was that:

(1)  In or about 1993, the 1st and 2nd defendants and Mr NP Tang on behalf of the plaintiff entered into a “Partnership Agreement”.

(2)  The presently alleged Management Fee Loss and Macho Loan Loss (as defined below) were not found therein.  On the contrary, it was pleaded that the JVC had not lent the sum of RMB22,110,842.75 to Macho Company Limited (“Macho”).

(3)  The plaintiff asked for damages in the sum of RMB16,790,998.30 (instead of RMB3,070,147.26 as now claimed).

42. On or about 5 October 2009, however, the plaintiff’s original Amended Statement of Claim was struck out by Mr Recorder Paul Shieh SC, although the action was not dismissed.

43. After its original Amended Statement of Claim was struck out in October 2009, Mr NP Tang reformulated his case again and came back with the present Statement of Claim only in August 2013.

44. According to the plaintiff’s latest formulation of the claim, in or about July 1993, the 1st and 2nd defendants and Mr NP Tang on behalf of the plaintiff entered into a “Co-operation Agreement” in personam whereby the plaintiff invested in the development of the Project.  The 1st and 2nd defendants personally agreed that upon injection of the money by the plaintiff, the 1st and 2nd defendants would, in their personal capacity, pay to the plaintiff its profit return based on the percentage share of the plaintiff in the Project worked out by reference to the amount of money paid by the plaintiff.  Mr NP Tang specifically denies that the plaintiff was a shareholder of Master Kingdom, and alleges that he was not aware that the plaintiff was recorded as a shareholder of Master Kingdom in the Companies Registry until April 2004.

45. There are 2 complaints in the present claim. 

46. Firstly, it is alleged that the defendants caused Master Kingdom to overcharge the JVC for its management fee without the plaintiff’s knowledge and consent (“the Management Fee Loss”). 

47. Secondly, it is also alleged that the JVC had lent a sum of RMB22,219,453.22 to Macho without the plaintiff’s knowledge and consent and subsequently abandoned the collection of the said loan (“the Macho Loan Loss”). 

48. By overcharging the management fee and causing the making of the Macho Loan, the plaintiff complains that the defendant had failed to take necessary step to protect the interest of the plaintiff or to act in good faith towards the plaintiff, thereby in breach of the implied terms of the “Co-operation Agreement”.  The plaintiff drastically reduces the amount of the claim to RMB3,070,147.26.   

49. The issues before the court are therefore:

(i)  Whether the plaintiff’s investment was made in the form of the “Co-operation Agreement” as alleged by the plaintiff or in the form of the Master Kingdom Agreement as alleged by the defendants?

(ii)  Whether the Project had suffered the Management Fee Loss as alleged by the plaintiff? and

(iii)  Whether the Project had suffered the Macho Loan Loss as alleged by the plaintiff?

50. I will deal with these issues in turn.

Form of investment

51. The form of investment would have an important bearing on the relief claimed by the plaintiff.  If the plaintiff invested in the Project as a shareholder of Master Kingdom, the plaintiff would have suffered no Management Fee Loss (even if such claim can be established) because the management fee would have been received by Master Kingdom.  In such circumstances, the plaintiff should have asked Master Kingdom to account to it for the management fee received from the JVC.  The same also applies to the Macho Loan Loss.  If the JVC had indeed advanced the loan to Macho, the plaintiff, as one who invested in the Project, can then take the appropriate action against the JVC or Macho through Master Kingdom.  It cannot pursue a personal claim against the 1st or 2nd defendant.

52. Mr Sze, counsel for the plaintiff, concedes that if the plaintiff’s investment was made in the form of the Master Kingdom Agreement and not the “Co-operation Agreement”, the plaintiff’s claim must fail.

53. Having considered all the evidence in the present case, I prefer to accept the defendants’ case relating to the form of the investment on the balance of probabilities.

54. Firstly, the nature of the plaintiff’s claim has drastically changed throughout the year.  Although the draft petition had not been presented to the court, it was pleaded therein that the plaintiff was a shareholder of Master Kingdom.  Mr NP Tang denies knowledge of the contents in the draft petition, but the shifting nature of the plaintiff’s claim certainly undermines the credibility of the claim.

55. Secondly, if the plaintiff was not investing in the Project through Master Kingdom, there was simply no need for the defendants to cause the allotment of the shares of Master Kingdom to the plaintiff back in 1993, as the “Co-operation Agreement” alleged by the plaintiff was only a personal agreement made between the plaintiff and the two defendants.

56. Thirdly, if what the plaintiff alleged were the truth, it would virtually mean that the 1st and the 2nd defendants made a private agreement with the plaintiff without involving the other investors of the Project including SKTC.  According to the plaintiff, the defendants agreed to pay to the plaintiff its profit return based on the percentage share of the plaintiff in the Project worked out by reference to the amount of money paid by the plaintiff.  However, what happened if the other investors did not agree to such arrangement.  In my judgment, it would be against any business sense for the 1st and 2nd defendants to make such kind of personal agreement with the plaintiff without involving the other investors. In fact, there was existing agreement with SKTC, with Master Kingdom holding 60% and SKTC holding 40% of the interests of the Project.  Under such circumstances, it would make much more business sense for the Hong Kong investors to invest in the Project through Master Kingdom.  All the Hong Kong investors could then hold the shares of Master Kingdom in the same proportion as their contributions for the development of the Project.

57. Fourthly, I find the defendants’ witnesses to be more reliable as compared with Mr NP Tang for the plaintiff. In my observation, Mr NP Tang is evasive when he is asked about the contents of the documents prepared by the plaintiff’s solicitors.  He simply denies responsibility and shifts all the blame to his lawyers.  At the trial, he raises for the first time that the minutes of the meeting on 1 August 2000 was a forgery.  In my judgment, Mr NP Tang is the kind of person who is prepared to say anything to suit his own purposes. On the other hand, I find the 2nd defendant to be an impressive witness.  Although he is now 78 years of age, he provides straightforward answers to the questions posed to him without any evasion.  The same applies to the 1st defendant.  Although he is 82 years old now, he provides clear answers to all the questions posed to him.  Their evidence is also consistent with the documentary evidence and has remained unshaken during cross-examination.  I find them to be honest and truthful witnesses.

58. Mr Sze attacks the defendants’ evidence relating to the Master Kingdom Agreement because there was no share certificate issued to the plaintiff for the allotment of shares, no board resolutions passing the allotment of shares, no evidence of the plaintiff’s representative attending the board or the general meetings of Master Kingdom, no buy-out of the plaintiff’s shares in Master Kingdom after the distribution of payments. On the other hand, according to the 2 documents of the JVC dated 20 February 2004 signed by the 1st and 2nd defendants, they confirmed that the shareholders of Master Kingdom were only the defendants and Mr Kwong.

59. In my judgment, none of these arguments would undermine the creditability of the defendants’ case.  It is common ground that Master Kingdom was only a vehicle for the Hong Kong investors to invest in the Project.  No one would expect the parties to comply with all the formal requirements of the company law in Hong Kong.  What is important here is that Master Kingdom had filed the return in the Companies Registry showing that the plaintiff was one of the shareholders of Master Kingdom.  Furthermore, after the distribution of the money to the various investors, Master Kingdom would cease to become the investment vehicle for the Hong Kong investors, and so it would be natural for the JVC to refer the defendants and Mr Kwong as the only remaining shareholders, as they were the ones responsible to close down the business of the JVC.

60. Based on such findings, the plaintiff’s claim must fail.  However, I also proceed to find that the plaintiff’s claims on the Management Fee Loss and the Macho Loan Loss are also without merit.

The Management Fee Loss

61. Mr NP Tang’s allegation is that:

(1)  The Haijia Report disclosed that the JVC paid a total sum of RMB11,417,018.40 as management fee to Master Kingdom.

(2)  The Xing Zhong Report disclosed that the JVC paid a total sum of RMB8,286,556.92 again as management fee to Master Kingdom.

(3)  The said sums were excessive and must have exceeded 1% of the construction expenses of the plaintiff which was prohibited under the alleged “Co-operation Agreement”.

62. As explained by the JVC’s financial manager at that time, Mr Ng Sun Po, Mr NP Tang’s allegation is simply wrong because:

(1)  Master Kingdom was merely a shareholder of the JVC.  The management of the Project was not carried out by Master Kingdom but by the JVC’s staff.

(2)  The JVC did not pay any management fee to Master Kingdom, whether it was RMB11,417,018.40 or RMB8,286,556.92.

(3)  Those management fees were paid for the JVC’s own management expenses.  As recorded in the JVC’s financial statement as of 31 December 1997, such management expenses (recorded as “開辦費”) had accumulated to RMB7,917,847.64.

63. Mr Ng Sun Po has left the JVC after 2005, he has no further business relationship with the defendants.  He is an independent witness who has no financial interest in the outcome of the litigation.  There is no reason for the court to doubt the reliability of his evidence.  Further, the plaintiff has not asked for the inspection of the JVC’s accounts prior to this trial, and hence the plaintiff cannot produce anything before the court which casts doubt on the evidence of Mr Ng Sun Po.  In fact, the plaintiff has not challenged the explanation given by Mr Ng Sun Po at the trial.  In such circumstances, the plaintiff’s claim on the Management Fee Loss must fail.

The Macho Loan Loss

64. Mr NP Tang’s allegation is that:

(1)  The Xing Zhong Report disclosed that as at 3 December 2003, the JVC had lent a sum of RMB22,219,453.22 to Macho, of which the 2nd defendant was a director and shareholder.

(2)  On 20 February 2004, the 1st and 2nd defendants passed a board resolution in the JVC abandoning the collection of the Macho Loan.

65. As explained by Mr Ng Sun Po, Mr NP Tang’s allegation is misconceived because:

(i)  After the production of the Haijia Report on or about 12 February 2003, all investors in the Project intended that the JVC should make distribution as soon as possible according to the Haijia Report.

(ii)  As the JVC was still a going concern, it could not directly return its capital to its investors.  As a result, the JVC advanced a temporary loan in the amount of RMB22,219,453.22 to Macho which was owned by the 1st and 2nd defendants.

(iii)  After Macho received the said amount of RMB22,219,453.22, the 1st and 2nd defendants started to make distributions to all the investors, including the plaintiff, Mr Kwong and Mr Eddy Yau.  In particular, Mr NP Tang received the distribution of HK$1,596,575 based on the Haijia Report on or about 17 March 2003.

(iv)  In short, the Macho Loan was a means of distribution avoiding the contravention of the rule against return of capital, with the 1st and 2nd defendants bearing any risk of repayment back to the JVC.

(v)  By around mid-March 2003, the 1st and 2nd defendants had effectively bought out the 3 other investors’ interests in Master Kingdom and the JVC, including the plaintiff’s interests.  The 1st and 2nd defendants thereby became the only real owners of Master Kingdom and the JVC.

(vi)  In around February 2004, the JVC was about to cease its business.  As Master Kingdom, the JVC and Macho were then all, in real terms, owned by the 1st and 2nd defendants, instead of asking Macho to transfer RMB22,219,453.22 back to the JVC who would in turn transfer again the sum (together with remaining operation costs in the amount of RMB191,389.53) to Master Kingdom:

(a)  On or about 20 February 2004, the JVC passed a resolution and entered into an agreement with Master Kingdom that its entitlement to RMB22,410,842.75 (ie RMB22,219,453.22 + RMB191,389.53) would be transferred to Master Kingdom.  This completed the return of capital from Master Kingdom to the JVC.

(b)  After the aforesaid resolution and agreement, Macho technically owed RMB22,219,453.22 to Master Kingdom.  However, as both Macho and Master Kingdom were owned by the 1st and 2nd defendants by that time, the debt was agreed to be regarded as set-off and repaid.

66. The 1st and 2nd defendants also confirm that the so-called Macho Loan was made for the purpose of making the distributions to the various investors of the Project including the plaintiff.

67. Again, without inspecting the accounts before the trial, the plaintiff cannot produce anything before the court to doubt the explanation given by the defendants.  Furthermore, the plaintiff had actually received the distribution itself.  Where did that money come from?  I therefore have every reason to believe that the Macho Loan was made for the purpose of the making the distributions to the various investors.

68. Mr Sze attacks the defendants’ case on the Macho Loan Loss by raising queries as to why the Macho Loan had not been included in the Haijia Report, and the “different account” relating to the sum of RMB32,000,000 given by the 2nd defendant in his 2nd affirmation filed on 3 August 2009.

69. Again, there is no merit in such argument.  It is clear that the Haijai Report and the Xing Zhong Report served 2 different purposes:  the first one showing the financial position of the JVC as at 3 December 2003 and the second one for the dissolution of the JVC.  Apart from the 2 different purposes, there is some uncertainty as to the exact time when the Macho Loan was made for the distribution of the money to the various investors, and so it would not be surprising to find that the Macho Loan did not appear in the Haijai Report.  Furthermore, the sum of RMB32,000,000 was an amount owed by the 1st defendant to the 2nd defendant personally, and the 2nd defendant took that amount into account in distributing the money from the Project to the 1st defendant.  In such circumstances, the sum of RMB32,000,000 is not a matter which is directly relevant to the issues in the present case.  What is most important is that the Macho Loan was made for the purpose of making distributions of the remaining capital to the various investors, which to me, is a very logical explanation for the making of the loan.

70. For the above reasons, the claim for the Macho Loan Loss must also fail.

Miscellaneous Matters

71. Before leaving this judgment, I have to deal with 2 remaining matters.

72. Firstly, there is a factual dispute relating to the exact amount paid by the plaintiff for the investment of the Project.  Apart from the money paid by the Mr NP Tang through the plaintiff, Mr NP Tang also claims that the 2 other shareholders of the plaintiff had advanced a total of sum of $450,000 to the Project.  However, Mr NP Tang personally has no knowledge about the making of such payment.  Mr NP Tang did not bother to ask for any bank remittance slip or other documentary evidence to support the payment, and Master Kingdom’s bank statements did not disclose the making of such payment.  Hence, I reject the evidence of Mr NP Tang and find as a matter of fact that the plaintiff had not made the additional payment of $450,000 whether to Master Kingdom or to the defendants.

73. Secondly, the defendants apply for leave to file a supplemental list of documents shortly before the trial.  Some of these additional documents were in possession of Master Kingdom and the defendants seek to rely on these documents to show that the plaintiff was involved in the operation of Master Kingdom.  However, as the plaintiff disputes the authenticity of these documents, their late production would necessitate an adjournment of the trial.  Hence, except for the documents with no objection from the plaintiff, I refuse the late production of these additional documents.

74. For the above reasons, I dismiss the plaintiff’s claim and I now listen to the parties’ submissions on the issue of costs.