HOTUNG INVESTMENTS (CHINA) LTD v. ERIC SHEA KIM HOTUNG

HCA 77/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 77 OF 2012

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D E C I S I O N

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THE APPLICATIONS

1. There are two summonses before this Court:

a.  The plaintiff’s summons for further and better particulars.  The outstanding requests are 1(a), 1(c), 2(c), 3(c), 4(a) and 4(b);

b.  The defendant’s summons for amendment to the particulars given to the requests, which the plaintiff has raised no objection.

2. The Court will make an order in terms of the defendant’s summons for amendment, subject to the condition and costs below.

3. The plaintiff’s summons is contested and the parties are legally represented.^[1]

THE FACTUAL BACKGROUND

4. I shall adopt the plaintiff’s brief facts as set out in counsel’s written submissions.  They are as follows[2].

1.  Mr. Eric Edward Hotung (“EEH”) is the natural father of Mr. Sean Eric Hotung (“Sean”) and the Defendant.  Sean is appointed as one of the directors of the Plaintiff.

2.  In 1987, the Plaintiff purchased 300 ounces of American Eagle Gold Coins (“Gold Coins”) from a bullion brokerage firm, Mocatta & Goldsmidat at the total costs of US$131,780.00. In 1994, the Plaintiff placed the Gold Coins under the custody of EEH who held the Gold Coins as trustee and/or bailiff of the Plaintiff.  In 2004, the Gold Coins were placed in a safe deposit box at Sun Trust Bank in Mclean, Virginia, USA held under the name of EEH.  Between 2007 and 2009, EEH appointed the Defendant as joint custodian and signatory to the said deposit box.  As informed by EEH, the Defendant knew or ought to have known that the Gold Coins as kept in the said deposit box were held by EEH and the Defendant as trustees / bailiffs of the Plaintiff. 

3.  EEH had expressly informed the Defendant that the Gold Coins kept in the said deposit box belonged to the Plaintiff and that EEH and the Defendant held the Gold Coins in the capacities as express trustees on behalf of the members of the Plaintiff or words to that effect. 

4.  On the other hand, EEH gifted an antique Ivory Screen (“Ivory Screen”) as described in the will of the late Sir Robert Hotung to the Plaintiff.  The Ivory Screen was placed in the said deposit box by EEH together with the Gold Coins.

5.  In the latter part of 2010, in the absence of the prior knowledge and consent of the Plaintiff, the Defendant removed the Gold Coins and the Ivory Screen from the said deposit box.

6.  In March 2011, the Defendant orally informed his brother Sean that he had already sold some of the Gold Coins and only 125 pieces of Gold Coins were left in the said deposit box.  Despite demands, the Defendant failed and/or refused to return the Gold Coins and/or the Ivory Screen to the Plaintiff.

THE ISSUES IN DISPUTE

5. The defendant admits that he had taken away the gold coins and the ivory screen and defence counsel submits that the issues of dispute between the parties are[3]:

a.  Whether the Plaintiff is the owner of the Gifts as alleged; and

b.  Whether the Defendant’s father, EEH, gifted the Gifts as alleged.

6. The plaintiff has no dispute with the defendant on those issues.

7. However, as in this hearing turns out, in the amended answers to request 1(a), the defendant now says that he only admits that he had taken away those gold coins given to him by his father, not those gold coins that the plaintiff pleaded in the pleadings.  This, however, is not clear from §4 and §7 of the Defence.  They are, in fact, inconsistent with one and another.  Read together, they are embarrassing pleadings, which are not allowed under O.18 RHC.

8. I shall now direct that the amended particulars for request 1(a) shall not be admissible unless the defendant has amended his Defence to plead those facts above.

THE RELEVANT LEGAL PRINCIPLES

9. The relevant legal principles for this application are as follows:

a.  Order 18, rule 12 defines the parameter of the particulars of pleadings.

b.  Order 18, rule 12(1) of the Rules of the High Court provides that every pleading must contain the necessary particulars of any claim, defence or other matter pleaded.  The requirement to give particulars reflects the overriding principle that the litigation between the parties, and particularly the trial, should be conducted fairly, openly, without surprises and, as far as possible, so as to minimize costs: Hong Kong Civil Procedure (2016) at §18/12/1.

c.   In ADS v Wheelock Marden & Co Ltd [1994] 2 HKC 264 Bokhary JA (as he then was) said at 269E-270E that the functions of properly particularized pleadings are as follows:-

(a)  To inform the other side of the nature of the case that they have to meet as distinguished from the mode in which that case is to be proved;

(b)  To prevent the other side from being taken by surprise at the trial;

(c)  To enable the other side to know with what evidence they ought to be prepared and to prepare for trial;

(d)  To limit the generality of the pleadings, the claim and the evidence;

(e)  To limit and define the issues to be tried, and as to which discovery is required;

(f)  To tie the hands of the party so that he cannot without leave go into any matters not included (although if opponent omits to ask for particulars, evidence may be given which supports any material allegation in the pleadings).

d.  In assessing whether it is “necessary” to order the provision of further and better particulars, one must bear in mind the fundamental functions of pleadings, as stated by Ma CJHC (as he then was) in Wing Hang Bank Ltd v Crystal Jet International [2005] 2 HKLRD 795 at 799, that is, looking at the live issues.

10. I shall now deal with the plaintiff’s application.

DISCUSSION

Request 1(a)

11. The plaintiff’s request for necessary particulars of paragraph 4 of the Defence: “1(a)  Please state when (the date(s) and time(s) the Gold Coins were given to the Defendant.”  The defendant replies: “See Defence 7.  For the purposes of clarity, the Gold Coins claimed are a separate quantity of coins from those gifted to the Defendant by the Plaintiff.  The Defendant has never had possession of the Gold Coins as particularized in the Statement of Claim.”  The defendant now denies in the defendant’s purported answers that the ‘Gold Coins’ referred to in the Defence are the same ‘Gold Coins” of the Amended Statement of Claim. 

12. Today, the defendant confirms that he is pleading that the gold coins he had taken away were those given to him by his father, not the same gold coins mentioned in the Amended Statement of Claim.

13. This inconsistency in pleadings that will cause embarrassment at trial only reveals in the amended particulars.  However, throughout the discussion, it seems clear that the answer should have been clear from paragraph 7 of Defence, which referred to the same gold coins as pleaded in the Amended Statement of Claim.  That is to say, the plaintiff should not have raised this request in the first place.  Although the plaintiff argues that if not for the request, the defendant would not have revealed this inconsistency, I do not agree that the request should have been raised in the first place.  The amended particulars do not answer the request anyway.

14. I dismiss the plaintiff’s request.

Request 1(c), 2(c) and 3(c)

15. It reads “Please state how and under what circumstances the Gold Coins or Ivory Screen were given to the Defendant.”  The defendant’s responses: “Please specify the meaning of how and under what circumstances”.  The plaintiff complains that this answer does not answer the request.  However, when defence counsel has pointed out the various information under §7 of the Defence and the amended particulars in his written submissions, the plaintiff agrees that with those information, it can properly plead its case.  That means the plaintiff should not have pursued its requests after having obtained the amended particulars.

16. It should be borne in mind that particulars should be asked for proper pleadings of the case.  If a party cannot do so without those particulars, an application should be taken out.  Otherwise, it would be better to wait until after the exchange of the witness statements, which should reveal the evidence in support of the pleadings, rendering the application for particulars unnecessary.

17. These requests are unnecessary and are dismissed.

Request 4(a) and 4(b)

18. The Plaintiff says that it is entitled to know the whereabouts of the Gold Coins and Ivory Screen and it asks the defendant to state where all the Gold Coins and Ivory Screen were placed after they had been removed from the defendant’s STB Deposit Box.

19. The defendant argues that they are irrelevant to the issues of dispute and should not have been raised.

20. I agree with the defendant.  The court is not concerned with the whereabouts of the Gold Coins and the Ivory Screen.  It can simply make an order for their return or damages in lieu by the defendant.  The court will not spend time on the whereabouts of those articles at the trial. These requests are dismissed.

21. The plaintiff’s requests are dismissed.

22. As to the costs of the application and the hearing today, they should follow the event.  Although the plaintiff argues that if not for request 1(a), the defendant would not have revealed his inconsistency in the Defence, this does not give the plaintiff good reasons for taking out the application because the result was not intended by the plaintiff in the first place. Its application is now dismissed.  The plaintiff submits that because of the unclear answer supplied by the defendant, the plaintiff was not clear about the defendant’s stance.  However, this kind of mis-communication between the parties should have been sorted out between the legal representatives without taking the matter to court for adjudication. In any event, I have already found that the requests should not be pursued after having the amended particulars.  The costs for today should follow the event for the plaintiff’s summons.  Taking into account of the inconsistent pleadings of the Defence, the costs of the defendant for the application and today’s hearing is assessed under O.62 r. 9A at $36,000.  The plaintiff asks for $10,000 for the amended summons from the defendant.  I find that excessive. There is no costs schedule for the costs.  The defendant agrees that the costs should be $3,200 for reading the amended particulars and the 3-minute chamber’s hearing before Master Au-Yeung.  I agree.  Setting off each other’s costs, the plaintiff has to paid to the defendant $32,800 within 14 days from the date hereof.

ORDER AND COSTS

23. This Court now makes an order in terms as follows:

a.  The outstanding requests for plaintiff’s summons are dismissed;

b.  By consent, the defendant’s summons is allowed, subject to one condition that the amended particulars for request 1(a) should not be allowed unless and until the defendant has amended his Defence as mentioned above;

c.  The costs of the applications are as per paragraph 22 above.