LO FONG HUNG v. FUNG YUEN KWAN, VERONICA AND ANOTHER

HCMP 2219/2020

[2025] HKCFI 2351

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2219 OF 2020

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BETWEEN

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JUDGMENT

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Index

	Sections		Para
A.	Introduction		1
B.	Factual background		11
	B1	Madam Lo Fong Hung (“Madam Lo”) and her husband Wang Xianfei	13
	B2	Sam Pa	17
	B3	Ms Veronica Fung (“Ms Fung”)	24
	B4	Sam Pa’s other relationships with different women	27
	B5	Madam Lo became acquainted with Sam Pa	28
	B6	Discussion and planning to do business together	30
	B7	Incorporation of the Company	31
	B8	The Company’s articles of association (“Articles”)	36
	B9	The board resolution of the Company dated 9 August 2013	37
	B10	The Company: its administration and management	38
	B11	The unique business of the Company	40
	B12	The Company / the Group were jointly run and managed by Madam Lo and Sam Pa from 2003 to 2015	42
	B13	Sam Pa disappeared 2015 and thereafter	44
C.	The issues; and the sequencing of issues
	C1	Madam Lo’s arguments	51
	C2	Ms Fung’s arguments	54
	C3	Discussion	55
D.	Resolving factual disputes: the applicable principles
	D1	The principles that are not in dispute	64
	D2	Principles in dispute	69
E.	Witnesses: general observations		74
F.	Issue 1: whether Ms Fung was the nominee of the 70% shares for Sam Pa
	F1	Burden and standard of proof	85
	F2	Madam Lo’s case	88
	F3	Ms Fung’s case	93
	F4	Discussion	96
G.	Issue 2: whether Madam Lo and Sam Pa had concluded the oral Co-operation Agreement
	G1	Preliminary	111
	G2	Summary of Madam Lo’s evidence	116
	G2.1	From early 2000 to late 2001 / early 2002	117
	G2.2	From early to middle 2002 onwards: Madam Lo began to approach her contact in Mainland China	120
	G2.3	Concerns expressed by the leaders of the NDRC; and the final approval of those business ideas	123
	G2.4	Early 2003 to mid 2003: further meetings between Madam Lo and Sam Pa leading to the conclusion of the Co-operation Agreement	129
	G2.5	The Articles of the Company	143
	G2.6	Subsidiaries within the Group	146
	G3	Discussion of the evidence and parties’ arguments
	G3.1	Subsidiaries within the Group	147
	G3.2	Madam Lo’s evidence: the inherent improbabilities	152
	G3.3	The alleged Co-operation Agreement unsupported by any documentary evidence	164
	G4.	Conclusion	176
H.	Issue 3: whether the Co-operation Agreement (if existed) would be binding upon Ms Fung		177
	H1	Arguments for Ms Fung	179
	H2	Arguments for Madam Lo	180
	H3	Discussion	181
I	Conclusion		190

A. Introduction

1.  The 2^nd Respondent (the “Company”) was at all material times and is a company incorporated in Hong Kong, with an issued share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each.

2.  In these proceedings, the Petitioner (“Madam Lo”), a shareholder holding 3,000 shares and a director of the Company, presented an unfair prejudice petition (“Petition”) against the 1^st Respondent (“Ms Fung”) and the Company. Ms Fung has been the other director and shareholder of the Company, holding the remaining 7,000 shares in the Company. It is Madam Lo’s case that Ms Fung has been acting as the nominee of Sam Pa (徐京華 or 徐景華) (“Sam Pa”), who co-founded the Company with Madam Lo.

3.  Whilst it is common ground that Sam Pa played a pivotal role in the establishment of the Company and the operation of its business, unlike Madam Lo, Sam Pa has never been registered as a shareholder or director of the Company. Sam Pa has become uncontactable since about 2015 and as such there is no viva voce evidence from him in this trial.

4.  In the Petition, Madam Lo complains that the affairs of the Company were conducted in an unfairly prejudicial manner, in that Madam Lo and Sam Pa (who for himself and on behalf of Ms Fung) entered into an oral co-operation agreement (the alleged “Co-operation Agreement”) during various meetings in June / July 2003; and yet Ms Fung acted in breach of the Co-operation Agreement. The Co-operation Agreement is defined and pleaded in paragraph 20 of the Petition, which I shall come to shortly.

5.  In the Petition, Madam Lo seeks, inter alia, a final injunction to restrain Ms Fung from taking any steps to appoint or remove any person(s) as the director of the Company with the effect of altering the equal ratio of directors appointed by Madam Lo and Ms Fung respectively on the board of the Company.

6.  Apart from the present proceedings, there are other related proceedings between the parties.[1]

7.  On 1 November 2022, Mr Justice A Chan made an Order, directing that there be a trial of the preliminary issue (“Preliminary Issue”). In the Order, His Lordship also stayed those related proceedings[2] pending the determination of the Preliminary Issue.

8.  The Preliminary Issue is whether the “Co-operation Agreement” as pleaded in paragraph 20 of the Petition was entered into between Madam Lo on one hand and one Sam Pa on the other hand. It is pleaded in paragraph 20 of the Petition in the following terms:-

“B2. The Co-operation Agreement and the Equal Participation Agreement

20. The above discussions culminated in an oral agreement and understanding (“Co-operation Agreement”) reached between Madam Lo and Sam Pa (on behalf of himself and Veronica Fung) in around June or July 2003, through face-to-face meetings in Hong Kong, in relation to the intended joint venture on the following terms:-

(a) Madam Lo and Sam Pa shall establish an ultimate holding company in Hong Kong, i.e. the Company, which will operate the business and operations through subsidiaries to be established and/or acquired.

(b) Madam Lo and Sam Pa shall have equal power and participation in the Company and its subsidiaries, and to reflect their equal status (the “Equal Participation Agreement”):-

(i) That each of them shall be entitled to appoint one director to the board of the Company; and shall have an equal ratio of representatives on the board of the subsidiaries.

(ii) They shall consult each other (and/or their representatives) when major decisions concerning the Company and its subsidiaries are being made.

(c) As to their respective shareholdings in the Company:-

(i) Since Sam Pa was in greater need of funds due to the need to support his families and to pay off his outstanding heavy debts and expenses, whereas Madam Lo was well-off, Madam Lo agreed to let Sam Pa have a greater share of the distribution of profits. Therefore, they agreed that Sam Pa could hold a greater proportion of the shareholding in the Company to reflect a larger share in profits distribution.

(ii) However, Madam Lo and Sam Pa agreed that the divergence in their shareholding shall not affect the Equal Participation Agreement. In addition to emphasising that he will not abuse his majority voting power to remove the director nominated by Madam Lo, Sam Pa proposed that since the usual articles of association at the time would normally provide that a special resolution is necessary to remove a director, he would only hold 70% shareholding in the Company, such that he would not be in the position to remove the director nominated by Madam Lo. As a result, it was agreed that Sam Pa shall On the shareholdings, whilst Sam Pa would hold a greater proportion of the shareholding in the Company to reflect a larger share in profits distribution, it was agreed that the divergence in their shareholding shall not affect the EPA. That Sam Pa proposed that, since the usual articles of association at the time would normally provide that a special resolution is necessary to remove a director, he would only hold 70% shareholding in the Company, such that he would not be in the position to remove the director nominated by Madam Lo. As a result, it was agreed that Sam Pa shall hold 70% shareholding in the Company; and Madam Lo shall hold the remaining 30% shareholding in the Company.

(d) However, according to Sam Pa, he could not be the shareholder or director of the Company on paper, as he was embroiled in litigation and disputes and was adjudicated bankrupt in Hong Kong. Thus, Sam Pa shall nominate Fung to be his nominee to hold the 70% shareholding in the Company as his nominee and to act as the director of the Company, though she would not actively participate in the business operations of the Company and its subsidiaries.”

9.  Apart from the Preliminary Issue, another major dispute between the parties is whether Ms Fung is Sam Pa’s nominee when she acts as the director and shareholder of the Company. The parties have arguments as to whether it is necessary for this Court to resolve this question at this trial of the Preliminary Issue.

10.  This is the trial of the Preliminary Issue. In this trial, Mr William Wong SC[3] appears for Madam Lo; whereas Mr Victor Dawes SC[4] appears for Madam Fong.

B. Factual background

11.  As observed by Mr Dawes in his opening submissions, the background of this case is wide-ranging and spans decades. Given the stake involved, the parties have produced a lot of evidence and have substantial disputes. For the purpose of the determination of the Preliminary Issue, I do not think I need to go into details of all the matters and arguments relied upon by the parties. Suffice it to say that I have considered them all. In this judgment, I would only set out those factual matters and relevant legal principles that are necessary for reaching my determination on the Preliminary Issue.

12.  As a starting point, the undisputed / indisputable facts may be summarized as follows.

B1. Madam Lo and her husband Wang Xianfei

13.  Madam Lo was a businesswoman with very good connections in both commerce and politics in Mainland China.

14.  According to Madam Lo’s evidence which is not challenged, as a cadre in the Communist Party, she started working for the International Department of the Central Committee of the Communist Part of China (中共中央對外聯絡部). In the 1980s, she was the head of the 綜合處 (general department), which was in charge of comparative study of the political, economic and social aspects of the Soviet Union countries in the Eastern Europe. As such, she had extensive high-level political and government connections in Mainland China, including the State Planning Commission (國家計委), the predecessor of the National Development and Reform Commission (國家發展和改革委員會, 簡稱發改委) (“NDRC”) of Mainland China. She is also well-connected in the business sectors, with many of her friends being ministers, directors, presidents of banks or ambassadors from foreign countries.

15.  According to the evidence of Madam Lo, in around 1980s to 1990s, her husband, Wang Xiangfei (“Wang”) was a member of senior management of the China Everbright Group, a state-owned enterprise in Mainland China. Wang was later promoted to the position of director and deputy general manager and had worked in China Everbright for many years.

16.  It is the unchallenged evidence of Madam Lo that, in the 1980s and 1990s, Sam Pa and Wang were business partners in Cambodia. Wang (then representing China Everbright) and Sam Pa engaged in timber business which involved purchasing and processing timber logs in Cambodia and the subsequent on-sale of the processed products in Mainland China.

B2. Sam Pa

17.  Whilst not before this Court, Sam Pa is a major protagonist in these proceedings. He has many aliases, such as Samo Hui, Xu Jinghua, Sam King, Ghiu Ka Leung, Tsui Kyung-wha, and Antonio Famtosonghiu Sampo Menezes etc.

18.  It is common ground that Sam Pa also had many relationships with different women. He first married a Belgian lady Marie Helene Driesden (“Marie”) and they gave birth to their daughter Mei Ling (“Mei Ling”) in around 1980. Sam Pa and Marie divorced in around 1987.

19.  In around 1978 / 1979, Sam Pa first met Madam Chiu Yee Mui (“Madam Chiu”) and they soon were in a romantic relationship. Mei Ling was raised by Madam Chiu. In 1981 and 1987 respectively, Sam Pa and Madam Chiu also gave birth to 2 daughters; and Mei Ling had all along been raised alongside with Madam Chiu’s own daughters. In July 1990, when they were having a family trip to the Las Vegas, Sam Pa married Madam Chiu in the United States.

20.  According to Madam Chiu’s evidence which is not challenged, Sam Pa’s companies were not well managed and he was in financial troubles. This is consistent with the undisputed facts and contemporaneous documents. Between 1988 and 1998, Sam Pa and his Hong Kong companies were the subjects of at least 22 lawsuits. Between 1997 and 2005, most of his companies were wound up or dissolved for various reasons. On 3 February 1999, Sam Pa was adjudicated bankrupt in Hong Kong.

21.  Nonetheless, Sam Pa had established important business and political contacts in Angola, as he had spent a substantial amount of time doing business in Angola during its civil war. Angola had rich oil resources for exploration and extraction. After the end of its civil war in 2002, Angola also had a high demand for infrastructure and construction projects.

22.  It is not disputed that Sam Pa was investigated by the colonial government. In about May 1995, his passports were seized by the Immigration Department. In about April 2014, Sam Pa was sanctioned by the US Department of the Treasury’s Office of Foreign Assets Control based on accusations that he played a role in undermining Zimbabwe’s democratic process.

23.  Before Sam Pa disappeared in around 2015, he lived with Madam Chiu and the daughters in luxurious residences such as Dynasty Court and Redhill Peninsula.

B3. Ms Fung

24.  Ms Fung had not attended business school or any formal business education. After completing secondary school education, she had a 1 year course commercial school. She first met Sam Pa in about 1986, when she was 19 years old and worked as a clerk near Sam Pa’s office.

25.  In 1987, she quit her job to work for Sam Pa as his secretary / personal assistant; and soon afterwards they had started a relationship. According to her evidence, she knew that Sam Pa had divorced his first wife; and that he had a relationship with Madam Chiu and she had given birth to a child. But Sam Pa assured her that they were not married and they were no longer in love, or she would not be willing to start a relationship with him. Ms Fung has 2 brothers, namely, Fung Ting Bong Harry (“Harry Fung”), and Fung Ting Hang Baton (“Baton Fung”).

26.  In 1989, they moved into an apartment in Happy Valley (held by a company of which Sam Pa was director). In around 1991, Sam Pa and Ms Fung moved into a house in Redhill Peninsula, held by a company called Acegain Investments Ltd, in which both Sam Pa and Ms Fung held equal shares.

B4. Sam Pa’s other relationships with different women

27.  Apart from Marie, Madam Chiu and Ms Fung, Sam Pa also had many other relationships with different women. This is borne out by the fact that Sam Pa attended various events of the Group with other women, including one Shi Qin, Li Liya and Sun Baihui.

B5. Madam Lo became acquainted with Sam Pa

28.  Madam Lo gives evidence on how she became acquainted with Sam Pa.

29.  Since 1998, Madam Lo through Wang became acquainted with Sam Pa. In around 2002, upon Sam Pa’s request, Madam Lo helped him oversee the operations of one of his companies in Hong Kong when he was away from Hong Kong (and even when he became uncontactable for a period of time). Sam Pa appreciated her help and friendship and they reposed trust and confidence in each other.

B6. Discussions and planning to do business together

30.  It is Madam Lo’s evidence that, the genesis of the establishment of the Company dated back to the discussions and meetings that she had with Sam Pa since about early 2000. Later, since around early to middle 2002, Madam Lo also started to approach her contact in Mainland China (including her friends and contacts in the 3 leading major oil companies in Mainland China; the person in charge of Sinopec and the key leaders of the NDRC) to discuss the possibility of the business plans and ideas that she had with Sam Pa. From early 2003 to mid-2003, there were further meetings between Madam Lo and Sam La, finally resulting in the conclusion of the oral Co-operation Agreement concluded during meetings held in June and July 2003. I will consider this part of Madam Lo’s evidence in further detail, when I consider the question as to whether the Co-operation Agreement was concluded between the parties in Section G below.

B7. Incorporation of the Company

31.  It is common ground that it was Madam Lo and Sam Pa who co-founded the Company in July 2003; and that Ms Fung was not involved in the establishment of the Company.

32.  The Company has an issued share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each. Since its incorporation, Madam Lo has been a director and shareholder of the Company holding 3,000 shares.

33.  However, unlike Madam Lo, Sam Pa has never been a registered shareholder or director of the Company or any other entities within the Group. Instead, it was Ms Fung who has been registered as the other director and shareholder of the Company, holding the remaining 7,000 shares.

34.  As mentioned above, the parties have disputes as to whether Ms Fung has been acting as director and holding the remaining 7,000 shares as the nominee of Sam Pa. The parties even have arguments as to whether I need to resolve this question for the resolution of the Preliminary Issue. They will be addressed in Section C below.

35.  The Company was at all material times and is still an investment holding company which holds substantial assets through its vast network of subsidiaries (together with the Company, collectively the “Group”). The companies in the Group carry on a diverse portfolio of businesses, including oil and gas exploration, mining, cement plants, infrastructure, aircraft, and holds investment in high value property development. According to Madam Lo, from the previous offer to buy from Ms Fung, the Company is valued at least over HK$42.9 billion. For the purpose of this trial, it is not necessary to reach any conclusion on the value of the Company.

B8. The Company’s articles of association

36.  It is Madam Lo’s evidence that the articles of association of the Company (the “Articles”) were specifically chosen amongst various templates; and that reflect the conclusion of the Co-operation Agreement and the Equal Participation Agreement. I will address them when I deal with the parties’ arguments on the existence of the alleged Co-operation Agreement (see Section G below).

B9. The board resolution of the Company dated 9 August 2013

37.  Mr Wong also relies upon a board resolution dated 9 August 2013 of the Company, in which Madam Lo was appointed the Chairman of the board of the Company. This also gave her the casting vote in the event of a tie pursuant to Article 100.

B10. The Company: its administration and management

38.  It is common ground that, since its incorporation in 2003 till late 2015 when Sam Pa disappeared, it was Madam Lo and Sam Pa who jointly ran and managed the Company. Amongst other things, they often had business trips together to meet Chinese and foreign government officials and business partners for signing important contracts for the Group.

39.  On the other hand, at all material times until around 2015 when Sam Pa disappeared, Ms Fung did not participate / actively involved in the running of the business of the Group. However, she was a director and also a bank signatory of a number of entities within the Group. It is not disputed that, apart from signing certain cheques when Madam Lo / Sam Pa were not around, Ms Fung did not participate in the management or operation of the Company.

B11. The unique business of the Company

40.  In order to establish that Madam Lo and Sam Pa had made the Co-operation Agreement, Mr Wong SC argues that the Company is “far from a typical company” and carries on unique business. He heavily relies on the following facts:-

(1) The Company was established in 2003, when the government of Mainland China encouraged businesses to establish international operations, especially Africa.

(2) The decades-long civil war in Angola had just ended in around 2002; and that Angola was also in need of financial and technical assistance. At the same time, there was a significant demand in Mainland China for energy resources.

(3) Mr Wong even contends that the vision, objective and purpose of the Company suggested that the business nature would be intricately linked to state interests and policies. He also argues that the strategic cooperation in energy resources between Mainland China and Angola was a matter of important state interest.

(4) Whilst Madam Lo is well connected in Mainland China, it is not disputed that Sam Pa has extensive connections in Angola. He had forged good ties with political and business figures there, such as the President of Angola (from 1979 to 2017). Yet Sam Pa did not have any necessary connections in Mainland China. Instead, it was Madam Lo who was very well connected in the Mainland.

41.  Through their respective connections in the Mainland and Africa, Madam Lo and Sam Pa managed to expand the scope and scale of the business of the Group.

B12. The Company / the Group were jointly run and managed by Lo and Sam Pa from 2003 to 2015

42.  It is common ground that it was Madam Lo and Sam Pa who set up and ran the Company since its incorporation in 2003 up to 2015, utilising their respective high-level connections in Mainland China and Africa.

43.  On the other hand, Ms Fung was not involved in the operation or management of the Company at all material times from 2003 to 2015. Ms Fung admitted that she has been a housewife; and that she did not take part in the day-to-day management of the Group. She had no office, office telephone number or company email address. On Ms Fung’s own evidence, her involvement was limited to the signing of documents as director of the Company (after confirming the same with Sam Pa).

B13. Sam Pa disappeared in 2015 and thereafter

44.  Since about October 2015, Sam Pa disappeared and had become uncontactable. The evidence is that she had been detained in Mainland China.

45.  It is common ground that, on about 21 May 2016, Madam Lo and Ms Fung met in Singapore to discuss the affairs of the Company.

46.  On about 7 October 2016, Ms Fung sent an email attaching a letter with two notices of resignation in respect of two subsidiaries of the Company, namely, Dayuan International Development Limited (“Dayuan”) and China Sonangol International Holding Ltd (“CSIHL”) (the “October 2016 Letter”). In the October 2016 Letter, she wrote that she was “overwhelmed and suffocated”; and that “Sam Pa and Madam Lo worked hard to build up and grow the Company”.

47.  During the period of Sam Pa’s disappearance, an unfair prejudice petition was presented against a subsidiary within the Group known as China Sonangol International Limited (“CSIL”) by its Angolan shareholder (“Sonangol EP”) in HCMP 670/2018. In those proceedings, Ms Fung filed an affirmation. Mr Wong SC relies upon such affirmation, arguing that she did not deny the allegation that she was a nominee of Sam Pa.

48.  Further, in October 2018, it is not disputed that Madam Lo and Ms Fung had negotiations about a shareholders’ agreement in respect of the Company. However, no agreement was reached.

49.  Later, in a letter dated 14 September 2020 written by Wang, he referred to “an agreement between Sam Pa and Madam Lo … binding on [Ms Fung]”. In the said letter, it is written that “notwithstanding the divergence in shareholdings in the ratio of 70 to 30, the board of directors should be two with one director to be appointed by each of them”; and there was allegedly a “two director formulation which Mr Sam Pa and Madam Lo had agreed”.

50.  At this juncture, it is pertinent to note Mr Dawes’ argument that this is the very first time that the Co-operation Agreement was ever mentioned in any written document. This is not seriously disputed by Mr Wong SC. In fact, according to Madam Lo, her evidence is that she did not need nor did she think about suddenly mentioning or emphasizing the existence of the Co-operation Agreement to Ms Fung throughout the years. I will also address this in Section G.

C. The issues; and the “sequencing” of issues

C1. Madam Lo’s arguments

51.  The Preliminary Issue is whether the Co-operation Agreement was entered into between Lo and Sam. It is Madam Lo’s case that she had entered into the Co-operation Agreement with Sam Pa, under which Madam Lo and Sam Pa would have equal representation on the board of the Company and would consult each other for any major decisions concerning the Company and the Group (i.e. the “Equal Participation Agreement” or the “EPA”).

52.  Nonetheless, Mr Wong SC contends that there are two factual questions for the Court to determine. Apart from determining if the Co-operation Agreement was concluded between Madam Lo and Sam Pa, he argues that the Court also has to determine if Ms Fung was a director and shareholder of the Company as Sam Pa’s nominee. He contends that whether Ms Fung was only a nominee would also bear on whether the Co-operation Agreement existed.

53.  Relying on the decision of Mr Justice A Chan in Sun Tian Gang v. Changchun High & New Technology Industries Development Parent Co [2022] HKCFI 3348 at §110, Mr Wong SC argues that the Court should make necessary findings to resolve the Preliminary Issue.

C2. Ms Fung’s arguments

54.  On the other hand, Mr Dawes SC argues that the very first question for the Court to decide is the proper “sequencing” of issues to be determined. Specifically, Mr Dawes argues that Mr Wong’s approach puts the cart before the horse. Instead, Mr Dawes contends that:-

(1) The sole question is to determine if the Cooperation Agreement existed. If the Court holds that Madam Lo is unable to discharge her burden of proof of the Cooperation Agreement, then it would be the end of the matter. In other words, whoever beneficially owns the 70% shareholding is not something that concerns Madam Lo anymore; and that it would not be necessary for this Court to make any finding on the question of beneficial ownership of the 70% shares.

(2) He further argues that it is the alleged Co-operation Agreement that grounds nay alleged nomineeship. Thus, he argues that Madam Lo should first establish the existence of the alleged Co-operation Agreement, rather than to rely on the nomineeship to prove the existence of the alleged Co-operation Agreement.

(3) Finally, Mr Dawes further argues that, even if it is necessary to make a determination on whether Ms Fung was a nominee for Sam Pa in respect of the Shares and the directorship, the proper sequence is that the Court should first make a finding on the Co-operation Agreement first; and if the Court finds that there is no Co-operation Agreement concluded between Madam Lo and Veronica Fung, it is then not necessary to consider the question of beneficial ownership of the Shares.

C3. Discussion

55.  Whilst Mr Dawes has no dispute as to the principles in Sun Tian Gang (above), one must also understand the proper context of Mr Justice A Chan’s judgment in Sun Tian Gang.

56.  Sun Tian Gang is a case involving a trial of a preliminary issue, namely, whether the new claims sought to be introduced by the plaintiff in that case were time-barred. The question before Mr Justice A Chan was how the Court should approach the other issues that did not fall within the scope of the preliminary issue. In Sun Tian Gang, it was held that, for other issues in the action that do not fall within the scope of the preliminary issue, it would be more appropriate to resolve those other issues later at the trial, where all the evidence will be before the court. On this basis, His Lordship held in paragraph 110 of the judgment that it was not unusual for assumptions to be made for the purposes of the trial of a preliminary issue, citing Brown v Bird & Lovibond [2002] EWHC 719 (QB) at [3]; Julien v Evolving Technologies and Enterprise Development Ltd [2018] UKPC 2, [11].

57.  The present case is different from Sun Tian Gang, when the parties never suggests that the Court has to make any assumptions for the purpose of the trial of the Preliminary Issue. Quite the contrary, the dispute here is whether, for the purpose of the determination of the Preliminary Issue, it is necessary to determine whether Ms Fung was a nominee for Sam Pa when she acted as a director and shareholder of the Company.

58.  Having considered the parties’ submissions, in my judgment, for the purpose of the hearing of the Preliminary Trial, the Court should determine the question if Ms Fung was a director and shareholder of the Company as nominee for Sam Pa. I do not think I can ignore the question of whether Ms Fung was acting as Sam Pa’s nominee, bearing in mind a trial judge should adopt a holistic approach in evaluating the evidence. The court should not compartmentalize evidence, assessing parts in isolation rather than in the context of the entire body of evidence presented.

59.  In Big Island Construction (HK) Ltd v Wu Yi Development Ltd (unrep) HCA 1957/2005, 714/2007, 886/2007, 1364/2008, 28 July 2011) at §25, Poon J (as he then was) held that the court must not take a blinkered approach when considering the testimony of witnesses; and must assess their overall credibility on all the matters that they have testified to. If one’s evidence is found to be unreliable in one matter, it will most likely affect his credibility in another. The Court is entitled to take into account all the factual matters in the fact-finding process.

60.  Whilst this is a trial of a preliminary issue, it is not disputed by the parties that the aforesaid principles also apply.

61.  In the present case, the question of whether Ms Fung has been acting as a shareholder and director of the Company as a nominee for Sam Pa would form part of the factual background against which the Co-operation Agreement was allegedly made. If I am to find that Ms Fung in fact has been holding the 7,000 shares as a nominee for Sam Pa, that may give some credence to Madam Lo’s case that she had concluded with Sam Pa the Co-operation Agreement, especially when it is a term of the Co-operation Agreement that the Sam Pa’s shares would be held by Ms Fung as his nominee and that she would be his nominee director. Alternatively, if I am to find that Ms Fung in fact is the beneficial owner of the 70% shares and a director (not as nominee for Sam Pa), that may militate against Madam Lo’s on whether the Co-operation Agreement was made and the overall assessment.

62.  Further, even if Madam Lo could prove and establish that she and Sam Pa had entered into the Co-operation Agreement as pleaded, that is not the end of the matter, for it is still incumbent upon Madam Lo to establish, both on facts and as a matter of law, that the alleged Co-operation Agreement would bind not only Sam Pa but also Madam Fung, such that it could be enforced against her.

63.  In the premises, broadly speaking, there are three major issues that require determination in this trial of the Preliminary Issue:-

(1) First, whether Ms Fung was a director and shareholder of the Company, merely acting as nominee for Sam Pa; or whether Ms Fung was also the beneficial owner of the 70% of the issued share capital of the Company.

(2) Second, whether Madam Lo and Sam Pa had concluded the oral Co-operation Agreement. Whilst it is not disputed that Ms Fung has no personal knowledge of the Co-operation Agreement, it is her case that Madam Lo has failed to prove her case.

(3) Third, if Madam Lo could establish as a matter of fact that she and Sam Pa had concluded the Co-operation Agreement as pleaded in paragraph 20 of the Petition, the Court would still have to decide if the Co-operation Agreement (if proved) is binding upon Ms Fung, both on the facts and on the law.

D. Resolving factual disputes: the applicable principles

D1. The principles that are not in dispute

64.  The parties’ disputes consist of largely factual disputes.

65.  The principles relevant for the resolution of factual disputes and witnesses’ credibility are well established. Those which are not in dispute may be summarized as follows:-

(1) In assessing credibility, the court takes into account, amongst other things, the inherent probabilities or improbabilities of a witnesses’ testimony; the contemporaneous documents or evidence which is undisputed or indisputable, tending to support or contradict one account or the other and the overall impression of the characters and motivations of the witnesses. Where there exists a wealth of contemporaneous documents, credibility is to be tested by reference most particularly to them: Big Island Construction (HK) Ltd v Wu Yi Development Ltd (above) at §24, per Poon J (as he then was).

(2) In resolving disputes of facts happening years ago, heavy regard should be given to contemporaneous documents and inherent probabilities: Macau First Universal International Ltd v Ding Xiao Hong (unrep), HCA 992/2010, 20 August 2014 at §§48-49, per Au Yeung J.

(3) Generally speaking, contemporaneous documents and documents that came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Hui Cheung Wa v Daiway Development Ltd (HCA 1734/2009, 8 April 2014) at §77, per DHCJ Eugene Fung SC.

(4) Importance is attached to the consistency of witnesses’ evidence with undisputed or indisputable evidence, and the internal consistency of witnesses’ evidence (tested by comparison between the oral testimony and his/her witness statement): Hui Cheung Wa (above) at §79, per DHCJ Eugene Fung SC.

(5) The court should also caution itself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses or from the assessment of the witnesses’ character: Hui Cheung Wa (above) §80.

66.  Mr Dawes SC also refers me to Blue v Ashley [2017] EWHC 1928 (Comm), where Leggatt J held that it was rare in modern commercial litigation to encounter a claim based on an agreement which is not only said to have been purely by word of mouth but of which there is no contemporaneous documentary record of any kind. The prevalence of emails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic imprint.

67.  Because the value of a written record is understood by anyone with business experience, its absence may, depending on the circumstances, tend to suggest that no contract was concluded: Blue v Ashley (above) §49 per Leggatt J; Yu Man Fung Alice v. Chiau Sing Chi Stephen [2020] HKCFI 2923 at §18, per Coleman J.

68.  In his closing submissions, Mr Wong SC repeats the importance of the context and circumstances. He relies on Mansion Place Ltd v. Fox Industrial Services Ltd [2021] EWHC 2972 at §55, where Eyres J held that, when determining whether an oral agreement existed, the court would “look at the witnesses’ evidence through the prism of the contemporaneous documents; of their subsequent actions of those events which are accepted or clearly demonstrated to have happened; and of inherent likelihood”.

D2. Principles in dispute

69.  Mr Wong SC submits that Madam Lo’s case is that the meetings were held between Madam Lo and Sam Pa; and that Ms Fung was not present in those meetings. On this basis, Mr Wong further submits that Ms Fung herself does not have any personal knowledge as to whether the Co-operation Agreement was concluded between Madam Lo and Sam Pa. This is not disputed by Mr Dawes.

70.  However, Mr Dawes SC argues that, it is an important aspect of this case that the alleged Co-operation Agreement is one reached with Sam Pa, who has been uncontactable since 2015. As Sam Pa is not here to contradict Madam Lo’s evidence, Mr Dawes argues that an analogy should be drawn with those cases where claims are made against the estate of the deceased who cannot give evidence against such claim. He relies upon Re Silver Bell Uniform Ltd [2012] 1 HKLRD 719, where Fok JA (as he then was) said this at §§27-28:-

“27. … in cases involving claims against an estate of a deceased person who cannot give evidence against the claim, the court is enjoined to approach the claimant’s story with suspicion. See also the judgment of Sir Balliol Brett MR in Re Garnett (1886) LR 31 Ch D 1, 8-9:-

The law is that when an attempt is made to charge a dead person in a matter, in which if he were alive he might have answered the charge, the evidence ought to be looked at with great care; the evidence ought to be thoroughly sifted, and the mind of any Judge who hears it ought to be, first of all, in a state of suspicion …

28. As Walton J observed in Re Gonin (Deceased) [1979] Ch 16, this is simply a matter of common sense. At p. 32, he said:

Now it is common sense that all claims against the estate of a deceased person which had not been put forward whilst they were still living fall to be scrutinised with considerable care, for the obvious reason that the other person to the agreement is in the nature of things unable to give his or her version of events” [Emphasis added]

71.  Relying on those passages quoted from Re Silver Bell Uniform Ltd (above), Mr Dawes SC argues that Madam Lo’s evidence must be looked at “with great circumspect”, and that Madam Lo would only succeed if in the end “the truthfulness of her / her witnesses is made perfectly clear and apparent”.

72.  With respect, I disagree. The context in the present case is different from the two cases cited in Re Silver Bell Uniform Ltd (above), when the principles discussed relate to cases involving making a case against the estate of a deceased person. Having referred to those cases, Fok JA did not apply those principles.

73.  Nonetheless, whilst I refuse to draw the analogy with the two cases referred to in Re Silver Bell Uniform Ltd (above), I caution myself that I would still need to be satisfied, on the balance of probabilities, that Madam Lo’s evidence is truthful and reliable, in light of the inherent probabilities, consistencies and the principles highlighted in paragraphs 64 to 68 above.

E. Witnesses: general observations

74.  Madam Lo has given evidence in this trial. She has also called the following witnesses:-

(1) Her husband, Wang.

(2) Ms Tong Yuk Ying Angel (“Angel Tong”), a former financial officer in the employment of the Group (from August 2010 to April 2017);

(3) Madam Chiu.

(4) Luo Zhigang (“Luo”), the younger brother of Madam Lo.

(5) King Chui (“King Chui”), the brother of Sam Pa and another former employee of the Group.

(6) Ms Prom Savada (“Savada”) as an expert to testy on the law of Cambodia.

75.  Ms Fung is the sole witness to testify for herself. She does not call any other witnesses.

76.  It is Madam Lo’s case that the Co-operation Agreement was made in meetings held in June to July 2005 in “can.teen” restaurants in the Admiralty Centre and in Sam Pa’s office. Her evidence is that those meetings were only attended by Sam Pa and Madam Lo herself. It is not disputed that the other witnesses (including Madam Fung, Madam Chiu, Angel Tong and Mr Luo) were not present in any of those meetings and therefore they have no personal knowledge on whether the Co-operation Agreement was concluded. In these circumstances, I agree with Mr Dawes SC that their evidence is of no assistance to the question of whether the Co-operation Agreement was concluded between Madam Lo and Sam Pa.

77.  Similarly, for Angel Tong, she joined the Group in August 2010 as the Chief Financial Controller. It is not disputed between the parties that Angel Tong had no personal knowledge of the alleged Co-operation Agreement. She also admitted in cross-examination that it was impossible for her to know about the private arrangement between Madam Lo and Sam Pa.

78.  According to Luo, in about 2007, he was formally appointed as the assistant to Sam Pa. Luo’s evidence is that, during a meal with Sam Pa on around the National Day of China in 2009 in Angola, Sam Pa mentioned to him about the management of the Company and that Ms Fung was his nominee. However, it cannot be disputed that Luo also has no personal knowledge of the alleged Co-operation Agreement or the private arrangement between Sam Pa and Ms Fung, for his evidence is that he only became involved in the operations of the Company from around 2004 and met Sam Pa in 2005. In any event, I can reach the determination of the two major factual issues and the determination of the Preliminary Issue on the basis of the indisputable / undisputed facts; contemporaneous documents (and the lack of them); the inherent probabilities; and the consistencies of the evidence of the two major witnesses (i.e. Madam Lo and Ms Fung).

79.  Likewise, King Chui also has no personal knowledge of the alleged Co-operation Agreement.

80.  Insofar as Savada’s expert evidence is concerned, again I do not see why her evidence is necessary for the purpose of the determination of the Preliminary Issue. Madam Lo adduced the expert evidence of Savada against such context:-

(1) In her affirmation, Ms Fung exhibited a marriage certificate written in the Khmer language of Cambodia (the “Cambodia Document”) to prove that she has married Sam Pa.

(2) Madam Lo argues that it is a critical part of Fung’s case that she is the lawfully wedded wife of Sam Pa. As such, Madam Lo has called Savada as an expert to testify that the Cambodian Document is not a valid marriage certificate under the law of Cambodia but only an informal letter of confirmation which records the self-declaration of the parties that they have been married since 23 December 1995.

81.  With respect to Mr Wong SC, I do not see why it is necessary for the Court to resolve this question and decide on the expert evidence of Savada, especially when it has been Mr Wong’s argument that the Court only needs to make the “necessary findings” for the purpose of the Preliminary Issue pursuant to the principles in Sun Tian Gang (above). As submitted by Mr Dawes, which I agree, the issue here is not whether Sam Pa and Ms Fung were validly married or not. I shall deal with this further when I come to the question of whether Ms Fung was Sam Pa’s nominee.

82.  On the question of the Co-operation Agreement, none of the other witnesses was present in those meetings that were held in June / July 2003. As Sam Pa could not give an evidence in this trial, the only key witness is that of Madam Lo.

83.  Likewise, on the issue of whether Ms Fung was Sam Pa’s nominee, Ms Fung gives evidence on, inter alia, the private conversation and arrangement between her and Sam Pa. Mr Dawes argues that Madam Lo herself has no knowledge of the communications between Sam Pa and Fung and their dealings inter se and hence the only key witness is Ms Fung.

84.  Nonetheless, the Court is not bound to accept a witness’ oral testimony even when there is no other person with personal knowledge who comes forward to challenge it. I am still bound to apply the principles summarized above to consider the evidence of Madam Lo and Ms Fung and their credibility.

F. Issue 1: whether Ms Fung was a nominee for Sam Pa

F1. Burden and standard of proof

85.  To begin with, the 7,000 shares in the Company have all along been registered in the name of Ms Fung. As such, Mr Dawes SC relies on the decision of Madam Justice Au-Yeung in Macau First Universal International Ltd v. Fing Xiao Hong (unrep), HCA 992/2010, 20 August 2014 at §§42-47, contending that the legal title of the shares is the starting point; and that the onus is on Madam Lo to establish sufficient bases to show that the beneficial ownership is different from the legal ownership.

86.  Mr Dawes also refers to Music Holdings Property HK Ltd v Ooi Lean Choo [2020] HKCFI 1312 at §55 to argue that there is no burden on Ms Fung to persuade the Court that her alternative version of events should be accepted.

87.  Mr Wong SC has no disputes on the above principles.

F2. Madam Lo’s case

88.  Mr Wong relies upon many matters in support of Madam Lo’s case that Ms Fung was merely a nominee for Sam Pa. Again I do not intend to go into every single argument or evidence that he relies upon. It is sufficient for me to address the major ones.

89.  First, Mr Wong relies upon the indisputable fact that, even before the incorporation of the Company, Sam Pa had already been adjudicated bankrupt and that he and his companies had been embroiled in numerous legal proceedings. For this reason, Sam Pa nominated and arranged Ms Fung to hold the 7,000 shares as his nominee; and to act as the nominee director of the Company, signing documents on his instructions.

90.  Second, Mr Wong SC also relies upon the evidence of Madam Chiu. As stated above, Madam Chiu married with Sam Pa in 1990 in Las Vegas, the United States. Madam Chiu’s evidence is, inter alia, that she acted as a nominee shareholder and paper director for Sam Pa in various Hong Kong companies for the purpose of Sam Pa’s businesses, back in the 1980s and 1990s. Her evidence in this regard is also consistent with the company research records produced. This part of her evidence is not seriously challenged by Mr Dawes.

91.  Third, Mr Wong SC also relies upon the undisputed facts which I set out in Section B above to contend that Ms Fung was merely holding the shares on behalf of Sam Pa, including that the fact that it was Sam Pa and Madam Lo who was responsible for the establishment of the Company and the running of its business; and that on the other hand Ms Fung was not involved in the establishment / operation of the business of the Company.

92.  Fourth, Mr Wong also relies upon the documents filed in the unfair prejudice proceedings brought by Sonangol EP.

(1) In HCMP 670/2018, Sonangol EP presented an unfair prejudice petition against the Company, Ms Fung, and her brother Harry Fung.

(2) In HCMP 2010/2018, Sonangol EP brought unfair prejudice proceedings against, inter alia, Ms Fung and Harry Fung.

(3) In those proceedings, Sonangol EP stated that the Company were represented by Sam Pa and Madam Lo. It was also alleged against Ms Fung that she had been holding the shares in the Company as a nominee for Sam Pa.

(4) Ms Fung filed an affirmation in those proceedings. Mr Wong argues that Ms Fung did not dispute such allegation made against her. In addition, Mr Wong also relies upon a Decision of Harris J, in which His Lordship recorded at paragraph 5 therein that Ms Fung held the shares in the Company as nominee for Sam Pa.

F3. Ms Fung’s case

93.  Ms Fung’s case is that she is the true beneficial owner of the 70% of the shares in the Company. Ms Fung’s evidence may be summarized as follows. In her 1^st Affirmation:-

(1) She met Sam Pa at work in Hong Kong in the 1980s. She worked for him; and then they fell in love and got married in 1998. They have three children.

(2) In about 2002 / 2003, Ms Fung and Sam Pa came up with the idea of setting up the Company; and their family money was used to seed-fund the business.

(3) Sam Pa told him that Ms Fung was his wife and trusted her most in the world; and told her that she should be the owner of the shares in the Company as he would be flying around the world for business; and therefore she became the 70% shareholder of the Company. She left it to Sam Pa to deal with the business; and that did not change the fact that she was the 70% shareholder of the Company.

(4) Thus, Ms Fung’s evidence is that there was never any nominee or trust arrangement between Sam Pa and her regarding the shares in the Company.

94.  In her 2^nd Affirmation filed in these proceedings, Ms Fung’s evidence is that it was Sam Pa who came up with the idea of the Company; and that the Company did not require any significant injection of capital. Ms Fung also produced the Cambodia Document.

95.  On Mr Wong SC’s reliance on the judgment of Mr Justice Harris in HCMP 670/2018, Mr Dawes SC argues that Mr Wong’s argument is simply a repeated mischaracterization. He contends that Mr Justice Harris merely recited the assertions in the petition in those proceedings; and that Ms Fung had in fact expressly noted that she did not admit any allegations raised by Sonangol EP even if any such allegation was not specifically addressed.

F4. Discussion

96.  To support his contention that Ms Fung was merely a nominee of Sam Pa, Mr Wong heavily relies upon the fact that Ms Fung was not involved in the management / administration of the Company’s business; and thus she could not be the 70% beneficial owner of the 70% shares in the Company. However, Mr Dawes argues, and I agree, that a shareholder may not personally manage the business; and thus the fact that Ms Fung did not take part in the management of the Company is neither here nor there.

97.  Mr Wong SC also relies upon the understanding of Sonangol EP to contend that Ms Fung was only holding the 7,000 shares as a nominee for Sam Pa. Such reliance is misplaced and I do not see how this would assist Madam Lo’s case, when the Court is concerned with matters of facts and evidence, rather than Sonangol EP’s understanding. It is indeed unsafe for the Court to place weight on such understanding, when none of the representatives of Sonangol EP was tendered for cross-examination. Further, the Decision of Mr Justice Harris does not assist Madam Lo’s case, when it is only an interlocutory judgment and that his Lordship did not make any findings of facts in his judgment.

98.  Nonetheless, on the totality of the evidence before me, I find as a matter of fact that Ms Fung was acting as a director and shareholder of the Company as a nominee for Sam Pa. This finding is consistent with the indisputable / undisputed facts; the contemporaneous documents; the inherent probabilities and also the internal consistencies of her evidence. For the avoidance of doubt, this finding is reached without even relying upon any evidence of Madam Lo.

99.  First, according to the evidence of Madam Chiu, which is supported by contemporaneous documents, back in the 1980s and 1990s, Madam Chiu had pursuant to Sam Pa’s requests acted as his nominee shareholder and paper director in various Hong Kong companies for the purpose of Sam Pa’s businesses. There is no serious challenge in this regard and there is no evidence to suggest the contrary.

100.  In the circumstances, I accept this part of Madam Chiu’s evidence (insofar as it is unchallenged and supported by contemporaneous documents).[5] Thus, I find as a matter of fact that, before the incorporation of the Company, Sam Pa had known and in fact had a practice of using nominee director / shareholder for his business. Thus, it is not inherently improbable for him to ask Ms Fung to be his nominee in respect of the directorship and the 7,000 shares of the Company.

101.  Second, Ms Fung tries to explain that Sam Pa did not wish to take up directorship of the Company as he did not wish to trouble himself with administrative matters and he felt he was just as able to manage the Group without the formal title of director. I find such explanation of Ms Fung contrived and this could not be the reason why Sam Pa chose not to be a director of the Company. As an experienced businessman, Sam Pa could always delegate those administrative matters to his staff.

102.  The indisputable evidence is that, given Sam Pa was an undischarged bankrupt, he could not act as a director of the Company (except with the leave of the court by which he was adjudged bankrupt): section 156 of the Companies Ordinance (Cap. 32) (now repealed).

103.  Third, I agree with Mr Wong SC that there are inconsistencies in Ms Fung’s evidence, such that I am unable to accept her evidence that Sam Pa gifted the 7,000 shares to her. For instance:-

(1) In her 1^st Affirmation, Ms Fung first alleged that it was the family money from her and Sam Pa that was used to “seed-fund” the business. Yet she did not elaborate how much such seed funds were and where such money came from, when Sam Pa was bankrupt. Then in her 2^nd affirmation, her evidence is that Sam Pa was able to source funding from counterparts of the Group in respect of its oil and gas business. Then in the witness box, she gave a different version, saying that the Company got its funding from “syndicated loans”. Yet in her affirmations, Ms Fung never mentioned anything about “syndicated loans”.

(2) In her 2^nd Affirmation, Ms Fung alleged that they sold their house in Redhill Peninsula in 1999 to generate capital for the Company. But the contemporaneous documents show that the house in the Redhill Peninsula was subject to two mortgages which had not yet been discharged.

(3) The Redhill Peninsula house was sold in 2000, i.e. 3 years before the incorporation of the Company. Yet in her 1^st Affirmation, Ms Fung claimed that she and Sam Pa came up with the idea of the Company only in around 2002 or 2003. As such, Mr Wong contends, and I agree, that it is quite impossible for them to have sold the house in 2000 to fund the business venture under the Company which had not yet been conceived. During cross-examination, Ms Fung then changed her evidence, suggesting that she and Sam Pa came up with the idea in the late 1990s.

(4) Further, when Ms Fung’s evidence is that Sam Pa took HK$7,000 cash from their savings and then handed such cash to Madam Lo – such that she had contributed to the initial HK$7,000 for the share capital, this is inconsistent with the audited accounts of the Company for the period from 9 July 2003 (incorporation date) and 31 December 2004, which shows that Ms Fung still owed to the Company her portion of share capital (i.e. US$897 / ~HK$7,000) as a loan to director. Whilst Ms Fung may not have knowledge if ultimately the 7,000 shares were paid, this must be clear from the audited accounts. More importantly, the fact remains that the share capital of HK$7,000 was not contributed by her.

104.  In the light of such inconsistencies, I am unable to accept the evidence of Ms Fung in this respect, even when there is no evidence from witnesses who have personal knowledge about the private conversations and dealings between her and Sam Pa.

105.  Fourth, the more reliable yardstick is the undisputed / indisputable evidence and also inherent probabilities. Sam Pa was a bankrupt and that there were various legal proceedings brought against him and his companies. In the light of these circumstances, with a view to avoiding any claims that his creditors may have on those shares, I find that, as a matter of inherent probabilities, Sam Pa had arranged the 7,000 shares in the Company to be registered in the name of Ms Fung as his nominee.

106.  Fifth, I have taken into account the content of the October 2016 Letter written by Ms Fung. Ms Fung claimed that when she signed the October 2016 Letter, she was “depressed and was subject to constant anxiety” when Sam Pa disappeared and became uncontactable; and that she was “poorly advised by various parties and was misled”. But there is never any suggestion that the content of the October 2016 Letter was wrong.

(1) In the said letter, she never suggests that she has any beneficial interest in the 7,000 Shares. Instead, she kept on saying that the Company was Sam’s years of work.

(2) Further, given the significant amount of the 70% shares involved, one would have expected Ms Fung to have raised her beneficial ownership in the 7,000 shares with Madam Lo when she sought to resign. Yet there is nothing to that effect.

107.  Finally, as explained above, it is not necessary for me to decide the expert evidence on the law of Cambodia. For present purposes of this trial of the Preliminary Issue, I am prepared to assume that Ms Fung was then the lawfully wedded wife of Sam Pa. But even with such assumption, in light of the inconsistencies in her evidence and other unsatisfactory aspects highlighted above, I do not accept Ms Fung’s evidence that Sam Pa had gifted the shares to her.

108.  Quite the contrary, the fact remains that Sam Pa had multiple families and also had various relationships with other women. Further, as accepted by Ms Fung during cross-examination, since the incorporation of the Company and the development of the Group’s business, Sam Pa did not have any other business or source of income. In the circumstances, Mr Wong argues that it is it is inherently improbable that Sam Pa would have gifted to Ms Fung the entire 7,000 shares in the Company (representing the sole income-generating part of his assets). On the other hand, Mr Dawes contends that this is nothing but conjecture.

109.  Having considered the undisputed evidence and inherent probability, I accept the argument of Mr Wong SC. This is also consistent with the undisputed fact that Sam Pa had arranged both Madam Chiu and Ms Fung to have their family homes at different residences in the Redhill Peninsula. There is no objective or independent evidence to suggest that Sam Pa would have gifted the 7,000 shares to Ms Fung.

110.  In conclusion, on Issue 1, I find that Ms Fung holds the 7,000 shares in the Company and acts as a director as the nominee of Sam Pa.

G. Issue 2: whether Madam Lo and Sam Pa concluded the Co-operation Agreement

G1. Preliminary

111.  According to Mr Wong SC, the starting point is that the parties must have had discussions about the shareholding and management of the Company. Mr Wong SC prays in aid the decision of Mr Justice Harris in Yau Yin Man v. Aitken Enterprises Ltd [2022] HKCFI 2870, at §§10, 41-43. In particular, he relies upon §10 of the judgment of Mr Justice Harris in Yau Yin Man (above), where his Lordship said that:-

“as is all too common in cases of this sort, the parties did not reduce their understanding about the basis on which they would conduct business to writing. However, they must have had some discussions about the business that the Company was to carry out and how it was to be run”.

112.  Those observations made by Mr Harris in Yan Yin Man (above) are nothing but general remarks about the facts of the case.

113.  Whilst I accept that, as a matter of common and commercial sense, one would expect the parties / any business venturers would have some discussions on the shareholdings and how the business was to be run, one cannot jump from those general remarks to the conclusion that the Co-operation Agreement and the Equal Participation Agreement must have existed.

114.  At the end of the day, as Mr Dawes SC contends, it is incumbent upon Madam Lo to prove and establish that the Co-operation Agreement and more importantly the terms of such agreement (including of course the Equal Participation Agreement). It is not disputed by Mr Wong SC.

115.  In this section, I would first summarize the salient features of Madam Lo’s evidence. I would then consider if Madam Lo has discharged her burden of proof in establishing the oral Co-operation Agreement (together with its terms thereof) in light of the parties’ submissions.

G2. Summary of Madam Lo’s evidence

116.  On the facts and circumstances leading to the conclusion of the Co-operation Agreement and the incorporation of the Company, the key aspects of Madam Lo’s evidence may be summarized as follows.

G2.1 From early 2000 to late 2001 / early 2002

117.  Madam Lo first met Sam Pa in around 1998. From then until about late 1999 / early 2000, Sam Pa kept in contact with her and Wang and they also met in Hong Kong from time to time. Through their discussions, Sam Pa learned that, apart from Wang, Madam Lo also had extensive network of contacts in the high-end of the political and business circles in the Mainland, including leaders of the Central Government.

118.  From about early 2000 to late 2001 / early 2002, Madam Lo and Sam Pa frequently met at Sam Pa’s office at the Admiralty Centre and also the “can.teen” restaurant in the Admiralty Centre. They had discussion amongst various matters, including the Mainland government’s policy to support the Chinese enterprises “to go global”; the rapid development in Mainland China and the huge demands for energy resources at the time. As the decades-long civil war in Angola also ended in around early 2002, their discussion also covered Angola’s needs for funds for the rebuilding of its infrastructure and the redevelopment of its economy; and also the rich natural resources in Angola such as oil and diamonds.

119.  From those discussion, Madam Lo and Sam Pa realized that they could generate business opportunities through their respective network of contacts in the very senior level in the political and business sectors in both Mainland China (through Madam Lo) and Angola (through Sam Pa). Both Madam Lo and Sam Pa were both intent and keen on exploring opportunities of development business in development countries.

G2.2 From early to middle 2002 onwards: Madam Lo began to approach her contact in Mainland China

120.  According to Madam Lo, before approaching the Angolan side, she must ensure in advance whether the Mainland Chinese side was willing to invest resources into Angola on a large-scale, with her and Sam Pa as the “introducers”. She also told Sam Pa that, if the two of them were to implement such business plan, they must obtain the recognition, support and guidance from the NDRC to ensure that their plan was in line with the national policy and development strategy.

121.  Since around early to middle 2002, Madam Lo started to approach her contact in Mainland China to discuss the possibility of implementing the business plan that she had discussed with Sam Pa. Such contact included her friends from the 3 major oil companies in Mainland China (namely 中石油, 中石化, 中海油); and also relevant departments in the Mainland Chinese government (especially the leadership of the NDRC).

122.  At the same time, Madam Lo also travelled to Beijing many times to meet and consult with the key leaders of the NDRC at that time (known as the State Development Planning Commission before March 2003; and also known as the State Planning Commission) in order to explore the feasibility of the basic ideas that she had got with Sam Pa.

G2.3 Concerns expressed by the leaders of the NDRC; and the final approval of those business ideas

123.  From around mid 2002 to mid-2003, Madam Lo travelled to Beijing many times to meet with and consult the then key leaders of the NDRC at that time (known as the State Development Planning Commission before March 2003; and also known as the State Planning Commission).

124.  In her evidence, Madam Lo emphasized that the Company needed the blessing, recognition and support from the NDRC if it wished to establish joint venture projects with the state-owned enterprises.

125.  During those meetings, those key leaders provided guidance on the general direction. Whilst those leaders expressed agreement, believing that the plan was in line with the state’s national policies, it is Madam Lo’s evidence that the leaders of the NDRC expressed their concern about who would take the lead in implementing this unprecedented development plan. When they learned that Madam Lo’s proposed partner was Sam Pa, the NDRC leaders expressed their distrust and worry towards Sam Pa. It was because, according to their knowledge, Sam Pa’s credibility was questionable and he was not a reliable partner, especially when Sam Pa did not have any record of working with large enterprises.

126.  As a result of the concerns expressed by the NDRC’s leaders, Madam Lo made further inquiries and investigation into Sam Pa’s background with her network of contacts. Through such inquiries and investigation, Madam Lo learned that Sam Pa was heavily indebted at that time and was even afraid to return to Hong Kong to avoid debt collectors in Hong Kong.

127.  Whilst Madam Lo understood the leaders’ worries and concern about Sam Pa’s reputation, economic conditions and work ethics, she thought that it was worthwhile to give serious consideration to utilizing Sam Pa’s network of contacts in Angola to assist Mainland China in establishing relations with the upper echelons of Angola.

128.  After further meetings with the leaders of the NDRC in Beijing again for several times, the leaders also expressed to Madam Lo their approval of those business ideas of Sam Pa and Madam Lo.

G2.4 Early 2003 to mid 2003: further meetings between Madam Lo and Sam Pa leading to the conclusion of the Co-operation Agreement

129.  After obtaining instructions and approval from the leaders of the NDRC, from around early 2003 to mid-2003, Sam Pa and Madam Lo met in Hong Kong for a few more times in Sam Pa’s office and also the can.teen restaurant in Admiralty Centre.

130.  According to Madam Lo, about a month before the establishment of the Company, she met Sam Pa many times in around June and July 2003 to discuss the details of establishing the Company, finally resulting in the Co-operation Agreement.

131.  On the business side, it was agreed between them that the principal business activities of the new company and its subsidiaries would include exploration and development of oil blocks and other natural resources; trading of crude oil; infrastructure construction such as airports, railways, highways and ports; and also industrial projects such as oil refinery, cement plans and power plants. If such business model was successful, they could apply that business model to other developing countries.

132.  As to the shareholdings, Madam Lo’s evidence is that she was not short of money and as the proverb suggested, 賺錢買花戴 (i.e earning extra money to buy flowers). But Sam Pa needed to finally support his family and children and also had debts. As such, she did not mind Sam Pa having a larger share of revenue to meet his debts and expenses.

133.  Madam Lo also made it clear that, whilst she was willing to make concessions on the shareholdings ratio, she insisted that she must have equal management and decision-making power in the Company. She made it clear to Sam Pa that the Chinese state-owned enterprises adhere to the policy of 門當戶對 (i.e. “well-matched” – the background and standards of the owner who was responsible for controlling and managing the Company were important. Thus, the NDRC or state-owned enterprises would not trust a company led or controlled by Sam Pa. Therefore, the precondition for the new company to be established was that the owner and controller of the Company must be someone that the Mainland authorities would trust. Sam Pa understood and agreed with her.

134.  It was in that context that Sam Pa and Madam Lo agreed that, even if she had to make concessions on the shareholding ratio, Madam Lo must have equal management and decision-making powers as Sam Pa in the new company and its subsidiaries.

135.  Madam Lo also maintains that, without the status of an equal partner, she would not be willing to co-operate with Sam Pa, who was embroiled in legal disputes and was declared bankrupt. She also indicated that her bottom line is that Sam Pa could not monopolize and that she would be able to check the acts of Sam Pa. Thus, she insisted with Sam Pa that the establishment of the Company must be based on the principles of Equal Participation.

136.  According to Madam Lo’s evidence, Sam Pa was more familiar with the company laws of Hong Kong. in order to ensure equal participation, it was Sam Pa who proposed to take only 70% of the issued share capital, such that he would not be able to unilaterally remove Madam Lo as a director of the Company (given Sam Pa explained that the articles of a Hong Kong company typically required a special resolution (i.e. 75%) to remove a director; such that Sam Pa would not be able to unilaterally remove Madam Lo as a director of the Company.

137.  According to Madam Lo, Sam Pa also mentioned to her that, as he had been entangled in many lawsuits in Hong Kong, he would get his girlfriend Ms Fung to hold his shares in the new company and to serve as a director. Sam Pa also promised that Ms Fung would not participate in the operation of the business.

138.  At the same time, Madam Lo went to Beijing and reported back the matter to the leaders in NDRC.

139.  However, the leaders of the NDRC emphasised to Madam Lo that, in view of her bad record, she must be able to control the cooperation with Sam Pa. Further, Sam Pa must not disclose any relevant sensitive information to Ms Fung.

140.  Whilst the leaders of the NDRC indicated that, as long as Madam Lo was able to ensure that she could control the cooperation with Sam Pa, they could facilitate the establishment of a joint venture between the new company to be set up by Sam Pa and Madam.

141.  After obtaining the approval of the leaders from NDRC, there were several meetings in June / July 2003 between Sam Pa and Madam Lo in Admiralty. It was in such meetings that the Co-operation Agreement was reached between Sam Pa and Madam Lo – with the agreement of the Equal Participation as its core principle.

142.  Given the sensitivity / special nature of the Group’s business and the involvement of the Chinese authorities, it was also expressly agreed between Madam Lo and Sam Pa that they would not enter into any written agreement in respect of the Co-operation Agreement (or the Equal Participation Agreement).

G2.5 The Articles of the Company

143.  It is Madam Lo’s evidence that the Articles were specifically chosen so as to reflect the Co-operation Agreement.

144.  Relying upon the Articles, Mr Wong SC argues that the Articles are consistent with and supports the existence of the Co-operation Agreement (and also the Equal Participation Agreement). Amongst other things, Mr Wong SC emphasises the following points:-

(1) Article 8 was specifically added, which provides that the quorum of any directors’ meeting shall be 2 directors.

(2) Article 22 was also specifically added, which provides that for all purposes the quorum of any general meeting shall be 2 shareholders and no business shall be transacted unless the quorum is met.

(3) There is no automatic retirement of directors. The specifically added Article 6(a) and 6(b) provide that a director may only be removed from office by a special resolution (i.e. 75%, over and above the 70% shareholding registered under the name of Ms Fung), or be replaced by an ordinary resolution at the Company’s annual general meeting (the quorum of which is 2 under Article 22) provided that 7 days’ prior notice is given.

(4) Articles 49 to 51 of the Table A provides that general meetings are to be called by directors.

145.  Mr Wong SC contends that the net effect of all these articles is that:-

(1) When the Company was incorporated, the Articles were set up in such a way that Sam Pa / Ms Fung could not unilaterally remove Madam Lo as director by special resolution, as they did not have the requisite votes.

(2) Practically Sam Pa / Ms Fung could not unilaterally appoint a replacement of Madam Lo as director by ordinary resolution, as Madam Lo could simply choose not to attend and render inquorate any annual general meeting where 7 days’ prior notice is given that an attempt would be made to replace her.

G2.6 Subsidiaries within the Group

146.  Mr Wong SC also relies upon the fact that, despite being a 30% shareholder of the Company, Madam Lo was appointed as the sole director of some of the subsidiaries (those carried on the actual operations and held substantial assets), especially CSIL Limited (formerly known as China Sonangol International Ltd) (“CSIL”) and China International Fund Ltd (“CIFL”).

G3. Discussion of the evidence and parties’ arguments

G3.1 Subsidiaries within the Group

147.  Dealing with this last argument first, it is difficult to see how the fact that Madam Lo was appointed as the sole director of some of the subsidiaries within the Group would advance Madam Lo’s case on the Co-operation Agreement (and the Equal Participation Agreement) any further.

148.  Insofar as these subsidiaries are concerned, there was no “equal participation” between Madam Lo and Sam Pa/ Ms Fung. when it is Madam Lo accepts that she was appointed the sole director. Such objective facts militate against Madam Lo’s case on the Equal Participation Agreement.

149.  Further, according to the company records produced by Ms Fung, Madam Lo was also the sole director of Swifton Resources Ltd, Topworld Success Ltd and Beldam Holdings Ltd prior to 2016; and of Cosmo Horizon Ltd (“Cosmo Horizon”) and Newtech Holdings Ltd (“Newtech”) prior to 2017.

150.  These objective facts are clearly inconsistent and militate against Madam Lo’s case that she had reached the oral Co-operation Agreement with Sam Pa, when it is her pleaded case that “each of [Madam Lo and Sam Pa] shall have equal power and participation in the Company and its subsidiaries …” and that “each of them shall be entitled to appoint one director to the board of the company, and shall have an equal ratio of representatives on the board of the subsidiaries”: para 20(b) of the Petition.

151.  In this regard, Madam Lo tried to explain belatedly in her 3^rd Affirmation that there was in fact some additional arrangement between her and Sam Pa – that she was acting as a sole director in the subsidiaries of CIFL, CFIL that operates the substantive business and hold overseas assets. I find such belated explanation unsatisfactory and unreliable. Essentially those objective facts are just inconsistent with the key features of the Co-operation Agreement that they would be entitled to equal ratio and representation at the board level – not only in respect of the Company but also in relation to the subsidiaries within the Group.

G3.2 Madam Lo’s evidence – the inherent improbabilities

152.  Mr Dawes submits that Madam Lo’s evidence on the Co-operation Agreement is fraught with inherent improbabilities. He has helpfully identified major flaws in her evidence / case theory.

153.  First, Mr Dawes submits that Madam Lo’s explanation for giving up the majority shareholding is inexplicable. As a sophisticated businesswoman, it is difficult to understand why she would be willing to allow Sam Pa to have the majority shareholding of the Company (even after taking into account the various concerns expressed by the leaders of the NDRC over Sam Pa and her own investigation) – when the idea was only to allow Sam Pa to be paid more. Contrary to the reason for giving more shares to Sam Pa (i.e. to have more dividends), the Company had not distributed any dividends since its incorporation as a matter of fact. Further, there were more straight-forward options to allow Sam Pa to be paid more (for instance, through drawings from current account). Mr Dawes relies upon the evidence of Angel Tong, who confirms that Madam Lo and Sam Pa / Ms Fung just obtained money from the Group by way of drawings from their current accounts.

154.  Second, another flaws in Madam Lo’s evidence lies in the fact that the alleged Co-operation Agreement was not reduced into writing. Mr Wong SC emphasised that the business of the Company was sensitive such that there was nothing wrong for them to agree not to reduce the agreement into writing. However, I am not persuaded by Mr Wong’s contention. As pointed out by Mr Dawes, which I accept, the flaw of this argument is that, apparently, even according to Madam Lo and her witnesses, everyone knew it was Madam Lo and Sam Pa who were the real bosses running the Group; and that there is nothing confidential about their status as equal partners. The alleged secrecy is no justification for not reducing the Co-operation Agreement into writing.

155.  Third, on Mr Wong’s reliance on the Articles to establish the Co-operation Agreement, Mr Dawes argues that such reliance is completely misplaced. Mr Dawes contends that, if the Co-operation Agreement (together with its terms) are so confidential that they cannot be written down in any documents, then such reasoning must also apply to the Articles.

156.  More importantly, I agree with Mr Dawes that, if Madam Lo and Sam Pa actually saw fit to use the Articles to reflect the alleged Co-operation Agreement, I see no reason why they could not have prepared a one-page memorandum just to record their agreement that they would be entitled to have the equal participation as agreed under the Co-operation Agreement.

157.  This is especially so in the present case, when, on the evidence of Madam Lo, the leaders of NDRC had repeatedly expressed distrust on Sam Pa. Given the serious concerns and distrust that those leaders had over Sam Pa, as a matter of common sense, one would expect that Madam Lo would have tried to secured something in writing to buttress the Co-operation Agreement, such that she could then produce to the authorities including the NDRC to allay any concern they may have over co-operating with Sam Pa and to convince them that she was an equal partner of Sam Pa despite the fact that she was only a 30% minority shareholder of the Company. However, there was no contemporaneous documents to support the conclusion of the Co-operation Agreement.

158.  Madam Lo and Mr Wong SC respectively emphasised the sensitivity of the matter. Whilst I accept that the energy business involved in the matter would be sensitive, it would be contrived to suggest that their co-operation as an equal partner is equally confidential. As Mr Dawes rightly points out, from the operation and management of the business of the Company, it has all along been an “open secret” that Madam Lo and Sam Pa had been working as the bosses of the Company and the Group. On that basis, I find that there is no satisfactory reason to explain why the terms of the Co-operation Agreement could not be reduced into writing.

159.  As stated above, Mr Wong heavily relies upon the Articles to support his contention that Madam Lo and Sam Pa had reached an oral Co-operation Agreement.

160.  However, I have difficulties in accepting his arguments that the Articles reflect the alleged Co-operation Agreement and the Equal Participation Agreement. Whilst Mr Wong argues that, the design of the Articles is such that Madam Lo cannot be removed as a director of the Company, Mr Dawes points out that Mr Wong’s argument just cannot withstand scrutiny if one takes into account Article 6(b) of the Articles, which reads as follows:-

“6. A Director shall hold office until either:-

(a) He is removed from office by a special resolution of the Company; or

(b) Notice is given to the Company by any Member at least seven days before the Annual General Meeting of intention to propose a resolution that some other person be appointed in his place and such resolution is duly passed as an ordinary resolution.”

161.  The alleged Co-operation Agreement does not sit well with Article 6(b), when this provides for a mechanism under which Ms Fung (then holding more than 50% of the issued share capital) can replace Madam Lo.

162.  Further, Article 56 of Table A provides that:-

“56. If within half an hour from the time appointed for the meeting quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved; in any other case it shall stand adjourned to the same day in the next week, at the same time and place or to such other day and at such other time and place as the directors may determine, and if at the meeting a quorum is not present within half an hour from the time appointed for the meeting, the members present shall be a quorum.” [Emphasis added]

163.  In light of these articles, I have difficulties in accepting Mr Wong’s argument that the Articles support Madam Lo’s case on the existence of the alleged oral Co-operation Agreement. These articles tend to suggest that it was still possible for a majority shareholder to remove and replace Madam Lo.

G3.3 The alleged Co-operation Agreement unsupported by any documentary evidence

164.  Mr Dawes also submits that Madam Lo’s case should be rejected, for her case on the Co-operation Agreement is not supported by any contemporaneous documentary evidence.

165.  He also relies upon cases such as Yu Man Fung Alice (above) at §18 and Blue v Ashley (above) §49 to contend that, given the value of the written record is understood by anyone with business experience, its absence would tend to suggest that no Co-operation Agreement was concluded.

166.  I agree. This is especially so, bearing in mind the importance of the Co-operation Agreement and in particular those aspects relating to the Equal Participation Agreement.

167.  Mr Wong answers this – by suggesting that one must consider this point in context. He argues, inter alia, that:-

(1) When the Company was operating successfully (at all material times before 2015), there was no need for the parties to refer to that oral Co-operation Agreement.

(2) Later from 2015 to 2017, there was no need to refer to the Co-operation Agreement, when Madam Lo handled the matter.

168.  Despite the valiant efforts of Mr Wong SC, I am not persuaded. This is so especially when, after the disappearance of Sam Pa, there were also other instances that militate against any finding of the Co-operation Agreement.

169.  For instance, in June 2017, Ms Fung appointed herself and Harry Fung to the board of Cosmo Horizon without Madam Lo’s consent.

170.  On 25 July 2017, Ms Fung appointed Harry Fung as a director of Deptford. Ms Fung also appointed herself and Harry Fung to the board of Newtech on the same day.

171.  It is not disputed that these are key subsidiaries within the Group. When one expects that Madam Lo to take issue and raise with Ms Fung that this would constitute breach of the Co-operation Agreement, there was no mention of the Co-operation Agreement.

172.  Further, it is common ground that, from October to November 2018, the two camps (Madam Lo on the one hand and Ms Fung on the other hand) were trying to negotiate for a shareholders agreement. Madam Lo was all along legally represented. When one would have expected that the oral Co-operation Agreement would somehow been raised or referred in the drafts or correspondence, in fact neither the Co-operation Agreement nor its terms was ever mentioned. This militated against any existence of the Co-operation Agreement, let alone its terms.

173.  In terms of contemporaneous documents, it was only until 14 September 2020 that it was alleged in a letter from Wang to Ms Fung that, it was alleged for the very first time that there was some sort of an agreement along the following terms:-

“(e) For the record:-

(1) When the Company was established, the original founder viz Mr Sam Pa and Madam Lo agreed that notwithstanding the divergence in shareholdings in the ratio of 70 to 30, the Board of Directors should be two with one director to be appointed by appointed by each of them. That agreement between Mr Sam Pa and Madam Lo is binding on you.”

174.  Nonetheless, in light of the totality of the evidence before the Court, I do not see how such letter could advance Madam Lo’s case any further.

(1) First, this letter was very late (i.e. over 17 years after the alleged oral Collateral Agreement), and that there were previous occasions when one would expect that the Co-operation Agreement would have been raised.

(2) Second, the terms alleged are quite different from Madam Lo’s pleaded case, in that the alleged equal status between Madam Lo and Sam Pa as alleged in this letter only covered the Company but not its subsidiaries. This is different from Madam Lo’s pleaded case.

(3) Third, there was no mention of any terms that the parties should be entitled to have “equal ratio” of representatives on the board of the subsidiaries.

(4) Fourth, the letter does not say anything about the agreement between Sam Pa and Madam Lo that Ms Fung was in fact a nominee for Sam Pa and that she would not participate in the management of the Company or its business.

175.  In light of these considerations, and more importantly in light of the totality of the evidence, this does not advance Madam Lo’s case any further.

G4. Conclusion

176.  In conclusion, it is my ruling that Madam Lo has failed to discharge her burden of proof that, on the balance of probabilities, she had concluded the oral Cooperation Agreement with Sam Pa on those terms as pleaded in paragraph 20 of the Petition.

H. Issue 3: whether the Co-operation Agreement (if found) was binding upon Ms Fung as a matter of law

177.  Given my conclusion on Issue 2 above, strictly speaking, it is not necessary for me to consider this final question of whether the Co-operation Agreement (if found) was binding upon Ms Fung.

178.  Nonetheless, for the sake of completeness, I will also set out the parties’ submissions and my determination, especially taking into account Mr Dawes’ argument that, as a matter of law, Madam Lo’s case on Sam Pa’s alleged authority to bind Ms Fung is inherently defective and this constitutes a fatal blow to Madam Lo’s case (even if the Co-operation Agreement can be proved).

H1. Ms Fung’s arguments

179.  On this question, Mr Dawes’ arguments are as follows:-

(1) A nominee in itself is not automatically bound by a contract concluded by a shareholder. He gives an example that, where any shareholder appoints nominee directors to the board, those nominee directors are not parties to the shareholders’ agreements and thus could not be bound solely because of being a nominee of the shareholder.

(2) The Petition is silent as to how and when the agency relationship between Ms Fung and Sam Pa arose, such that Sam Pa concluded the Co-operation Agreement with Madam Lo “for and on behalf of himself and Ms Fung”.

(3) The burden of establishing a conferral of authority rests on the party asserting its existence: Bowstead and Reynolds on Agency (22^nd ed) §3-001.

(4) Madam Lo’s case is that Ms Fung had never participated in the discussions leading up to the establishment of the Company. As such, Madam Lo has not even suggested that there is actual authority whereby Fung authorized Sam Pa to act on her behalf.

(5) Ms Fung also relies upon Thanakharn Kasikorn Thai Chamkat v Akai Holdings Ltd (2010) 13 HKCFAR 479 at §§64, 70 for the proposition that apparent authority is based on a representation as between the alleged principal and the party as to the authority of the alleged agent. In the circumstances, it is argued that Madam Lo cannot rely upon any apparent authority, when there is no representation of any sort which Ms Fung can have made to Madam Lo that Sam Pa had authority to act on her behalf in entering into the Co-operation Agreement.

(6) In K & L Gates v Navin Kumar Aggarwal (unrep., HCA 1061/2011 and HCA 349/2012, 20 May 2016), Madam Justice Au-Yeung said this at §18:-

“The plaintiff has to make it clear whether it is pleading a case of actual, ostensible or apparent authority, and if apparent authority is relied on, it is essential to plead facts which show a “holding out” by the principal that the agent has the authority to enter into the agreement on its behalf: Polima Toys Manufacturing Co Ltd v Super Art Toys Co Ltd, HCA 948/2012, 6 February 2014, DHCJ B Chu (as she then was), §54; Yip Lai Fong at §17.”

H2. Madam Lo’s arguments

180.  Mr Wong SC does not engage with the aforesaid arguments advanced by Mr Dawes. Instead, Mr Wong SC contends that:-

(1) The burden should be on Ms Fung to prove the lack of authority on the part of Sam Pa, relying on a passage in Hong Kong Civil Procedure 2024, §18/8/6.

(2) If the Co-operation Agreement existed, that must somehow bind Ms Fung as Sam Pa’s nominee. He relies upon the decision of Mr Justice Harris in Yau Tin Man v Aitken Enterprises Ltd [2022] 2870 at §§4, 7, 10-11, 41-46.

H3. Discussion

181.  I agree with Mr Dawes’ submissions. Apart from the submissions set out above, Mr Wong SC in fact has no serious challenge to those matters of principles that Mr Dawes advances.

182.  Further, I have difficulties to accept Mr Wong’s arguments.

183.  First, with respect Mr Wong’s reliance upon Hong Kong Civil Procedure 2024, §18/8/6 is misplaced, when that passage is only authority for the proposition that reliance on a defence of lack of authority to enter into agreements must be specifically pleaded in a defence. However, apart from the Petition here, there is no pleadings filed in this case. During the trial, Mr Wong SC has never made any “pleading” objection such that this point is not open to Mr Dawes SC. Most importantly, in light of how paragraph 20 of the Petition is pleaded, it is legitimate and open to Mr Dawes to demand Madam Lo to make good her pleaded case that Sam Pa entered into the Co-operation Agreement not only for himself but also for and on behalf of Ms Fung.

184.  Second, it is Madam Lo who alleged that Sam Pa entered into the Co-operation Agreement “for himself and also for and on behalf of Veronica Fung”. Then in light of K & L Gates v Navin Kumar Aggarwal (above), one would expect that there should be facts pleaded in the Petition in support of such plea. However, the Petition itself is silent.

185.  Third, in light of how paragraph 20 of the Petition is pleaded, it is also fair for Mr Dawes to suggest that one should not have the question of authority to be bound up with the issue of nomineeship.

186.  When Madam Lo’s pleaded case is that Sam Pa entered into the Co-operation Agreement with Madam Lo for himself and “on behalf of Fung” (with emphasis), one would expect that there should be evidence to establish the authority that Sam Pa had in entering into the Co-operation Agreement “on behalf of Fung”. Yet there is none. Specifically, Madam Lo has no evidence on any actual authority. Mr Wong SC has never made any submissions that there is actual authority from Ms Fung to authorize Sam Pa to enter into the Co-operation Agreement for and on her behalf.

187.  Madam Lo could not rely upon any implied authority or apparent authority either, when Mr Wong SC has not identified any representation made by Ms Fung.

188.  Instead, Mr Wong SC only relies upon the decision of Mr Justice Harris in Yau Tin Man (above). However, the dicta that he relies upon are only dicta made in the light of the facts of the case; and there was no discussion on the legal principles as to how a nominee shareholder / director would be bound by an agreement made by a beneficial shareholder. I do not see how those dicta on the facts of that case would assist Madam Lo.

189.  In conclusion, I rule that, even if I am to find that the Co-operation Agreement existed, Madam Lo fails to demonstrate why it would be binding upon Ms Fung.

I. Conclusion

190.  In conclusion, I find as a matter of fact that Ms Fung acted as the shareholder and director of the Company as nominee for Sam Pa. However, on the Preliminary Issue, I find that Madam Lo fails to discharge her burden of proof to establish, on the balance of probabilities, the Co-operation Agreement as pleaded in paragraph 20 of the Petition. In any event, even if, contrary to my finding, that the Co-operation Agreement were concluded between Madam Hung and Sam Pa, it is also my judgment that Madam Lo fails as a matter of law that it is binding upon Ms Fung.

191.  Costs should follow the event. I make an order nisi that the costs of and occasioned by the Preliminary Issue be paid by the Petitioner to the 1^st Respondent, together with a certificate for three counsel. In the absence of any application to vary the costs order nisi within 14 days from the date of this decision, the costs order nisi shall become absolute.