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HCA 2020/2012
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
HIGH COURT ACTION NO 2020 OF 2012
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BETWEEN
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LI SEK KEUNG (李錫強) |
Plaintiff |
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and |
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Tsui Hin Chi (徐憲馳) |
1st Defendant |
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Mok Wah Pui (莫華沛) |
2nd Defendant |
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| Before : Master M Wong in Chambers (Open to Public) |
| Dates of Hearing : 8 September 2015 and 27 January 2016 |
| Date of Handing Down of Decision : 30 May 2016 |
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D E C I S I O N
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THE APPLICATIONS
1. By three summonses all dated 27 January 2015, the 1st and 2nd defendants make the following applications:-
(a) Striking out part of the plaintiff’s witness statement dated 12 December 2014 (“Striking Out Application”);
(b) Withdrawal of the plaintiff’s interrogatories dated 23 January 2015 (“Withdrawal Application”);
(c) Specific discovery in respect of certain audio recordings made by the plaintiff (“Discovery Application”).
2. The defendants contend that the ground for the Striking Out Application and the Withdrawal Application is on a point of law in that the materials in question are not relevant and hence they have not filed any evidence in support. On the other hand, the plaintiff has filed his 2nd Affirmation in opposition to the Striking Out Application and his 1st Affirmation in opposition to the Withdrawal Application.
3. As to the Discovery Application, the defendants’ ground of application is that there is a prima facie case on the existence of the audio recordings. The defendants rely on the Affirmation of 1st defendant to set out the background leading to the late discovery of certain audio recordings by the plaintiff and the procedural background of the application. The plaintiff has filed his 3rd Affirmation in opposition to the Discovery Application.
4. At the call-over hearing of all the three summonses on 17 December 2014, the plaintiff (who was then acting in person) and the defendants (who were represented by counsel) agreed that the summonses should be adjourned for argument with 3 hours reserved. The hearing for argument was then fixed on 8 September 2015 before me with 3 hours reserved.
5. On 3 July 2015, the plaintiff (who was then legally represented) took out a summons to re-fix the hearing for argument to another date with 1 day reserved (“Re-fixing Application”) as the 3 hours allotted would not be sufficient to deal with all three summonses.
6. The Re-fixing Application was heard by Master Ho on 22 July 2015. At the hearing, the defendants’ counsel informed Master Ho that the defendants’ submission would not take more than one hour. Master Ho then made no order in respect of the Re-fixing Application and reserved the costs of the Re-fixing Application for me to deal with on 8 September 2015.
7. Thus, apart from the three summonses, I also need to deal with the costs of the Re-fixing Application.
THE PLAINTIFF’S CASE
8. In gist, the plaintiff’s pleaded case is that the defendants had informed the plaintiff that they were the shareholders and beneficiary owners of a Hong Kong company called China Investment Group International Finance Limited (“CIGIF”), which held a 60% stake in a Guangzhou company called 广州远兴房产有限公司 (“the Land Company”), and the Land Company had interests in a property project at 德政南路19-49號in the city of Guangzhou (“the Property Project”).
9. The beneficiary owner of the other 40% stake in the Land Company was a PRC resident named Ms Liang Jun Xian (“Liang”) who was the defendants’ partner in China. Liang was originally the sole beneficiary owner of CIGIF but the defendants paid HKD 50 million to Liang in exchange of all the shares of CIGIF.
10. The defendants had a serious dispute with Liang on the shareholding of CIGIF and the management and control of the Property Project. Liang instituted a legal action in Hong Kong (ie HCA 2288/2007) against the defendants for the return of all the shares in CIGIF. There was also another action (ie HCA 2586/2007) in which CIGIF made a claim against Liang.
11. The defendants informed the plaintiff that they were very much afraid of Liang as her husband was holding important position in the Police Force in Guangzhou and Liang herself was a representative of Peoples’ Congress in Yue Xiu District, Guangzhou and has significant influence in Guangzhou which may affect the management and control of the Property Project.
12. As both the 1st and 2nd defendants are Hong Kong residents and do not have experience in handling disputes with Liang, they obtained the plaintiff’s service to help them to negotiate with Liang and to get back their investment as much as possible.
13. After various discussion and meetings between the defendants and the plaintiff, on 24 October 2007, the 1st and 2nd defendants appointed the plaintiff as an agent of the defendants and CIGIF to negotiate with Liang and to deal with all the matters in relation to the Property Project, including assisting the defendants in handling the legal action HCA2288/2007. It was agreed between the plaintiff and the defendants that the plaintiff would charge his fees on a time-spent basis for the said services (“the 1st Agreement”).
14. During the course of negotiation with Liang, the plaintiff was informed by the defendants that Liang was going to sell the Land Company. As Liang was the Legal Representative of the Land Company, Liang had the legal right to sell the Land Company. The defendants then requested the plaintiff to prevent Liang from selling the Land Company and to find people to develop the Property Project or alternatively to find prospective buyers for the defendants to sell CIGIF and to get back their investment as much as possible.
15. To prevent Liang from selling the Land Company, it was orally agreed between the plaintiff and the defendants that the plaintiff would provide service to change the Legal Representative of the Land Company from Liang to an agent of the plaintiff for a fee of HKD 2.5 million (“the 2nd Agreement”). The 2nd Agreement was made on 15 November 2007 when the 1st defendant called the plaintiff who was in Guangzhou at that time. The 1st defendant said that he also represented the 2nd defendant and the fee of HKD 2.5 million was other than the usual time costs already charged by the plaintiff on ordinary ground work. The defendant did not have to pay if the change of Legal Representative was not confirmed.
16. In November 2007, the plaintiff successfully changed the Legal Representative of the Land Company and the service fee of HKD 2.5 million was paid.
17. As to the finding of people to develop the Property Project or alternatively finding potential buyers to purchase CIGIF, the plaintiff successfully found a buyer who was willing to purchase CIGIF with RMB 83 million in about June 2010. On 13 June 2010, when the plaintiff was in Guangzhou, the 1st defendant called the plaintiff and said that he also represented the 2nd defendant, and they entered into an oral agreement (“the 3rd Agreement”) whereby the plaintiff would be paid a remuneration of RMB 13 million if the deal for the potential buyer to pay RMB 83 million to purchase 100% shares of CIGIF was successful.
18. The deal was completed, but the defendants only made a partial payment of RMB 6.2 million to the plaintiff leaving an unpaid balance of RMB 6.8 million, which forms the subject claim of the plaintiff in this action.
19. It is pleaded in paragraph 16 of the Statement of Claim that the reason for making verbal contracts for the services provided by the plaintiff under the 2nd and 3rd Agreements was that the additional services (missions) involved very complicated issues of human factors, employing specific China agents with strong relationship and influences on that particular mission in China. The plaintiff would first investigate the complexities of each mission and see how much he could charge for the mission. Then, the plaintiff would quote a fixed price to the 1st and 2nd defendants verbally. The plaintiff would request the 1st and 2nd defendants to pay the agreed fees of each mission to the companies or persons designated by the plaintiff for his own sake of convenience.
20. The plaintiff also gives the reasons why the 2nd and 3rd Agreements between him and the defendants were made orally in paragraph 15 of his Reply as follows:-
“Given that Liang and her husband have significant influence in Guangzhou and that she also has triad connections in both Hong Kong and Guangzhou. That is why when there were agreements between the Defendants and the Plaintiff for changing the legal representative of the Land Company and finding prospective new buyers for the land project, there can be no written contracts between the Defendants and the Plaintiff to ensure that Liang would have no knowledge about the Plaintiff’s crucial involvement in these sensitive deals in the land project. In addition, Plaintiff concerned that the information of the deal would be leaked to some agents (related to triad) that Siu and Mr. 謝萬香had introduced to the Plaintiff before. These agents had tried to find buyers of CIGIF for the Defendants. But they all failed. The Plaintiff concerned that his personal safety would be at stake if these people had knowledge about his crucial involvement in selling CIGIF, too.”
THE DEFENDANTS’ CASE
21. The defendants’ pleaded case is that the 2nd defendant had only met the plaintiff about two times in about 2008 in Hong Kong and that he, his servants and agents had no dealings or contacts with the plaintiff whatsoever as alleged in the Statement of Claim. Only the 1st defendant had various meetings with the plaintiff and had told the plaintiff that he had a land investment project in Guangzhou and had invested in CIGIF. In HCA 2288/2007, Liang only claimed against the 1st defendant as the sole defendant.
22. Concerning the 1st Agreement, the defendants contend that there was only a written agreement (“the Time-Spent Agreement”) entered into between a firm operated by the plaintiff called Anderson and Company and the 1st defendant. Anderson and Company was to handle the matters arising from the 1st defendant’s investment in CIGIF and the service of Anderson and Company was charged at the rate of $1,500.00 per hour to be performed by the plaintiff.
23. However, the defendants deny the existence of the 2nd and 3rd Agreements. They contend that the services rendered by the plaintiff in relation to the change of the Legal Representative of the Land Company and the sale of the 1st defendant’s interest in CIGIF were within the Time-Spent Agreement, and that Anderson and Company had already charged the 1st defendant for such services in its two invoices (numbered A009-110335 dated 27 December 2007 and A008-023711 dated 28 April 2011 respectively) which were duly paid by the 1st defendant.
ISSUES
24. The defendants submit that the only issue of this action is the existence of the 3rd Agreement, and in fact the plaintiff also stated in his latest CMC questionnaire that it is the only issue.
25. However, the plaintiff in his Skeleton Submissions stated that the main issues in dispute are as follows:-
(a) Whether the 2nd defendant was involved in any of the dealings with the plaintiff in relation to matters of CIGIF or the Property Project;
(b) Whether the 2nd Agreement exists, and if so, the terms of such agreement;
(c) Whether the 3rd Agreement exists, and if so, the terms of such agreement; and
(d) Whether the services rendered by the plaintiff were all covered under the 1st Agreement.
26. The plaintiff also stated in his Further Supplemental Skeleton Submissions that this case involves the issues such as (a) whether the plaintiff had entered into the 2nd Agreement with the defendants; (b) whether the plaintiff entered into the 3rd Agreement which entitled him to be paid RMB 13 million; (c) If so, whether the plaintiff was paid RMB 6.2 million, leaving an outstanding balance of RMB 6.8 million; (d) whether the 2nd defendant was the 1st defendant’s nominee in respect of the shares of CIGIF; (e) whether the 2nd defendant also entered into the 3rd Agreement with the plaintiff; and (f) whether the 2nd defendant had only seen the plaintiff twice in 2008 and neither he nor his servants or agents had any dealing or contact with the plaintiff.
27. No doubt the main issue in this case is the existence of the 3rd Agreement. However, I do not agree with the defendants that this is the only issue. For example, the involvement of the 2nd defendant is clearly an issue that requires determination. If the court finds that there was this telephone conversation made between the plaintiff and the 1st defendant on 13 June 2010, the court still needs to determine whether the 1st defendant could represent the 2nd defendant and whether the 2nd defendant is liable under the 3rd Agreement or not.
28. Moreover, the determination of the parties to the 1st Agreement or the Time-Spent Agreement and the scope of these agreements are also relevant and important as it will help to decide whether the service of finding a buyer for CIGIF was provided by whom to whom and whether it was covered by the 3rd Agreement or the Time-Spent Agreement.
29. In fact, the existence of the 2nd Agreement is also an important background fact that will help the court to determine the scope of the 1st Agreement or the Time-Spent Agreement, which will in turn help the court to decide whether the 3rd Agreement is likely to exist or not. Moreover, the 2nd and 3rd Agreements are part and parcel of the exit strategy by which the defendants hoped to recoup their investment in the Property Project. The existence of the 2nd Agreement will support the existence of the 3rd Agreement.
30. As conceded by the defendants, the plaintiff may adduce evidence in relation to other disputed matters as found in the pleadings subject to the caveat that such evidence would assist the court in understanding the background of the action and in resolving the subject dispute. Thus, the disputed background facts that will assist the court in determining the existence of the 3rd Agreement are also issues in this case.
31. Moreover, although the main issue is of course whether the parties have entered into the 3rd Agreement, the credibility of the parties is also in issue when the defendants flatly deny there was such an agreement. The 3rd Agreement is orally made and hence there is little, if any, of documentary evidence of the agreement. When the parties’ respective cases are diametrically opposite, the court would need to go into some of the relevant background facts to ascertain the credibility of each witness so as to decide who is to be believed.
STRIKING-OUT APPLICATION
Legal Principles
32. The legal principles of striking out witness statement had been summarized in Talent Weaving Dyeing & Printing Ltd v Able Billion Textiles Ltd [2013] 2 HKLRD 479 at paragraph 5 as follows:-
(a) The court has jurisdiction to strike out or expunge any scandalous matter in witness statements;
(b) Evidence that bears no relevance to the pleaded issues in dispute is scandalous and is inadmissible and liable to be struck out;
(c) Evidence given by way of witness statements pursuant to Order 38 rule 2A of the Rules of the High Court shall not make inadmissible evidence admissible;
(d) A witness statement which is inconsistent with the party’s own pleadings should be struck out, and to decide relevance, the court will only refer to the pleadings;
(e) Scandalous parts of witness statements by reference to the pleaded issues should be struck out;
(f) Evidence that is beyond the ambit of the pleaded issues is scandalous and should be struck out.
33. The Court of Final Appeal had emphasised twice recently the importance of pleadings in defining the issues in a trial. In Sinoearn International Ltd v Hyundai-CCECC Joint Venture (2013) 16 HKCFAR 632, Ribeiro PJ held that:-
“30. A party must raise all the issues he wishes to raise to be dealt with at the trial. Parties are not entitled to have issues recently thought up dealt with separately and piecemeal. The other party is entitled to know from a clear pleading what is the entire case he has to meet so that he can decide whether particulars should be sought; how he should plead in response; what discovery he is entitled to; what evidence he should adduce to meet it; and what points of law should be taken.”
34. Also in Kwok Chin Wing v 21 Holdings Ltd, (2013) 16 HKCFAR 663, Ma CJ held that:-
“21. It should by now really be quite unnecessary to issue yet another reminder on the rationale behind pleadings. The basic objective is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues: Wing Hing Bank Limited v Crystal Jet International Ltd. It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced…
…
23. The purpose of pleadings, in clearly and unambiguously setting out the true extent and nature of a dispute not just for the benefit of the parties but also for the Court in managing and trying cases, remains important under our system of civil justice. The retention of the old rules as to pleading as well as the introduction of new provisions over four years ago under the Civil Justice Reform, reinforce this.”
35. Thus, it is for the court to exercise its case management function at this stage to exclude irrelevant matters by reference to the issues defined in the pleadings.
36. However, the court has to be prudent in exercising its discretion and should only strike out those parts that are clearly objectionable. In case of doubt, the court should leave it to the trial judge to decide. In Ng Yuk Pui Kelly v Dung Wai Man and others (unreported) HCA 1826/2011, Registrar Lung dismissed the summons to strike out parts of the witness statement and said this:-
“17. It is clear that the court has the discretion to strike out the impugned parts of the witness statement. But the court has to be prudent in the exercise of its discretion because the impugned parts of the witness statement may be a mixture of admissible factual evidence and inadmissible opinion of another unrelated proceeding…
18. Since the trial judge has the option to retain the impugned evidence, at the interlocutory stage, the court will only strike out the parts which are clearly objectionable. In case of doubt, the court should not strike it out and should leave it to the trial judge…”
37. The Registrar found an analogy with the approach to admissibility of expert evidence which may be of doubtful relevance as adumbrated in the case of Wong Hoi Fung v American International Assurance Company (Bermuda) Limited & Another [2002] 3 HKLRD 507.
Impugned parts of the plaintiff’s witness statement
38. The defendants seek to strike out all together 39 paragraphs of the plaintiff’s witness statement either in whole or in part on the ground that they are irrelevant. However, the plaintiff contends that
(a) the entirety of the witness statement is relevant to the pleadings;
(b) the facts fare inter-connected and form a chain of events culminating in the 3rd Agreement and his claim against the defendants; and
(c) the relevant paragraphs provide the witness statement with narrative integrity.
39. Applying the above legal principles, I shall deal with the impugned parts of the witness statement in turn as stated below.
(1) Paragraphs 14, 15 (except the first sentence) and 17
40. Paragraph 14 reads as follows:-
“They asked me how I felt about the documents. I examined the documents and I informed them that:
a. Most of the transactions were abnormal. The only reasonable ones were appointment of Tsui as the director of CIGIF (“Page 29 to 32”) and the transfer of the first lot of 4000 shares of CIGIF from Liang to Tsui (“Page 34 to 35”);
b. All the other documents were abnormal, especially, the serious time gap between the date when the first and second lot of shares was transferred;
c. The transfer of Liang’s 7,000 shares in CIGIF to Tsui on 26 March 2014 was abnormal, as two sets of bought and sold notes and the instrument of transfers were signed. If these shares were transferred on the same date, only one set of bought and sold note and the instrument of transfer should be executed instead of two;
d. The two bought and sold notes and the instrument of transfers, each set accounted for 30% transfer of Liang’s shares in CIGIF to Tsui, were almost identical and particularly abnormal. One set was dated 26th March 2007 while the other set was dated 23rd August 2007 which was almost five months apart;
e. It was also suspicious that there were other documents prepared deliberately to expel Liang from the management of CIGIF without her consent. They were resigning Liang from the director, appointment of a Mok Wah Cho and Mok as directors, and resigning of Dynamic Key Service Limited from secretary of CIGIF. Those actions/transactions were dated back to different dates but they were filed to Company Registry together with a Special Resolution of EGM of CIGIF on the same day 25th Sep. 2007. It seems that the reason for making these important documents were simply to prepare for a deadline for something.”
41. Paragraph 15 reads as follows:-
“Tsui & Mok also showed me a legal letter to Liang dated 25th September 2007 (“Page 51 to 54”) and two meeting minutes in 廣州產權交易所廣州產權交易所 (Guangzhou Property Exchange, hereinafter, the “Guangzhou Exchange”) on 26th & 28th September 2007 (“Page 55 to 58”). They confirmed that the documents were filed to Company Registry on 25th September 2007 and they deliberately arranged them for the purpose of meeting to be held in Guangzhou Exchange on 26th September 2007. They were requesting Guangzhou Exchange to assist them on gaining the control of the Land Company. Both Mok and Tsui attended the meeting held at the conference room of Guangzhou Exchange on 26th September 2007. However, Liang did not shown up at the first meeting and the representative of Liang was challenging the truth of the documents provided by Tsui and Mok.嚴文勝先生, 提出：
“其對沈律師所發出的律師函的所列之事實不清楚，並質疑證明事實的相關文件的真實性。” (Row 7 and 8 of “Page 56”);”
42. Paragraph 17 reads as follows:-
“Tsui told me that they had done something “偷雞” by transferring the last 30% of shares of CIGIF out of Liang without consideration (it was one of the duplicated documents executed), and then transfer 30% of shares of CIGIF to Mok, dismissed Liang from the director, appointing Mok and his brother to became the directors of CIGIF but all without the consent with Liang. According Tsui & Mok, they committed all these actions unilaterally and they were trying to gain control of the Land Project and they did not believe talking to Liang was useful.”
43. The defendants submit that these paragraphs are problematic because the plaintiff gave his opinion on the documents provided. In gist, he illustrated as to how the transactions and documents were abnormal and suspicious (concerning the transfers of shares from Liang to the 1st defendant, etc). They refer to pre-contract negotiation of the Time-Spent Agreement and are not relevant issues. They demonstrated the desire of the plaintiff to discredit the defendants with ungrounded accusations of wrongdoings. Not only that the defendants have to rebut the allegation that there were no such exchanges between the plaintiff and the defendants, but more importantly the impropriety of the defendants as suggested in this paragraph. These matters if admitted in evidence would involve considerable examination of records and possibly other documents which may well be relevant to two High Court Actions between the 1st defendant and Liang. They have however no relevance to the issue of the present case.
44. The defendants further submit that in these paragraphs, by reference to the accusations made by Liang against the defendants, the plaintiff is in fact making an allegation of fraud against the defendants through the backdoor while these matters were not pleaded at all, and that the plaintiff’s subjective opinion on those documents as abnormal or suspicious were not matters fit for trial.
45. I disagree with the defendants’ submissions. These paragraphs show what were discussed during the meetings in October 2007 between the plaintiff and both defendants. The evidence if accepted will establish the involvement of the 2nd defendant which is clearly in issue. I see no objection at all for the plaintiff to give details of what were said at the meetings including the opinions he gave to the defendants, as they can establish the authenticity of such meetings with both defendants if accepted.
46. Moreover, the plaintiff pleads in paragraph 5(d) of the Statement of Claim that the defendants had a serious dispute with Liang on the shareholding of CIGIF, which is denied by the defendants in paragraph 8 of the Defence. Paragraphs 14, 15 and 17 explain why Liang became the defendants’ nemesis, which is clearly in issue.
47. The defendants, referring to some authorities, submit that evidence of pre-contract negotiation and parties’ subject intention are inadmissible, but we are not dealing with interpretation of a written contract here. Such evidence is just to establish the background facts leading to the existence of the oral contracts. I think our case is different from the authorities cited by the defendants.
(2) Paragraph 19
48. Paragraph19 reads as follows:-
“The defendants also gave me a copy of name card of Liang (“Page 128 to 129”). Relying on their information, I did some research on Liang and her husband through website and my agents in China. It was found that Liang and her husband were really of big influence in their areas in Guangzhou. Liang was the 常務副會長、秘書長 of 廣州現代理財管理協會 (“Page 130 to 142”). The Chairman and the Honorable Chairman of the association were廣州市原市長楊資元 and 廣東省原省長盧瑞華 (“Page 131, 133”). And my agents also confirmed that her husband, 黃光明 was one of the 公安局局長in Guangzhou (“Page 143 to 144”).”
49. The defendants submit that the background of Liang is irrelevant and in any event more than necessary. I disagree. Paragraph 19 supports paragraph 6 of the Statement of Claim which pleads that Liang was powerful and the defendants were very afraid of her. The defendants deny all this in paragraph 9 of the Defence. It also explains why the plaintiff tried to keep the 2nd and 3rd Agreements confidential and left not much of a paper trail. Obviously the defendants’ state of mind and Liang’s connections are in issue.
(3) Paragraph 36 (except the first sentence), paragraph 37 (except the last sentence) and the first sentence of paragraph 38
50. The defendants seek to strike out paragraph 36 except the first sentence. Paragraph 36 reads as follows:-
“Paragraph 5 of the Defence was not true. The solicitor of the Defendants in this action is Kenneth Ng and the counsel of this action is Ross Yuen. They were introduced to me by my agent Siu. I first recommended Kenneth Ng to Tsui to handle the police investigation of Tsui’s case in around August 2008. It is now produced a BILL No. 30614 from Kenneth Ng. The bill was reported to me and Tsui by Siu on or around 13th August 2008 (“Page 182”). Then, I recommended both Kenneth Ng and Ross Yuen to both Tsui & Mok for them to take up the case HCA2586/2007 in around March 2009 and Mok became the sole owner of CIGIF in around March 2009. The case was originally handled by ONC Lawyers since 2007.”
51. The defendants seek to strike out paragraph 37 except the last sentence. Paragraph 37 reads as follows:-
“Furthermore, they were also employed to help Mok on his defence against Liang’s application of inter-Parte Summons in HCA 2288/2007 to add Mok as a defendant on 25th May 2010 (“Page to 88 to 127” mentioned previously). It is now produce to this honorable court:
a. Copies of nine email communications mainly between myself, Kenneth Ng, Ross Yuen and cc Tsui, Siu Fat Nam & Dickson Wong (“Page 183 to 201”). The communications were dealing with preparation of Mok’s affirmation in opposition to Liang’s Notice of Appeal dated 14th June 2010 against the decision of Master de Souza on Summons dated 25th May 2010 for joining Mok as 2nd Defendant in the HCA2288/2007. The last email prepared by Ross on 26th July 2010 also contained “Affirmation of Mok- Final Version”;
b. A copy of email from me to Ross Yuen, cc the Tsui, Kenneth Ng, Siu. On the last row of the email, I told Ross Yuen that, “I would like to talk to Mok 1st….” (“Page 202”).
The facts had shown Mok appointed both of Kenneth Ng and Ross Yuen as their legal representatives (agents) and, acting on behalf of Mok, they had frequent communications with me.I also escorted Mok to sign his affirmation in front of Kenneth Ng in his office on or around 26th July 2010.”
52. The defendants seek to strike out the first sentence of paragraph 38, which reads as follows:-
“Besides, Kenneth Ng and Ross Yuen, other lawyers also knew and confirmed that Tsui and Mok appointed me as their representative at all material times.”
53. The defendants submit that these paragraphs are irrelevant, but the plaintiff uses these paragraphs to disprove paragraph 5 of the Defence which denies that the plaintiff had met the 2nd defendant’s agents, but Messrs Kenneth Ng and Ross Yuen were the 2nd defendant’s agents. Such evidence if accepted will show that the defendants were telling a lie in this respect and the 2nd defendant was trying to distance himself from the deal with the plaintiff.
54. Thus, I do not agree with the defendants that these passages are irrelevant.
(4) Paragraph 43
55. Paragraph 43 reads as follows:-
“In fact, Liang was much aggravated and commenced below very serious legal actions and criminal complaints in response to Tsui & Mok’s unilateral actions of transferring all her shares out of CIGIF, expelling her from the director of CIGIF and also attempted to expel her from the director, chairman of board of directors and Legal Representative of the Land Company. Liang appointed a firm in Guangzhou called 北京市德恒律師事務所廣州分所 to issue a legal letter to Tsui with two attachments on 31st October 2007 (“Page 213”):
a. The first attachment was a letter issued by a law firm, Jal N. Karbhari & Co. in HK. It contained the First page a Writ of Summons of HCA2288/2007 to Tsui on 30th October 2007 (“Page 214 to 215”);
b. The second attachment was a copy of upper part of the first page of a police statement report by Liang on 26th October 2007 (“Page 216”). It was later found that Liang was reporting Tsui deceived her into signing a number of documents causing her to suffer a loss of HK$50million and all the shares in CIGIF to Tsui on 22nd August 2007. In Tsui’s statement to Police on 20th November 2007. The police officer told Tsui in the 4th row of the first paragraph (“Page 3”):
“…. 我係探員49216劉英豪，而家駐守響中區警署刑事調查隊第六隊，我而家用本地話向你講徐憲馳我而家向你調查一宗 ‘行騙’ 案件 日期發生響2007 8月22日…當時一名女子梁俊賢聲稱簽下一些 文 件，因而損失咗約港幣伍仟萬及中國投資集團國際理財有限公司一萬股嗱徐憲馳….”
56. The defendants submit that paragraph 43 sets out the legal action taken by Liang against the 1st defendant, but it is unknown as to how the matters are relevant to this action as they are not dealing with the trials of HCA 2288/2007 or HCA 2586/2007.
57. The defendants further submit that it is common ground that there is indeed dispute Liang and the defendants and this is only evidence about pre-contract negotiation. More importantly, it includes more than necessary background to be considered by the court.
58. However, the defendants deny they had a serious dispute with Liang in paragraph 8 of the Defence save that the 1st defendant had informed the plaintiff of the legal action HCA 2288/2007. Paragraph 43 is therefore relevant to show the acrimonious relationship between Liang and the defendants. As aforesaid, I do not agree that the plaintiff cannot adduce pre-contract negotiation to establish the background facts leading to the oral agreements as we are not dealing with interpretation of written contract here.
(5) Paragraphs 45 to 47 and part of paragraph 48
59. Paragraph 45 reads as follows:-
“On 5th November 2007, I arranged a meeting for Tsui, Zhang and Xiao to meet in a hotel in Shenzhen (深圳福臨酒店) instead of going to Guangzhou for the convenience of Tsui(“Page 161”). In the meeting, Zhang repeated again the stories that he was also a victim of Liang by paying RMB43million to Liang’s controlling company. Xiao said that Liang had also promised to give 5% shares of the Land Company to Xiao but it never happened. They spent quite a lot of time on the past activities. However, following main points were raised in the meeting:
a. Both Zhang & Xiao confirmed to us that Liang had already met with a couple of buyers in Hong Kong and she was moving fast to sell the Land Company;
b. Zhang was in progress to sue the Land Company, ZhongDa Limited and also CIGIF for the 28.5% shares. He would like to have Tsui and Mok’s co-operation in the litigation. He estimated that he need to spend RMB3 million or more for this action;
c. Zhang also requested Tsui & Mok to join force to stop Liang from selling the company;”
60. Paragraph 46 reads as follows:-
“Immediate after meeting with Zhang and Xiao, Tsui and I went to the lobby coffee shop in Shenzhen Shangrila Hotel. He asked my comments on the meeting and also my progress of findings. I told Tsui that Zhang had his own thinking to protect his own interests. To co-operate with him could be a way but saving his interests would just create another Liang. I told him that I already had planning to propose to him and Mok. He said that Mok was waiting for his call.”
61. Paragraph 47 reads as follows:-
“Tsui made a phone call to Mok. Tsui handed over the phone to me and we greeted each other. Then, Tsui reported to Mok main points of the last meeting. For my planning, I informed them that:
a. I had already discussed with my people on how to prevent Liang from selling the Land Company;
b. We should continue to visit and inform all related Chinese Authorities that the ownership and directors of CIGIF were changed and Liang no longer held any shares of CIGIF and did not hold any position in CIGIF; there was no intention for CIGIF to sell the Land Company. We also had to convince Guangzhou Exchange to hold the company stamp and finance stamp of the Land Company as long as possible. We believed that Liang needed to use these stamps in order to sell the Land Company. We should also put a notice on newspaper in China for the change of directors and shareholders of CIGIF and also inform the public that Liang was dismissed from the position of Legal Representative of the Land Company;
c. In order to achieve above, there will be lots of paper works, researches, investigations and co-ordinations. My knowledge and my lawyers in China could be able to handle them. I also informed them that these services would also be charged as time costs according to our First Verbal Contract.”
62. The defendants seek to strike out the underlined parts of paragraph 48 as stated below:-
“Furthermore, I informed them that there was also a long term and a more secured way of stopping Liang from selling the Land Company. It was to change the Legal Representative of the Land Company. But it was not an ordinary task and could not be solved by normal procedures after detail analysis of the situation because:
a. The change of Legal Representative of the Land Company to the name of Liang was just approved by relevant authorities a couple of months ago on 24th July 2007. It is now produced in (“Page 217 to 227”) a copy of Application of Changes to廣州市工商行政管理局Guangzhou Administration for Industry and Commerce (the “GZAIC”) on 8th June 2007 and a copy of 企業註冊登記資料issued by GZAIC confirming the date of approval “核准日期” of Liang being the new Legal Representative was on 24th July 2007 (“Page 228”). If we filed another new application for such important change in such a short time, it would sure draw the special attention of relevant authorities;
b. It was against the will of Liang. Liang would not sign on any paper for the change. I reminded them the meeting minutes in Guangzhou Exchange on 28th September 2007 by referring to the documents that I brought along with me. Liang had expressed her concern and the bottom paragraphs of the said meeting minutes (“Page 57”) which has been mentioned in the above paragraph:
“梁俊賢女士回應：
1、不同意徐憲馳先生主張的控股70%的中國理財國際投資公司的股權，就可以控股遠興房地產公司，並免去梁俊賢女士董事長職務的要求。”
c. Procedure wise, we had to file application and obtain approval from at least two authorities. They were the 廣州市對外貿易經濟合作局Bureau of Foreign Trade & Economic Cooperation of Guangzhou Municipality (GZBFTEC) and the GZAIC. As Liang was holding a position of Representative of Peoples’ Congress in Li Wan District, Guangzhou, China (廣州市荔灣區人大代表) and she had significant influence in Guangzhou, especially, the areas of Yue Xiu (越秀區) and Li Wan districts (荔灣區). Any application on changes of the Land Company in the Chinese Authorities around the area would come to be known by her. She would definitely resist it;
d. Liang was holding all the original documents, including, original Business Registration and original documents for the development of the Land, especially, 國有土地使用證with reference no. of 穗府國用「2000」字特126號 (“Land Ownership Certificate”), 建設用地批准書 (“Building Permit”), 建設用地規劃許可證 (“Land Planning Approval”), etc… Without the original Business Registration presented to GZAIC without proper reasons, it was almost not possible for GZAIC to accept the change;
e. A board of Directors resolution, together with other documents, was needed for filing of change of Legal Representative. However, Liang was controlling the whole of the board of Directors of the Land Company (“Page 227”). Liang was the Chairman of the board of Directors and the other two directors were Liang’s relatives. It was not possible to obtain such resolution at all;
f. Company stamp was needed to stamp on the application documents but it was in the custody of the Guangzhou Exchange;
I told them that to take care of relevant authorities mentioned in (a), (c) and (f) above, we needed additional support from people who had great influence. My agent in China was now working on this but it would involve a substantial extra fee to accomplish the mission.” (underlines added)
63. Paragraphs 45 to 47 refer to the meeting between the plaintiff, the 1st defendant, Zhang (who had invested in the Property Project) and Xiao (former staff of Liang). The content of these paragraphs is about the risk of Liang selling the Land Company which led to the proposal of change of legal representative of the Land Company and hence the 2nd Agreement. Although the fact that there was a need and the proposal at the material time to change the legal representative is not in dispute, the existence of the 2nd Agreement is in dispute. The involvement of the 2nd defendant is also in dispute. The phone call made by the 1st defendant to the 2nd defendant will show the involvement of the 2nd defendant. Thus, the content of these paragraphs will provide the background leading to the existence of the 2nd Agreement which will in turn support the existence of the 3rd Agreement.
64. Moreover, if paragraphs 45 to 47 are deleted, there is no reference to the meeting of 5 November 2007 at all and the reader cannot make sense of the first part of paragraph 48, which does not refer to the time, venue and attendees of the meeting.
(6) Paragraphs 53 and 54
65. Paragraph 53 statesthat:-
“After the meeting on 5th November 2007, I checked with my connections in relevant authorities and they were all being informed of “unauthorized transfer of shares and expelling Liang from the management of CIGIF”. Liang was providing people in the Chinese authorities with writ of summons of HCA2288/2007 and the reported to police of alleged Fraud of Tsui. As mention in paragraph above, one of the ground works were to continue to visit and inform (actually lobby) all related Chinese Authorities that the ownership and directors of CIGIF were changed and Liang no longer hold any shares of CIGIF and did not held any position in CIGIF and there was no intention for CIGIF to sell the Land Company. Luckily, it was also near the required date to file Annual Return, I requested Tsui to file Annual Return to show all the transfers of shares and change of directors of CIGIF. The said annual return was filed on 7th November 2007. It is now produced in (“Page 229 to 238”). Of cause, I showed this to all Chinese officials and departments, including, Guangzhou Exchange, GZAIC, etc…”
66. Paragraph 54states that:-
“In fact, Liang had also visited Companies Registry in Hong Kong and also issued Legal Letter to Companies Registry to request the authority to withdraw the registration of Tsui and Mok’s documents, including the Annual Return. I was also assigned to negotiate with Companies Registry in Hong Kong.”
67. The defendants submit that paragraphs 53 and 54 are irrelevant as they are about the action taken by Liang and the investigation works done by the plaintiff, but I agree with the plaintiff that both paragraphs 53 and 54 are relevant as they relate to the background leading to the 2nd Agreement. Although on the plaintiff’s case, the contract sum of HKD 2.5 million was paid by the defendants, in view of the defendants’ denial of the 2nd Agreement, they are relevant not just on the defendants’ general credibility but also on the existence of the 2nd Agreement. The 2nd Agreement was closely related to the 3rd Agreement in that their purposes were the same, namely to help the plaintiff to realize the profits from the Property Project. Thus, they are clearly relevant.
(7) Paragraphs 56 (except the first and last sentences) and 58 (except the first two sentences)
68. The relevant part of Paragraph 56 is underlined below:-
“On around 14th November 2007, after over a week of ground works, Siu told me that Lam had informed him the quotation of the mission of changing Legal Representative was going to be finalized and Lam needed to talk to me face to face in Guangzhou. Siu also told me that he knew a manager of quite a good relationship in Bank of China (BOC) in Shenzhen. I told him that we could look for opportunity to get loan from BOC to develop the land or else asked the manager to help us to find investor or buyers or , worse scenario, just get more information on first hand property development market in China. Both appointments were fixed on 15th November 2007. I was also planning to meet my lawyer in Shenzhen and to go Guangzhou to inform Property Exchange about we were ready in HK for changing the owner information of the Land Company in their records on the same day. I, then, email to Tsui at 10pm on 14th November 2007 my tentative trips to Shenzhen and Guangzhou (“Page 243”).”
69. The defendants seek to strike out Paragraph 58 except its opening sentence as underlined below:-
“On 15th November 2007, I went to Shenzhen, then to Guangzhou. By the evening, I met Lam in 東山賓館 in 東山區 Guangzhou. I jointed Siu to our meeting by calling his mobile in Hong Kong. Lam told us that Beijing connections were asking for HK$1.5 million. I then requested Lam to provide me details. He told me that if the ground work documentation was ready, he would submit the documentation to Beijing connections. The Beijing connections would exercise their influence to authorities and GZAIC would accept our application in a few days because of the great influence of the relatives of the sister of the President of PRC, Hu Jin Tao (胡錦濤的妹妹親人). I asked Lam if the Beijing connections or he could provide a written contract to me. He told me that Beijing connections would not provide any written contract as this was a general practice for this kind of mission. I then asked if he could sign a contract with me. He told me that Liang and her husband had significant influence in Guangzhou and she also had triad connections in both Hong Kong and Guangzhou. It was not a good idea to have written contract on such sensitive mission. This was to ensure that Liang would have no knowledge about our crucial involvement in this sensitive deal in the Land Project. He further added that if the mission was not achieved, they would not charge us, we don’t have anything to loose. I agreed with his view and told him that the basic documentation would be ready in a week time. After discussion, Lam confirmed to me that:
a. They would not charge if the mission of changing Legal Representative could not be achieved任務不成功不收費;
b. He needed to be the Legal Representative as he and the Beijing connections did not want to see my clients failed to pay after the Legal Representative has changed;
c. The Beijing connections could escort the project to build in six months. My clients could get back RMB100 million by instalments within three months after the first bank loan was achieved. The Beijing connections needed a total 12% of the profit of the whole project after the project was built and sold;
d. He demanded for 6% of the profit of the whole project after the project was built and sold;
e. The second reason for him to be the Legal Representative was that the Beijing connections would only trust him. If he was the Legal Representative, he could exercise control on allocation of profit to them.”
70. The defendants submit that paragraph 56 except the first and last sentence is about the investigation works done by the plaintiff and is irrelevant, and that paragraph 58 except the first two sentences is about the negotiation between the plaintiff and the person who was later appointed as the legal representative of the Land Company and is also irrelevant.
71. However, paragraphs 56 and 58 show that both Lam Pong and Siu are no more than the plaintiff’s agents in relation to the deal with the defendants and the extent of their involvement in the change of the legal representative of the Land Company. Lam was arranged to be the legal representative of the Land Company in place of Liang. These paragraphs rebut the defendants’ claim in paragraph 17 of the Defence that the legal representative was changed to an agent of the 1st defendant and it is Siu who brought about the change as Siu claims in his witness statement. Paragraph 58 also shows how the figure of HKD 2.5 million was arrived at and this is not an artificial figure and with the explanations, the court would be in a better position to assess whether the plaintiff is telling the truth when he says that there was an oral agreement based on contingency fee. Thus, these paragraphs are relevant.
(8) Paragraph 66
72. Paragraph 66 states that:-
“In the afternoon on the same day, after the transfer was confirmed, I re-arranged with the final documentations that were needed by Lam mentioned earlier in my Shenzhen office with Siu and Lam together (Reported in Job Lot Report Date: Nov 28, 2007, (“Page 249”). The final set of documentations was then hand carried by Lam to the Beijing connections. It was now produced in (“Page 258 to 263”) the essential copies of the documentation.”
73. The defendants submit that paragraph 66 is about the execution of the change of the legal representative and the task done by and the dealings between Lam, Siu and the plaintiff after the change of the legal representative, and they have no bearing to the 2nd and 3rd Agreements.
74. However, paragraph 66 shows that the plaintiff was in charge of the change of legal representative, not Siu as suggested by the defendants. This issue is clearly in dispute.
(9) Paragraphs 73 to 80 (including the heading)
75. Paragraph 73 reads:-
“The Legal Representative was changed to my agent Lam, the land project was kept safe and was never being sold by Liang. However, Liang and her controlling company fought back seriously with administrative appeals and litigations against GZAIC for their decision on changing Lam to be the new Legal Representative of the Land Company since early 2008.”
76. Paragraph 74 reads:-
“On around 22nd January 2008, Lam was summoned as a third party to a case under reference number (2008)天法行初字第13號from 廣州市天河區人民法院to attend Court 6 on 28th February 2008. It was a case initiated by Liang to sue GZAIC requesting the court to set aside the change of Legal Representative of the Land Company made to Lam in November 2007. It is now produced in (“Page 304”) the said summons. Lam requested RMB100,000 to employ lawyers in Guangzhou. This is now produced in (“Page 305 to 306”) payment records of two RMB50,000 to Lam’s bank account in China by a 肖文良, who was a niece of Siu, on 27th February and 4th March 2008.”
77. Paragraph 75 reads:-
“In late April to early May before the judgment of the case was made, Lam requested for a further RMB500,000 to make sure GZAIC won the case. I told him that if RMB500,000 was really the costs for the job, he and his connections should also responsible for half of that costs. I told Siu & Lam that I was not satisfied with the delay of the Land Project. According to Lam, the Beijing connections promised to build the project in half year in last November. However, it was hard to believe that we were facing the risk of losing the control of Legal Representative, now. I also reminded them about the big spending of Lam over the past five to six months.”
78. Paragraph 76 reads:-
“I told Lam that I could only pay him RMB250,000 if I saw the judgment that favored us. He accepted my counter offer. I informed Tsui and Mok about the situation. I quoted RMB700,000 to them. I told Siu that he could have 50% of the difference between my quote to Tsui & Mok and payment to Lam.”
79. Paragraph 77 reads:-
“On around 15th May 2008, Lam’s partner, Mr. Ding, provided us with the judgment of 廣州市天河區人民法院行政裁定書 (2008)天法行初字第13號 that favored us (“Page 307 to 309”). On the third row of the last page of the said judgment:
“ 駁回原告梁俊賢的起訴。”
80. Paragraph 78 reads:-
“Just like the past practice, I instruct Siu to receive the RMB700,000 from Tsui in China. It is now produced in (“Page 310”) an email dated 2nd June 2008 from Siu to Tsui cc me requesting for 0.7rmb to the bank account of his niece, 肖文良 in China. A copy of an email replying Siu from Tsui cc me that Tsui would arranged RMB350,000 on the same day and remaining RMB350,000 later evening or in the morning in early next day (“Page 311”).”
81. Paragraph 79 reads:-
“In the following weeks, I instructed Siu to effect the following transactions:
a. On 5th June 2008, RMB250,000 to Lam’s bank account in China (“Page 312”);
b. On 16th June 2008, RMB100,000 to me (“Page 313”) and he could also get RMB100,000 as 50% of the difference of RMB700,000 minus RMB500,000;
c. On 23rd June 2008, RMB250,000 to me (“Page 314”)”
82. Paragraph 80 reads:-
“In around mid of July, it was confirmed that Lam would not request the difference of RMB250,000. I asked Siu to give me a bank account for me to transfer my agreed 50% of RMB250,000 to him as service fees. I then settled RMB125,000 to him on around 16th July 2008 according to bank information provided by Siu. It is now produced in (“Page 315 to 316”) copies of two emails dated 15th and 16th July 2008. On 15th July 2008, Siu provided his niece, 肖文良’s bank information to me and on 16th July 2008, I replied to Siu that I would remit the money to the bank account on the next day or latest by Thur.”
83. The defendants submit that paragraphs 73 to 80 are about the development of legal action in the PRC taken out by Liang and the responding measures taken by the plaintiff and they are irrelevant.
84. However, these paragraphs show the plaintiff’s work under the 2nd Agreement and it was the plaintiff who instructed Siu to remit money. It could establish the 2nd Agreement between the plaintiff and the defendants and Siu was working for the plaintiff only. Thus, they are relevant.
(10) Paragraph 81
85. Paragraph 81states that:-
“I continued to negotiate with Liang’s relatives and agents for the possibilities of settlement since January 2008. The first one was何祖禕 (the “Ho”) . Tsui and Mok told me that Ho was a close relative to Liang. Ho used to drove them around in Guangzhou when Liang was introducing projects to them. The Land Company was not the first one being introduced to them. Liang also sent何正雷 (the “Simon Ho”) and 梁榮 (the “Wing”) later. Simon Ho took up the negotiation from “Ho”. He told me that his bigger sister was a Senior Police officer in Guangzhou and he knew a lot of people in “黑白兩道” in Guangzhou. Simon Ho introduced Wing to me. Wing told me that Liang was his大姐. He told me that he himself 喺黑嘅 (a triad member I believed) and there were a lot of places under his power in Guangzhou and Macau. He told me that “喺廣州同澳門有好多場系我睇嘅”. He had a very different attitude with Simon Ho. He was not a negotiator but a dictator. He said that Tsui & Mok had to surrender CIGIF’s shares which were stolen from Liang by Tsui & Mok’s fraudulent acts. I reiterated to both Simon Ho and Wing that I was just a mediator and tried to help both sides to come up with a settlement. Anyway, I became more cautious about my work in China after they had clearly identified themselves as members of Triads. I also informed Lam and Siu that we were facing Triads from Liang.
86. The defendants say that paragraph 81 is about the negotiation done by the plaintiff with a view to settle the dispute with Liang and is irrelevant. However, paragraph 81shows how influential Liang and her husband were, which in turn justifies the high fee which the plaintiff and the defendants agreed on and the need for confidentiality which caused the parties to make oral agreements. It is therefore relevant.
(11) Paragraph 82
87. Paragraph 82 reads:-
“In around March 2008, I requested Lam to provide sign receipts from his connections for all cash payments. I and Siu also chased Lam the progress of the Land Project but there were lots of excuses. And he kept on requesting for money to pay for his trips but lots of expenses were unreasonable entertainment and lots of the entertainments were without receipts, especially, RMB126,000 was paid for prostitution fees and RMB53,500 for wine without receipts. Lam reported to me that there were lots of progresses in meeting with top officials from the central government in China. He further added that entertainment with China officials could not be avoided and there were three times that seven persons, including himself, went for prostitution and each virgin girl costs RMB5000 a night and this was necessary to get the project done.”
88. The defendants say that paragraph 82 is about the mistrust developing between the new legal representative and the plaintiff and is irrelevant. However, paragraph 82 also shows the plaintiff’s involvement in relation to the 2ndAgreement and Siu and Lam’s subsidiary roles which are in dispute. It is therefore relevant.
(12) Paragraphs 84 and 89 (except the first two sentences)
89. Paragraph 84 states that:-
“Siu suggested me to use Tse’s service to track Liang. It is now produced in (“Page 317”) copy of an email from Siu to me about a quotation of Tse’s service on 11th March 2008. After Tsui confirmed to use telephone tracking service, Siu provided me 28 pages of telephone record of Liang’s mobile phone number 13316052888 from 1st December 2007 to 12th March 2008 (“Page 318 to 346”) and 5 pages of SMS records of the same number from 2nd February 2008 to 11th March 2008 (“Page 347 to 351”). The records were provided to Siu by Tse on 12th March 2008.”
90. The defendants seek to strike out the underlined parts of Paragraph 89 as stated below:-
“On around 30th June 2008, Tse told us that there was a very good progress with the potential Buyer. Siu suggested Tse to provide a surveillance service on Liang for three days in order to rule out the possibilities of Liang’s knowledge or involvement of deal in progress. It is now produced in (“Page 352”) an invoice by Tse’s trade name called “PRCAFFAIRS.COM”. The invoice covered a “24 hours TRACKING of a SUBJECT in Guangzhou area for 3 full days (2008/6/30 7pm to 2008/7/3 7pm). The SUBJECT was Liang. I also checked with Liang’s two brothers and meet them in Guangzhou in order to make sure that no information of our selling CIGIF’s interests on the Land Company was leaked. Job Lot # 11 mentioned in previous paragraphs reported my trip to Guangzhou on 30th June 2008 (“Page 168”).” (underlines added)
91. The defendants say that paragraphs 84 and 89 are about the action taken by the plaintiff in tracking Liang and are irrelevant. However, paragraph 84 and the relevant parts of paragraph 89 could prove that the plaintiff’s concern about his personal safety is justified as Tse was involved with triad-related agents who could track Liang. So there was the need for confidentiality of the 2nd and 3rdAgreements and also for the high fee. They are relevant.
(13) Part of paragraph 100
92. The defendants seek to strike out the underlined parts of paragraph 100 as follows:-
“Siu suggested to me for a couple of times to let Tse to station in Guangzhou before Chinese New Year, 2009. Strictly speaking, Tse was not my agent, Siu proposed to me a way of co-operation with Tse. He told me if Tse could be the project manager in Guangzhou, if he had successfully found anybody to develop or to sell the project and got a benefit out of such mission, we could split the benefit among three of us. Just before Chines (sic) New Year, Siu, Tse and I had meeting, Siu said Tse would be responsible for all the work to find people to develop or to buy the land. Siu suggested that the mission fee to be divided according to 40:30:30, Tse entitled 40%, I entitled 30% and Siu entitled 30%. After the meeting, I treated this as an alternative to the highly possible failure of the Beijing connections and Lam,I decided to suggest to Tusi and Mok to employ Tse to station in Guangzhou office on a full time basis to take over Lam’s job. Upon the confirmation of Tsui and Mok for Tse to station in Guangzhou, I emailed to Siu and Tse to confirm their proposal of dividing the mission fees, commissions, bonuses (I refer as project sharing) on 2nd February 2009. It is now produced in (“Page 371”) a copy of the email. In the email, I mentioned:
“LY (short form of Chinese words 老友),
FURTHER TO OUR MEETING BEFORE CNY (Chines New Year) IN P’S OFFICE (Siu’s office):
AS EDMOND (Tse) IS THE PM (Project Manager), ( I ) CONFIRM THE PROJECT SHARING WILL BE 4/3/3. JUST FOR EVERYBODY’S RECORD.
REGARDS,
LL (Lawrence Li)” (underlines added)
93. The defendants say that paragraph 100 is about the appointment of another agent to work for the defendants. The defendants have no quarrel to include the sentence of “I decided to suggest to Tsui and Mok to employ Tse to station in Guangzhou office on a full time basis to take over Lam’s job” and the last sentence which may serve as a background, but the rest is not necessary.
94. However, the underlined parts of paragraph 100 show that it is the plaintiff who was in charge of all “missions”’ for the change of the legal representative contrary to the defendants’ case. It is the plaintiff who decided on the split of the remuneration among him, Lam and Siu. That shows the subsidiary roles of Siu and Tse. It is therefore relevant.
(14) Paragraphs 109 to 112
95. Paragraph 109 states that:-
“As mentioned before, I had been pushing Siu and Lam for receipts or proofs of Lam’s expenses and payment to the Beijing and other connections since March 2008, but Lam always made excuses. I had arranged over HK$3 million to Lam since project started. As there was no progress of the Land Project and Lam was removed from all his positions in CIGIF and the Land Company, I was very concerned with the real existence of his so called Beijing and other connections. I also sent emails to Lam and Siu officially chasing for progress report and report on expenses. It is now produced in (“Page 393 to 395”) three copies of emails.
On 2nd June 2009, in the email, I requested:
“Peter (Siu), 林邦先生：
…. 還沒有收到現在 項 目的進度報告。….
已經說過多少次，過去的開支報告在那裡? ……”
On 12th June 2009, in the email, I requested:
“林邦先生：
根據我在2009-6-2發給您與PETER(Siu) 的電郵，請儘快給我進度報告。….
另外，有關開支的報銷問題，會計已經再三追我，給了您的三百萬，請儘快報帳。….”
On 16th June 2009, in the email, I requested:
“林邦先生：
….
至今還沒有收到你的書面資料，請儘快給我。 謝謝！我希望得到資料後我們才開會。….”
96. Paragraph 110states that:-
“With my official written notices, Lam began to avoid talking about the Beijing and other connections when I questioned him. I told my agent Siu the same. In response to my queries of expenses and Lam’s so called Beijing and other connections, Siu provided me a telephone recording between himself and Lam on 22nd July 2009. It is now produced in (“Page 396 to 418”) copy of transcript of a telephone conversation between Siu and Lam on 22nd July 2009. MV1(male voice 1) belongs to Siu while MV2(male voice 2) belongs to Lam:
a. Since both Siu and Lam were my agents, Siu requested Lam to provide accounts on his expense to me in paragraph 5 and also reminded Lam that he promised to give me the receipts and invoices before:
“5. MV1 (Siu) : 但喺，阿阿阿阿阿~~石頭 (my nickname) 啲數你都係要比啲啫喺~~交待番喎。”
“7. MV1 (Siu) : 你味嗰次話咪準備啫喺比番啲收據佢，咁樣嘅？啲發票收據啊！”
b. Lam began to find excuses that payment to connections to Land Authority did not have any proofs and he could not remember as it was a long time Paragraph 12:
“12. MV2 (Lam) : 你嗰個~~國土局個邊有收據㗎！… 見面傾啦，見面傾啦，詳細情形講就知啦！… 總之，有數喺度我都唔記得啦，係咁耐啦。...”
c. In paragraph 13, 15 and 17, Siu would like to reconfirmed with and questioned Lam if he had the Beijing connections:
“13. MV1 (Siu) : 唔係，你嗰陣時又，你你你嗰陣時又講到又話咩嘢識~~識胡錦濤，又話識習近平嗰啲。唉…”
“15. MV1 (Siu) : 咁人哋識唔識你㗎啫？ 其實。”
“17. MV1 (Siu) : 唔係，你係唔係真係識嗰啲人啊？而家！”
d. Lam told Siu that he did not know the Beijing connections in paragraph 18:
“18. MV2 (Lam) : 唉，我唔識啦，我唔識啦，我作大㗎，我作大㗎。….”
e. Siu replied to Lam by stressing that I paid him money because he knew the Beijing connections and he told me that Beijing connections could settle the dispute in paragraph 19:
“19. MV1 (Siu) : 你~而家先至咁講 (did not know the Beijing connections)，你而家，你嗰陣時你又話識，人地 (this referred to me) 比錢你，就因為你識佢，你話可以搞得掂嘛。”
f. Lam found further excuses and Siu further questioned his connections and progress in the project from paragraph 20 to 37. And finally, they quarreled with each other from paragraph 36 to 43. Lam insisted that he had done a lot for the project and concluded in paragraph 42:
“42. MV2 (Lam) : 你唔好~，唔好講咁個廢話啦，唔好講咁多廢話啦，我做咗咁多嘢，係上面同你舖咗咁多路，條路鋪得咁靚，叫石頭係...”
g. However Siu objected to this by saying in paragraph 43:
“43. MV1 (Lam) :係啦，係啦，叫七個處女，每個五千蚊叫做咗好多嘢啦。”
h. Siu expressed strongly that he did not trust Lam by saying in paragraph 69, 71 and 73:
“69. MV1 (Siu) : 你真係累死我, 我唔係講笑啊！我都唔敢見佢哋。”
“71. MV1(Siu) : 我都唔知點？點同佢哋講？唔知點交待。”
“73. MV1 (Siu) : 而家係我交待唔到啊！”
i. Lam found further excuses and tried to put Siu in to a more difficult situation by saying that Siu was also involved if he was making deception in paragraph 70 about their under table transaction:
“70. MV2 (Lam) : 你唔好咁講，你坐係嗰度呢，你都收咗錢啦。我做嘢，你收錢，我~係唔係先？你介紹嘅人嚟，你都收到錢啦。你啲錢唔喺比我嘛。係唔係先？….”
In fact, Lam was trying to scared Siu and implied that he might disclosed that Siu had got under table money in the same paragraph, “….你講良心話啦，就算講唔好啲我喺騙子，你都收到錢啦。你唔係白做嘅嘛。….我覺得你唔係兄弟啦，咁你唔係兄弟嘅話，大家咪叫阿石頭(me)啊，叫阿徐一齊大家出來~~”
97. Paragraph 111 states that:-
“In the rest of their conversation, Lam was trying to find more excuses and had made a serious allegation and counterclaim on Tse falsifying his signature in Guangzhou in order to cover up his wrong doings of deceptions.”
98. Paragraph 112states that:-
“I asked Siu what Lam meant by, “你唔好咁講，你坐係嗰度呢，你都收咗錢啦。我做嘢，你收錢，我~係唔係先？你介紹嘅人嚟，你都收到錢啦。你啲錢唔喺比我嘛。係唔係先？….”. Siu told me that Lam was guessing he earned money for changing Legal Representative. Siu rest assured me that he did not get any advantage from Lam, too. I told Siu that I trusted him.”
99. The defendants say that paragraphs 109 to 112 are about the mistrust between the plaintiff and the new legal representative and are irrelevant. However, paragraphs 109 to 112 show that Siu and Lam are no more than the plaintiff’s agent in relation to the performance of the 2nd Agreement and hence they are relevant.
(15) Paragraph 116 (except the first two sentences)
100. Paragraph 116 reads:-
“There had been a couple of attempts to sell all the interests of CIGIF since 2008 to early 2010 but they all failed. Mok, Tsui & I understood pretty well the difficulties. The major difficulties lies below:
a. It was very difficult to convince any buyers in the absence of all the important original documents for the development of the Land Company, especially, 國有土地使用證with reference no. of 穗府國用「2000」字特126號 (“Land Ownership Certificate”), 建設用地批准書 (“Building Permit”), 建設用地規劃許可證 (“Land Planning Approval”). They were all under the custody of Liang;
b. Liang’s influence in China Authorities: As mentioned in above paragraphs, Tsui & Mok had spent millions of dollars to keep the Guangzhou office managed by Tse and to apply for a new Land Ownership Certificate. But it failed in a very bad way. This proved the influence of Liang and her husband in Guangzhou authorities;
c. Liang’s influence in 黑道：As mentioned in previous paragraphs, Liang was sending her relatives with Triad background to negotiate (in some ways, threaten) with us. Since Liang was still controlling 40% of the Land Company, ordinary buyers would try to touch base with Liang before they would purchase CIGIF who was holding 60% of the Land Company. We strongly believe that she would do the same to any potential buyer in order to scare them away;
d. Liang’s control of the Land Company: CIGIF only had 60% of the shares of the Land Company while Liang was controlling 40% through her controlling company ZhongDa Limited. A new buyer would definitely needed the ability and power to also control Liang before the Land could be developed;
e. Uncertainties on the position of Legal Representatives. As mentioned before, Liang had already won litigations against GZAIC in the judgment of 廣東省廣州市天河區人民法院 行政判決書 (2008)天法行初字96號. Although we were appealing the judgment, it was a big uncertainty for Mok to keep the Legal Representative to his people 何宇佳;
f. Uncertainties on the ownership of CIGIF: There were never ending litigations against Tsui & Mok in HCA2288/2007. The order of summary judgment and the order for security for costs made by Hon Fung J on 7th March 2008 in favor of Tsui were set aside by Hon Tang VP and Barnes J on 26th September 2008;
g. Uncertainties on the actual size of the building site. The original size of the construction site was 4,079 SQM. It was found that the actual size of the building site was made less as a result of overlapping of boundaries with constructions in the vicinity of the Land Project in around October 2009. In Chinese, we called it 項 目 紅 線 與 第 三 方 重 疊. The “項 目 紅 線” was a technical term referring to the approved boundary of the construction site by government. It was reflected in the terms and conditions of various Share Transfer Contracts which aimed at selling CIGIF. And we could cover this in details when we talked about the contracts;
h. Uncertainties on the plot ratio: The original allowed total area that could be built above the ground was 39,157 SQM. And the original plot ratio was 39,157 SQM / 4079 SQM = 9.5997. The original approved plot ratio of over 9 was approved in the 90’s. However, the land was idle for many years and the town planning was changed. The authorities in Guangzhou was announcing the plot ratio above the ground of buildings along the riverside had to be controlled to 6 or less in order to protect the view of the riverside in around 2009. As the allowed area that could be built was lowered for at least one third, the value of the land would be severely down grade to at least one third if the plot ratio dropped to 6 or below. Again, it was reflected in the terms and conditions of various Share Transfer Contracts which aimed at selling CIGIF. And we could cover this in details when we talked about the contracts;
i. The business license of the Land Company would expire on 18th August 2010. However, extension of business license needed the consent of the ZhongDa Limited which held 40% of the Land Company. And Zhongda Limited was controlled by Liang. In fact, we had tried to appoint a lawyer in Guangzhou to help in February 2010 but it was rejected. It is now produced in (“Page 438 to 442”) copies of emails that we sent to a lawyer 鄭玉蓉律師 of 廣東金領律師事務所 for extension of Business License on 2nd February 2010 but the reply from the lawyer was “因 你 們 的 文 件 並 不 合 格，肯 定 是 暫 時 不 能 批 准 的” on 23rd February 2010 (“Page 442”).”
101. The defendants say that paragraph 116 states that it was difficult to find purchaser of CIGIF. The questionable part (ie the whole paragraph except the first two sentences) is giving the details as to how difficult it was and is irrelevant. However, as stressed by the heading of “The difficulties on Finding Buyers of CIGIF”, paragraph 116 relate to the difficulties facing the plaintiff in finding a buyer and the justification of the high fee. It also highlights the complexity of the 3rd Agreement. It gives the background to the 3rd Agreement. Moreover, without paragraph 116, paragraph 124 may not be comprehensible. Thus, the whole of paragraph 116 is relevant.
(16) Paragraph 119 (except the first sentence)
102. Paragraph 119 states that:-
“Below are some of the major attempts to sell CIGIF:
a. As mentioned previously, in around July 2008, an attempt to sell 100% of CIGIF in was made by appointing Tse to sell it at RMB65 million. A service fee of RMB3 million for finding a buyer was promised to Tse. In other words, Tusi and Mok could only get back at most RMB62 million if the deal was successful;
b. In around November 2009, another attempt to sell was made (“Page 443 to 451”). The offer from a 中聯投資有限公司 was RMB68 million (“Page 444”)
“二、股權轉讓總作價及轉讓原則安排
1. 甲、乙雙方經協商，同意由乙方…..以人民幣6800萬元的總作價受讓甲方持有目標公司60%的權益。”
c. On 6th January 2010, an offer was given to a 柏聯發展有限公司 sign by Siu(“Page 452 to 459”). The selling price was fixed at RMB70 million (“Page 452”)
““二、股權轉讓總作價及轉讓原則安排
1. 甲、乙雙方經協商，同意由乙方…..以人民幣7000萬元的總作價受讓甲方持有目標公司60%的權益。”
d. On around 2nd February 2010, another offer from buyer 彭柏銘 and 譚任生 (“Page 460 to 463”) was made to 莫華沛 (Mok) . These two joint buyers were introduced by Tse. Tse told us that they had triad background and he needed a service fee of RMB4 million to pay to other triad “brothers”. Tsui and Mok confirmed the RMB4 million to Tse verbally if this buyer could sign a formal contract of purchase of all shares of CIGIF. However, there was a difference on the price. Mok was asking for RMB70 million but the sellers were offering HK$70 million (“Page 461”):
“ 五、收購價款及確定價格的方式
乙方主張收購標的價格為人民幣7000萬元，甲方主張收購標的價格為港幣7000萬元。最終交易價格雙方同意在2010年3月15日前進一步的協商，並最終確定交易價格.
In other words, Tusi and Mok could only get back at most RMB66 million if the deal was successful. And this did not account for the big bonus promised by Tsui and Mok. This attempt also failed even after several back and forth bargaining;
e. In late March to early April 2010, I had managed to find a potential buyer who had deposited RMB5 million to the Guangzhou Exchange. This was the first time “so solid”. I was asking at least RMB70 million. There were no potential buyers who had really arranged a deposit. It is now produced in (“Page 464 to 467”). However, the deal failed again.”
103. The defendants say that paragraph 119 states there were previous failed attempts to sell CIGIF. The first sentence already serves the purpose. The rest is giving the details of the failed attempts and is irrelevant.
104. However, these previous failed attempts could show that the defendants were desperate in finding a buyer and were willing to pay the plaintiff a high fee and are relevant.
(17) Paragraph 149
105. Paragraph 149 states that:-
“I began to focus on helping Tsui & Mok to communicate with lawyers on litigations between Liang, Tsui & Mok. On around 26th July 2010, I escorted Mok to Yaddy Cheung & Co. Solicitors & Notaries in Units A&B, 21/F, Full Win Commercial Center, 573 Nathan Road, Kowloon to sign his affirmation to oppose Liang’s application to the court to join him as the 2nd Defendant to the HCA2288/2007 in front of Mr. Kenneth Ng who was a solicitor of the firm. Copies of the nine emails (“Page 183 to 201”) among Ross Yuen, Kenneth Ng, Siu, Tsui, I and others from 12th to 26 July 2010 has already been produced to this honorable court in previous paragraphs.”
106. The defendants submit that paragraph 149 states that the plaintiff escorted the 2nd defendant to the firm of solicitors to make his affirmation in HCA 2288/2007. There is no plea that the plaintiff assisted the 2nd defendant in handling the litigation. It is simply inexplicable as to how it is relevant to the issue as to the existence of the 3rd Agreement.
107. However, this paragraph belies paragraphs 5 and 6 of the Defence wherein the defendants allege that the 2nd defendant did not by himself or his agent involved in any dealings with the plaintiff. It is therefore relevant.
(18) Paragraphs 151 & 152
108. Paragraph 151 reads:-
“On 26th July 2010, Kenneth Ng received a letter from the legalrepresentative, Quan & Co, of Liang. Kenneth Ng gave me the letter. Although the content of letter was problematic, it surprised me that Liang seemed to know something about the sale of CIGIF by Mok. The letter was addressed solely to the attention of Mok (“Page 503”):
“Re: HCA2288 of 2007
….
We are instructed to refer to the adjourned hearing before Mr. Justice Suffiad of High Court and our application to add your client Mok Wah Pui as the 2nd Defendant of the captioned action…...It is our client’s allegation that your client has conspired with a Mr. Tsui Hin Chi the defendant in the captioned action to deprive of our client’s lawful ownership of all the shares of the said company. We are further instructed that your client has also tried to …..sell it off without our client’s consent. We are instructed that unless your client confirmed in writing that he has no such intention …. we would apply to court for an Injunction order and to inform Mr. Justice Suffiad of our client’s action.”
As this involved legal issues and there was really a sale of CIGIF going on, I told Kenneth Ng the same and asked him to obtain the instruction from Mok directly on how to handle the request of Liang mentioned in the last three rows of the letter.”
109. Paragraph 152 reads:-
“On around 2ndAugust 2010, Kenneth Ng sent me a letter prepared by Ross Yuen to reply to Quan and Co. under the instruction of Mok. I read the letter and I suggested to translating it into Chinese. I believed that Liang was using her letter to show to China authorities. That’s why it was in both English and Chinese. I would be prepared to show to China authorities our reply letter immediately in response to Liang’s letter if it was really shown to the Chinese Authorities. I helped to translate it and added the last paragraph in Chinese and email back to Kenneth for them to final. On 3rd August 2010, Kenneth Ng told me that he had sent a reply letter to Quan & Co.. He emailed to me, Siu, Tsui and cc Ross Yuen the letter with the subject “Case against Liang” (“Page 504 to 506”).
110. The defendants say that paragraphs 151 and 152 are in relation to the plaintiff’s handling of the legal action of HCA 2288/2007 and are irrelevant. However, both paragraphs 151 and 152 demonstrate that the plaintiff was heavily involved in the defendants’ litigation and contradict paragraphs 5 and 6 of the Defence which suggest that the 2nd defendant, his servants and agents had no contact or dealing with the plaintiff.
Summary
111. In sum, I find that the paragraphs sought to be struck out are relevant and are not scandalous. They contain admissible evidence which render the plaintiff’s case on the oral agreements more credible and shows that the 2nd defendant was, contrary to the defendants’ allegations, a party to the 3rdAgreement. I do not think that it is right for the court to remove the evidence in the paragraphs as they tend to prove the existence of the 3rdAgreement and the 2nd defendant’s liability. Insofar as the relevant paragraphs concerning Siu, as Siu would be called to give evidence for the defendants, they also form the foundation for cross-examining Siu. Otherwise, questions directed at Siu would be objected to on the grounds of lack of basis if the paragraphs are struck out.
112. Even if such evidence are just marginally relevant or if I have doubt on their relevancy, I should still leave them to the trial judge to decide (see Ng Yuk Pui Kelly, supra).
113. In the circumstances, I agree with the plaintiff that the Striking Out Application should be dismissed with costs.
WITHDRAWAL APPLICATION
Legal Principles
114. The principles governing applications for interrogatories are clear and are set out in Lee Nui Foon v Ocean Park Corporation (No 2) [1995] 2 HKC 395. In sum, the interrogatories must: (1) relate to ‘a matter in question’ between the parties; (2) be necessary either for the disposal fairly of the cause or matter or for saving costs; (3) not be fishing; (4) not be oppressive; (5) not be prolix; (6) not be imprecise; (7) not be questions which go to the evidence; (8) not be questions which required an answer which is a matter of opinion or for an expert; (9) not be questions which go to the facts which will assist in establishing the opposing party as opposed to the case of the party seeking to interrogate; and (10) not be effectively asking documents or discovery.
115. The interrogatories must not represent the sort of “deposit-taking exercise” which Ma J (as he then was) warned against in Kao Lee & Yip v. Donald Koo, HCA 8847/1993 as follows:-
“The administering of interrogatories is not for the purpose of enabling a party to indulge in some sort of deposition-taking exercise or to enable him to have a dry run in cross-examination against the other side prior to trial. As I have already said, the key consideration is the fact of necessity referred to in the RHC, Order 26, rule 1(1).” (underline added)
116. However, in an application for withdrawal of interrogatories, the burden lies on the applicant to satisfy the court why each ofthe interrogatories ought to be withdrawn (see Mega Yield International Holdings Ltd v Fonfair Company Ltd, (unreported), HCA 948/2009).
117. The overriding principle for administering interrogatories is that interrogatories must relate to a matter in question between the parties and must be necessary either for disposing fairly of the cause or matter or for saving costs.
118. Besides, the guidelines on relevance and necessity can be found in Det Danske Hedeselskabet v KDM International Plc [1994] 2 Lloyd’s 534:-
(a) First, unless the answers are essential for the preparation of the requesting party’s case for trial and cannot be reasonably expected to emerge from requests for further and better particulars and further discovery or witness statements, interrogatories will not normally be ordered. For this reason the service of interrogatories before witness statements have been exchanged will almost always be premature;
(b) Secondly, information which is relevant to matters in issue only in the sense that it may lead to further inquiry or that questions about it could be asked in cross-examination at the trial will not be essential information for the purposes of the first consideration;
(c) Thirdly, requests for information which, although it may be relevant to matters in issue, can be provided only by means of detailed research or investigation which the party interrogated would not otherwise carry out for the purpose of preparing for trial will hardly ever qualify as being necessary either for disposing fairly of the cause of the matter or for saving costs.
(d) Fourthly, hypothetical questions should not normally be asked.
(e) Fifthly, requests for information ascertainable by cross-examination at the trial are inappropriate unless the party questioning can establish that it is essential for the proper preparation of its case that such information is available before trial, in the sense that if the matter is left until cross-examination at the trial the party will, or probably will irremediably be prejudiced in his conduct of the trial or the trial may be unduly interrupted or otherwise disorganized by the late emergence of the information.
119. Interrogatories are admissible where they go to support the applicant’s case or destroy the opponent’s (see Kao Lee & Yip (a firm) v Donald Koo Hoi-yan & Ors, unreported,HCA 8847/1993).
120. The right to interrogate is not confined to the fact directly in issue, but extends to any facts the existence or non-existence of which is relevant to the existence or non-existence of the facts directly in issue (see Mega Yield International Holdings Ltd, supra).
121. A matter of evidence is more appropriately dealt with by interrogatories than by further and better particulars (see Hong Kong Civil Procedure 2015, paragraph 26/4/7).
Interrogatories
122. In the present case, the defendants have not filed any affirmation to support the Withdrawal Application, but they submit that the present interrogatories administered by the plaintiff are not relevant, fishing and are at best to be put in cross-examination.
123. The plaintiff, on the other hand, submit that the interrogatories have been administered subsequent to filing of the witness statements of 1st defendant, Siu and Chung Cheuk Ming for the plaintiff’s preparation of his case in the trial and thus are not premature. The interrogatories consist of short, direct and simple questions and they do not require the defendants’ detailed or in-depth investigation. Costs incurred by the defendants are not likely to be substantial.
124. The plaintiff also submits that the interrogatories relate to the evidence given by the defendants by way of witness statements instead of their pleaded case. Seeking such information by way of interrogatories is more appropriate than by further and better particulars. The interrogatories do not solely relate to the defendants’ credibility or at all and thus the plaintiff is not dry-running his cross-examination at trial against the defendants.
125. I shall deal with each of the interrogatories below.
(1) Interrogatories 1 and 2: details of the alleged trust agreements made between the 1st defendant and the 2nd defendant as to the transfer of 30% and subsequently 70% shareholding of CIGIF from the 1st defendant to the 2nd defendant
126. The defendants say that the questions put under this head are in relation to the transfer of shares of CIGIF by the 1st defendant to the 2nd defendant. They presuppose that there were agreements between the defendants in relation to the transfer which is however not the case of the defendants. The questions are not relevant to the present dispute. At best, it is a deposit taking exercise to have a dry run of cross-examination.
127. However, it is the defendants’ assertion that the 2nd defendant was never involved in any of CIGIF’s matters or investment, or any dealings with the plaintiff. The 1st defendant also denied telling the plaintiff that the 2nd defendant had any beneficial interest in CIGIF or the 1st defendant was acting on behalf of the 2nd defendant.
128. It is inexplicable why the 1st defendant transferred his shares in CIGIF to the 2nd defendant who in turn held them on trust for the 1st defendant, and why the 1st defendant would transfer his shares on two occasions and in such percentage. Despite the defendants, in their Defence, only admitted the 1st defendant told the plaintiff that the 1st defendant had invested in CIGIF, the above version of shareholding transfer and trust arrangement has never been pleaded.
129. Should the details of the agreements only be elicited during cross-examination at trial, or should any written form of such trust agreements be discovered during trial, this is likely to prejudice or disrupt the plaintiff’s conduct of his entire case. As such, I agree with the plaintiff that it is more desirable for the plaintiff to obtain these information at this stage.
130. Besides, the details of the alleged trust agreements between the 1st defendant and the 2nd defendant are highly relevant to the involvement of the 2nd defendant and are also necessary for the plaintiff to properly prepare his case before the next stage is embarked upon, especially whether the 2nd defendant should remain as a defendant in this action and whether the plaintiff should pursue further interlocutory applications, like specific discovery, against the defendants. This should also save unnecessary costs incurred by the parties.
(2) Interrogatory 3: details of an alleged payment pursuant to a letter of appointment
131. The defendants submit that the plaintiff is purporting to cross-examine as to whether the 2nd defendant had returned the sale proceeds of CIGIF to the 1st defendant. It is another attempt of fishing and having a dry run of cross-examination.
132. However, this interrogatory is relevant to the 2nd defendant’s involvement in the matters of CIGIF. If the defendants’ version is true and the 1st defendant has all along been the sole beneficial owner of the shares in CIGIF, part of the consideration which was transferred to the 2nd defendant pursuant to the letter of appointment should have been returned to the 1st defendant.
133. Thus, I find that this interrogatory is relevant and should be allowed.
(3) Interrogatory 4: details of an alleged agreement made between the 1st defendant and Siu as to the change of legal representative of the Land Company
134. The defendants submit that this interrogatory concerns the agreement between the 1st defendant and Siu whereby the 1st defendant agreed to pay Siu HKD 2.5 million for the change of legal representative of the Land Company. The 1st defendant’s evidence highlights there was an authorization form issued by the 1st defendant authorising an accountant to make a payment of HKD 2.5 million to Siu, but the defendants never paid the plaintiff the said sum as alleged.
135. However, I agree with the plaintiff that this interrogatory is relevant to the existence of the 2nd and 3rd Agreements and is therefore relevant.
(4) Interrogatory 5: details of a conversation between the plaintiff and the 1st defendant
136. The plaintiff is willing to withdraw this interrogatory.
(5) Interrogatory 6: details of an alleged agreement between the 1st defendant and the buyer of the 1st defendant’s interest in CIGIF
137. The defendants submit that this line of questioning is about the particulars of the agreement of the sale of the shares of CIGIF. There is however no dispute that the buyer was introduced by the plaintiff. The plaintiff should know the details of the agreement better than anyone. This interrogatory has no purpose except fishing.
138. However, this interrogatory is relevant to the existence of the 3rd Agreement and whether the service was covered by the 1st Agreement. In their Defence, the defendants denied that the 3rd Agreement existed and averred that the service of selling the 1st defendant’s interest in CIGIF was within the 1st Agreement. However, in his witness statement, the 1st defendant claimed that it was he who reached a final agreement with a subsequent buyer who was willing to acquire all the shares in CIGIF in the sum of RMB 83 million. It is strange that the 1st defendant would need to communicate with the buyer himself if he already paid for the service pursuant to the 1st Agreement. Clarifying the details under this interrogatory is necessary.
(6) Interrogatory 7: details of an alleged appointment made by the 1st defendant that Siu be appointed to sign the agreement of sale of CIGIF
139. It is about the appointment of Siu to assist the plaintiff to sign and complete the sale and purchase agreement of the shares of CIGIF. The defendants say that it is entirely unknown as to the relevancy of this line of questioning, when it is common ground that the buyer was introduced by the plaintiff.
140. The interrogatory is relevant to the existency of the 2nd and 3rd Agreements as to whether the agreements to perform the services of changing the legal representative of CIGIF and selling the 1st defendant’s interest in CIGIF were entered into between the plaintiff and the defendants.
(7) Interrogatory 8: details of any agreement made between the 1st defendant and Siu that the 1st defendant be assisted by Siu in the course of selling the 1st defendant’s interest in CIGIF
141. This is in the same situation as in Interrogatory 7.
(8) Interrogatory 9: details of communication between the 1st defendant and Siu as to Siu’s knowledge of paying other persons
142. The defendants say that this interrogatory is a fishing exercise, but I think it is relevant to whether Siu was in charge of the mission for looking for a buyer.
(9) Interrogatory 10: details of the alleged assistance provided by Siu in relation to matters of CIGIF
143. This is in the same situation as in Interrogatory 7.
Summary
144. As aforesaid, I find that all the interrogatories are relevant to the issues in dispute and the administering of interrogatories serves the purpose of saving costs and promoting fair and efficient conduct of the action. Thus, the defendants fail to discharge their burden of proving why each of these interrogatories should be withdrawn.
145. The Withdrawal Application should therefore be dismissed with costs to the plaintiff.
DISCOVERY APPLICATION
Legal Principles
146. The relevant principles governing Order 24 rule 3 of the Rules of the High Court are well settled. An order may be made for a further and better list of documents where it appears: (a) from the list itself; or (b) from the documents referred to in it; or (c) from admissions made either in the pleadings of the party making discovery or otherwise, that the party making discovery has or has had other relevant documents in his possession, custody or power (seeHong Kong Civil Procedure 2015 paragraph 24/3/7).
147. As to the application under Order 24 rule 7 of the Rules of the High Court, there is no jurisdiction to grant such order unless the party seeking specific discovery can make out a prima facie case that:-
(a) There is sufficient evidence that the documents exist which the other party has not disclosed;
(b) The document or documents relate to matters in issue in the action; and
(c) There is sufficient evidence that the document is in the possession, custody or power of the other party.
(see Hong Kong Civil Procedure 2015 paragraph 24/7/1)
148. In Ngan In leng v Chu Yuent Wah (No 1) [2013] 1 HKLRD 717 at 729, DHCJ Au-Yeung (as she then was) observed that: -
“42. A prima facie case on existence may be established on merely showing the probability arising from the surrounding circumstances or on specific facts deposed to: Hong Kong Civil Procedures 2012, Vol 1, p.553 para. 24/7/1. For example, a prima facie case on existence may be established simply by assessing whether it is business practice for a certain type of document to exist: Union Bank of India v General Nice Resources (Hong Kong) Ltd (unrep., HCA299/2007, [2010] HKEC 704), 10 May 2010, Bharwaney J, [10].”
Audio recordings
149. By the Discovery Application, the defendants seek to discover some audio recordings that they say the plaintiff should have.
150. The history of discovery is summarized below:-
(a) By the Order of Mr Registrar K W Lung dated 22 June 2014, it was ordered that the parties should file and serve the list of documents within 56 days;
(b) The plaintiff’s List of Documents was filed on 25 August 2014;
(c) On 12 December 2014, the plaintiff exchanged the witness statements with the defendants and at the same time filed his Supplementary List of Documents. Both in his witness statement and Supplement List of Document (items 33, 40, and 42), he referred to and relied on the transcripts of three audio recordings;
(d) However, the audio recordings themselves are not included in his Supplement List of Document. The copies of the audio recordings were not provided either;
(e) As appeared on the last page of each transcript, they were prepared as early as on 9 April 2014;
(f) Since 18 December 2014, the solicitors of the defendants made repeated demand to the plaintiff to make discovery of all relevant audio recordings that he had ever taken by way of a further list of documents;
(g) On 5 January 2015, the plaintiff (then acting in person) by his letter stated that he was providing all the audio recordings he had relevant to the case. He provided a total of 13 audio recordings (ie 10 more than the earlier 3 relied upon by the plaintiff in his witness statement). Nonetheless, the plaintiff failed to discover any of the audio recordings by way of a further list of documents as demanded;
(h) After listening to the additional 10 audio recordings, 4 of them are found to be relevant. In other words, there are 7 relevant audio recordings (4 plus the original 3);
(i) In the premises, the defendants took out the present application.
151. Subsequent to the taking out of the Discovery Summons, the plaintiff has filed a Supplementary List of Document dated 6 February 2015 covering the said 7 audio recordings.
152. However, the defendants say that it only satisfies paragraphs 1(a) & 1(b) of the Discovery Application. The plaintiff still fails to verify the list by affidavit in accordance with paragraph 2 of the Discovery Application.
153. The plaintiff has not complied with paragraphs 1(c) and 1(d) of the Discovery Application which are in relation to discovery of all audio recordings concerning the 3rd Agreement and the plaintiff’s alleged demand to the defendants for payment of the outstanding fee under the 3rd Agreement.
154. The defendants submit that a prima facie case is established on the existence of such recordings:-
(a) The recordings discovered so far are within the period of over three years from 25 June 2008 to 18 November 2011. It establishes that it was the plaintiff’s practice to keep audio recordings during the material time;
(b) According to paragraph 199 of the Plaintiff’s witness statement, it states that on 8 November 2011 (ie within the abovesaid period) there was a conversation between the parties regarding the 3rd Agreement. The fact that the plaintiff is able to set out the exact time and the details of the conversation that took place over 3 year ago is telling evidence that he should have a recording of such conversation.
155. On the other hand, the plaintiff, in his witness statement dated 12 December 2014, sets out the background of the audio recordings with file names 001 dated 22 July 2009, 2011042501301900 dated 25 April 2011 and 2011111816270400 dated 18 November 2011 respectively in paragraphs 110, 181, 182 and 200 to 202. These 3 audio recordings are those referred to in paragraph 1(a) of the Discovery Application.
156. By the Supplemental List of Documents dated 12 December 2014, the plaintiff disclosed the transcripts of the above 3 audio recordings.
157. By a letter dated 5 January 2015, the plaintiff informed Ng, Au Yeung & Partners, solicitors for the defendants that a CD containing 13 audio recordings (which include the above 3 recordings and which are all relevant recordings in the plaintiff’s possession) was available for collection. The file names of the audio recordings are as follows: -
(a) 20080625A;
(b) 20080625B;
(c) 20080625C;
(d) File 0001 (already contained in the said Supplemental List);
(e) File 0002;
(f) File 0003;
(g) 2011032513200600;
(h) 2011032815275400;
(i) 2011041809320100;
(j) 2011042513101900 (already contained in the said Supplemental List);
(k) 2011042615593800;
(l) 2011050416101200; and
(m) 2011111816270400 (already contained in thesaid Supplemental List).
158. On 9 January 2015, the above CD was provided to the defendants’ solicitors and they have acknowledged receipts on the same date. In other words, by 9 January 2015, the defendants already obtained files of all the audio recordings as requested by them.
159. By the Further Supplemental List of Documents dated 6 February 2015 (a date after the Summons was taken out), the plaintiff discovered all the audio recordings which included all the above 13 audio recordings.
160. The plaintiff therefore submits that the application under paragraphs 1 and 4 of the Discovery Applicationfor a further list of documents and inspection of documents as specified under paragraphs 1(a) and (b) simply falls away and should not be entertained.
161. As to the documents specified under paragraphs 1(c) and (d) of the Discovery Application, the plaintiff submits that the defendants plainly fail to show that the requested documents are in the plaintiff’s possession or are even in existence for the following reasons:-
(a) Among the lists of documents previously filed, the documents already discovered and any other pleadings or documents filed by the plaintiff, there is no evidence at all suggesting that the plaintiff has any other relevant documents beyond those disclosed;
(b) In the letter dated 5 January 2015, the plaintiff informed and confirmed to the defendants’ solicitors that the 13 audio recordings are all the relevant audio recordings he has;
(c) The defendants’ speculation that the plaintiff had a habit of recording all conversations concerning CIGIF is plainly groundless with no basis at all;
(d) The absence of mentioning of the payment arrangement in the audio conversation is far from suggesting that there must be a further audio recording;
(e) The single line of “上次到而家傾咗都成十日啦！” in one of the audio recordings does not, in any sense, imply that there must be an earlier audio recording;
(f) The mere fact that the plaintiff could recall some striking parts of the conversation does not imply that there must be audio recording.
162. The plaintiff therefore submits that the defendants fail to make out the prima facie case as to existence and possession of the audio recordings in question.
163. Besides, the plaintiff has already confirmed that there is no other relevant audio recording within his power, custody and possession, apart from those disclosed. As such, it is only a waste of unnecessary costs for the court to order the plaintiff to make another affidavit verifying the Further Supplemental List of Documents.
164. The plaintiff believes that the Discovery Application is a mere fishing exercise and delaying tactic and should not be entertained.
My ruling
165. I do not accept that the defendants have established a prima facie case that there are more audio recordings than those that have been disclosed by the plaintiff. The mere fact that the plaintiff had omitted to produce some audio recordings previously does not give rise to the fact that the plaintiff must have some more. The facts relied on by the defendants cannot show that the plaintiff must have recorded each and every single conversation as a habit. The plaintiff has repeatedly said that those audio recordings produced are all he has. I have no reason to disbelieve him. It is clear that if there are any further recordings relating to the oral agreements, the plaintiff should be more than happy to produce them, as the defendants’ case is simply that there was no such oral agreements at all. Any further recordings concerning the oral agreements would just damage the defendants’ case rather than helping them. Thus, there is no reason for the plaintiff to hide such recordings.
166. I also agree with the plaintiff that another affidavit verifying the Further Supplemental List of Documents is simply a waste of costs.
167. Thus, the Discovery Application should be dismissed with costs to the plaintiff.
RE-FIXING APPLICATION
168. As can be seen from the correspondence passing between the parties, the Re-fixing Application was taken out by the plaintiff because the plaintiff was advised by counsel that the argument for all three summonses would take at least one day, but the defendants refused to accept this.
169. At the hearing before Master Ho, it is clear that Master Ho did not make any order in respect of the Re-fixing Application because he was told by counsel for the defendants that the defendants’ submission would be within an hour. It does not matter whether the defendants’ counsel was giving a promise or an undertaking at that time. The fact remains that Master Ho did not re-fix the case because of what the defendants’ counsel told him.
170. In actual fact, the defendants’ submission took one hour 45 minutes on 8 September 2015. The plaintiff’s submission took the rest of the 3 hours allotted and yet could not finish. I allowed the parties to go on with the submission in the afternoon on 8 September 2015. The plaintiff’s counsel used the whole of the afternoon and still could not finish the submission. Thus, the case was adjourned to another date with 2 hours reserved. The adjourned hearing was fixed on 27 January 2016 at 2:30 p.m. but the parties could only finish all the submission at about 4:45 p.m.
171. Thus, it is clear that the original estimated hearing time of 3 hours was totally insufficient. The plaintiff could not be blamed when he first agreed to this time estimate as he was acting in person. He acted rightly by taking out the Re-fixing Application after receiving counsel’s advice. On the other hand, it is clearly wrong for the defendants to insist on 3 hours when their own submission took one hour 45 minutes leaving not much time for the plaintiff to submit.
172. There were 39 paragraphs of the plaintiff’s witness statement and 10 interrogatories as well as specific discovery of audio tapes to be dealt with at the hearing. I think it is reasonable to foresee that 3 hours would not be sufficient to deal with all these matters. There is no reason for the defendants to insist on this time estimate.
173. The defendants blamed the plaintiff for not being able to give a time estimate of how long the plaintiff’s submission would take when the plaintiff was asked by Master Ho about this. It is not fair to suggest that the plaintiff was at fault on this. The plaintiff took out the Re-fixing Application because his counsel’s estimate was at least one day and that was a more reasonable estimate. There is simply no reason for the defendants to disagree with the plaintiff’s estimate.
174. In the correspondence passing between the parties, the defendants thought that the plaintiff wanted to re-fix the hearing because his previous counsel was not free on 8 September 2015, but that cannot be the reason for re-fixing because the plaintiff was prepared to use the same day on 8 September 2015 with extended hours.
175. Thus, I am of the view that the defendants should bear the costs of the Re-fixing Application.
176. However, the defendants suggest that there should be two sets of costs, one for the summons itself and the other for the call-over hearing on 22 July 2015. The defendants suggest that there should be no order as to costs for these two sets of costs. I totally disagree. If the parties had agreed to re-fix the hearing, they could have written to the court to re-fix the hearing instead of taking out a summons. The need to take out the summons was caused by the defendants’ disagreement with the plaintiff’s estimate, and hence the defendants should bear the costs. Likewise, the call-over hearing was also caused by the defendants’ disagreement with the plaintiff and hence the defendants should bear the costs.
177. The defendants submit that they should not bear any costs because of their wrong estimate of time. I disagree. The entire costs of the Re-fixing Application was occasioned by the defendants’ fault in giving such a wrong estimate of time and refusal to re-fix. There is no reason for the plaintiff to incur such costs if the defendants had been more reasonable. In fact the defendants had been warned that the plaintiff would apply for costs if they refused to agree to re-fix the hearing.
178. In the circumstances, the defendants must bear all the costs of the Re-fixing Application.
CONCLUSION
179. By reasons aforesaid, I hereby order as follows:-
(1)Save for the withdrawal of Interrogatory 5 as aforesaid, all the three summonses be dismissed.
(2)Costs order nisi: The defendants do pay the plaintiff’s costs of the three summonses with certificate for counsel to be assessed summarily on paper. The plaintiff do submit and serve his Statement of Costs on or before 13 June 2016. The defendants do submit and serve their Statement of Objection on Costs on or before 27 June 2016.
(3)The defendants do pay the plaintiff his costs of the summons dated 3 July 2015 with certificate for counsel to be assessed summarily on paper. The plaintiff do submit and serve his Statement of Costs on or before 13 June 2016. The defendants do submit and serve their Statement of Objection on Costs on or before 27 June 2016.
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(Michael Wong)
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Master of the High Court |
Mr Raymond Lau, instructed by Mike So, Joseph Lau & Co, for the plaintiff
Mr Ross Yuen, instructed by Ng, Au Yeung & Partners, for the 1st and 2nd defendants
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